Environmental Safety Consultants, Inc.
Docket: ASBCA 58343
Decision date: 2014-10-23

ARMED SERVICES BOARD OF CONTRACT APPEALS 
Appeal of--
Environmental Safety Consultants, Inc. 
Under Contract No. N62470-95-C-2399 
APPEARANCE FOR THE APPELLANT: 
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APPEARANCES FOR THE GOVERNMENT: 
ASBCA No. 58343 
Mr. Peter C. Nwogu 
President 
Ronald J. Borro, Esq. 
Navy Chief Trial Attorney 
Ellen M. Evans, Esq. 
Senior Trial Attorney 
OPINION BY ADMINISTRATIVE JUDGE FREEMAN ON 
THE GOVERNMENT'S RENEWED MOTION TO DISMISS 
On 10 July 2014, the government submitted this renewed motion to dismiss the 
appeal on the grounds that (i) Environmental Safety Consultants, Inc., (ESCI) 
has not 
complied with the Board's 20 May 2014 discovery order, and (ii) ESCI's failure to 
retain cost records as required by the contract has prejudiced the government's ability 
to respond to ESCI' s allegations in the appeal. ESCI opposes the motion stating that 
(i) it provided its books and records for government inspection as required by FAR and 
(ii) the fact that its books and records did not contain evidence of actual incurred costs 
was no basis for dismissing the appeal or applying sanctions (opp'n at 9). On review 
ofESCI's responses to the discovery order, we find substantial non-compliances 
which warrant prohibiting ESCI from producing at hearing any documentary evidence 
or witness that should have been disclosed in the discovery ordered by the Board. 
Accordingly, that sanction is ordered and the motion to dismiss is denied. 
STATEMENT OF FACTS (SOF) FOR PURPOSES OF THE MOTION 
1. The captioned contract, awarded on 13 November 1995, (hereinafter 
"Contract 2399") was terminated for default on 12 June 1998. On 28 September 2011, 
the Board sustained an appeal from the default termination. Pursuant to the terms of 
the contract, that decision converted the default termination to a termination for the 
convenience of the government. See Environmental Safety Consultants, Inc., ASBCA 
No. 51722, 11-2 BCA ~ 34,848. Familiarity with that decision is presumed. 

2. On or about 5 July 2012, ESCI's submitted to the contracting officer a total 
cost basis termination settlement proposal with a net payment request of$1,183,366.59 
for the termination of Contract 23 99. On 14 September 2012, ESCI converted the 
proposal to a claim under the Contract Disputes Act of 1978 (CDA), 41 U.S.C. 
§ § 7101-7109. The contracting officer refused to either negotiate a settlement 
agreement or issue a final decision on the claim. She alleged that the claim was 
"conceived in fraud and is permeated by fraud" and that the contracting officer "lacks 
authority to decide it or settle it." See Environmental Safety Consultants, Inc., 
ASBCA No. 58343, 14-1BCAif35,681 at 174,666. On 29 September 2012, ESCI 
appealed the deemed denial of its claim, and that appeal (ASBCA No. 58343) is 
presently before us. 
3. The Federal Acquisition Regulation (FAR) 52.249-2, TERMINATION FOR 
CONVENIENCE OF THE GOVERNMENT (FIXED-PRICE}-ALTERNATE 1(APR1984) clause 
(hereinafter "the Termination clause"), of the captioned contract states in pertinent 
part: 
(f) If the Contractor and Contracting Officer fail to 
agree on the whole amount to be paid the Contractor 
because of the termination of work, the Contracting Officer 
shall pay the Contractor the amounts determined as 
follows ... 
( 1) For contract work performed before the 
effective date of termination, the total (without duplication 
of any items) of -
(i) The cost of this work; 
(h) The cost principles and procedures of Part 31 of 
the Federal Acquisition Regulation, in effect on the date of 
this contract, shall govern all costs claimed, agreed to, or 
determined under this clause. 
4. The FAR 31.201-1, "Composition of total cost" provision, in effect on the 
date of Contract 23 99, stated in pertinent part: "(a) The total cost of a contract is the 
sum of the direct and indirect costs allocable to the contract, incurred or to be incurred, 
less any allocable credits," plus any allocable cost of money pursuant to 31.205.10. 
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5. FAR 49.206-2(b )(2), applicable to all contracts that provide for termination 
for the convenience of the government, 1 states in pertinent part that: "When the 
total-cost basis is used under a complete termination, the contractor must itemize all 
costs incurred under the contract up to the effective date of termination." 
6. The FAR 52.214-26, AUDIT-SEALED BIDDING (APR 1985) clause of 
Contract 2399, states at paragraph (b)(2) that: "Records pertaining to appeals under 
the Disputes clause or to litigation or the settlement of claims arising under or relating 
to the performance of this contract shall be made available until disposition of such 
appeals, litigation or claims." 
7. ESCI's 5 July 2012 total cost basis termination settlement claim was 
submitted for audit to the Defense Contract Audit Agency (DCAA) on 22 March 2013. 
On 24 February 2014, the DCAA issued a "DISCLAIMER OF OPINION" report. 
The stated reasons for the disclaimer included, among other things, that: 
Based upon the results of our adequacy evaluation, 
we determined that ESCI's July 5, 2012 termination for 
convenience settlement proposal does not comply with the 
requirements of FAR 49.206-2(b )(2) Bases for Settlement 
Proposals, and FAR 49 .206-1 ( c ), Submission of Settlement 
Proposals, and therefore, is inadequate. 
ESCI' s termination for convenience settlement 
proposal was not prepared using actual costs incurred 
through the effective date of the termination, but iiistead 
was based on an estimated increased contract price. 
(Bd. corr., DCAA Report) 
8. On 4 April 2014, the government served 24 discovery requests on ESCI in 
the captioned appeal. On 14 April 2014, ESCI answered the request with 
argumentative allegations that the documents had already been provided to the 
government, or did not exist, or were irrelevant to the issues in the appeal. (Bd. corr.) 
9. On 25 April 2014, the government moved for an order to compel discovery 
(Bd. corr.). On 20 May 2014 the presiding judge issued a discovery order stating in 
relevant part: 
1 See FAR 49 .002. 
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(Id.) 
ESCI will deliver to the Atlanta DCAA Branch Office, no 
later than 20 June 2014, the responsive documents in a 
separate marked package for each of the following requests 
in the government's 24 April 2014 motion: Nos. 1, 2, 3, 5, 
11, 12, 13, 14, 19, and 20. IfESCI has no responsive 
documents for a particular request, it shall so state in 
writing with its submission. After inspection and copy at 
the DCAA office, the government will return the submitted 
documents to ESCI. A single document "dump" by ESCI 
for all of the above-listed requests, without a separate 
package of documents for each request, or inclusion of 
clearly non-responsive documents in a package for a 
particular request, will be considered a non-compliance 
with this order. 
For any non-compliance with the foregoing orders, 
the Board will entertain a motion for appropriate sanctions, 
up to and including dismissal of the appeal. 
10. On or about 25 June 2014, ESCI submitted its response to the presiding 
judge's 20 May 2014 order. ESCI's response provided no documents, explanation or 
other response to four of the ten production requests for which a response was required 
by the 20 May 2014 order. Those four requests were: Request No. 12 for "copies of 
all purchase orders for costs incurred under the subject contract"; Request No. 13 for 
"copies of all receipts for costs incurred under the subject contract"; Request No. 14 
for "copies of all subcontractor and vendor agreements relating to this contract"; and 
Request No. 19 for "a complete list of the witnesses you intend to call at trial." The 
six requests in the 20 May 2014 order for which some substantive response was 
provided by ESCI and the response to each are set forth in SOF ~~ 11-20 below. 
11. Request No. 1 was: "Provide a complete, legible copy of the actual record 
you used to contemporaneously accumulate and track the actual costs expended for 
this contract." ESCI's response was: 
No. [sic] such record was required under the contract 
and was not developed. 
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For the appellant's CDA claim as part of the Termination 
for Convenience (T4C) claim, appellant used the 
subcontract agreement and the request for equitable 
adjustment (REA) claim documentation to track additional 
costs related to appellant's CDA claim. Appellant used the 
Fixed Price Bid Cost Break Down by Work Division: (See 
Letter Dated September 20, 1995). Also there were 
invoices submitted to government used to track the earned 
contract work. 
All included in the Item No. 1 Response Package) 
12. The documents submitted by ESCI in its Item No. 1 response package do 
not individually or collectively accumulate and track the actual costs expended on the 
contract. Moreover, although ESCI denies in its response that it "developed" a 
record 
to "accumulate and track the actual costs expended for this contract," the table of 
contents in each of its annual corporate financial statements for the years 1995, 1996 
and 1997, show a "SCHEDULE OF JOB REVENUE AND COSTS" as an item in the 
statement. 2 
13. Request No. 2 was: "Provide a complete, legible copy of your current list 
of actual costs expended for this contract; state the date on which such list was 
compiled and identify who compiled it." ESCI's response was: 
No. [sic] such record was required under the contract and 
was not collected. The contract did not require ESCI to 
perform this line of work. For the appellant's CDA claim 
as part of the T4C claim there are bilateral contract 
modification, pre-termination costs and post-termination 
costs related to appellant's T4C claims. (See Packages in 
Item #20) 
14. The documents submitted in ESCI's response to Request No. 2 including 
those in the Packages in Item 20 do not individually 
or collectively provide a current 
list of actual costs expended on the contract. Some of the separate packages of 
documents submitted by ESCI under Request No. 20 include canceled checks or 
invoices indicating payment to suppliers and subcontractors for work under Contract 
2399, but there is no current list of the actual incurred costs of the contract. The total 
2 The "SCHEDULE OF JOB REVENUE AND COSTS" for the year 1995 was 
inadvertently disclosed by ESCI in its otherwise non-responsive submission of 
documents for Production Request No. 3 (see SOF ii 15). 
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amount of the cancelled checks and invoices marked paid in the documents submitted 
in response to Request No. 20 was $143,050.08. 
15. Request No. 3 was: "Provide a complete, legible copy ofESCI's general 
corporate ledger for the years 1995 through 1998; make the original available for 
inspection by the government." ESCl's response was: "There is Package Cover Sheet 
Item #3 Containing ESCI's Corporate Financial Statements, 1995, 1996, 1997, 1998." 
The annual corporate financial statements may have been prepared in part from data 
recorded in the general 
corporate ledger but they were not the ledger itself. ESCI 
provided no explanation for its failure to provide the requested general corporate 
ledger or copy thereof. 
16. Request No. 5 was: "Provide complete, legible copies of all payroll 
records and time-keeping records for this contract, including, but not limited to, all 
certified payrolls for ESCI and each subcontractor." ESCI's response was: "Due to 
passage of time and after eighteen (18) years most of the records could not be located. 
The ones located are enclosed as Package Cover Sheet Item # 5 Some Employees 
Payroll Records." 
17. The documents submitted in response to Request No. 5 are 423 pages of 
which only 16 pages are identifiable on their face as payroll for direct labor on 
Contract 2399. Twelve of these 16 pages are a subcontractor's weekly payrolls, 
required for compliance with the Davis Bacon Act, totaling $4,439.50 for the period 
12 December 1996 to 5 February 1997 (ESCI Response, tab 5 at 86-97). Although 
ESCI claims $1,021,306 for "DIRECT LABOR" on its SF 1436 total cost basis 
termination settlement claim, there are no Davis-Bacon Act weekly payroll records for 
ESCI's direct labor on the contract in its response to Request No. 5. Three pages in 
the response are time sheets of an ESCI employee working directly on Contract 2399 
during the weeks of 9, 16, and 23 February 1996 with a gross pay amount of $1,553.79 
(id. at 267-68, 271). One page in the response is the time sheet of another ESCI direct 
employee charging 4.5 hours at a gross payroll amount of $45.00 to "NWS-Project" on 
9 September 1996 (id. at 105). 
18. Request No. 11 was: "Provide complete, legible copies of all invoices for 
costs incurred under the subject contract; make the originals available for government 
inspection." ESCI's response was: "Don't have all the invoices. There are invoices 
from subcontractor Rickmond related to post-termination for convenience costs and 
3 Contract 2399 included the FAR 52.222-6, DA VIS-BACON ACT (FEB 1995) clause 
and the FAR 52.222-8, p A YROLLS AND BASIC RECORDS (FEB 1988) clause 
(ASBCA No. 51722, R4, tab 1 at 66). 
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changed work for appellant's termination for convenience package. Package Item 
No. 11." 
19. The 54 pages of documents submitted by ESCI in its response package to 
Item No. 11are19 pages of invoices ofRickmond Environmental, Inc., and 35 pages 
of change order and other pricing documents either supporting those invoices or 
proposals for payments on change orders. The Rickmond invoices were dated from 
9 December 1996 to 18 July 1997 for work performed as a subcontractor under 
Contract 2399. The total amount billed to ESCI on these invoices was $147,059.60. 
The total amount of payments by ESCI to Rickmond recorded on these invoices was 
$13,680. 
20. Request No. 20 was: "Provide complete, legible copies of each of the 
documents you brought with you to the DCAA audit 'walk through' in connection 
with that agency's adequacy review of your termination for convenience claim under 
the subject contract; make the original documents available for government 
inspection." ESCI' s response was the submission of 612 pages of documents in 
numbered packages, with description of contents and number of pages as follows: 
20-1 Bond/Insurance Costs related to post-termination 
cost (13 pages). 
20-2 Contractor Production Report, Labor Hours/ 
Equipment@ Site Work (2 pages). 
20-3 Changed Work May 28, 1996 (4 pages). 
20-5 Sub Contractor Production Report/Labor/ 
Equipment 1996/1997 (19 pages). 
20-6 Terminated (Unfinished) Work Amount (4 pages). 
20-7 Unpaid Completed Work at Fixed Contract Price 
(16 pages). 
20-8 Contract Modification 
for Changed Work 
PC0-01 (23 pages). 
20-9 Pre-Termination Contract Work Labor Costs Source 
611997-6/1998 (73 pages). 
20-10 Post-Termination Unrelated to T4C Settlement Cost 
Source (7/1997 through 05/1998) (148 pages). 
20-11 Unpaid invoices by the government (30 pages). 
20-12 Sub Contractor invoices for work directed by the 
government ( 11 pages). 
20-13 List of outstanding payments due in June 23, 1997 
Invoice No. 7 (61 pages). 
20-14 Bond and Insurance source claim (212 pages). 
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21. While a significant number of the submitted documents for Request No. 20 
had no relevance to ESCI's termination settlement claim (e.g. 123 pages in package 
20-14 that related to contracts other than Contract 2399), all of the submitted 
documents literally met the request for all documents that ESCI had brought to the 
"walk-through" with the DCAA of its termination settlement claim. 
DECISION 
The Board's 20 May 2014 discovery order required ESCI to comply with 
Production Request Nos. 1, 2, 3, 5, 11, 12, 13, 14, 19 and 20 of the government's 
discovery requests of 4 April 2014. The Board's order further provided that: 
"inclusion of clearly non-responsive documents in a package for a particular request, 
will be considered a non-compliance with this order." (SOF ~ 9) The documents 
submitted for the government's Request Nos. 1, 2, and 3 were clearly not responsive to 
those requests. The documents submitted for Request No. 1 did not accumulate and 
track the actual costs expended on the contract. The documents submitted for Request 
No. 2 did not provide a current list of actual costs expended for the contract. The 
documents submitted for Request No. 3 were not the general corporate ledger for the 
years 1995-1998. (See SOF ~~ 9-13) 
With respect to Production Request Nos. 1 and 2, ESCI contends that the 
contract did not require it to maintain a 
record of actual costs expended on the 
contract. We disagree. ESCI is claiming a total cost basis termination for convenience 
settlement determination by the contracting officer. For ESCI's total cost termination 
settlement claim that was not settled by agreement of the parties, the contract 
Termination clause at paragraph (f)(l)(i) required the contracting officer to determine 
"the cost of this work" (SOF ~ 3). Paragraph (h) of the Termination clause stated that 
FAR Part 31 "shall govern all costs claimed, agreed to, or determined under this 
clause" (SOF ~ 3). FAR 31.201-1 defined the total cost of a contract as "the sum of 
the direct and indirect costs allocable to the contract, incurred or to be incurred, less 
any allocable credits, plus any allocable cost of money pursuant to 31.205 .1 O" (SOF 
~ 4 ). FAR 49 .206-2(b )(2) required that for a total cost termination settlement claim 
"the contractor must itemize all costs incurred under the contract up to the effective 
date of the termination" (SOF ~ 5). 
ESCI also contends in its responses to Request Nos. 1 and 2 that it did not in 
fact maintain job cost records (SOF ~~ 11, 13). This contention however is shown to 
be mistaken by ESCI's own corporate financial statement for the years 1995, 1996 and 
1997 when Contract 2399 was being performed (SOF ~ 12). 
The documents submitted for the government's Production Request Nos. 5 and 
11 were in each case a mixed bag of responsive and non-responsive documents. Four 
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hundred and seven (407) of the 423 pages in the submittal for Request No. 5, and 35 of 
the 54 pages in the submittal for Request No. 11 were non-responsive to the request. 
(SOF iii! 17, 19) The "passage of time" does not excuse ESCI's inability to provide 
the payrolls for Request No. 5. The Audit-Sealed Bidding clause of the contract 
required ESCI to retain records 
pertaining to the appeal until disposition of the appeal 
(SOF if 6). The inclusion of the non-responsive pages in the submittals for Request 
Nos. 5 and 11 were clear non-compliances with the Board's order. 
For Production Request Nos. 12, 13, 14 and 19, ESCI's response was silence. 
No purchase orders, no receipts for costs incurred, no subcontractor or vendor 
agreements, and no list of witnesses intended to be called at hearing were provided in 
response to the specific requests (SOF if 10). 
On this record, we find substantial non-compliances with the Board's order. 
Our longstanding authority to impose sanctions for non-compliance with our 
discovery orders is set forth in Turbomach, ASBCA No. 30799, 87-2 BCA if 19,756 
at 99,953-54 as follows: 
It cannot be disputed that this Board has the 
inherent power to control the discovery process in appeals 
before it. We have im~lemented this authority, in part, 
with Rules 31 and 3 5. 41 Our power to impose sanctions is 
broad and may even extend to dismissal of an appeal. 
Metadure Corp. v. United States, 6 Cl. Ct. 61 (1984). We 
have issued orders prohibiting the introduction of evidence 
(Arcon Pacific Contractors, ASBCA No. 25057, 81-2 
BCA if 15,225; Integrity Management International, Inc., 
ASBCA No. 18289, 75-1BCAif11,235), prohibited the 
calling of witnesses (Industrial Design Laboratories, Inc., 
ASBCA No. 21603, 80-1BCAif14,269), and drawn 
adverse inferences (Bromley Contracting, Inc., ASBCA 
No. 20271, 77-2 BCA if 12,715). Thus, the Board has 
available to it, and has used, a variety of sanctions 
designed to enforce compliance with our Rules and orders 
and secure the just and expeditious resolution of the 
disputes before us. 
4 Now Rules 16 and 17. 
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An appropriate sanction for ESCI's non-compliances with the Board's 20 May 
2014 discovery order is that no documents or testimonial evidence, other than the 
testimony of Mr. Nwogu, that should have been, but were not disclosed by ESCI in its 
response to the discovery 
order will be allowed to be offered by appellant for admission 
into evidence at the hearing. 
Dated: 23 October 2014 
111~'2b~~ 
I concur 
Administrative Judge 
Acting Chairman 
Armed Services Board 
of Contract Appeals 
MONROE E. FREEMAN, JR. 
Administrative Judge 
Armed Services Board 
of Contract Appeals 
I concur 
RIC~FORD 
Administrative Judge 
Vice Chairman 
Armed Services Board 
of Contract Appeals 
I certify that the foregoing is a true copy of the Opinion and Decision of the 
Armed Services Board of Contract Appeals in ASBCA No. 58343, Appeal of 
Environmental Safety Consultants, Inc., rendered in conformance with the Board's 
Charter. 
Dated: 
10 
JEFFREY D. GARDIN 
Recorder, Armed Services 
Board of Contract Appeals 
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