SupplyCore, Inc.
Docket: ASBCA 58676
Decision date: 2016-02-17

ARMED SERVICES BOARD OF CONTRACT APPEALS 
Appeal of--
SupplyCore, Inc. 
Under Contract No. W52PIJ-09-C-0006 
APPEARANCES FOR THE APPELLANT: 
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APPEARANCES FOR THE GOVERNMENT: 
ASBCA No. 58676 
William E. Hughes III, Esq. 
Emily A. Constantine, Esq. 
Whyte Hirschboeck Dudek S.C. 
Milwaukee, WI 
Raymond M. Saunders, Esq. 
Army Chief Trial Attorney 
CPT Harry M. Parent III, JA 
Trial Attorney 
OPINION BY ADMINISTRATIVE JUDGE WILSON 
ON THE GOVERNMENT'S AMENDED MOTION FOR SUMMARY JUDGMENT 
The government declined to exercise the fourth option of the captioned contract for 
warehousing services in Kuwait. Appellant, SupplyCore, Inc. (SupplyCore ), maintains that it 
was required under Kuwaiti labor law to provide its employees 90-days notice of termination, 
and seeks an additional $145,634.80 representing pay to its employees for 39 days because the 
government did not notify it that the government would not exercise the fourth option until 
51 days prior to the expiration of the contract. We have jurisdiction pursuant to the Contract 
Disputes Act of 1978, 41 U.S.C. §§ 7101-7109. The government moves for summary 
judgment. SupplyCore opposes the motion. For the reasons stated below, the motion is 
granted. 
STATEMENT OF 
FACTS FOR THE PURPOSES OF THE MOTION 
1. On 24 November 2008, the United States Army Contracting Command Rock 
Island Contracting Center (hereinafter referred to as Army or government) awarded 
Contract No. W52PIJ-09-C-0006 to SupplyCore. Under the contract, SupplyCore was to 
provide warehouse services at the Interceptor Body 
Armor Warehouse at Camp Ali Al 
Salem, Kuwait. The contract was awarded as a firm fixed-price commercial items contract 
and incorporated FAR 52.212-4, CONTRACT TERMS AND CONDITIONS - COMMERCIAL 
ITEMS (OCT 2008). (R4, tab 2 at 1, 3, 10) 
2. The contract was awarded for a one-year base period and contained four 
one-year options. The contract included FAR 52.217-9, OPTION TO EXTEND THE TERM 
OF THE CONTRACT (MAR 2000), which stated, in pertinent part: 

(a) The Government may extend the term of this 
contract by written notice to the Contractor within 30 days; 
provided that the Government gives the Contractor a 
preliminary written notice of its intent to extend at least 
60 days before the contract expires. The preliminary notice 
does not commit the Government to an extension. 
(R4, tab 2 at 3, 14) 
3. The contract also incorporated DFARS 252.222-7002, COMPLIANCE WITH 
LOCAL LABOR LAWS (OVERSEAS) (JUN 1997), which provided: 
(a) The Contractor shall comply with all-
( 1) Local laws, regulations, and labor union 
agreements governing work hours; and 
(2) Labor regulations including collective bargaining 
agreements, workers' compensation, working conditions, 
fringe benefits, and labor standards or labor contract matters. 
(b) The Contractor indemnifies and holds harmless the 
United States Government from all claims arising out of the 
requirements of this clause. This indemnity includes the 
Contractor's obligation to handle and settle, without cost to 
the United States Government, any claims or litigation 
concerning allegations that the Contractor or the United 
States Government, or both, have not fully complied with 
local labor laws or regulations relating to the performance of 
work required by this contract. 
(c) Notwithstanding paragraph (b) of this clause, 
consistent with paragraphs 3 l.205-15(a) and 31.205-47(d) of 
the Federal Acquisition Regulation, the Contractor will be 
reimbursed for the costs of all fines, penalties, and reasonable 
litigation expenses incurred as a result of compliance with 
specific contract terms and conditions or written instructions 
from the Contracting Officer. 
(R4, tab 2 at 10) 
4. The government exercised the first three options, extending the term of the 
contract through 23 November 2012 (R4, tabs 8, 10, 13). 
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5. SupplyCore alleges that, at the time the contract was executed, Kuwaiti labor 
law required an employer to provide 15 days advanced notice of termination to its 
employees (compl. ~ 4). On 21February2010, Kuwait enacted "The Law of Labor in the 
Private Sector," No. 6of2010. Article 44 of that law provided, in pertinent part: 
In the event where the term of the work contract is not 
specified, both parties shall have the right to terminate the 
same by means of a notice to the other party as follows: 
a- Three months prior to the termination of the contract 
for workers earning a monthly remuneration. 
b- One month prior to the termination of the contract 
for other workers. In the event where the party 
wishing to terminate the contract does not abide by 
the period of notice, he shall be obliged to pay the 
other party a compensation for the notification 
period equal to the remuneration of the worker for 
the same period. 
(Gov't am. mot., ex. 2 at KFLD-48) 
6. In a 10 September 2012 email to SupplyCore, an Army contract specialist 
stated, "hopefully we will get the funding and approval for OY4 [option year 4] with 
plenty of time to get it exercised without last minute jumping" (app. opp'n, ex. 8). 
7. The record includes a 19 September 2012 email from the same contract 
specialist to an Army captain discussing the contract with SupplyCore. That email stated, 
in pertinent part: 
The contract allows the Government to extend the term of the 
contract by written notice to the Contractor within 30 days; 
provided that the Government gives the Contractor a 
preliminary written notice of its intent to extend at least 
60 days before the contract expires. This preliminary notice 
does not commit the Government to an extension. 
Basically what this means is that we need to provide 
[SupplyCore] with a letter of intent to exercise the option 
prior to 24 Sep 12 if we plan to exercise the option within 
30 days. I'm sure [SupplyCore] would still accept the option 
if it was within 30 days but they may have additional costs 
associated. Lack of receipt of a 60 day notice is 
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SupplyCore's authorization to begin demobilizing on 
24 Oct 12. They are still responsible for the final month of 
service but they can begin terminating housing leases, vehicle 
leases, notifying employees that their contract will be ending, 
etc. Once they do this then the Government would be 
responsible for any related charges should we wish to 
exercise the option within that 30 day window. 
(App. opp'n, ex. 2) 
8. By letter dated 25 September 2012, the government notified SupplyCore of its 
intent to exercise the fourth option period from 24 November 2012 
to 23 November 
2013. The notice further stated: "This preliminary notice does not commit the 
Government to an extension. If the Government exercises the option, a fully executed 
modification will be provided to you prior to the contract[']s expiration date of 
23 November 2012." (R4, tab 16 at 2) 
9. On 27 September 2012, a General Officer Steering Committee (GOSC) met to 
discuss, inter alia, whether to extend SupplyCore's contract (app. opp'n, Jameson dep. 
at 17-18). The decision made at that meeting was memorialized in a 1 October 2012 
memorandum, which stated in pertinent part: 
2. The contract GOSC was presented a decision brief 
regarding the IBA warehouse at the Ali As [sic] Salem LSA 
in Kuwait on 27 September 2012 in order to determine the 
future of the current requirement. 
5. Based on current use, which is less than 1500 customers 
per month, the elimination of R&R leave for units with a 
270 day boots on ground (BOG), and an uncertainty 
regarding throughput at the gateway over the next 12 months, 
the members of the GOSC concurred on the decision to not 
renew the option year and operate the warehouse with 
Soldiers. 
(R4, tab 17 at 3) 
10. By email on 4 October 2012, the government provided SupplyCore a copy of 
a 3 October 2012 letter from the contracting officer notifying SupplyCore that the 
government would not be exercising the contract's fourth option (R4, tab 18). 
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11. Following receipt of the contracting officer's letter stating that the fourth 
option would not be exercised, SupplyCore provided notice of termination to its Kuwaiti 
employees on 9 October 2012 (compl. ~ 15). 
12. SupplyCore submitted a 15 November 2012 "Equitable Adjustment Request" 
seeking payment of $145,634.80 on the basis that Kuwaiti labor law required 90 days 
notice of termination to employees and that the difference between the government's 
3 October 2012 notice of its intent not to exercise the fourth option "and the notice 
required by Kuwait law (90 days) subject[ed] SupplyCore to 39 days of renumeration 
[sic] (also know[n] in this case severance) pay" (R4, tab 19 at 1, 7, 8). The contracting 
officer denied SupplyCore's request by letter dated 14 January 2013 (R4, tab 20). 
13. SupplyCore submitted an 11 April 2013 certified claim to the contracting 
officer seeking $145,634.80 representing an "additional 39 days of compensation to the 
terminated employees" due to "the Government's failure to provide adequate notice of 
termination of the Contract." In its claim, SupplyCore asserted that following the change 
in Kuwaiti law regarding notice of termination to employees, "compliance with Kuwaiti 
law was rendered impossible unless the Government provided SupplyCore at least 
90 days[] advanced notice of its intent to not exercise its option for an extension of the 
Contract." SupplyCore alleged that it refrained from providing notice of termination to its 
workers in reliance on the government's communications indicating that it intended to 
exercise the fourth option. SupplyCore therefore maintained that the government was 
"responsible for lack of 90 days notice to [SupplyCore's] workers." (R4, tab 21 at 6) 
14. The contracting officer denied SupplyCore's claim by final decision dated 
28 May 2013 (R4, tab 23). 
15. SupplyCore timely appealed by notice of appeal dated 31May2013, which 
the Board docketed as ASBCA No. 58676. SupplyCore filed a complaint on 6 August 
2013 asserting four grounds for relief: Count I-breach of contract for non-compliance 
with DFARS 252.222-7002(c), Compliance with Local Labor Laws (Overseas), which 
provides for contract reimbursement of costs for compliance with local labor laws; Count 
II-breach of contract for failing to disclose superior knowledge; Count III-constructive 
change to the contract; and Count IV-breach of implied-in-fact contract of good faith and 
fair dealing (comp I. at 4-6). 
16. In lieu of filing an answer, on 21August2013 the government filed a motion 
for summary judgment. By order dated 9 December 2014, the Board deferred ruling on 
the motion to allow the parties to engage in discovery. 
17. Following the conclusion of discovery, on 28 September 2015 the government 
filed an amended motion for summary judgment contending, inter alia: (1) appellant is 
not entitled to additional compensation under DF ARS 252.222-7002( c ); (2) appellant is 
not entitled to additional compensation based on a failure to disclose superior knowledge; 
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(3) there was no constructive change to the contract; and (4) the Army did not breach its 
implied duty of good faith and fair dealing (gov't br., passim). SupplyCore responded in 
opposition on 29 October 2015, contending that there are 
material facts in dispute 
regarding whether the government breached its implied duty of good faith and fair 
dealing by failing to inform appellant that it had determined that it no longer needed the 
contract (app. opp'n at 11). The opposition did not address the other three government 
contentions. 
DECISION 
Summary judgment is properly granted only where the moving party has met its 
burden of proving the absence of any genuine issue of material fact and that it is entitled 
to judgment as a matter oflaw. Mingus Constructors, Inc. v. United States, 812 F.2d 
1387, 1390 (Fed. Cir. 1987). A material fact is one which may affect the outcome of the 
decision. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). All significant 
doubt over factual issues must be resolved in favor of the non-moving party. Mingus at 
1390 (citing United States v. Diebold, Inc., 369 U.S. 654 (1962)); SRI International v. 
Matsushita Electric Corp., 775 F.2d 1107, 1116 (Fed. Cir. 1985). 
The government seeks summary judgment on all four theories of recovery raised in 
SupplyCore's complaint. In its opposition, SupplyCore does not address the government's 
arguments regarding DF ARS 252.222- 7002( c ), the superior knowledge doctrine, or 
constructive changes (SOF ~ 17). Accordingly, we consider SupplyCore to have abandoned 
these issues. See States Roofing Corp., ASBCA No. 54860 et al., 10-1BCA~34,356 at 
169,664 (failure to address release of claims contention in its post-hearing brief equated to 
abandonment of the issue); Beyley Constr. Grp. Corp., ASBCA No. 55692, 08-2 BCA 
~ 33,999 at 168,135 (brief failed to address any issues raised previously for which appellant 
claimed entitlement, thus the claim for performance cost deemed abandoned). Accordingly, 
we grant the government summary judgment on Count I (Breach of Contract-DP ARS 
§ 252.222-7002(c)), Count II (Breach of Contract-Doctrine of Superior Knowledge), and 
Count III (Constructive Change). 
In Count IV of its complaint, SupplyCore argues that the government breached its 
duty of good faith and fair dealing. Implied in every contract is a duty of good faith and 
fair dealing in its performance and enforcement. Lakeshore Eng 'g Servs., Inc. v. United 
States, 748 F.3d 1341, 1349 (Fed. Cir. 2014); Metcalf Constr. Co. v. United States, 742 
F.3d 984, 990 (Fed. Cir. 2014). The duty of good faith and fair dealing applies to the 
government as it does to private parties. Centex Corp. v. United States, 395 F.3d 1283, 
1304 (Fed. Cir. 2005). A showing of bad faith is not required to demonstrate a breach of 
the duty. SIA Constr., Inc., ASBCA No. 57693, 14-1 BCA ~ 35,762 at 174,986. The duty 
of good faith and fair dealing requires a party to refrain from interfering with the other 
party's performance and from acting to destroy the reasonable expectations of the other 
party regarding the fruits of the contract. Bell/Heery v. United States, 739 F.3d 1324, 
1334-35 (Fed. Cir. 2014); Centex, 395 F.3d at 1304. What the duty entails is "keyed to the 
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obligations and opportunities established in the contract," Lakeshore, 748 F.3d at 1349, and 
depends on what the contract promises or disclaims, Bell/Heery, 739 F.3d at 1335. See 
also Metcalf, 742 F.3d at 991-92 (explaining the need to consider the contract's allocation 
of risks and benefits in considering a claim of breach of the duty of good faith and fair 
dealing). The implied duty of good faith and fair dealing cannot create duties inconsistent 
with the express provisions of the contract. Bell/Heery, 739 F.3d at 1335. 
SupplyCore does not contend that the government was required to exercise the 
fourth option period or that the failure to exercise the option was arbitrary, capricious, an 
abuse of discretion, or done in bad faith. Rather, this contention turns on notice. 
SupplyCore argues that the government "breached its implied duty of good faith and fair 
dealing by failing to inform SupplyCore that it had determined that it no longer needed 
the Contract, despite having knowledge that its failure to timely provide that information 
to SupplyCore would result in significant costs to SupplyCore" (app. opp'n at 11). 
Appellant maintains that "not only did the Government fail to notify SupplyCore that it 
had decided it no longer needed the Contract, it actually informed SupplyCore that it 
intended to exercise the option to extend the Contract" (id. at 12). SupplyCore asserts 
that the government was "aware that SupplyCore could not begin the demobilization 
process-including laying off its Kuwaiti workforce-until at least 60 days[] prior to 
termination of the Contract" (id.). SupplyCore suggests that the "unfairness of the 
Government's actions" is underscored because the contract was a "fixed-price contract 
for which SupplyCore bore the risk of expense" (id. at 13). 
SupplyCore's opposition to the government's amended motion is, at best, 
confusing. The most liberal reading of SupplyCore's argument is that the government 
breached the duty of good faith and fair dealing by failing to provide SupplyCore any 
notice that the fourth option would not be exercised. The problem with the argument so 
framed is that the government did provide notice to SupplyCore that it would not be 
exercising the fourth option (SOF ~ 10), and SupplyCore does not dispute that it 
"received notice that the final option year would not be renewed on October 4, 2012" 
(app. opp'n at 5). We decline to read SupplyCore's opposition in such a self-defeating 
manner. We instead interpret SupplyCore's opposition as arguing, consistent with its 
11April2013 certified claim, that the implied duty of good faith and fair dealing required 
the government to provide earlier notice that the fourth option would not be exercised. 
Nonetheless, we reject SupplyCore's argument. 
The presence of an option in a contract does not create a legal obligation upon the 
government to exercise the option. Mid-Eastern Industries, Inc., ASBCA No. 53015, 
01-2 BCA il 31,471at155,383; Def Sys. Co., ASBCA No. 50918, 00-2 BCA ~ 30,991 at 
153,006. The exercise of an option is generally within the broad discretion of the 
government. IMS Engineers-Architects, P.C., ASBCA No. 53471, 06-1BCAil33,231 at 
164,674, recon. denied, 07-1BCAil33,467, aff'd, IMS Engineers-Architects, P.C. v. 
Geren, 274 F. App'x 898 (Fed. Cir. 2008); Plum Run, Inc., ASBCA No. 46091 et al., 
97-2 BCA il 29,193 at 145,230. The option clause in SupplyCore's contract stated that 
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the gov~rnment "may extend the term of this contract" (SOF ~ 2), providing the 
government such broad discretion here. See Northeast Air Group, Inc., ASBCA 
No. 46350, 95-2 BCA ~ 27,679 at 138,004-05. In light of the government's broad 
discretion in determining whether to exercise an option and the lack of an obligation to 
do so, SupplyCore could only have reasonably assumed that the contract would expire on 
23 November 2012. Nor could SupplyCore have reasonably relied on the government's 
communications indicating that it would exercise the fourth option. While the contract 
conditioned the exercise of an option upon providing preliminary written notice of the 
government's intent to extend at least 
60 days prior to the expiration of the contract, the 
option clause specifically stated that such notice would not commit the government to 
actually extend the term of the contract (SOF ~ 2). Because the government had not yet 
exercised the fourth option, any expectation SupplyCore may have had that the contract 
would continue beyond the 23 November 2012 expiration date was patently 
unreasonable. 
SupplyCore seeks to shift responsibility onto the government, contending that the 
government knew that its failure to provide timely notice that the fourth option would not 
be exercised ''would result in significant costs to SupplyCore" (app. opp'n at 11). 
SupplyCore cites the contract specialist's 19 September 2012 email for the proposition 
that under the contract, "SupplyCore was not authorized to begin the demobilization 
process, including laying off its workers, until 60 days[] prior to termination of the 
Contract term" (app·. opp'n at 9). For the purposes of summary judgment, we accept 
SupplyCore's characterization of the 19 September 2012 email. That email alone, 
however, is insufficient to establish that SupplyCore was prohibited from providing 
timely notice of termination to its employees. SupplyCore cites no provision of the 
contract that precluded SupplyCore from giving the required notice to its employees 
under Kuwaiti law until the government notified it that the contract would not be 
extended. DF ARS 252.222-7002(b ), on the other hand, placed the risk of compliance 
with Kuwaiti law squarely on SupplyCore. Furthermore, because the contract was firm 
fixed-price, SupplyCore also bore the risk that the cost of such compliance would 
increase. Lakeshore, 7 48 F .3d at 134 7 ("The essence of a firm fixed-price contract is that 
the contractor, not the government, assumes the risk of unexpected costs."); Raytheon 
Missile Sys. Co., ASBCA No. 57594, 13 BCA ~ 35,264 at 173, 117 ("[T]he risk allocated 
to contractors by fixed-price-contracts of unexpected increases in the costs of material 
and labor is very broad indeed."). The contract specialist's 19 September 2012 email, 
therefore, does not raise a material factual issue that would bar summary 
judgment. 
Based upon the foregoing, the government did not breach its duty of good faith 
and fair dealing. 
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CONCLUSION 
The government's amended motion for summary judgment is granted. The appeal 
is denied. 
Dated: 17 February 2016 
oc:wfLSON 
Administrative Judge 
Armed Services Board 
of Contract Appeals 
I concur I concur 
~~~Rl~CKLEFORD 
Administrative Judge 
Acting Chairman 
Armed Services Board 
of Contract Appeals 
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. 58676, Appeal of SupplyCore, Inc., 
rendered in conformance with the Board's Charter. 
Dated: 
9 
JEFFREY D. GARDIN 
Recorder, Armed Services 
Board of Contract Appeals