U.S. Aeroteam, Inc.
Docket: ASBCA 61933, ASBCA 61934
Decision date: 2025-05-14

ARMED SERVICES BOARD OF CONTRACT APPEALS 
 
OPINION BY ADMINISTRATIVE JUDGE O’CONNELL 
PURSUANT TO BOARD RULE 11 
 
The Air Force terminated for default a contract with U.S. Aeroteam, Inc. 
(USAT), for failure to make progress furnishing trailers used to transport aircraft 
engines and demanded the return of progress payments.  The parties have elected to 
submit the appeals on the record pursuant to Board Rule 11.  USAT previously filed an 
appeal with the United States Court of Federal Claims (COFC) regarding the denial of 
its claims for additional costs under two contracts (including the above-captioned 
contract) related to running gear for the trailers.  After the COFC ruled in favor of the 
government, USAT filed an appeal at the United Stated Court of Appeals for the 
Federal Circuit, which affirmed the lower court’s decision.  U.S. Aeroteam, Inc. v. 
United States, 2022 WL 2431626 (Fed. Cir. 2022).  For the reasons discussed below, 
we conclude that the government has adequately supported the default termination as 
well as the return of a portion of the progress payments.  The Board denies the appeals. 
 
FINDINGS OF FACT 
 
1.  USAT is a contractor that specializes in building components for the 
aerospace industry.  U.S. Aeroteam, Inc. v. United States, 2022 WL 2431626 at *1 
(USAT) (Fed. Cir. 2022). 
 
2.  On September 6, 2012, the Air Force awarded USAT Contract No. FA8526-
12-C-0039 (the 0039 contract), a firm fixed price contract for 86 trailers to be used for 
Appeals of - )  
 )  
U.S. Aeroteam, Inc. ) ASBCA Nos. 61933, 61934 
 )  
Under Contract No. FA8526-12-C-0039 )  
   
APPEARANCE FOR THE APPELLANT: Milton Johns, Esq. 
    Executive Law Partners, PLLC 
  Fairfax, VA   
 
APPEARANCES FOR THE GOVERNMENT: Caryl A. Potter, III, Esq. 
    Air Force Deputy Chief Trial Attorney 
 Isabelle P. Cutting, Esq. 
Michael Farr, Esq. 
    Trial Attorneys 
  
 

2 
 
transporting C-17 aircraft engines (R4, tab 1 at 1-4).  At that time, USAT was 
performing a similar contract that the Air Force had awarded in 2009, No. FA8526-09-
C-0007 (the 007 contract) (compl. ¶¶ 1-2).  The 007 contract is not at issue in these 
appeals, but it has some bearing on the facts because USAT experienced the same 
problem on both contracts. 
 
3.  The original price for the (0039) contract was $15,477,850, or $179,975 per 
trailer (R4, tab 1 at 1-3).  The government exercised an option to add an additional 12 
trailers at $184,975 each for a total of 98 trailers (R4, tabs 3, 5-6). 
 
4.  The contract contained various clauses including Federal Acquisition 
Regulation (FAR) 52.232-16, PROGRESS PAYMENTS (APR 2012); FAR 52.233-1, 
DISPUTES (JUL 2002); and FAR 52.249-8, DEFAULT (FIXED-PRICE SUPPLY 
AND SERVICE) (APR 1984) (R4, tab 1 at 15, 17-18). 
 
5.  Originally, the trailers were to be delivered within 280 days of order but two 
bilateral schedule modifications along with the modifications ordering additional 
trailers pushed the last delivery to July 2016 (R4, tab 1 at 3, tabs 2-6). 
 
6.  The government made progress payments to USAT almost every month 
from April 5, 2013 to May 4, 2015 (see R4, tabs 27-54 (each tab is a progress payment 
sheet); R4, tab 18 at 2). 
 
USAT Submits REAs  
 
7.  Although not before the Board in the present appeals, on or about 
January 31, 2015, USAT submitted requests for equitable adjustment (REAs) on both 
the 007 and 0039 contracts (app. supp. R4, tab 2 at ¶¶ 9-10; No. 61973, R4, tab 20 
at 167 (hereinafter “REA at 167”); ASBCA Nos. 61972, 61973, joint stipulation of 
facts (JSF) ¶¶ 42-43).  The REA for the 0039 contract sought $4,531,523 for 11 items 
that USAT referred to as “factors” (JSF ¶ 43). 
 
8.  By far the largest single element in each REA was factor 1, which related to 
the running gear for the trailers (app. br. at 2; JSF ¶ 43).  For the 0039 contract, USAT 
sought an additional $3,559,810 for this factor (JSF ¶ 43).1  The running gear is 
essentially a drive train for the trailer, which allows it to roll, brake, and steer.  The 
running gear was the largest and most expensive sub-assembly for the trailer.  USAT 
obtained the running gear from a subcontractor, PDI Ground Support Systems (PDI).  
USAT, 2022 WL 2431626 at *1; (JSF ¶ 43; app. supp. R4, tab 54; app. br. at 2) 
 
 
1 For the 007 contract, USAT sought $1,092,415 for the running gear (JSF ¶ 42). 

3 
 
9.  In 2011 (nine months or more before the parties executed the 0039 contract), 
PDI experienced financial difficulties and attempted to raise its price per unit from an 
agreed upon $20,300 to at least $38,000.  USAT, 2022 WL 2431626 at *1; (REA at 6, 
168). 
 
10.  USAT formally asked the Air Force if it could assume responsibility for 
manufacturing the running gear.  The contracting officer (CO) granted the request, but 
USAT incurred higher costs than it expected.  USAT, 2022 WL 2431626 at *1.  The 
REA stated that the PDI cost per trailer had been $20,300 but USAT’s cost to 
manufacture was $56,625 (REA at 168). 
 
11.  The parties executed Modification No. 10 (Mod 10) on March 2, 2016, to 
give USAT some relief while the government considered the REA by suspending the 
schedule but requiring USAT to make a good faith effort to continue production (R4, 
tab 11).  The modification stated: 
 
The purpose of this modification is to extend the delivery 
schedule of CLINs 0001AA, 0001AB, 1001AA, 1001AB, 
1001AC, 1001AD, 1001AE, and 1001AF indefinitely.  A 
firm delivery schedule will be established upon resolution 
of the REAs submitted for FA8526-09-C-0007 and 
FA8526-12-C-0039. 
 
. . . 
 
USAeroteam shall make a good faith effort to continue to 
produce and ship units prior to REA resolution and 
establishment of a firm delivery schedule. 
 
All other terms and conditions remain unchanged and in 
full force and effect. 
 
(Id. at 3) 
 
USAT Fails to Manufacture any Trailers after Mod. 10 
 
12.  USAT did not manufacture any trailers after the execution of Mod. 10.  
At the time the modification was executed, USAT had four completed trailers on hand 
that it had not delivered to the Air Force (R4, tabs 119 at 2, 120 at 1).  USAT delivered 
two of those trailers on March 9, 2016; it delivered the third trailer on March 23, 2016, 
and the fourth on June 23, 2016.  USAT did not deliver any trailers after June 23, 
2016.  USAT delivered 58 of the 98 trailers ordered.  (R4, tab 23 at 1; app. supp. R4 
tab 33 at 1) 

4 
 
 
13.  On June 28, 2016, the parties addressed the pending REA in bilateral 
Modification No. 11 (Mod. 11).  Mod. 11 provided payment of $136,542.21 to USAT 
for REA Factors 5 and 6 and stated that the interest that USAT had requested in Factor 
4 was unallowable.  The modification left the remaining issues open to allow USAT to 
submit further documentation: 
 
REA factor Numbers 1, 2, 3, 4 (except interest as 
addressed above), 7, 8, 9, 10, and 11 are considered “open” 
pending the Contractor’s submission of adequate 
supporting documentation in accordance with FAR 31.201-
2(d). 
 
(R4, tab 12 at 1-2) 
 
14.  On November 10, 2016, the contracting officer (CO) wrote by email to 
USAT to inquire about re-establishing a delivery schedule.  The CO stated that the 
government had understood that USAT would resume production once its facility 
relocated and that USAT had informed the government over the summer that it had 
enough material on hand to manufacture 5-6 trailers.  He stated that “[d]elivering new 
trailers represents the surest way for USAT to liquidate the $3.54M in overpaid 
progress payments currently owed to the AF. . . .”  Among other things, he asked 
USAT to propose a schedule by December 1, 2016.  (App. supp. R4, tab 22) 
 
15.  USAT responded by email on November 14, 2016, stating that it was 
working on a request for a CO’s final decision.  USAT did not propose a delivery 
schedule but instead stated “[w]e need to make a good progress on your side to resolve 
the REA/COFD, before we know our action plans. . . .”  (Id.)  
 
16.  USAT also responded to the CO by formal letter on November 30, 2016.  It 
contended that the purpose of Mod. 10 was to alleviate USAT’s “cash crunch” caused 
“primarily” by the running gear.  (App. br. at 2 (citing app. supp. R4, tab 24))  USAT 
stated that, due to its financial condition “and the fact that the REAs have not been 
resolved, we are unable to commit to a ‘firm delivery schedule’ with immediate 
deliveries but could propose a longer term schedule.”  USAT did not provide any 
specifics on what this schedule would be, but it again stated that it was working on a 
request for a contracting officer’s final decision.  (App. supp. R4, tab 24 at 2) 
(emphasis in original)) 
 
  

5 
 
The Running Gear Claims and Litigation 
 
17.  On February 24, 2017, USAT submitted a certified claim for $4,022,273 
limited to the running gear.  The CO denied the claim on July 28, 2017.  (App. supp. 
R4, tab 2 at ¶¶ 13-14); USAT, 2022 WL 2431626 at *1-*2.2   
 
18.  On July 26, 2018, USAT filed suit on that claim in the United States Court 
of Federal Claims (app. supp. R4, tab 2 at ¶ 15).  
 
19.  After a trial, the Court of Federal Claims ruled from the bench in favor of 
the government.  USAT, 2022 WL 2431626 at *2.  USAT appealed to the United 
States Court of Appeals for the Federal Circuit, which affirmed the trial court’s 
decision.  The court of appeals held that USAT failed to prove its contention that the 
Air Force ordered it to manufacture the running gear.  Id. at *2.  Rather, it held that it 
was USAT’s “choice” to manufacture it.  Id.  The court observed that PDI did not 
refuse to manufacture the running gear.  Rather, PDI only demanded a higher price, 
which USAT chose not to pay (apparently because USAT believed that it could 
produce the running gear “as well or better than PDI”).  Id. at *2-*4.  The court of 
appeals held that an increase in a subcontractor price was part of the risk that USAT 
assumed in entering into a firm fixed price contract.  Id. at *5. 
 
First Cure Notice 
 
20.  On May 25, 2017, while the running gear claims were still pending before 
the CO, USAT wrote to the government by email stating it “would like nothing better 
than to resume production as soon as possible to make final delivery of the trailers” 
but that it would “need[] additional capital to make this a reality.”  It stated that it was 
“making an unusual request.”  USAT asked the Air Force to advance it 25% of the 
value of the pending claims on the two contracts so that the parties could “achieve all 
of our mutual goals.”  (App. supp. R4, tab 29 at 1)  There does not appear to be a 
government response to this email in the record. 
 
21.  By email dated July 5, 2018, USAT informed the Air Force that it was “not 
in a position to produce additional RG [running gear] until REA favorably 
adjudicated.  . .” (R4, tab 121 at 1). 
 
22.  On July 18, 2018, the CO wrote to USAT stating that USAT’s “failure to 
make progress in delivering the remaining units under this contract” was “a condition 
that is endangering performance of the contract.”  The CO stated that unless the 
condition was cured within 10 days, the government would consider terminating the 
 
2 At the same time, USAT submitted a claim for $1,385,912 for the running gear on 
the 007 contract that the CO also denied.  USAT, 2022 WL 2431626 at *1-*2. 

6 
 
contract for default.  The CO demanded a written response, including “a detailed 
manufacturing schedule to prove compliance with the delivery schedule established in 
the attached modification.”  (R4, tab 17) 
 
23.  The attached Modification No. 133 (Mod. 13) set a schedule in which 
USAT would deliver three trailers on August 30, 2018, and then three trailers every 
month until USAT completed its work with the delivery of four trailers on 
August 30, 2019 (R4, tab 14 at 2). 
 
24.  USAT responded to the CO’s July 18, 2018 letter on August 1, 2018.  
USAT stated that the delivery schedule in Mod. 13 was “unreasonable” and 
“unenforceable” (R4, tab 18 at 1).  It stated that the REAs on the two contracts “were 
necessary” because the government had breached the contracts by directing CO to 
bring the running gear in-house.  It stated that the REAs had not been resolved.  (Id. 
at 2)  USAT stated that it would have to restart its production line, but that, between 
May 2015 and December 2016, it had “let go approximately 60 percent of its trained, 
experienced production employees” (id. at 3).  USAT contended that the government 
had breached the contract by suspending progress payments after June 2015.  USAT 
also contended that the government breached the contract because USAT had expected 
PDI to produce the running gear but USAT had to take over production of the running 
gear, which USAT contended was a cardinal change.  (Id. at 3-4) 
 
25.  The CO responded to USAT on August 10, 2018.  The CO stated, among 
other things, that the REA had been resolved on May 17, 2016, and that, while the 
government had allowed USAT to submit new documentation in support of the various 
factors, USAT had never done so.
4  The CO stated that the delivery schedule in 
Mod. 13 was not unreasonable and was based on the schedule that existed prior to 
suspension of the schedule in Mod. 10.  (R4, tab 19 at 1) (see R4, tab 4 at 2-3 
(modification 3 establishing schedule in which USAT would deliver 3 or 4 trailers in 
most months)) 
 
26.  USAT did not deliver any trailers on August 30, 2018.  The CO then wrote 
to USAT on September 24, 2018, asking USAT to propose a reasonable schedule.  The 
CO stated that the schedule should be proposed based on the understanding that the 
government would not make any payment on the existing claims.  (R4, tab 20)  
 
 
3 The CO did not sign the copy of Mod. 13 in the record (R4, tab 14).  However, the 
context indicates that the CO considered it to be in effect because he rescinded 
Mod. 13 when he terminated the contract for default (R4, tab 15 at 1-2).  
4 A May 17, 2016 document is not in the record but, as described above, bilateral 
Mod. 11 dated June 28, 2016, documented the actions taken on the REA 
(finding 13). 

7 
 
27.  On October 5, 2018, USAT responded.  It contended that Mod. 13 was not 
reasonable and that there was no enforceable schedule.  It stated that under Mod. 10 
the schedule was on hold until the REA had been resolved and it contended that the 
REA was pending before the Court of Federal Claims.  (R4, tab 21 at 1)  However, it 
did propose a schedule.  The schedule called for a six-month ramp-up phase because 
USAT stated that it had reduced its staff on the contract from 76 to 26 people.  It 
proposed to produce one trailer nine months after the issuance of a contract 
modification, one trailer after 10 months, two trailers in the 11th and 12th months, and 
three trailers per month thereafter until contract completion.  (Id. at 2)  However, 
contrary to the instructions of the CO, USAT made this schedule contingent upon 
settlement of the running gear lawsuit (Id.). 
 
28.  On November 16, 2018, USAT submitted a certified claim on REA factors 
2 to 4 and 7 to 11 in the amount of $4,460,952 (61973, R4, tab 28).  This was a large 
increase from the amount sought for these factors in the REA.  Most of this increase 
related to factor 11, “Impact on Business/other deliveries and Interruptions to 
Production,” which USAT increased from $574,265 to $4,054,265 (compare REA 
61973, R4, tab 20 at 166 and 61973, R4, tab 28 at 2).
5  The CO did not issue a final 
decision and USAT filed an appeal with the Board on February 19, 2019, that the 
Board docketed as no. 61973.  That appeal remains pending. 
 
Second Cure Notice and Termination 
 
29.  On November 28, 2018, the CO sent USAT another cure notice.  The CO 
stated “you are required to respond to this notice in writing, and your response shall 
outline any past or current efforts being made by U.S. Aeroteam to continue producing 
and shipping units” since the issuance of Mod. 10.  The CO also stated that if USAT 
could not cure the default, the CO was willing to delete the remaining trailers on the 
contract if USAT returned $3,670,239.50 in unliquidated progress payments.  (R4, 
tab 22) 
 
30.  USAT responded on December 7, 2018.  USAT stated that it was not in 
default of the contract. USAT contended that “Mod. 10 does not require USAT to 
make continuous actual progress in production, prior to the establishment of a firm 
delivery schedule.”  It stated that the four trailers it had delivered in March and June of 
2016 after the execution of Mod. 10 satisfied its obligations under that modification.  It 
did not propose a new schedule and once again referenced settlement of the pending 
claims and litigation in connection with a resumption of production. 
(R4, tab 23 at 1- 2) 
 
5 USAT also submitted a certified claim on the remaining factors on the 007 contract 
(ASBCA Nos. 61972, 61973, JSF ¶ 42). 

8 
 
31.  On December 13, 2018, the CO terminated the contract for default based 
on a “failure to make progress as to endanger performance of the contract” and 
“[o]mission of stopping work under the contract” (R4, tab 24). 
 
32.  On this same date, the CO issued a final decision demanding 
$3,670,239.50, which was his calculation of the amount that USAT had received in 
progress payments but had not liquidated through deliveries of trailers. 
(R4, tab 25 at 1).  USAT does not appear to contest that it has been paid for more than 
the 58 trailers it delivered because it states in its brief that it “estimates it would owe 
no more than $3,148,062” (app. br. at 11; see app. supp. R4 tab 29 (email from USAT 
president estimating that USAT would need to deliver 18 more trailers to liquidate the 
progress payments)). 
 
33.  USAT filed a timely appeal of both decisions on January 10, 2019.  The 
Board docketed the termination for default as No. 61933 and the Air Force money 
demand as No. 61934. 
 
DECISION 
 
I. Standards of Review 
 
“When a CO terminates a contract for default, and the contractor appeals that 
termination decision, ‘the government ... bear[s] the burden of proof with respect to 
the issue of whether termination for default was justified.’”  Dep’t of Transp. v. Eagle 
Peak Rock & Paving, Inc., 69 F.4th 1367, 1375 (Fed. Cir. 2023) (quoting  
Lisbon Contractors, Inc. v. United States, 828 F.2d 759, 765 (Fed. Cir. 1987)).  “In 
failure-to-make-progress cases, the government must establish that ‘the contracting 
officer’s decision to terminate ... was reasonable given the events that occurred before 
the termination decision was made.’”  Id. (quoting Empire Energy Mgmt. Sys., Inc. v. 
Roche, 362 F.3d 1343, 1357–58 (Fed. Cir. 2004)).  “If the government makes this 
showing, the contractor then bears the ‘burden of proving that its nonperformance was 
excusable.’”  Id. (quoting DCX, Inc. v. Perry, 79 F.3d 132, 134 (Fed. Cir. 1996)). 
 
II. Contract Clauses 
 
FAR 52.249-8, DEFAULT (FIXED-PRICE SUPPLY AND SERVICE) (APR 
1984) provides that the government may terminate a contract for default if the 
contractor fails to. . . 
 
(ii)  Make progress, so as to endanger performance of this 
contract (but see subparagraph (a)(2) of this clause ); or 
 

9 
 
(iii)  Perform any of the other provisions of this contract 
(but see subparagraph (a)(2) of this clause). 
 
(2)  The Government’s right to terminate this contract 
under subdivisions (1)(ii) and (1)(iii) of this clause ], may 
be exercised if the Contractor does not cure such failure 
within 10 days (or more if authorized in writing by the CO) 
after receipt of the notice from the CO specifying the 
failure. 
 
FAR 52.249-8(a) (finding 4). 
 
A second clause is also significant with respect to USAT’s demand for payment 
of the disputed claims before it would agree to resume work.  FAR 52.233-1, 
DISPUTES (JUL 2002) specifies the procedures for a contractor to submit a claim to 
the CO pursuant to the Contract Disputes Act (finding 4).  However, it specifically 
requires the contractor to continue working while the claim is pending: 
 
(i)  The Contractor shall proceed diligently with 
performance of this contract, pending final resolution of 
any request for relief, claim, appeal, or action arising under 
the contract, and comply with any decision of the CO. 
 
FAR 52.233-1(i). 
 
Finally, with respect to the government’s demand for the return of progress 
payments, FAR 52.232-16, PROGRESS PAYMENTS, provides “[i]f this contract is 
terminated under the Default clause, (i) the Contractor shall, on demand, repay to the 
Government the amount of unliquidated progress payments. . . .” 
 
FAR 52.232-16(h) (finding 4). 
 
III. Analysis – ASBCA No. 61933 
 
The Federal Circuit’s USAT opinion and the record demonstrate that the 
problems on this contract arose when the running gear subcontractor raised its price, 
USAT chose not to pay that price, and USAT began producing the running gear in-
house, which resulted in the cost nearly tripling (findings 9-10).  The consequences of 
these events cannot be pinned on the government.  USAT, 2022 WL 2431626 at *2 -
*5.  Accordingly, while USAT repeatedly alleged that the government breached the 
contract when USAT began manufacturing the running gear in-house and cited the 
running gear as the cause of its inability to perform (findings 16, 19-21, 24, 27), the 
Federal Circuit’s and Court of Federal Claims’ decisions have foreclosed USAT’s 

10 
 
reliance on those contentions.  See also New Era Cont. Sales, Inc., ASBCA No. 56661 
et al., 11-1 BCA ¶ 34,738 at 171,022-23 (subcontractor price increase does not excuse 
a contractor’s default). 
 
USAT repeatedly demanded money or payment of the pending REA/claims 
before it would resume work (findings 15, 21, 27, 30).  But the Disputes clause 
prohibited USAT from withholding its performance.  The Court of Claims upheld a 
termination for default when, in the context of a dispute about a borrow area, the 
contractor refused to switch to an alternate borrow area unless the government agreed 
to pay additional money on a pending change order.  Discount Co. v. United States, 
554 F.2d 435, 440 (Ct. Cl. 1977).  The Court of Claims called this “precisely the kind 
of controversy to be handled under the ‘disputes’ mechanism by appeal to the Board if 
necessary.”  Id.  Even if the CO’s interpretation of the contract is incorrect, a 
contractor is bound to proceed with the performance directed by the CO and then 
submit a claim.  Benju Corp., ASBCA No. 43648, 97-2 BCA ¶ 29,274 at 145,654-55 
aff’d 178 F.3d 1312, *3 (Fed. Cir. 1999) (non-precedential). 
 
This appeal is comparable to Universal Fiberglass Corp. v. United States, 537 
F.2d 393 (Ct. Cl. 1976).  In that case, a contractor struggled to produce mailsters (a 
small mail-delivery truck) and the agency repeatedly extended the deadlines.  Id. 
at 394-95.  After the contractor failed to meet several revised schedules, the agency 
wrote to the contractor, asking it to propose a schedule.  The Court of Claims held that 
the letter waived the default up to that date but not the failure to make progress.  The 
court held that the letter was “more in the nature of a warning that such failure [to 
make progress] was not unnoticed.”  Id. at 397.  The court held that the contractor’s 
actions up to the date of the government’s request for a schedule “indicate a pattern of 
nonperformance and delay which should not be ignored.”  Id. 
 
In upholding the termination, the Court of Claims cited the following facts that 
we find to be the same or similar to those in this appeal: the contractor had been asked 
to submit a new delivery schedule but had not done so
6; the CO had not received “any 
information to lead him to believe that deliveries would or could be resumed”; the 
contractor “was making no progress at all”; the contractor did not have the financial 
resources to buy parts; and it “had allowed its labor force to wither away.”  Universal 
Fiberglass, 537 F.2d at 398.  The court observed: “[i]f this situation is not what this 
failure to make progress clause is about and is not the exact case for which it was 
written, we are at a loss to understand why it was put in the contract at all.”  Id. 
 
USAT contends that Mod. 10, which suspended the delivery schedule 
“indefinitely” (finding 11), justifies its actions.  We disagree.  Mod. 10 was not a 
 
6 As we have found, USAT did submit a proposed schedule but improperly tied it to 
the government paying disputed amounts (finding 27). 

11 
 
suspension of work in the usual sense because the modification also required that 
USAT “make a good faith effort to continue to produce and ship units prior to REA 
resolution and establishment of a firm delivery schedule” (id.).  USAT has contended 
that furnishing the Air Force with four trailers in March and June of 2016 was enough 
to constitute a good faith effort (finding 30).  The Board does not agree that this was a 
good faith effort.  The trailers that it delivered after Mod. 10 were already on hand; it 
failed to manufacture any units after execution of the modification (finding 12) and 
repeatedly indicated that it did not intend to do so absent a decision on the REA 
(findings 15, 21, 24, 27).  Mod. 10 required USAT to make a good faith effort “to 
produce and ship units,” not merely to ship those it had already manufactured.  At the 
very least, good faith would have required that USAT inform the Air Force prior to 
execution of the modification that it could not or would not “produce” any more 
trailers unless the Air Force agreed to pay the running gear claim.  We conclude that 
USAT’s failure to manufacture a single trailer in the two-year, nine-month, period 
between execution of Mod. 10 and the default termination does not represent a good 
faith effort. 
 
Moreover, a key part of Mod. 10 is the language providing that “[a] firm 
delivery schedule will be established upon resolution of the REAs” (finding 11).  This 
raises the question as to when the REA was resolved.  The government contends that 
the language refers to resolution of the REA itself, while USAT contends that it 
included not only resolution of the REA, but also resolution of the claim to the CO, its 
actions in the Court of Federal Claims and the Board, and its appeal to the Federal 
Circuit. (finding 27; app. br. at 5 n.3).  Mod. 10’s specific reference only to the REA 
and lack of reference to other potential steps in the dispute resolution process indicate 
that the parties intended to include only the then-pending REA.  The Board further 
finds USAT’s interpretation implausible simply because the timeframe for resolution 
of an REA, the subsequent certified claims, and litigation at either the Court of Federal 
Claims or the Board, and an appeal(s) to the Federal Circuit involves an unpredictable 
and potentially lengthy timeframe.  The Board does not believe that the Air Force 
would agree to put a contract involving an important cargo aircraft on hold for an 
indefinite period beyond its control or that USAT could reasonably interpret the Mod. 
to have that result. 
 
The Board interprets Mod. 10 to mean what it says: that the suspension was 
only in effect until the REA itself was resolved.  In our view, there were three relevant 
milestones in determining when the REA had been resolved.  First, there was Mod. 11 
on June 28, 2016, in which the government agreed to pay USAT for two of the 11 
REA factors but left open everything else except for interest on factor 4 so that USAT 
could submit “adequate supporting documentation” (finding 13).  The modification did 
not specify a deadline for USAT to submit this documentation.  Although it appears 
that the Air Force was remarkably patient with USAT, we do not interpret Mod. 11 to 
mean that USAT had an unlimited amount of time to provide the documents.  Rather, 

12 
 
we interpret it to mean that USAT had a reasonable period of time to submit the 
documents.  See B-E-C-K Constructors v. United States, 571 F.2d 25, 31 (Ct. Cl. 
1978).  We note that, on August 10, 2018, more than two years after issuance of 
Mod. 10, the CO wrote to USAT stating that USAT had failed to submit any new 
documents (finding 25).  Certainly, by August 2018 a reasonable period of time had 
expired, and the REA was resolved by USAT’s failure to produce the documents. 
 
The second relevant date is February 24, 2017, when USAT submitted a 
certified claim on the running gear (finding 17).  A claim is a separate step in the 
process and is distinct from an REA.  An REA represents an attempt by the contractor 
to negotiate a resolution to the matter, for which it is sometimes entitled to recover its 
legal, accounting, and consulting costs.  But it is not entitled to these costs if it has 
submitted a claim.  Bill Strong Enters., Inc. v. Shannon, 49 F.3d 1541, 1549-50 (Fed. 
Cir. 1995), rev’d on other grounds, Reflectone, Inc. v. Dalton, 60 F.3d 1572 (Fed. Cir. 
1995).  By contrast, a claim has the advantage of enabling the contractor to initiate 
litigation if the claim is denied and it starts the clock on interest.  Contract Disputes 
Act (CDA), 41 U.S.C. §§ 7104, 7109.  USAT’s submission of a certified claim for the 
running gear indicates that it considered the REA to have been denied as to the 
running gear and, in any event, it put an effective end to the REA process for the 
running gear. 
 
The third milestone was November 16, 2018, when USAT submitted a certified 
claim for REA factors 2-4 and 7-11 (finding 28).  This ended the REA process for the 
remaining issues to the extent that the REA had not already been resolved by USAT’s 
failure to submit supporting documentation.  The CO sent USAT one more cure notice 
on November 28, 2018, but this only resulted in USAT once again raising payment of 
its claims as a precondition to resumption of work (findings 29-30).  Mod. 10 required 
the parties to establish a new schedule after the REA had been resolved.  USAT failed 
to act in good faith when it refused to agree to a new schedule if it did not include 
payment on the pending REA/claim (findings 15, 21, 27, 30). 
 
Finally, we reject USAT’s reliance on Technocratica, ASBCA Nos. 47992 et 
al., 06-2 BCA ¶ 33,316, in support of a contention that the government may not 
terminate a contract for default for failure to make progress when there is no firm 
delivery schedule in place (app. br. at 12).  In Technocratica, the Board held that the 
government had waived the right to terminate after the completion date passed and the 
appellant kept working for 10 to 13 months in reliance upon the government’s failure 
to terminate.  Technocratica, 06-2 BCA ¶ 33,316 at 165,187-88.  However, in this 
appeal the completion date did not pass, and the facts are more like those in Universal 
Fiberglass where the government tried unsuccessfully to establish a new schedule and 
get the contractor to resume deliveries.  Universal Fiberglass, 537 F.2d at 398. 
 

13 
 
In summary, the Board concludes the government has supported the termination 
for default by the great weight of the evidence because USAT did not produce any 
trailers after Mod. 10, its actions “indicate a pattern of nonperformance and delay 
which should not be ignored” and the CO had no “information to lead him to believe 
that deliveries would or could ever be resumed.”  Id.  Additionally, USAT has failed to 
show, based on the record in this appeal, that its non-performance was excusable.  
Thus, the termination was proper.  DCX, Inc. v. Perry, 79 F.3d 132, 134 (Fed. Cir. 
1996). 
 
IV. Return of Unliquidated Progress Payments – ASBCA No. 61934 
 
As described above, the Progress Payments clause requires the contractor to 
repay the government the amount of any unliquidated progress payments, that is, the 
amount of progress payments paid but not liquidated through deliveries of finished 
products.  FAR 52.232-16(h).  The parties agree that USAT has been paid for more 
than the 58 trailers that USAT delivered.  The government calculates the overpayment 
at $3,670,239.50, while USAT “estimates it would owe no more than $3,148,062” 
(finding 32).  This would appear to be indicate that USAT has been paid for 
somewhere between 17 and 20 trailers that it failed to deliver.  Because we conclude 
that the termination for default was proper, USAT must return these progress 
payments.  Accordingly, the Board returns this matter to the parties to determine the 
quantum of the overpayment. 
 
CONCLUSION 
 
For the foregoing reasons, we hold that the government’s termination of the 
contract was proper, and that the appeal (ASBCA No. 61933) is denied.  We further 
hold that the government is entitled to the repayment of unliquidated progress 
payments and deny that appeal (ASBCA No. 61934).  Accordingly, the matter is 
returned to the parties to determine quantum consistent with this decision. 
 
 Dated:  May 14, 2025 
 
 
 
 
 
 
 
 
 
(Signatures continued) 
 
 
 
MICHAEL N. O’CONNELL 
Administrative Judge 
Vice Chairman 
Armed Services Board 
of Contract Appeals 
 

14 
 
I concur 
 
 
 
OWEN C. WILSON 
Administrative Judge 
Acting Chairman 
Armed Services Board 
of Contract Appeals 
 I concur 
 
 
 
 THOMAS P. MCLISH  
Administrative Judge 
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 Nos. 61933, 61934,
 Appeals of 
U.S. Aeroteam, Inc., rendered in conformance with the Board’s Charter. 
 
 Dated:  May 14, 2025 
 
 
 
 
 
 
 
 
PAULLA K. GATES-LEWIS 
Recorder, Armed Services 
Board of Contract Appeals