Ensign-Bickford Aerospace & Defense Company
Docket: ASBCA 57929
Decision date: 2013-05-23

ARMED SERVICES BOARD OF CONTRACT APPEALS
Appeal of— )
)
Ensign-Bickford Aerospace & Defense Company ) ASBCA No. 57929
)
Under Contract Nos. N00164-07-D-4259 )
N00164-08-D-JM15 )
APPEARANCE FOR THE APPELLANT: John C. Person, Esq.
Person & Craver, LLP
Washington, DC
APPEARANCES FOR THE GOVERNMENT: Ronald J. Borro, Esq.
Navy Chief Trial Attorney
Russell A. Shultis, Esq.
Senior Trial Attorney
Stephen D. Tobin, Esq.
Trial Attorney
OPINION BY ADMINISTRATIVE JUDGE PAGE
ON THE GOVERNMENT'S MOTION FOR AN ADVERSE INFERENCE
This appeal arises from Contract Nos. N00164-07-D-4259 and N00164-08-D-JM15
(collectively "the contract"), which called for Ensign-Bickford Aerospace & Defense
Company1 (EBA&D, appellant or the contractor) to provide the Department of the Navy,
Naval Surface Warfare Center, Crane Division (NSWC, Navy or government), with
MK 154 Delay Detonators (detonators) (R4, tabs 15, 35). EBA&D's 12 July 2011 certified
claim totaling $911,293.13 contested the government's disapproval of Lot Acceptance Test
(LAT) Reports for detonator Lots 11-14 (R4, tab 95). The government's motion for an
adverse inference seeks a dispositive sanction against the contractor for discarding the
tested ("functioned") items (gov't mot.). The parties fully briefed the motion (see
appellant's opposition (app. opp'n) and the government's response (gov't resp.), and
supporting documentation).
STATEMENT OF FACTS (SOF) FOR PURPOSES OF THE MOTION
1. EBA&D prepared an 8 October 2010 "[LAT] and Inspection Report" for
Lots 11-12, and on 1 December 2010 for Lots 13-14 (R4, tabs 66, 67, 75, 76). The
The original contracts were issued to Shock Tube Systems, Inc. (R4, tabs 15, 35). On
9 September 2009, the parties entered into novation agreements transferring the
interests of that company to EBA&D (R4, tabs 51, 52).

"objective of this inspection and test was to evaluate the submission of 60 [LAT] samples
of the Mk 154 Mod 0 Detonator." The reports advised that the detonator "consists of
100 feet of dual 0.118" olive drab shock tube wound on a 3" x 5" black plastic spool with
2 in line initiators at the input end and two detonators at the output end." Each report
summary stated that 60 units were selected "to verify that the lot met all applicable
drawings and specifications" and concluded that "[a]ll units met the requirements
specified." (R4, tab 66 at 1359, tab 67 at 1402, tab 75 at 1472, tab 76 at 1497) Test data
sheets for each lot recorded the incidence of venting for each LAT (see, e.g., R4, tab 67 at
1411-12, tab 66 at 1368-69, tab 75 at 1481-82, tab 76 at 1503-04, 1506-07).
2. By letter dated 5 January 2011, contracting officer (CO) Cynthia Dant notified
EBA&D that the LAT reports for Lots 11-14 had been reviewed by the government and
were disapproved (R4, tab 77). The CO told appellant that the test results contradicted
the contractor's 1 October 2010 email which "states that there were no rupture/vents of
the 600 fpm shock tube after 14-Day T&H [temperature and humidity], Hot/Cold
conditioning and function" (id. at 1525). The CO disagreed with the contractor's
"manufacturing change" of making shock tubes "at 600 fpm verses [sic] 375 fpm," and
noted that "EBA&D has returned to the 375 fpm shock tube production, which is the
baseline for both contracts" (id).
3. Appellant's 11 January 2011 response (R4, tab 78), disagreed that the "MK 154
product in these 4 lots represents a physical or performance change to the baseline
configuration for the MK 154 or any other lots previously accepted under the" subject
contracts. It denied that First Article Testing "was required, or performed" on the subject
contracts. EBA&D stated that "[s]hock tube venting during functioning is a common
occurrence" and that "there are no requirements in the Navy TDP [Technical Data
Package] for the MK 154 that prohibit venting of the shock tube." The contractor pointed
out that there was an average of 7.7 vents per lot for Lots 11-14, compared to 6.7 vents
per lot in Lots 1-10. (Id. at 1528-29) EBA&D defended the "production rate change
from 375 fpm to 600 fpm [as] a minor change [in accordance with] EIA649 (does not
affect form, fit, or function of the end item, the MK 154)" (id. at 1529). Appellant said
that it had coordinated this with NSWC Crane beforehand (id. at 1529-30). The CO's
letter of 14 March 2011 disagreed with EBA&D's response, denied that the government
had concurred in the change, and informed the contractor that Lots 11-14 "are not
acceptable" (R4, tab 81 at 1549).
4. The date that the functioned detonators were destroyed is not in the record.
According to the contractor: "The functioned hardware associated with the LATs for
Lots 11-14 was discarded well in advance of the official rejection date of March 14, 2011,
and was discarded at a time when EBA&D believed that Lots 11-14 had, in fact, passed"
(app. opp'n, tab A, Bartholomew decl. at 2, ^ 7).

5. EBA&D conducted additional temperature and humidity tests on Lots 13-14 in
investigating whether lead azide had affected the subject detonator lots (R4, tab 82).
Appellant's email exchange with the government indicated that "They will be ready to
shoot on March 22" (id. at 1552). The contractor's "TEST DATA SHEET" shows that
the "INFO ONLY TESTING" was done 29 March 2011 (gov't mot., attach. 3).
Stephen W. Bartholomew, product development manager for EBA&D and program
manager for the MK 154 effort, stated in deposition that appellant did not preserve the
shock tubes from this testing (gov't mot., attach. 1, Bartholomew dep. 13:4-7, 59:1-7,
62:10-21). The date these tested "in house" detonators were discarded is not in the
record.
6. Appellant's letter of 31 March 2011 (R4, tab 84), reiterated that the venting
encountered was "normal and expected." Appellant told CO Dant that "[fjor the
Government to reject these lots for venting would be to hold EBA&D to a higher
standard than currently required by the contract." EBA&D sought a "first article
determination (for MK154 lots 11-14 only) for a process change that had occurred." The
contractor advised that it had "performed additional in-house testing to validate" the
detonators. While maintaining that it had informed the government of the increased
speed change from 375 fpm to 600 fpm for manufacturing the shock tubes for Lots 11-14,
EBA&D "does agree that we failed to submit the required formal notification of process
change" to the CO. (Id. at 1559) The CO replied on 19 April 2011 that contract 1 3.4.5,
Configuration Control, had not been modified "to allow EBA&D to change the
configuration baseline from 375 fpm to 600 fpm." She said that "[t]he Government
appreciates EBA&D's efforts, but will not retroactively approve the configuration
change" and reiterated that Lots 11-14 "are not acceptable." (R4, tab 86)
7. EBA&D's certified claim dated 12 July 2011 (R4, tab 95), alleged a
"constructive Change pursuant to Contract Clause FAR 52.243-1, Paragraph (a)(l)" and
sought a total of $911,293.13. This amount included "$847,968.00 for the value of the
product rejected by the Government without justification" (id. at 1688), for Lots
EBD10H001-011, EBD10J001-012, EBD10J001-013, and EBD10J001-014 (id. at 1685).
Appellant also sought "$60,030 for the constructive stop work imposed by the
Government between March 10, 2011 and April 17, 2011 and $3,295.13 for severance
expenses for three producers laid off as a result of this constructive stop work." The
contractor asserted that "the Government has acted to impose arbitrary acceptance criteria
for MK154's not embodied in the drawings, designs or specifications cited in the subject
contracts." (Id. at 1688)
8. EBA&D did not dispute that venting occurred in the functioned shock tubes,
which it observed had "existed to one degree or another on all prior lots." The contractor
disagreed with the government's rejection of the proffered detonator on that basis. It told
the government: "As you are well aware, absence of venting or rupturing is not an
acceptance criterion on either Contract." (R4, tab 95 at 1687)

9. The CO by letter dated 5 August 2011 notified EBA&D that she would "make
a decision regarding said claim on or before July 12, 2012" (R4, tab 96 at 1723). The
contractor on 16 September 2011 (R4, tab 98), informed the CO that this "lengthy
period" was "unacceptable to EBA&D" (id. at 1730). On 6 January 2012, the Board
received the contractor's notice of appeal, predicated upon the CO's deemed denial of its
claim due to the CO's failure to render a final decision (COFD) after an "unreasonably
long passage of time." The CO issued a COFD on 16 April 2012 denying EBA&D's
claim (R4, tab 1).
10. There is no evidence that, during months of discovery, the government sought
the spent detonators or questioned their whereabouts before 19 December 2012. During
the deposition on that date of EBA&D employee Mr. Bartholomew, the government
learned that the contractor had not preserved the functioned shock tubes (gov't mot. at 4,
attach. 1, Bartholomew dep. 4:7-8, 12:23-25, 62:11-25). Thereafter, government counsel
asked appellant to test remaining shock tube stock, and filed the subject motion for an
adverse inference after the contractor refused to do so without compensation and only
under limited conditions.
DECISION
The Parties' Positions
The government moves the Board to draw the adverse inference "that the
detonators in question failed the lot acceptance tests" because EBA&D intentionally
discarded Lots 11-14 spent detonators (gov't mot. at 1). The government does not
characterize the motion as dispositive. It is our view that granting the motion would have
that effect as the basis for EBA&D's claim is that the government rejected Lots 11-14
"without justification" and "impose[d] arbitrary acceptance criteria" (see SOF ^ 7). A
holding that Lots 11-14 failed contract requirements would be tantamount to denial of the
appeal.
The government bases its request for sanction upon appellant's discarding of
detonators tested in the LAT, followed by its disposal of hardware that EBA&D
subsequently tested in-house as it contemplated filing a claim (gov't mot. at 7). The
government further criticizes appellant's refusal of a post-appeal request from
government counsel that the contractor test remaining shock tube stock from Lots 11-14
unless EBA&D is compensated and then only under certain constraints (gov't mot. at 1,
8; gov't resp. at 9-10). The government asserts:
EBA&D's destruction of spent detonators has severely
prejudiced the Government and EBA&D should not be
allowed to benefit from its improper acts. The Navy rejected

detonators from the Lots 11-14 because of the number and
intensity of the vents that arose during the T&H testing.
Rule 4, Tab 1, GOV000004. Examination of the spent
detonators would allow the fact finder to know,
unambiguously, how many vents occurred during the T&H
tests. Direct examination of the spent detonators also allows
the fact finder to see the precise location of ruptures, which is
also an indication of the potential hazard to the war fighter, and
it would allow the fact finder to gauge the intensity of each vent
by being able to see the size and shape of each rupture.
Although some of the test reports recorded the number and
location of some of the ruptures, the shape and other physical
characteristics of the ruptures are undocumented. By
discarding the spent detonators, EBA&D has deprived the
Government, as well as the finder of fact, of the best, and most
objective, means of determining the probative facts regarding
the Government's defense. The Government has clearly been
prejudiced.
(Gov't resp. at 4)
EBA&D opposes the motion, maintaining that it disposed of the "functioned shock
tube from Lots 11-14 in the ordinary course of business" (app. opp'n at 3-4). It asserts
that the disposal occurred at a time when it believed the lots had passed LAT
requirements {id. at 3), as it threw the items away before the government officially
rejected Lots 11-14 {id. at 7), and "well in advance of the decision to file a claim and
impose a 'litigation hold' to preserve evidence" {id. at 9). The contractor denies that it
discarded the spent detonators "willfully" or was "motivated by any desire to advantage
EBA&D's position or disadvantage the Government's position as to acceptance and
payment on those lots" {id. at 6-7).
Appellant disagrees that it is obliged to now retest lot samples from the LAT, as
the CO has not directed or agreed to pay for it to do so (app. opp'n at 13-14). EBA&D
disputes the evidentiary value of the functioned detonators as asserted by the government.
The contractor questions whether "a qualified expert—if anyone at all-can extrapolate
from vent sizes and locations to a noise level or gaseous discharge associated with any
given vent, which is the direct evidence that the Government seeks to adduce here" {id. at
6). EBA&D contends that, to the extent that physical evidence is relevant, there exists
sufficient facsimile evidence to meet the government's evidentiary needs. It contends
that "the same indirect evidence" showing venting location and frequency that could be
obtained from the "physical husks of functioned hardware" can "be gleaned from an
inspection of the annotations on the test data sheets, the diagrams depicting the vent
location and size, and the photographs of the vents themselves" {id.).

Analysis
"'[Spoliation refers to the destruction or material alteration of evidence or to the
failure to preserve property for another's use as evidence in pending or reasonably
foreseeable litigation.'" Hynix Semiconductor Inc. v. Rambus Inc., 645 F.3d 1336,
1344.45 (Fed. Cir. 2011) (citing Silvestri v. General Motors Corp., 271 F.3d 583, 590
(4th Cir. 2001)). A party seeking sanctions for spoliation must prove:
(1) [T]he party having control over the evidence had an
obligation to preserve it when it was destroyed or altered;
(2) the destruction or loss was accompanied by a
"culpable state of mind;" and (3) the evidence that was
destroyed or altered was "relevant" to the claims or
defenses of the party that sought the discovery of the
spoliated evidence, to the extent that a reasonable
factfinder could conclude that the lost evidence would
have supported the claims or defenses of the party that
sought it.
ADTConstr. Group, Inc., ASBCA No. 55358, slip. op. at 58 (30 April 2013) (citing
Victor Stanley, Inc. v. Creative Pipe, Inc., 269 F.R.D. 497, 520-21 (D. Md. 2010) and
Jandreau v. Nicholson, 492 F.3d 1372, 1375 (Fed. Cir. 2007)).
Where spoliation is found, the "least onerous sanction corresponding to the
willfulness of the destructive act and the prejudice suffered" is to be imposed and any
sanction must be commensurate with the resulting harm. "Moreover, the presence of bad
faith and prejudice, without more, do not justify the imposition of dispositive sanctions."
Micron Technology, Inc. v. Rambus Inc., 645 F.3d 1311, 1329 (Fed. Cir. 2011).
The Board is empowered to sanction a party for spoliation that occurred before the
appeal was filed, as occurred here. "A discovery order need not be in place, as trial
forums have the inherent power to control litigation, and the trial forum has broad
discretion in imposing sanctions for spoliation." Northrop Grumman Corp., ASBCA
No. 52178 et al, 03-2 BCA \ 32,278 at 159,704; see also ADT, slip op. at 58 n.21
(discussing the Board's inherent authority to control the discovery process). The burden
of proof for spoliation is on the party seeking to use the evidence. Jandreau, 492 F.3d at
1375.
/. Duty to Preserve Evidence
We begin by assessing whether EBA&D was required to preserve evidence when, on
successive occasions, it discarded spent detonators from Lots 11-14 LATs and in-house

testing. This duty attaches when litigation is pending or reasonably foreseeable; from that
point on, a party is obliged to preserve, for another's use, property within its control. ADT,
slip op. at 57. Although precise dates are not in the record, EBA&D first disposed of
functioned detonators from October-December 2010 Lots 11-14 LATs prior to 14 March
2011 (SOF If 4); these items are central to EBA&D's challenge to the government's criteria
for rejecting these lots. Appellant subsequently discarded detonators, which it had tested
in-house on 29 March 2011, about 3V2 months prior to filing the claim (SOF fflf 5, 7) that
underlies this appeal. Both events occurred after the government had notified appellant that
Lots 11-14 exhibited venting which, in the government's view, occurred to an unacceptable
degree (SOF If 2), and at a time when instigation of the instant litigation was solely within
the contractor's control. We find that, in each instance, EBA&D knew or reasonably should
have known of the potential litigation value of these functioned detonators and failed in its
duty to preserve evidence.
2. Culpable State ofMind
We next determine whether "the destruction or loss was accompanied by a
'culpable state of mind.'" ADT, slip op. at 58 (citations omitted). There has been a
"great deal of litigation" about this criterion, as the burden of proof is not fully defined by
our appellate court. "This appears to be an open question in the Federal Circuit" as to
"whether a showing of bad faith, or something less than that, is required before a tribunal
imposes sanctions" for spoliation. Id. Although EBA&D wittingly discarded Lots 11-14
spent detonators (SOF f^J 4, 5), when it should have preserved that evidence, we are
unable to conclude from the record before us that appellant acted in bad faith or to
disadvantage the government.
3. Prejudice Due to Loss ofEvidence
Finally, to impose a spoliation sanction, we must find that the lost evidence was
relevant to the extent that a "reasonable factfinder" would conclude that it would have
supported the government's defenses in this appeal. ADT, slip op. at 58. This element
"is often cast in terms of prejudice," in that "it must be shown that the requesting party
was prejudiced by the loss of evidence." Id. at 59.
Despite the contractor's actions, the government has not justified the severe sanction
it seeks, as it fails to establish that its defense is prejudiced by the loss of spent detonators
from the LAT or in-house testing. "Prejudice to the opposing party requires a showing that
the spoliation 'materially affect[s] the substantial rights of the adverse party and is
prejudicial to the presentation of his case.'" Micron, 645 F.3d at 1328 (citing Wilson v.
Volkswagen ofAm., Inc., 561 F.2d 494, 504 (4th Cir. 1977)). The government has not
demonstrated the materiality of viewing in-hand the "precise location" or "size and shape
of ruptures in the spent detonators (see gov't resp. at 4), nor has the government tied the
allegedly-excessive venting to a contract requirement or a proviso it relied upon in

rejecting Lots 11-14. Further, the government has recourse to other physical evidence of
shock tube venting. Photographs, reports and other documentary evidence from the LAT
remain extant, and appellant has retained hardware from Lots 11-14 that the government
can have tested to demonstrate venting characteristics. The government provided no
foundation for its contention that "[t]he suggestion that EBA&D is willing to perform a
retest only if done pursuant to the changes clause not only ignores the terms of the
Contract, but is an unambiguous attempt by EBA&D to create a new claim, rather than
defusing an issue under the current one" (gov't resp. at 10). The government references no
contractual obligation for appellant to voluntarily and without recompense retest the
detonators, absent a CO's direction, for purposes of litigation as opposed to contract
acceptance.
CONCLUSION
We deny the government's motion for an adverse inference, as the government
failed to meet its burden of proof in support of the disproportionate sanction it seeks.
Dated: 23 May 2013
REBA PAGE
Administrative Judge
Armed Services Board
of Contract Appeals
I concur I concur
MARK N. STEMPLER
Administrative Judge
Acting Chairman
Armed Services Board
of Contract Appeals
RICHARD SHACKLEFORD
Administrative Judge
Acting 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. 57929, Appeal of Ensign-Bickford
Aerospace & Defense Company, rendered in conformance with the Board's Charter.
Dated:
JEFFREY D. GARDIN
Recorder, Armed Services
Board of Contract Appeals