Ikhana, LLC
Docket: ASBCA 60462, ASBCA 60463, ASBCA 60464
Decision date: 2017-10-18

ARMED SERVICES BOARD OF CONTRACT APPEALS 
Appeals of -- ) 
) 
Ikhana, LLC ) 
) 
) 
Under Contract No. W912DR-13-C-0051 ) 
APPEARANCE FOR THE APPELLANT: 
APPEARANCES FOR THE GOVERNMENT: 
ASBCA Nos. 60462, 60463, 60464 
60465,60466,61102 
William A. Scott, Esq. 
Pedersen & Scott, P.C. 
Charleston, SC 
Thomas H. Gourlay, Jr., Esq. 
Engineer Chief Trial Attorney 
Michael T. Shields, Esq. 
David B. Jerger, Esq. 
Engineer Trial Attorneys 
U.S. Army Engineer District, Baltimore 
OPINION BY ADMINISTRATIVE JUDGE SWEET ON THE GOVERNMENT'S 
MOTION TO DISMISS, OR IN THE ALTERNATIVE FOR SUMMARY JUDGMENT 
AND SURETY'S MOTION TO INTERVENE AND TO 
WITHDRAW THE APPEALS, OR FOR SUMMARY JUDGMENT 
Appellant Il<hana, LLC brings these actions seeking ( 1) to convert a termination 
for default to a termination for convenience (ASBCA No. 61102); and (2) damages for 
breach of contract (ASBCA Nos. 60462-60466). The government has moved to dismiss, 
or in the alternative for summary judgment, arguing that Ikhana lacks standing because a 
surety-The Guarantee Company of North America, USA (the surety)-is the real party 
in interest. The surety also has moved to intervene. Further, the surety has moved to 
withdraw the appeals, or in the alternative for summary judgment. The surety raises the 
same basic argument as the government. The motions are denied. 
STATEMENT OF FACT (SOF) FOR PURPOSES OF THE MOTIONS 
1. The government awarded Contract No. W912DR-13-C-0051 (0051 contract) 
to Ikhana to construct secured access lanes and remote screening facilities at the 
Pentagon (R4, tab 2). 
2. In connection with the 0051 contract, Ikhana executed performance and 
payment bonds with the surety (R4, tab 14 ). 

3. Part of the consideration Ilrnana offered for the bonds was to execute an 
indemnity agreement with the 
surety (gov't mot., ex. B). Under the indemnity 
agreement, an "EVENT OF DEFAULT" occurred when, inter alia, (I) Ilrnana was 
declared to be in default; (2) Ilrnana breached any terms of the indemnity agreement; 
or (3) there was "a payment by SURETY on any BOND" (id.~ 13). Ilrnana agreed 
that, in the event of such a default, it would assign to the surety a possessory right to 
collateral-which included "contract rights" (id.~~ IO(a)(i), 12). Moreover, upon an 
event of default, the surety may: 
[A ]ssert and prosecute any right or claim hereby assigned, 
transferred or otherwise conveyed in the name of [Ilrnana] 
and to compromise and settle any such right or claim on 
such terms as it considers reasonable under the 
circumstances in its sole and 
absolute discretion, subject 
only to the requirement that it act in good faith, which shall 
be defined as the absence of deliberate or willful 
malfeasance. 
(Gov't mot., ex. B, ~ 14(c)) The indemnity agreement also stated that Ilrnana: 
(Id.~ 18) 
[H]ereby irrevocably constitute and appoint SURETY as 
their true and lawful attorney with the right, but not the 
obligation, to exercise all of the rights of [Ilrnana] 
assigned, transferred and 
conveyed to SURETY in this 
Agreement, hereby giving and granting to SURETY full 
power and authority to make, execute, endorse and deliver 
any agreements for the full protection intended to be given 
to SURETY hereunder as [Ikhana] might or could do. 
4. After performance began, Ikhana encountered problems. In October 2015, 
Ikhana filed four claims (affirmative claims) with the contracting officer (CO). In the 
affirmative claims, Ikhana asserted that defective plans and specifications, unforeseen 
conditions, and government-caused delays caused increased costs and delays. (R4, 
tabs 129, 135, 137-38) The CO did not issue a final decision on the affirmative claims. 
5. On 17 December 2015, the government terminated the contract for default 
(R4, tab 142). 
6. On 25 February, 2016, Ikhana appealed the termination for default, as well 
as the deemed denial of its affirmative claims (collectively, appeals). 
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7. Thereafter, the government made a claim with the surety against the 
performance bond (gov't mot., ex. A, , 7). 
8. Between November 2015 and June 2016, seven oflkhana's subcontractors 
asserted claims against the payment bond (gov't mot., ex. A,, 8). In 2016, the surety paid 
three subcontractors under the payment bonds (id. , 9). Two other subcontractors sued the 
surety (id.,, 8, 10). 
9. On 15 June 2016, the surety made a demand for collateral from Ikhana under the 
indemnity agreement (gov't mot., ex. E). Ikhana responded to the demand letter by stating 
that it was premature and the amount sought was unreasonable (app. resp., ex. 9 at 1). 
10. The surety and the government then began negotiating a settlement of the 
government's bond claim (app. resp., ex. 12). The government proposed that the 
settlement include a clause pursuant to which the surety agreed to cause Ikhana to dismiss 
these appeals and release the government from all claims (id. at 4 ). 
11. Jeffrey Jubera, the surety's vice president for claims, responded that "[t]his 
was not the proposal that you and I discussed in Baltimore. I cannot take the steps to 
waive Ikhana's rights to their claim ifthe $1.7 [million] is not going to be applied to 
the existing contract work." (App. resp., ex. 13 at 2) 
12. On 25 September 2016, a government attorney sent an email to Ikhana's 
Patrick Pike, stating that: 
[T]here may have been a miscommunication regarding 
your positon after our initial offer of $950,000 from the 
Government in exchange for a full settlement. [The CO] 
received the attached email from Jeff Jubera indicating that 
he could not agree to work to waive Ikhana's rights ifthe 
entire $1. 7M of Government funds would not be applied to 
the completion contract. Afterwards, you and I discussed 
on the phone that in the interest of mitigating damages, you 
and Jeffhad discussed proceeding with the Government 
paying $950,000, but with the parties reserving their rights. 
I then sent over another draft of the settlement agreement, 
with all three parties reserving rights. You have since 
responded that [the surety] would be willing to pay $1.2M 
toward the completion contract in exchange for full 
settlement, meaning the Government would pay 
approximately $ l .5M toward the completion contract. I 
left a voicemail for you responding that we weren't able to 
accept that offer. 
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I may have misunderstood your position regarding 
reservation of rights. If you were just reiterating Jeffs 
email, which appeared to be that if the Government paid 
$950,000, the settlement could not include settlement with 
Umana, but would still include settlement with [the surety], 
that is something we are willing to consider, and would 
like to speak with you about on Monday. 
(App. resp., ex. 14 at 2) 
13. Negotiations continued, and on 30 September, 2016, the government and 
the surety executed a settlement agreement (gov't mot., ex. F). Under the settlement 
agreement, there was no take-over agreement. Rather, the surety tendered a 
completion contractor (id. ~ 1 ). The surety agreed to pay the completion contractor 
$1,455,000, and the government would pay the remainder of the completion contract 
(id.~ 3). Further, the surety agreed that it would cause the dismissal of these appeals 
and release the government from any claims regarding the contract (id.~ 4). In 
exchange, the government agreed to release the surety from all liability under the 
performance and payment bonds, including liquidated damages and additional excess 
reprocurement costs (id. ~ 6). 
DECISION 
The fundamental issues underlying the pending motions to dismiss, to intervene 
and withdraw, and for summary judgment are whether Ikhana assigned the claims 
subject to these appeals to the surety, and if so, whether that assignment precludes 
Ikhana from bringing these appeals (gov't mot. at 11; surety mot. to intervene, ~~ 10-11; 
surety mot. to withdraw at 11, 13). We need not decide the first issue. Even assuming, 
without deciding, that there was an assignment, 1 that assignment would not preclude 
Ikhana from bringing these appeals. 
Congress enacted the Contract Disputes Act, 41 U.S.C. §§ 7101-7109 (CDA), 
to equalize the parties' bargaining power by guaranteeing at least one impartial review 
of CO decisions. Minesen Co. v. McHugh, 671 F.3d 1332, 1340-41 (Fed. Cir. 2012); 
Burnside-Ott Aviation Training Ctr. v. Dalton, 107 F.3d 854, 859 (Fed. Cir. 1997). 
"Permitting parties to contract away Board review entirely would subvert this 
purpose." Burnside-Ott, 107 F.3d at 859. Thus: 
[A ]ny attempt to deprive the Board of power to hear a 
contract dispute that otherwise falls under the CDA 
1 For purposes of this opinion, we also assume, without deciding, that the Anti-Assignment 
Act, 31 U.S.C. § 3727, 41 U.S.C. § 6305 does not prohibit any assignment. 
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conflicts with the normal de novo review mandated by the 
CDA and subverts the purpose of the CDA .... Congress 
commanded that the CO's decision on any matter cannot 
be denied Board review. 
Id. at 858 (holding that a contractor cannot waive its right to appeal a CO's decision to 
the Board). 2 
Here, the indemnity and settlement agreements impermissibly attempt to 
deprive us of our power to hear these appeals, which otherwise fall under the CDA. 
Admittedly, that attempted deprivation is less direct than was the attempted 
deprivation in Burnside-Ott. In Burnside-Ott, the contractor directly waived its right 
to appeal to the Board in its contract with the government. 107 F .3d at 856. In this 
case, Umana indirectly waived its right to appeal to the Board by assigning the claims 
subject to these appeals to the surety, which then agreed with the government to 
withdraw these appeals. (SOF iii! 3, 13) However, that is a distinction without a 
difference. Regardless of the particular manner in which the contractor waived its 
CDA right to Board review, the end result is the same-the contractor impermissibly 
has contracted away its unwaivable CDA right to impartial review of the CO's 
decisions. Burnside-Ott, 107 F.3d at 859. 
The government argues that the surety had to be able to settle Ikhana's claims 
because otherwise it had no incentive to devote any resources to project completion 
prior to resolution of the appeals, which would defeat the purpose of a bond. 
However, the government provides no authority in support of that argument. (Gov't 
mot. at 11) On the contrary, that argument is belied by the facts of this case. During 
their settlement negotiations, both the surety and the government expressed their 
willingness to fund project completion without settling Ikhana's claims (SOF iii! 11, 
12). In any event, the government's equitable argument cannot override Ikhana's 
unwaivable CDA right to Board review of the CO's decision and deemed denials. 
Also misplaced is the surety's reliance upon Safeco Insurance Company of 
America, ASBCA No. 52107, 03-2 BCA if 32,341 (surety mot. to withdraw at 14). 
Unlike in the present case, it was the government-not the contractor-that was 
seeking to nullify the assignment of the contractor's claim to the surety in Safeco. 
03-2 BCA if 32,341 at 160,013-14. That distinction makes a difference because it 
2 Minesen declined to extend Burnside-Ott to cases where the parties waive their rights 
to appeal from the Board to the United States Court of Appeals for the Federal 
Circuit. 671 F.3d at 1340-41. Burnside-Ott-instead of Minesen-applies to 
this appeal because the issue here is a contractor's access to the Board, not its 
right to appeal Board decisions to the Federal Circuit. 
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means that, unlike in the present case, there was no assertion by the contractor that it 
had been compelled to waive its CDA right to Board review in Safeco. ld.3 
In sum, any assignment of the claims Ikhana appeals was invalid under Burnside-Ott. 
As a result, Ikhana has standing to bring these appeals, the surety does not have standing, 
and the surety therefore cannot withdraw the appeals. 
CONCLUSION 
The government's motion to dismiss, or in the alternative for summary 
judgment is denied. The surety's motion to intervene is denied. The surety's motion 
to withdraw the appeals or, in the alternative, motion for summary judgment is denied. 
Dated: 18 October 2017 
I concur 
RICHARD SHACKLEFORD 
Administrative Judge 
Acting Chairman 
Armed Services Board 
of Contract Appeals 
JAMES R. SWEET 
Administrative Judge 
Armed Services Board 
of Contract Appeals 
I concur 
OWEN C. WILSON 
Administrative Judge 
Vice Chairman 
Armed Services Board 
of Contract Appeals 
3 Maharaj Construction Inc., LBCA 2001-BCA-3, 2005 WL 166315-which the 
government and the surety cite (gov't mot. at 13-14; surety mot. to withdraw at 
14)-is not binding upon us. Nor do we find it persuasive because it does not 
address Burnside-Ott, which is binding precedent. 
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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. 60462, 60463, 60464, 60465, 60466, 
61102, Appeals of Ikhana LLC, rendered in conformance with the Board's Charter. 
Dated: 
7 
JEFFREY D. GARDIN 
Recorder, Armed Services 
Board of Contract Appeals