Nexagen Networks, Inc.
Docket: ASBCA 60641
Decision date: 2020-02-05

ARMED SERVICES BOARD OF CONTRACT APPEALS 
Appeal of -- ) 
) 
Nexagen Networks, Inc. ) ASBCA No. 60641 
) 
Under Contract No. Wl5P7T-13-D-E077/KX01 ) 
APPEARANCES FOR THE APPELLANT: David A. Rose, Esq. 
APPEARANCES FOR THE GOVERNMENT: 
Rose Consulting Law Firm 
Valdosta, GA 
Kendall R. Enyard, Esq. 
Caitlin T. Conroy, Esq. 
Steptoe & Johnson LLP 
Washington, DC 
Scott N. Flesch, Esq. 
Army Chief Trial Attorney 
Dana J. Chase, Esq. 
Trial Attorney 
OPINION BY ADMINISTRATIVE JUDGE O'CONNELL ON THE 
GOVERNMENT'S MOTION FOR PARTIAL SUMMARY JUDGMENT 
The Army has filed its second motion for partial summary judgment. In 
Nexagen Networks, Inc., ASBCA No. 60641, 19-1BCA137,258, the Board granted 
the government's first motion for summary judgment in part with respect to the 
majority of the damages sought in Nexagen's claim for consequential damages. In its 
new motion, the Army contends: 1) that appellant's claim is barred by the doctrine of 
res judicata as a result of the Court of Federal Claims' decision in Nexagen Networks, 
Inc. v. United States, 124 Fed. Cl. 645 (2015); and 2) the damages Nexagen seeks for 
the task order option year are too remote and uncertain to be recoverable. 
Nexagen has filed a lengthy opposition in which it disputes some of the 
government's proposed facts and proposes 96 additional facts, and contests the 
government's legal arguments. The government has not filed a reply brief or 
otherwise disputed any ofNexagen's 96 proposed findings. Because the Board 
believes it is not necessary for purposes of the pending motion to detail Nexagen's 
proposed findings, it suffices to state that Nexagen has a long list of grievances with 
respect to the government's handling of the task order. 

STATEMENT OF FACTS (SOF) FOR PURPOSES OF THE MOTION 
A longer description ofNexagen's claims is included in the Board's first 
opinion in this appeal (Nexagen, 19-1BCA137,258). The Board supplements the 
facts from that opinion where necessary, including with facts drawn from the Court of 
Federal Claims' opinion, which has not been appealed and is now final. 
As described in the Board's first decision, in May 2013 the Army awarded 
Nexagen a multiple award indefinite-delivery/indefinite quantity contract to provide 
software and systems engineering services. The appeal arises from a task order for 
data strategy service and software support awarded in February 2015. The task order 
contained base and option years and provided that "[t]he Government reserves the 
right to exercise the option pursuant to FAR 52.217-9, 'Option to Extend the Term of 
the Contract' found in Section I of the basic contract." (R4, tab 2 at 2) This clause 
provides that the government "may" exercise the option but must give the contractor 
notice at least 60 days before the contract expires. However, even if the government 
gives this notice, it is not obligated to exercise the option. FAR 52.2 l 7-9(a). 
As related in our first opinion, on May 4, 2015, (that is, during the base year) 
the contracting officer terminated the task order for default. He changed it to a 
termination for convenience less than two weeks later. Nexagen, 19-1BCA137,258 
at 181,325; (R4, tab 13-15). 
On May 6, 2015, a different contracting officer canceled the task order because 
she had concluded that material flaws in the evaluation record made a re-evaluation 
and subsequent award impossible. The Army subsequently issued a new task order 
request. Nexagen, 124 Fed. CL at 649-50; (R4, tabs 60-61). 
On June 26, 2015, Nexagen filed a complaint at the Court of Federal Claims. 
The action was in part a bid protest challenging the decision to issue a new task order, 
and in part a claim for damages arising from the canceled task order. Nexagen, 
124 Fed. CL at 652-54. 
On August 1, 2015, Nexagen for the first time submitted a certified claim to the 
contracting officer seeking $40,244,379.94 related to the termination and an alleged 
breach of the contract. The contracting officer notified Nexagen two weeks later that 
she did not possess jurisdiction to consider the claim due to the pending action at the 
Court of Federal Claims. Nexagen, 124 Fed. CL at 649, 652. 
On December 21, 2015, the Court dismissed Nexagen's claim for damages for 
lack of jurisdiction because it had not submitted a claim to the contracting officer 
before it filed suit. The Court further ruled that, to the extent that the action could be 
read to challenge the termination for default, that claim was moot due to the 
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contracting officer's conversion of the termination to one for the convenience of the 
government prior to Nexagen filing the law suit.* Nexagen, 124 Fed. Cl. at 652-54. 
On December 22, 2015, Nexagen submitted to the contracting officer the claim 
at issue in this appeal (R4, tab 20). It sought $37,597,526.94 for "Compensatory 
Consequential Damages: Breach of implied covenant of good faith and fair dealing," 
and $2,646,853 for "Compensatory Expectation Damages: Breach of contract based 
upon wrongful termination" (id. at 9). The contracting officer denied the claim except 
for a prorated fee (profit) on the base year of$151,424.54 (R4, tab 22). Nexagen 
timely appealed this decision to the Board. 
DECISION 
I. Nexagen 's Claim is Not Barred by the Doctrine of Res Judicata 
After the Board's decision on the government's first summary judgment 
motion, Nexagen's $2,646,853 claim for expectation damages remained pending. 
With respect to Nexagen's consequential damages claim, $7,409,260 remained 
pending. The government contends that these claims are barred by the doctrine of 
res judicata based on the Court of Federal Claims opinion described above. 
A claim is barred by res judicata when "( 1) the parties are identical or in 
privity; (2) the first suit proceeded to a final judgment on the merits; and (3) the 
second claim is based on the same set of transactional facts as the first." Cunningham 
v. United States, 748 F.3d 1172, 1179 (Fed. Cir. 2014) (citation omitted). The second 
prong of this test is clearly a problem for the government because the Court of Federal 
Claims dismissed Nexagen's money claim for lack of jurisdiction. Nexagen, 
124 Fed. Cl. at 652. 
The government points to the section of the Court of Federal Claims opinion 
where it stated that it possesses jurisdiction to consider challenges to default 
terminations. While that is correct, the Court never reached the merits of the 
termination because it observed that the contracting officer had already provided the 
only relief it could have awarded - conversion to a termination for convenience. This 
was the only relief that the Court believed it could provide because a challenge to a 
termination for default (a government claim) does not grant the Court jurisdiction to 
consider a money claim that the contractor failed to submit to the contracting officer. 
Nexagen, 124 Fed. Cl. at 652-54; DePonte Investments, Inc. v. United States, 
54 Fed. Cl. 112, 115 (2002). 
* The Court also dismissed Nexagen's challenge to the corrective action for lack of 
jurisdiction. Nexagen, 124 Fed. Cl. at 654. 
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Based on its determination that there was no relief it could provide, the Court 
dismissed as moot the portion of the complaint raising allegations challenging the 
termination. Nexagen, 124 Fed. Cl. at 654. The government contends that this was an 
adjudication on the merits ofNexagen's claim that the termination was wrongful 
(gov't mot. at 9) and, therefore, it bars litigation ofNexagen's claim that it is entitled 
to damages as a result of a wrongful termination. The government does not cite 
precedent supporting its position. 
As the Supreme Court has explained, "[a] case that becomes moot at any point 
during the proceedings is 'no longer a 'Case' or 'Controversy' for purposes of Article III,' 
and is outside the jurisdiction of the federal courts." United States v. Sanchez-Gomez, 
138 S. Ct. 1532, 1537 (2018) (quoting Already, LLC v. Nike, Inc., 568 U.S. 85, 91 (2013)). 
Because the contracting officer converted the termination to one for the convenience of 
the government before Nexagen filed suit, Nexagen, 124 Fed. Cl. at 649, there never was a 
case or controversy related to the termination, or a money claim, for which the Court 
possessed jurisdiction and there can be no judgment on the merits. Accordingly, the 
government's contention that the Court's decision on the default termination bars future 
litigation of N exagen' s money claim based on res judicata, is incorrect. 
II. The Government is not Entitled to Summary Judgment on the Option Year 
The Board's initial decision in this matter highlighted the challenges that 
Nexagen faces in recovering on its claim for a wrongful termination for convenience. 
As we stated, a termination for convenience is conclusive unless the contractor can 
show a clear abuse of discretion or that the government acted in bad faith. Nexagen, 
19-1 BCA ,i 37,258 at 181,328 (citing T&M Distributors, Inc. v. United States, 
185 F.3d 1279, 1283 (Fed. Cir. 1999)). A similar standard applies with respect to a 
decision not to exercise an option. Nexagen, 19-1 BCA ,i 37,258 at 181,329 (citing 
IMS Engineers-Architects, P.C., ASBCA No. 53471, 06-1BCA133,231, at 164,674, 
recon. denied, 07-1 BCA ,i 33,467, aff'd, IMS Engineers-Architects, P.C. v. Geren, 
274 F. App'x. 898 (Fed. Cir. 2008)). 
The Board's first decision observed that the contracting officer terminated the 
task order seven months before the deadline for the preliminary notice to exercise the 
option. This was far enough in the future that the Board was uncertain as to whether 
we should treat the option like a claim for damages on a future contract, which is 
considered too remote and speculative to award damages. Because the parties had not 
addressed the option year in their briefs, the Board declined to rule. Nexagen, 
19-1BCA137,258 at 181,328-29. 
In its new motion, the government cites Operational Services Corporation, 
ASBCA No. 38703 et al., 93-3 BCA ,i 26,190, in which the government terminated for 
convenience a contract two months into the performance of the first of two option 
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years. The Board ruled in favor of appellant on entitlement, finding that it had proven 
that the government had acted in an arbitrary and capricious manner. The Board held, 
however, that the appellant's damages would be limited to the first option year because 
there was no assurance that the government would exercise that option, nor was there 
any right of appellant to insist that the government exercise it. Id., 93-3 BCA ,i 26,190 
at 130,374. 
While Operational Services Corporation is consistent with the government's 
position, the Board declines to enter summary judgment in its favor. The Board issued 
the decision in Operational Services after a hearing. Operational Services, 93-3 BCA 
,i 26,190 at 130,374. The record in this appeal is not as developed. For one thing, 
Nexagen has disputed some of the government's proposed findings of fact. Further, 
the government has not responded to Nexagen's lengthy counter statement of facts, 
which alleges facts that, according to Nexagen, demonstrate bad faith or an abuse of 
discretion. The Board believes that a hearing with witness testimony subject to cross 
examination will be necessary to resolve the factual disputes. In a context where a 
hearing is already necessary to determine whether Nexagen can demonstrate an abuse 
of discretion or bad faith during the base year, the Board believes that there will be 
little additional burden on the parties to introduce evidence concerning the option year. 
The Board denies the government's motion with respect to the option year. 
CONCLUSION 
The government's motion for summary judgment is denied. 
Dated: February 5, 2020 
(Signatures continued) 
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MICHAEL N. O'CONNELL 
Administrative Judge 
Armed Services Board 
of Contract Appeals 
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I concur 
RICHARD SHACKLEFORD 
Administrative Judge 
Acting Chairman 
Armed Services Board 
of Contract Appeals 
I concur 
J. REIITPROUTY 
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. 60641, Appeal ofNexagen 
Networks, Inc., rendered in conformance with the Board's Charter. 
Dated: 
6 
PAULLA K. GATES-LEWIS 
Recorder, Armed Services 
Board of Contract Appeals