MOTION TO DISMISS IN PART DENIED; MOTION

FOR ATTORNEY FEES DENIED: November 5, 2012
 
CBCA 2704

SIGMA SERVICES, INC., 
Appellant, 
v. 
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT, 
Respondent. 
Margaret A. Dillenburg of Law Offices of Margaret Dillenburg, PC, Potomac, MD; 
and Alexander J. Brittin of Brittin Law Group, P.L.L.C., McLean, VA, counsel for 
Appellant. 
Linda Fallowfield and Rosamond Z. Xiang, Office of General Counsel, Department 
of Housing and Urban Development, Washington, DC, counsel for Respondent. 
Before Board Judges GOODMAN, DRUMMOND, and SHERIDAN. 
DRUMMOND, Board Judge. 
The Department of Housing and Urban Development (HUD) has filed a motion for 
partial judgment on the pleadings and moves to dismiss count 21 of the complaint for failure 
to state a claim upon which relief can be granted. Sigma Services, Inc. (Sigma) opposes 
1   For purposes of this ruling, count 2 refers to paragraph 21 of the complaint. 

 
                                       
 
 
 
   
   
   
     
 
  
  
   
 
  
     
2 CBCA 2704 
HUD’s motion and moves the Board to grant its attorney fees and costs associated with 
responding to HUD’s motion.   
For the reasons stated below, we deny both motions. 
Background 
In 2009, HUD issued solicitation R-OPC-23447. The solicitation, inter alia, sought 
contractors to perform marketing and management (M&M) services on HUD properties 
located in Arizona, Nevada, and Idaho.  Sigma alleges that the solicitation made clear that 
the HUD homes to be assigned to the contractors included properties referred to as new 
acquisition and transition properties. Sigma further alleges that its bid pricing was based on 
an assessment of services required for both types of properties, which were to be divided 
equally between the contractors. By Sigma’s estimation, the transition properties were more 
profitable to work on because they required fewer services to be performed. 
On June 1, 2010, HUD awarded contract C-OPC-23676 (contract) to Sigma and 
another contractor. The contract was an indefinite quantity fixed-unit rate contract. The 
contract term was one base year and four option years.  
Section C.1.4 of the contract states: 
On the ninety-first (91
st) day after contract award, each Vendor will be 
assigned an equal number of the outstanding unsold inventory in the contract 
area from the M&M II Vendors. 
. . . . 
After completion of the Transition Period, assignment of assets will be 
determined by the Vendor’s performance evaluations as assessed by the 
Government Technical Representative (GTR), based on the procedures 
outlined in HUD’s Quality Assurance Plan for M&M III. 
Performance began on September 27, 2010. Although HUD rated Sigma’s 
performance favorably, Sigma received fewer transition properties than the other contractor. 
By letter dated June 7, 2011, Sigma submitted a certified claim to the contracting 
officer (CO) seeking $656,214.91 in lost revenue and costs. The CO denied the claim and 
Sigma filed a timely appeal. Sigma subsequently filed a complaint, alleging that HUD 
breached the contract and its implied duty of  good faith and fair dealing. 

   
   
 
      
         
       
    
        
  
     
       
     
 
        
           
   
    
           
    
    
 
  
     
  
3 CBCA 2704 
Discussion 
HUD’s Motion 
In count 2 of the complaint Sigma alleges that HUD breached its implied duty of good 
faith and fair dealing by refusing to respond to Sigma’s many requests for its contractual 
share of the transition properties.  HUD contends that this count fails to state a claim upon 
which relief can be granted because Sigma has not alleged bad faith.  
HUD’s motion is akin to a 12(b) motion under the Federal Rules of Civil Procedure. 
To survive this motion, the complaint must allege facts, assumed as true, that would entitle 
Sigma to relief. Arctic Slope Native Ass’n v. Department of Health & Human Services , 
CBCA 294-ISDA, et al., 09-2 BCA ¶ 34,281, at 169,350 (citing Conley v. Gibson, 355 U.S. 
41, 45-46 (1957)); CH2M Hill Hanford Group, Inc. v. Department of Energy, CBCA 708, 
08-2 BCA ¶ 33,871, at 167,666 (citing Leider v. United States, 301 F.3d 1290, 1295 (Fed. 
Cir. 2002)).   
The covenant of good faith and fair dealing is inherent in every contract. Precision 
Pine & Timber, Inc. v. United States, 696 F.3d 1344, 1365 (Fed. Cir. 2009). Government 
officials are presumed to exercise their duties in good faith. Am-Pro Protective Agency, Inc. 
v. United States, 281 F.3d 1234, 1239 (Fed. Cir. 2002).  Sigma contends that it only needs 
to allege that HUD acted with lack of good faith.  We agree. 
A claim that HUD breached the implied covenant of good faith does not require a 
showing of bad faith. See Centex Corp. v. United States, 395 F.3d 1283, 1304 (Fed. Cir. 
2005).  
This is because a claim that the government breached the covenant of good 
faith and fair dealing is not the same as a claim that the government acted in 
bad faith. An allegation of breach of the covenant of good faith and fair 
dealing is an allegation that the party’s contracting partner deprived it of the 
fruits of the contract . . . while bad faith is motivated by malice . . . and does 
not necessarily result in a deprivation of the fruits of the contract. 
Rivera Agredano v. United States, 70 Fed. Cl. 564, 574 n.8 (2006) (citations omitted). 
The covenant of good faith and fair dealing can be breached upon proving, inter alia, 
lack of diligence, negligence, or a failure to cooperate. See Malone v. United States , 849 
F.2d 1441, 1445 (Fed. Cir. 1988); see also Peter Kiewit Sons’ Co. v. United States, 151 F. 
Supp. 726, 731 (Ct. Cl. 1957). In fact, one can violate the obligation of good faith through 

 
   
      
      
   
      
       
       
    
      
____________________________ 
_____________________________ _____________________________ 
 
 
4 CBCA 2704 
“[s]ubterfuges and evasions . . . even though the actor believes his conduct to be justified.” 
Restatement (Second) of Contracts § 205(D) (1981) (emphasis added).  
We find that the absence of an allegation of bad faith would not defeat Sigma’s claim 
in count 2. Accordingly, we reject HUD’s argument. 
Attorney fees and costs 
Sigma argues that it is entitled to attorney fees and costs associated with responding 
to HUD’s motion. HUD has not addressed Sigma’s request for attorney fees. Nevertheless, 
we note that Sigma’s request is premature. Claims for attorney fees and costs are considered 
under the Equal Access of Justice Act, 5 U.S.C. § 504 (2006). Applications for attorney fees 
and costs are made after Board decisions are final, in accordance with Rule 30 (48 CFR 
6101.30 (2012)). See TST Tallahassee, LLC v. Department of Veterans Affairs, CBCA 1576, 
11-1 BCA ¶ 34,672. 
Procedural Matter 
The parties are directed to file a status report by November 12, 2012, proposing a 
schedule for resolution of this proceeding. 
Decision 
HUD’s motion to dismiss in part is DENIED. Sigma’s motion for attorney fees is 
DENIED. 
JEROME M. DRUMMOND 
Board Judge 
We concur: 
ALLAN H. GOODMAN PATRICIA J. SHERIDAN 
Board Judge Board Judge