GRANTED: August 14, 2014
CBCA 3518
DMW MARINE GROUP,
Appellant,
v.
DEPARTMENT OF COMMERCE,
Respondent.
Mark C. Gregory of DMW Marine Group, Chester Springs, PA, appearing for
Appellant.
Ashley Powers, Office of the General Counsel, Department of Commerce,
Washington, DC, counsel for Respondent.
Before Board Judges DANIELS (Chairman), SOMERS, and STERN.
DANIELS, Board Judge.
The Department of Commerce’s National Oceanic and Atmospheric Administration
(NOAA) terminated for cause a contract it had awarded to DMW Marine Group (DMW) for
the supply of a marine crane.  On appeal, we overturn the termination.
Findings of Fact
The parties have asked us to resolve this case on the basis of the written record.  That
record contains documentation on the basis of which we make the following findings.


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In January 2012, an engineer with The Columbia Group, which DMW identifies as
a naval architecture firm, asked DMW about its ability to provide a marine crane for the
NOAA Coastal Mapping Vessel Ferdinand R. Hassler.  Discussions led to NOAA’s award
of a contract to DMW, on June 22, 2012, for the supply of a knuckle boom crane and a
hydraulic power unit for the Hassler.
The contract required DMW to “provide all parts, material, and ancillary equipment
required for the operation of the crane in accordance with the [specified] requirements.” 
Some of the requirements in the contract’s Statement of Work referenced the American
Bureau of Shipping (ABS).  ABS describes itself on its website as a “classification society”
whose “responsibility . . . is to verify that marine vessels and offshore structures comply with
Rules that the society has established for design, construction and periodic survey.”
DMW maintains that under the contract, ABS was simply to approve the design of the
crane.  NOAA asserts that ABS certification of the crane was also specified.  We find that
the contract mandated both design approval and certification by ABS.
The word “approval” is used by itself in certain paragraphs of the contract’s Statement
of Work.  These include:
– Paragraph 3.1.2: “The crane technical manual will include at a minimum but
is not limited to the following items:  . . . Crane details to include at a minimum: ABS
approval.”
– Paragraph 3.1.3: “Contractor shall receive Government and ABS approval of
the crane system.”
– Paragraph 5.1: “The Contractor shall supply for the Government review and
approval all documentation associated with construction, regulatory approval, and
operation [of] the crane.  Such documentation shall include as a minimum those items
listed below: Regulatory approval by the American Bureau of Shipping of the
provided crane system.”
The word “certification” is used in other places in the Statement of Work, including:
– Paragraph 3.1.1: “Construction of the Crane shall . . . meet the requirements
of ABS SVR [Steel Vessel Rules] <90M, ABS Guide for Certification of Lifting
Appliances, ABS Cargo Gear Certificate, API [American Petroleum Institute]
Spec[ification] 2C, and IEEE [Institute of Electrical and Electronics Engineers]-STD-

CBCA 3518 3
45, and ABS Record of Notation CRC for compliance with ABS Guide for
Certification of Cranes.[1]”  
– Paragraph 4.1.1.1: “Operation of all electrical, mechanical, hydraulic, and
control systems.  Tests shall demonstrate proper function of the crane per
manufacturer’s specifications as well as the performance requirements ABS Guide for
Certification of Lifting Appliances, ABS Cargo Gear Certificate, ABS Record of
Notation CRC for compliance with ABS Guide for Certification of Cranes, API
Spec[ification] 2C, IEEE-STD-45, and NOAA AMC-573-1C.”
– Paragraph 4.1.2: “Tests shall be conducted for post-installation (pier side)
functionality and ABS Cargo Gear Certifications.”
– Paragraph 4.2.2: “An ABS Approved test plan shall be provided for the ABS
Cargo Gear Certification.”
The ABS Guide for Certification of Cranes, which is referenced in paragraphs 3.1.1
and 4.1.1.1 of the contract’s Statement of Work, explains the meaning of the terms
“approved” and “certification.”  “The term ‘approved’ is to be interpreted to mean that the
plans, reports or documents have been reviewed for compliance with one or more of the
Rules, guides, standards or other criteria acceptable to ABS.”  “Certification is a
representation by ABS as to the structural and mechanical fitness for a particular use or
service, in accordance with its Rules, Guides and standards.”
The ABS Guide provides that “[p]lans showing the arrangements and details of the
crane are to be submitted for review before fabrication begins.”  Later, “[a]ll cranes are to
be surveyed at the crane manufacturer’s plant during construction.  In-plant surveys of the
cranes during construction are required to the extent necessary for the Surveyor to determine
that the details, material, welding and workmanship are acceptable to ABS and are in
accordance with the approved drawings.”  “Upon satisfactory fabrication, the Surveyor may
issue a certificate certifying that the crane has been built in accordance with these
requirements.”
In addition to the Statement of Work, the contract contains various standard clauses,
among which is one directly relevant to the NOAA action which is on appeal:
1 The ABS Guide for Certification of Cranes explains, “The vessel or unit
classed by ABS having an installed crane certified by ABS in accordance with Chapter 2 of
this Guide will be distinguished by the additional class notation CRC.”

CBCA 3518 4
Termination for cause.  The Government may terminate this contract, or any
part hereof, for cause in the event of any default by the Contractor, or if the
Contractor fails to comply with any contract terms and conditions, or fails to
provide the Government, upon request, with adequate assurances of future
performance.  In the event of termination for cause, the Government shall not
be liable to the Contractor for any amount for supplies or services not
accepted, and the contractor shall be liable to the Government for any and all
rights and remedies provided by law.  If it is determined that the Government
improperly terminated this contract for default, such termination shall be
deemed a termination for convenience.
A separate contract clause states further that if a contract is terminated for the
convenience of the Government, “the Contractor shall be paid a percentage of the contract
price reflecting the percentage of the work performed prior to the notice of termination, plus
reasonable charges the Contractor can demonstrate to the satisfaction of the Government
using its standard record keeping system, have resulted from the termination.”
The contract also includes a standard clause which NOAA did not invoke:
Inspection/Acceptance.  The Contractor shall only tender for acceptance those
items that conform to the requirements of this contract.  The Government
reserves the right to inspect or test any supplies or services that have been
tendered for acceptance.  The Government may require repair or replacement
of nonconforming supplies or reperformance of nonconforming services at no
increase in contract price.  If repair/replacement or reperformance will not
correct the defects or is not possible, the government may seek an equitable
price reduction or adequate consideration for acceptance of nonconforming
supplies or services.  The Government must exercise its post-acceptance
rights – 
(1) Within a reasonable time after the defect was discovered or
should have been discovered; and
(2) Before any substantial change occurs in the condition of the
item, unless the change is due to the defect in the item.
The contract provided additionally that in exchange for the crane, hydraulic power
unit, and associated services, NOAA would pay DMW $213,000.  The agency would pay
50% of this amount at the start of work and 50% at the time of delivery and receipt of the

CBCA 3518 5
crane.  NOAA could suspend or reduce milestone payments, however, after finding that
“[t]he contractor fails to comply with any material requirement of this contract.”
In August 2012, the NOAA contracting officer2 informed DMW that the agency
would send a representative to witness factory acceptance testing.  The crane manufacture
was completed by October 1, 2012, and the testing occurred shortly thereafter.  A NOAA
representative reported to DMW, “[E]verything went well.  The crane looks and operates
great.”
As far as our record is concerned, the issue of ABS certification was raised for the
first time on October 25.  On that date, in electronic mail correspondence, the contractor
asserted that “certification by ABS was not part of the contract” and the contacting officer
responded, “NOAA disagrees with your interpretation.”  The dispute continued on November
3, with the contractor writing, “The requirements for ABS [s]tate: contractor shall receive
Government and ABS approval of the crane system.  It is our intent that upon installation
ABS will certify the onboard load test thereby approving the crane system.  Please issue
concurrence with above, as we are not shipping this crane until it is agreed upon.”  The
contracting officer continued the discussion on January 3, 2013: “Speaking to the ABS
requirements, it appears that you and ABS have a good path forward that meets the
requirements of the contract and is acceptable to the Government.”  
By letter dated February 28, 2013 (as revised on March 12, 2013), ABS wrote to
DMW, stating, “[P]rovided the details and arrangements as indicated be adhered to, the work
is to the satisfaction of the Surveyor, and the rules in all other respects are complied with, the
same will be approved in accordance with the requirements for the issuance of an American
Bureau of Shipping Register of Lifting Appliances.”  ABS cautioned, however:
In-plant survey during construction of the subject will be required to the extent
necessary for the Surveyor to confirm the materials, welder qualifications,
welding procedure approval, compliance with approved drawings,
workmanship, quality control, and to witness any shop tests.  It is the
responsibility of the crane manufacturer to inform the Surveyor prior to the
commencement of construction in order to initiate the necessary surveys in due
time.
2 There were actually two different contracting officers acting for NOAA with
regard to this contract.  We refer to each of them as “the contracting officer.”

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Certification of the crane is contingent upon satisfactory unit proof tests and
surveys aboard the vessel.
On March 15, ABS gave full approval to the design.  The classification society
cautioned, however, “Please contact your local ABS Philadelphia Survey Office . . . to make
arrangements for construction survey, inspection and testing, as required for the certification
of the crane.”
DMW delivered the crane to NOAA on March 26, 2013 and installed it on the Hassler
on or about that date.
The contracting officer sent an electronic mail message to DMW on April 15, stating:
The Government has not agreed to your interpretation of the contract as stated
in your response.  It is a requirement of the contract for the design and
construction of the crane to meet the requirements of the Guide for
Certification of Lifting Appliances, and ABS Cargo Gear Certification.  This
remains the Government’s expectation.  NOAA has not granted a deviation
from these requirements of the contract.
During previous conversations/e-mails, this requirement was reiterated.  ABS
has confirmed that in order for the Surveyor to certify load testing, the design
and construction of the crane must meet ABS requirements.  The design
requirement has been satisfied by submitting and receiving approval for the
design and supporting calculations/data.  The construction requirement is
typically satisfied by communicating with ABS to attend an on-site
inspection(s) during construction to ensure the construction of the crane
adheres to the ABS-approved design (as stated in ABS’s design approval
letter).  You indicated ABS was not part of the construction of the crane. 
Since this requirement has not yet been met, it is incumbent upon DMW to
coordinate with ABS and determine the best path forward to satisfy this
requirement.
DMW responded, by electronic mail message of the same date, “Just ship the crane
back to us now and we will refund your slow and late payments.”
The correspondence between the parties continued in the same vein.  On April 16, the
contracting officer wrote to DMW, “As no survey during or after construction has been
performed, we are asking how DMW intends to comply with ABS’s requirements.”  On
May 7, DMW responded that if the Government would pay in full for the crane, “we will be

CBCA 3518 7
happy to assist you should you wish to get the crane certified by ABS,” but if full payment
was not made, “[w]e are ready to repossess the crane.”  The contracting officer stated on
May 9, “ABS certification will require a post-construction survey of the crane system. . . . 
ABS [has] provided a summary of what post-construction approval/certification entails and 
is summarized below.”  DMW responded on the same day, “No [. . . .]  We will pick up our
crane tomorrow.”
The contractor did not pick up the crane on May 10 or any other day, however. 
Instead, on May 14, it simply reiterated its view that it had already fulfilled all of its
obligations under the contract.
On May 29, 2013, the contracting officer terminated the contract for cause, “based on
DMW Marine Group’s refusal to perform pursuant to the terms of the contract which
includes the crane to be American Bureau [of] Shipping  (ABS) certified.”  The contracting
officer wrote in her decision:
To mitigate NOAA concerns and rights, the Government has concluded that
all payments to date should stand, but remaining funds on the contract will be
de-obligated upon termination. . . .  [T]he Government . . . will procure the
certification through a third party.  To date the Independent Government
Estimate (IGE) for a third party to perform tasks for ABS certification is
$75,000.  However, please be advised that the Government is not bound by the
IGE.  Once the exact costs of procuring crane certification is [sic] determined,
and should the cost exceed the remaining funds on the contract, the
Government will issue a demand for payment to DMW Marine Group.
By this time, NOAA had paid $152,250 to DMW on this contract.  By contract
modification dated July 9, 2013, NOAA deobligated the remaining $60,750 from the
contract.
The crane continues to be installed on the Hassler.
Discussion
The Board treats a termination for cause as the equivalent of a termination for default. 
ACM Construction & Marine Group, Inc. v. Department of Transportation, CBCA 2245, et
al., 14-1 BCA ¶ 35,537, at 174,150.  A termination for default is “a drastic sanction which
should be imposed (or sustained) only for good grounds and on solid evidence.”  Lisbon
Contractors, Inc. v. United States, 828 F.2d 759, 765 (Fed. Cir. 1987) (quoting J. D. Hedin
Construction Co. v. United States, 408 F.2d 424, 431 (Ct. Cl. 1969)); see also ACM

CBCA 3518 8
Construction, 14-1 BCA at 174,150; C-Shore International, Inc. v. Department of
Agriculture, CBCA 1696, 10-1 BCA ¶ 34,379, at 169,740.  “Such a termination is a
government claim, and the Government bears the burden of proof that its action was
justified.” Lisbon Contractors, 828 F.2d at 764-65; see also ACM Construction, 14-1 BCA
at 174,150; C-Shore, 10-1 BCA at 169,740.
NOAA maintains that its termination for cause of the contract for the supply of the
crane is justified because the contract required that the crane be certified by ABS and DMW
refused to provide this certification.  We agree that the contract required ABS certification;
the contract calls for such certification in several places which are quoted above.  DMW
asserts, in its complaint and in its brief, that before the contract was awarded, DMW made
clear to both The Columbia Group (acting as NOAA’s agent) and NOAA itself that due to
the need for speedy delivery of the crane, certification was not possible.  There is no
evidence to this effect, however, and DMW took no objection to any of the contract
provisions regarding certification.  Nevertheless, the failure of the contractor to provide the
certification does not constitute good grounds for the termination.
To reach this conclusion, we look to the Uniform Commercial Code (UCC) for
guidance in applying general contract principles, as the Court of Appeals for the Federal
Circuit has in the past.  See Hughes Communications Galaxy, Inc. v. United States, 271 F.3d
1060, 1066 (Fed. Cir. 2001); Group One, Ltd. v. Hallmark Cards, Inc., 254 F.3d 1041, 1047-
48 (Fed. Cir. 2001);  Stickle v. Heublein, Inc., 716 F.2d 1550, 1559-60 (Fed. Cir. 1983); see
also John C. Kohler Co. v. United States, 498 F.2d 1360, 1367 (Ct. Cl. 1974) (at n.6: “The
Uniform Commercial Code is applicable to the field of public contracts.”); ABM/Ansley
Business Materials v. General Services Administration, GSBCA 9367, 93-1 BCA ¶ 25,246,
at 125,750 (1992).  
Section 2-607(2)  of the UCC is highly relevant here.  It provides that:
Acceptance of goods by the buyer precludes rejection of the goods accepted
and if made with knowledge of a non-conformity cannot be revoked because
of it unless the acceptance was on the reasonable assumption that the non-
conformity would be seasonably cured but acceptance does not of itself impair
any other remedy provided by this Article for non-conformity.
As far back as October 2012, the parties had been discussing whether the contract
required ABS certification of the crane, with DMW insisting that “certification by ABS was
not part of the contract” and stating that it would provide the crane with ABS design approval
only.  In November 2012, DMW said that it would not ship the crane unless NOAA agreed
to the contractor’s understanding.  In February and the first half of March of 2013, ABS gave

CBCA 3518 9
design approval, but noted that further arrangements were required for certification.  Thus
NOAA knew well, when it accepted delivery of the crane on March 26, that there was a non-
conformity in the goods: the crane was not ABS certified.  Any assumption by the agency on
that date that DMW would seasonably cure its failure to have the crane certified was
unreasonable, given all that had transpired during the previous several months. 
Consequently, acceptance of the crane precluded rejection of it.  Terminating the contract for
cause was not justified.
Under the Inspection/Acceptance clause of the contract, NOAA could have sought an
equitable reduction in the contract price when DMW delivered the uncertified crane, rather
than the contracted-for certified equipment.  That alternative was open to NOAA only
“[w]ithin a reasonable time after the defect was discovered or should have been discovered,”
however, and the agency did not seek to employ this alternative within a reasonable time.3
DMW offered to repossess the crane and refund the money paid for it, if NOAA did not
desire to keep the uncertified crane, but the agency did not choose this option, either.  
In ABM/Ansley, one of our predecessor boards of contract appeals noted that “[s]ome
UCC cases have held that revocation may . . . be valid even absent return of the defective
article where it has been shown that the goods are a necessity.”  93-1 BCA at 125,750 n.9. 
The contracting officer in her decision which terminated the contract did assert that “[t]he
crane is essential to the ship’s mission and installation could not be delayed as it was a
critical path in the shipyard’s repair schedule.”  A statement in a contracting officer’s
decision is not evidence, however, and there is no evidence in the record on the basis of
which we could reach the conclusion the contracting officer suggested.  We need not decide
in this case, consequently, whether to follow the cases cited in the footnote in ABM/Ansley.
3 This case is reminiscent of another in which NOAA lost its opportunity to take
action against the contractor by failing to use a remedy available to it in a timely way.  In
Divecon Services, LP v. Department of Commerce, GSBCA 15997-COM, et al., 04-2 BCA
¶ 32,656, the contractor failed to provide the necessary equipment and services for a
scientific cruise, but instead of terminating the contract for default at that time (as it
justifiably could have), the agency directed the contractor to repair the equipment.  Only after
the contractor had accomplished the repairs, having worked around the clock for several
days, did the agency terminate the contract.  By then, the agency had effectively waived the
original contract completion date and had thereby lost its opportunity to terminate for default.

CBCA 3518 10
Decision
The appeal is GRANTED.  NOAA’s termination of the contract for cause is, under
the terms of the contract’s Termination for Cause clause, converted to a termination for the
convenience of the Government.
_________________________
STEPHEN M. DANIELS
Board Judge
We concur:
_________________________ _________________________
JERI KAYLENE SOMERS JAMES L. STERN
Board Judge Board Judge