CBCA 4012, 4013 DISMISSED AS MOOT; CBCA 5083 DENIED: May 17, 2016 
CBCA 4012, 4013, 5083
UNIVERSAL HOME HEALTH AND INDUSTRIAL SUPPLIES, INC.,
Appellant,
v.
DEPARTMENT OF VETERANS AFFAIRS,
Respondent.
Anthony R. Smith, President of Universal Home Health and Industrial Supplies, Inc.,
Tampa, FL, appearing for Appellant.
David G. Fagan, Office of Regional Counsel, Department of Veterans Affairs,
Portland, OR, counsel for Respondent.
Before Board Judges GOODMAN, WALTERS, and SULLIVAN.
SULLIVAN, Board Judge.
Appellant, Universal Home Health and Industrial Supplies, Inc. (Universal),
appeals the decisions of the respondent, Department of Veterans Affairs (VA), to
terminate two of its task orders (docketed as CBCA 4012 and 4013).  Universal alleges
that the initial decisions to terminate for default were undertaken in bad faith and, as a
consequence, VA owes Universal damages, despite the fact that the terminations have
been converted to terminations for convenience (docketed as CBCA 5083).  The parties
have submitted the appeals for a decision on the record, pursuant to Rule 19 of the Rules
of the Civilian Board of Contract Appeals.  48 CFR 6101.19 (2015).  For the reasons that


CBCA 4012, 4013, 5083 2
follow, the Board dismisses Universal’s original appeals of the terminations for default
(CBCA 4012 and 4013) and denies CBCA 5083.
  
Statement of Facts
I. The Contract and Task Orders
A. Underlying Federal Supply Schedule contract
The task orders at issue in these appeals were awarded based upon a Federal
Supply Schedule (FSS) contract that Universal held to supply medical equipment and
supplies (FSS contract number V797P-4612a).  Exhibit 11 at 203.1  The original contract
period was February 20, 2004, through February 19, 2009, id. at 204, but through a series
of modifications, the contract period was extended to February 14, 2014.  Id. at 641;
Exhibit 4 at 55.      
This contract incorporated 48 CFR 52.212-4 (Federal Acquisition Regulation
(FAR) 52.212-4), Contract Terms and Conditions–Commercial Items (Feb. 2003), which
contains provisions for the termination of the contract for the Government’s convenience
and termination for cause.  Exhibit 11 at 190.  The contract also provided that any
supplies to be furnished by Universal under the contract would be ordered by delivery or
task order.  Id. at 391 (FAR 52.216-18, Ordering).  “Such orders may be issued during
the contract term.”  Id. 
The contract contained several FSS provisions, including the requirement to
provide proof of uninterrupted supply:
When requested by the Contracting Officer, if other than the manufacturer,
the offeror must submit prior to award of a contract, either (1) a letter of
commitment from the manufacturer which will assure the offeror of a
source of supply sufficient to satisfy the Government’s requirements for the
contract period, or (2) evidence that the offeror will have an uninterrupted
1 Unless otherwise indicated, the exhibits are from the appeal file submitted by
the VA in appeal CBCA 4012.  The Portland task order termination is the subject of CBCA
4012.  The Board ordered the agency to provide a copy of Universal’s FSS contract, which
it did on January 28, 2016.  The Board cites throughout this decision to the contract
submitted as Exhibit 11 of the appeal file in CBCA 4012.  

CBCA 4012, 4013, 5083 3
source of supply from which to satisfy the Government’s requirements for
the contract award.
 
Exhibit 11 at 422 (I-FSS-644, Dealers and Suppliers (Oct. 1988)).  The FSS contract
contains such a statement from MedNet Health, dated August 1, 2008:
This letter is to certify that Universal Home Health and Industrial Supplies,
Inc. is an authorized distributor for MedNet Health.  
MedNet Health is committed to selling products to Universal Home Health
and Industrial Supplies, Inc. to service the contract award from the award
date through the end of the contract period.
Id. at 1544.    
B. Portland and Boise VA task orders   
1. Task orders awarded
On June 2, 2012, VA awarded to Universal a task order for the delivery of cardiac
event  monitoring services for patients at a VA hospital located in Portland, Oregon. 
Exhibit 9 at 157.  The statement of work described the scope of work as follows:
The contracted company will provide all equipment needed for Event and
Holter Monitor testing, either by hospital delivery or direct mail out to
patient.  The contracted company will provide continuous, twenty-four hour
observation of rhythm strips and immediately inform a representative from
the [electrocardiogram] lab, or the indicated interpreting physician of any
significant changes as specified by doctor.
Id. at 162.  The statement of work further stated that VA would provide names of patients
and identify the type of monitoring required.  Id.  The task order allowed for a base year
to run from June 4, 2012, through March 31, 2013, and for three option years to run from
April 1, 2013, through March 31, 2016.  Id. at 160-61.  Universal agreed to provide
cardiac event monitoring for an estimated 370 patients at a cost of $160 per patient and
cardiac holter monitoring for an estimated 270 patients at a cost of $85 per patient each
year.  Id.  The statement of work required Universal to provide invoices to VA “as
necessary for billing and with all information needed by billing specialist.”  Id. at 163. 
The total value of the Portland contract, including option years, was estimated to be
$328,600.  Exhibit 9 at 161. 

CBCA 4012, 4013, 5083 4
On September 18, 2012, VA awarded another task order to Universal for the same
types of monitoring services at the VA hospital located in Boise, Idaho.2  CBCA 4013,
Exhibit 6 at 75.  The base year was to run from October 1, 2012, through September 30,
2013, and allowed for four option years to run from October 1, 2013, through
September 30, 2017.  Id. at 80-81.  Universal was to provide holter monitoring for an
estimated 300 patients and event monitoring for an estimated 240 patients at the same
unit prices as the Portland task order.  Id. at 81.  The total value of the Boise task order,
including option years, was estimated to be $319,500.  Id.  
Both task orders designated the contracting officer’s representative (COR) as the
individual responsible for monitoring the contractor’s performance.  Exhibit 9 at 164;
CBCA 4013, Exhibit 6 at 84.  The Portland task order also contained a clause setting
forth the order of precedence between the underlying FSS contract and the contract
issued to Universal: the terms of the FSS contract applied to the individual contracts and,
in the event of a conflict, the terms of the FSS contract would take precedence.  Exhibit
9 at 177.  The Boise task order did not contain this clause. 
2. Modifications
With modification 0001 to the Portland task order, the agency incorporated FAR
52.237-3, Continuity of Services clause, which described the services provided as “vital
to the Government and must be continued without interruption.”  Exhibit 9 (modification
dated Aug. 8, 2012).  This clause was already included in the Boise task order.  CBCA
4013, Exhibit 6 at 96.    
With modification 0001 to the Boise task order, executed on September 27, 2013,
VA exercised the first option year, for performance from October 1, 2013, through
September 30, 2014.  CBCA 4013 Exhibit 5 at 51.  With modification 0006 to the
Portland task order, executed on March 17, 2014, the agency exercised option year two
for services through March 31, 2015.  Exhibit 5 at 88.  
2 The Boise task order termination is the subject of CBCA 4013.  VA received
two quotes for this task order, one from Universal and the other from CardioNet, Inc.  CBCA
4013, Exhibit 6 at 98.       

CBCA 4012, 4013, 5083 5
II. Agency Originally Terminated the Task Orders for Cause
On April 7, 2014, just after the agency sent the modification exercising the second
option year on the Portland task order, the COR sent an email message to the contracting
staff and others, advising of a possible service interruption on the contract:
The company [from which] the EKG lab receives holter and event monitors
(MedNet) informed us today that we will no longer be able to enroll
patients because they have not been paid by Universal Home Health in over
four months.  The representative for the company also alluded to the fact
that the same situation is happening at the Boise VA.
Clinically, this is unacceptable as this service is a[] fundamental piece of
the cardiology department.  If we cannot offer this service to our patients,
we will need to explore outsourcing IMMEDIATELY.  I will forward the
email I received from MedNet today, please scroll to the bottom to see the
correspondence between MedNet and Universal Home Health.  
Exhibit 4 at 84.  The COR forwarded an email message she had received from MedNet
which stated that Universal “issues the invoices and is expected to pay us.  This has not
been the case.”  Id.  at 81.  
After speaking with the president of MedNet, the COR sent another message to the
contracting staff and other agency employees regarding the need to continue the service:
The company that Universal Home Health is using for the event/holter
service at Portland Veterans Affairs Medical Center] is MedNet.  I spoke
with the president of MedNet today and he was thankfully willing to
temporarily re-open service to our patients while we are actively trying to
investigate this issue.  To continue keeping the service open he needs to be
included in the resolution of this situation. . . . [The MedNet president]
feels that his company has not been compensated for service since last
October.  He claims that the tax [identification] number was changed last
September and since that time all of the money has been going directly to
[the president of Universal], who has not been paying MedNet.  On the
phone today he clearly stated he feels this money is being misappropriated. 
My clinical worry is losing access to this service, which is fundamental to
cardiac care at PVAMC.  If we must suspend dealing with Universal Home

CBCA 4012, 4013, 5083 6
Health, cardiology must have access to another avenue to provide event and
holter monitors.  My hope would be to provide continuity of care by staying
with MedNet at this time, but I am willing to go whatever route is necessary
to keep this service available.  
Id. at 176.  In response to these communications, the contract administrator advised the
COR and other VA officials that VA would issue a cure notice, which would provide
Universal ten days to correct the situation.  The contract administrator further advised
that, if the contract were terminated, an emergency contract would be put in place to
maintain the services and “[w]e are in contact with MedNet and they have tentatively
assured us that they will continue to provide service in relation to this contract.” 
Id. at 70.  
The contract specialist then emailed the president of Universal and asked him to
contact the specialist regarding a service issue and outlined complaints received from
MedNet.  Exhibit 4 at 67-8.  The contract specialist advised that the agency was
preparing a cure notice and urged the president to contact him.  Id.3    
The president of Universal responded that he had not been paid what he was owed
by MedNet and that “the money [Universal] collected from the VA[] was owed to my
company.”  Exhibit 4 at 67.  The president further explained that, “[w]hen I did not get
paid and was not given the accounting information, I did not cancel the contract (which
would have stopped the services), and I did not involve you; I went to them.”  Id.  The
president concluded, “I have followed all VA guidelines, and I am in compliance.  I am
disputing Mednet’s allegations.”  Id.  
By letter dated April 10, 2014, the contracting officer issued a cure notice
regarding Universal’s “failure to meet financial obligations which has in-turn impacted
performance.”  Exhibit 4 at 65.  The letter described the failure as:
3 In its pleadings, Universal urges the Board to find, in part, that the contracting
specialist’s efforts to alert Universal of the performance concerns constituted bad faith
because the contracting specialist waited several hours after the COR alerted the contracting
staff of the problems to contact Universal and, in the initial email message, failed to convey
the seriousness of the concerns.  While the tone of the contracting specialist’s initial email
message does not convey the gravity of VA’s concerns, the Board does not find that the
contracting specialist acted in bad faith in his efforts to advise Universal that the agency had
concerns about future performance.  

CBCA 4012, 4013, 5083 7
Universal Home Health and Industrial Supplies, Inc. failure that has made
this cure notice necessary is the failure of fiscal responsibility which cause
subsequent vendor MedNet to cease service regarding the Holter Monitor
Service.  The contracting office has been informed that Universal Home
Health and Industrial Supplies Inc. failure to pay MedNet has led to the
disruption of cardiac monitoring for authorized veteran patients.
Id.  The contracting officer warned that, if Universal failed to cure this issue within ten
days, the contract would be terminated for cause, pursuant to FAR 52.214-4(m).  In the
email message forwarding the cure notice, the contract administrator stated: “so again,
we are very willing to keep you as our contractor, however, we need to have solid
assurance that this situation is ‘cured’ between you and MedNet, so your timely response
will help this situation immensely.”  Id. at 60.  
Universal responded to the cure notice by letter dated April 18, 2014.  Exhibit 4
at 59.  In this response, Universal disputed that it had failed to meet its financial
obligations but “relinquish[ed]” the contract with the VA:
First, Universal Home Health and Industrial Supplies, Inc. (UHH) has not
failed to meet financial obligations to MedNet.  Second, as prime vendor,
UHH has managed the Holter Monitor service contracts at the highest level
of performance.  Third, MedNet’s actions to cease services were done
independent of UHH.  
UHH has not failed to perform under the contracts and can replace MedNet
with another vendor to provide the Holter Monitor services to the Portland
VA Medical Center and to the Boise VA Medical Center.  However,
consistent with UHH’s practice of providing exemplary customer care, we
have elected to relinquish the contract in order to provide a timely cure to
this matter, as a result of MedNet’s disruptive actions.
Id.  Universal also asked for payment on the outstanding invoices on the contract and
stated that “UHH’s relinquishment of these contracts should not be reflected as an
adverse action on UHH’s VA performance record.”  Id.  
On April 22, 2014, the contracting officer issued a show cause notice.  Exhibit 4
at 56.  In this notice, the contracting officer asked Universal to present any information
regarding the determination that the “failure to perform arose from causes beyond your
control and without fault or negligence on your part.”  Id.  The contracting officer gave
Universal three days to respond to the notice.  

CBCA 4012, 4013, 5083 8
On April 25, 2014, Universal responded to the show cause notice, asserting that
the failure to perform was not Universal’s fault:
There is no fault or negligence on the part of Universal Home Health and
Industrial Supplies, Inc. (UHH) in the performance of this contract.  During
the contract period UHH performed in compliance with the terms and
conditions of the contract with no deficiency in services by providing
services to the Portland VA Medical Center and the Boise VA Medical
Center.  
It is not necessary to terminate contract #V797P-4612A, as the contract
expired under its own terms on February 14, 2014.  (See attached
Department of Veterans Affairs Federal Supply Schedule Price List,
Modification 021 (effective February 11, 2011).  In April 2014, MedNet
unilaterally ceased services.  UHH has no fiscal obligation to MedNet.
Exhibit 4 at 54.  Universal then reiterated its request for payment on outstanding invoices
issued for services through March 2014.  Id.  
On April 30, 2014, the contracting officer issued modifications terminating the
task orders for cause, pursuant to FAR 52.212-4(m), Termination for Cause.  Exhibit 4
at 50; CBCA 4013, Exhibit 4 at 34.  The contracting officer stated that “[t]he
termination[s] w[ere] due to the vendor’s inability to fulfill the Terms and Conditions of
the contract[s].”  Exhibit 4 at 50; CBCA 4013, Exhibit 4 at 34.  The contracting officer
also noted the issuance of cure and show cause notices, but stated that the “[v]endor has
failed to correct this situation to the Government’s satisfaction.”  Exhibit 4 at 50; CBCA
4013, Exhibit 4 at 34. 
Just prior to terminating the task orders with Universal, the contracting officer
signed a limited source justification for another contractor, CardioNet, to provide the
services for the agency beginning May 1, 2014.  Appellant’s Claim to the Contracting
Officer (Claim), Attachment 22.  Part of the justification for the use of CardioNet was
that it owned the equipment that Universal had been supplying on its task order.4  Id.  On
4 Universal also asserts that the justification describes CardioNet as Universal’s
subcontractor for its terminated contract.  The justification only says that CardioNet was
“previously the subcontractor.”  Claim, Attachment 22.  As Universal acknowledges,
CardioNet was its competitor and held the monitoring contract before the contract was
awarded to Universal.  Claim at 9.  

CBCA 4012, 4013, 5083 9
May 6, 2014, the contracting officer awarded a six-month bridge contract to CardioNet,
Inc. for cardiac monitoring services at the Portland and Boise VA medical centers. 
Appellant’s submission (Feb. 11, 2015), Attachment 4.      
III. Agency Converted Terminations into Terminations for Convenience
A. Amounts owed for services rendered prior to termination
Beginning in May 2014, agency personnel attempted to determine the amount that
Universal was owed for services provided from January through April 2014, because
Universal had not and could not provide proper invoices for these amounts.  Exhibit 3
at 37-47.  Universal repeatedly asked VA to provide information on patients so that it
could submit proper invoices.  Id.  In response, VA officials stated that VA did not have
the information Universal requested and asked that Universal submit invoices with the
same information that it had submitted in the past.  Id.  VA suggests that Universal’s
subcontractor had the required information but Universal was unwilling to ask its
subcontractor to supply the information; Universal does not explain why it did not have
the necessary data. 
In May and June 2014, the COR compared the VA examination records for the
period against the amount that Universal claimed it was owed.  Claim, Attachment 40. 
Based upon the COR’s review, it appeared that Universal’s records did not match VA’s
and the invoices reflected less money than the VA records showed Universal was owed,
in an amount of $3550.  Id.  In an affidavit submitted by the agency, the contracting
officer attests that she, with the assistance of the COR, determined that the value of the
“services received” at the Portland VA was higher than the amount sought by Universal. 
Declaration of Contracting Officer (January 15, 2015) ¶ 26. On July 25, 2014, the
supervisory contracting specialist sent an email message to Universal identifying the
amounts that Universal should invoice.  Declaration of Supervisory Contract Specialist
(January 15, 2015) ¶ 16; Claim, Attachment 39.  These invoice amounts matched the
amounts that Universal claimed that it was owed.  Claim, Attachment 39. 

CBCA 4012, 4013, 5083 10
B. Universal’s appeal and bilateral modification
On July 30, 2014, Universal filed two notices of appeal with the Board,
challenging the terminations for cause of both task orders.  As relief, Universal sought
reversal of the terminations for cause, compensatory damages for the remaining years of
the task orders, compensatory damages for the contracts that may have been adversely
affected by the improper termination of the contract, attorney fees and costs, and the
payments for services rendered on the task orders.  Notices of Appeal.  
On August 13, 2014, the contracting officer sent the president of Universal an
email message advising that the agency wanted to convert the terminations to
terminations for convenience:
By my request, the VA has completed an audit of the payment history for
the subject contract for Portland and found multiple errors had been made
dating all the way back to 2012.  The VA intends to correct these errors,
and is able at this time to make full payment of the invoices pending for
January through April 2014.  Funding is [a]vailable and payment can be
processed this week.  We also wish to convert the Termination for Cause
into a Termination for Convenience of the Government, as you were found
not to be at Fault.  This has been a mis[-]communication within the VA and
we apologize for the hardship that this has caused you and your company. 
Exhibit 1 at 17.  To the email message, the contracting officer attached the draft
modification that identified the Universal invoices by month and amount that totaled
$58,580, but noted that Universal had already been paid $5020, an amount that was
deducted to arrive at the final payment amount.  Id. at 20.  
On the same day, the contracting officer signed a memo for the record, in which
she noted that the original termination for cause was based upon a misunderstanding:
The original termination was based off default due to the Sub-contractor,
MedNet refusing to work for Universal Home Health.  At the time the CO
believed that performance had stopped; however, that does not seem to be
accurate.  The dispute seems to have been based on who was being paid for
the performance of this [delivery] order.
. . . .

CBCA 4012, 4013, 5083 11
Universal Home Health has submitted a CBCA protest against the
Termination for Default and is requesting payment in the amount of
$58,580.  The service line and Fiscal have review[ed] these invoices and
determined them to be accurate.
Exhibit 1 at 21.  
On August 18, 2014, the parties executed a bilateral modification of the Portland 
task order to “settle final invoices due to vendor for services rendered and to convert the
previous Termination for Default into a Termination for Convenience.”  Exhibit 1 at 1-2. 
Pursuant to this modification, Universal was paid $53,560 for outstanding invoices on
that task order and Universal agreed that “[t]his modification shall serve as a final claim
for all services performed prior to the Termination on 4/30/2014 with the exception of
those claims specifically itemized on page 2 of the modification.”  Id.  On page 2,
Universal reserved its rights to pursue its claims in the appeals pending before the Board
for (1) “compensatory damages for the remaining option years” on the two task orders
and (2) “compensatory damages for contracts that may be or may have been adversely
impacted by the improper termination” of those task orders.  Id. at 2.
On August 26, 2014, the parties executed a bilateral modification of the Boise 
task order to convert the termination for cause into a termination for convenience.  CBCA
4013, Exhibit 1 at 1.  The modification stated that all invoices for the task order, totaling
$35,760, had been paid in full.  Id.  The modification also noted that “[t]his modification
shall serve as a final claim for all services performed prior to the Termination on
4/30/2014, with the exception of those claims specifically itemized.”  Id.  The claims
specifically itemized were the same as those noted on the modification for the Portland
task order, claims for compensatory damages arising from the termination of the
contracts.  Id. at 2.         
IV. Universal’s claim
On August 17, 2015, Universal submitted a claim to the contracting officer in the
amount of $479,331.85.  Claim, Attachment 1.5  Universal sought amounts for the option
5 The parties filed their original submissions for decision on the record in
January and February 2015.  After reviewing these submissions, the Board convened a
conference call  to discuss a jurisdictional hurdle the Board had identified–namely, the record
on appeal did not contain a claim by Universal to the contracting officer for the damages it
sought arising from the allegedly improper termination of its contracts.  On May 27, 2015,

CBCA 4012, 4013, 5083 12
years that were canceled on each contract, the amounts for “contracts adversely affected
by the termination of Universal’s contracts,” and lost profits.  Claim at 1.  Universal also
sought $3550, for services rendered on the contracts through April 2014.  Universal
claimed this amount as the difference between the amount it invoiced on the contract and
the amount determined by VA through its review of patient services.  Claim at 24.  The
contracting officer denied the claim in a decision issued on October 26, 2015.
 
Universal appealed this decision to the Board on November 25, 2015, and the
Board consolidated the new appeal with the existing appeals.  The parties filed
supplements to the appeal file and submitted supplemental briefing on the issues in the
appeals between December 2015 and February 2016.  As part of its supplement to the
record, Universal also provided estimates of its attorney costs, consulting costs, and staff
time required to prepare the claim and prosecute its appeal.  Appellant’s Supplemental
submission (Dec. 18, 2015).6  The appeals are now ready for decision.  
Discussion
I. Universal’s Appeals of the Original Termination for Default are Moot
Universal first appealed the contracting officer’s decisions terminating the task
orders for default (CBCA 4012 and 4013).  The contracting officer subsequently
converted these terminations to terminations for convenience.  As a result of the
contracting officer’s actions, the terminations for default are withdrawn and Universal’s
initial appeals are moot.  Care One EMS, LLC v. Department of Veterans Affairs, CBCA
3170, 15-1 BCA ¶ 36,160, at 176,467.  Because there is no further relief the Board may
provide, the Board dismisses Universal’s initial appeals.  H.H. Christian Co., AGBCA
82-120-1, 83-1 BCA ¶ 16,335, at 81,190.   
after Universal confirmed that it had not submitted a claim, the Board suspended proceedings
in the appeals to allow Universal to submit its claim.     
6 Claims for attorney fees and costs are processed pursuant to the Equal Access
to Justice Act (EAJA), after a decision is rendered by the Board.  Jane Mobley Associates,
Inc. v. General Services Administration, CBCA 2878, 16-1 BCA ¶ 36,209, at 176,679. 
However, under EAJA, Universal would have to be the prevailing party in the appeal before
any attorney fees or costs could be awarded.  Elrich Contracting, Inc., ASBCA 50867, 02-2
BCA ¶ 31,950, at 157,841-2 (dismissal following conversion of termination for default into
termination for convenience is not a decision on the merits as required for the award of fees). 
 

CBCA 4012, 4013, 5083 13
II. The VA Did Not Act in Bad Faith when it Terminated Universal’s Task Orders
Universal appeals the contracting officer’s decision on its claim arising from the
purported bad faith terminations of its task orders and seeks compensatory damages and
anticipatory profits (CBCA 5083).  
Generally, the contracting officer may terminate a contract for convenience
without cause whenever it is determined to be in the Government’s best interest.  FAR
52.212-4(l) (“The Government reserves the right to termination this contract, or any part
hereof, at its sole convenience.”); Corners & Edges, Inc. v. Department of Health &
Human Services, CBCA 693 et al., 08-2 BCA ¶ 33,961, at 168,022 (“[t]he termination
for convenience clause grants the contracting officer exceptional authority.”)  A
termination for convenience will only be a breach of contract if “the tribunal finds that
the termination was motivated by bad faith or constituted an abuse of discretion, or that
the Government entered into the contract with no intention of fulfilling its promises.” 
Greenlee Construction, Inc. v. General Services Administration, CBCA 415 et al., 07-2
BCA ¶ 33,619, at 166,510.  “In the absence of bad faith or clear abuse of discretion, the
contracting officer’s election to terminate for the government’s convenience is
conclusive.”  T&M Distributors, Inc. v. United States, 185 F.3d 1279, 1283 (Fed. Cir.
1999). 
Universal bears a heavy burden to show that the termination was undertaken in bad
faith.  Krygoski Construction Co. v. United States, 94 F.3d 1537, 1541 (Fed. Cir. 1996);
Greenlee Construction, 07-2 BCA at 166,510.  The Board’s analysis begins with the
“presumption that public officials act ‘conscientiously in the discharge of their duties.’” 
Kalvar Corp. v. United States, 543 F.2d 1298, 1301 (Ct. Cl. 1976) (quoting Librach v.
United States, 147 Ct. Cl. 605, 612 (1959)).  “To prove bad faith, appellant must provide
facts to show by clear and convincing evidence that [government] officials had something
akin to a ‘specific intent to injure’ appellant, engaged in a ‘proven conspiracy to get rid
of’ appellant, or were ‘motivated alone by malice’ against appellant.”  V.I.C. Enterprises,
Inc. v. Department of Veterans Affairs, CBCA 1598, 09-2 BCA ¶ 34,284, at 169,363-64
(quoting Am-Pro Protective Agency, Inc. v. United States, 281 F.3d 1234, 1240 (Fed. Cir.
2002)).  “The mere fact that a contracting officer awards a contract to another company
after terminating the plaintiff’s contract is insufficient to show bad faith.”  Kalvar, 543
F.2d at 1302.  Similarly, the contracting officer’s incorrect interpretation of the contract
requirements or mistaken determination regarding the contract specifications is not
sufficient to establish bad faith.  Id. at 1302-03.  
Absent this showing of bad faith or abuse of discretion, Universal’s remedies are
limited.  A contractor may not recover anticipatory profits or consequential damages

CBCA 4012, 4013, 5083 14
when a contract has been properly terminated for convenience.  Arbor III Realty Co.,
HUD BCA 96-C-114-C5, 98-1 BCA ¶ 29,344, at 145,901 (1997).  Instead, the contractor
may only recover the costs of performance up through the date of termination.  Carol S.
Best, HUD BCA 82-693-C17, 85-1 BCA ¶ 17,712, at 88,397 (1984).       
Universal alleges that the original termination for cause and the subsequent
conversion to a termination for convenience were “predetermined” by the agency, that
the contracting personnel did not act promptly to alert it to the problems on its contract,
and that the agency improperly included Universal’s subcontractor, MedNet, in the
solution to the problem.  Claim at 5-13. Rather than the termination being
“predetermined,” it appears that the agency took actions to resolve a possible disruption
in heart monitoring services that were vital for the patients at the two VA hospitals.  The
actions to terminate the contract began when the COR, the individual charged with
monitoring Universal’s performance, received word that MedNet, Universal’s supplier,
was no longer willing to provide the monitoring services and equipment.  Prior to
terminating Universal’s contract, the contracting specialist and contracting officer
provided Universal opportunities to resolve the situation and provide assurance of future
performance.  In response to the contracting specialist’s inquiry, Universal “disputed”
MedNet’s allegations and provided further evidence that there was a dispute between
itself and its subcontractor that reasonably could have been viewed as endangering future
performance.  In response to the cure notice, Universal told the contracting officials that
it was “relinquishing” its contracts for these services and that MedNet was the company
that had “ceased [providing] services.”  In response to the show cause notice, Universal
simply stated that there was no need to terminate the contract because the underlying FSS
contract had ended on February 14, 2014.    
Universal claims that VA issued a “false” cure notice because it knew that MedNet
had not stopped providing services.  Claim at 11.  But Universal, in its communications
with VA, did not choose to explain that services had not been interrupted or provide
assurances that services would continue.  Instead, Universal stated that MedNet was to
blame for the interruption in service. 
Universal asserts that VA demonstrated bad faith by obtaining services through
a six-month bridge contract with CardioNet, Universal’s competitor, and apparently,
MedNet’s parent company.7  Claim at 9-11.  Universal also alleges, without providing
7 Universal provided to the Board a copy of a press release announcing the
buyout of MedNet by CardioNet following resolution of a patent suit.  Appellant’s 
Submission, Attachment 7.

CBCA 4012, 4013, 5083 15
any evidence, that VA paid CardioNet significantly more for services than were priced
on Universal’s task order.  Id. at 23.8  The record shows, however, that CardioNet was
one of the bidders on the Boise task order and, as Universal acknowledges, CardioNet
had provided heart monitoring services to VA previously.  These facts provide a reasoned
basis for the contracting officer’s decision to obtain services from CardioNet, despite its
corporate relationship to MedNet, and do not support Universal’s allegations of bad faith. 
   
Finally, Universal contends that, rather than convert the terminations to
terminations for convenience, VA should have reinstated the task orders.  Claim at 18. 
This contention does not provide a basis for finding bad faith for two reasons.  The task
orders, by their terms, permitted the contracting officer to terminate the task orders for
the Government’s sole convenience.  The contracting officer was within her authority to
convert the terminations to terminations for convenience once she determined that
Universal was not at fault in performance problems that led to the initial terminations. 
Additionally, the underlying FSS contract permitted the exercise of task orders, as long
as the term of the FSS contract continued, but the underlying FSS contract ended in
February 2014.  The contracting officer could not reinstate the task orders because the
authority to issue task orders expired with the underlying contract. 
We find no evidence of bad faith or an abuse of discretion on the part of agency
officials in the dealings with Universal.  As noted above, a finding of bad faith would
require a showing that actions were undertaken by the agency with a specific animus
toward Universal.  In contrast, this record reflects that the agency was seeking to fulfill
the urgent needs of VA patients and provided Universal an opportunity to respond. 
Universal’s allegations that the agency was somehow seeking to work directly with
MedNet are not borne out by the record.  Absent a finding of bad faith, Universal may
not recover the damages that it seeks arising from the termination of the task orders.  
 
III. Universal May Not Recover the Additional $3550 that It Seeks
As noted above, with the conversion of the termination for default into a
termination for convenience, the agency agreed to pay Universal $53,560 for services
rendered prior to the termination date.  Universal, in its claim to the contracting officer,
sought an additional amount of $3550 for the services rendered between January and
April 2014.  Its claim for this additional amount is based upon the email message from
8 Universal cites attachment 38 to its claim as support for this allegation.  The
Board does not find support for this allegation in attachment 38 or any other attachments to
Universal’s claim.  

CBCA 4012, 4013, 5083 16
the COR in which she states that her review of VA patient records showed that Universal
was owed $62,130 for services during this period, rather than the $58,050 that it was
seeking.  The contracting officer did not address this claim in her decision and the agency
asserts in a footnote in its supplemental briefing that Universal has waived its claim to
these additional amounts because these amounts were not included in the reservation of
rights set forth in the modifications that converted the terminations. 
Universal’s agreement to the modification that set forth the amount it was claiming
constitutes accord and satisfaction of its claim for these additional amounts.  “[W]hen a
bilateral contract modification does not contain any reservation of claims, the
modification constitutes an accord and satisfaction as to the subject matter of the
modification and the contractor cannot later narrow the scope of the modification.” 
Trataros Construction, Inc. v. General Services Administration, GSBCA 15344, 03-1
BCA ¶ 32,251, at 159,459. 
The modification that Universal signed concerned the payment for services
rendered prior to the terminations.  The modification contained a reservation of rights for
Universal’s claims arising from the alleged bad faith terminations of the task orders, but
not for additional sums owed for performance prior to the termination dates.  In
satisfaction of its claim for services rendered and prompt payment of these amounts,
Universal accepted the agency’s offer of payment.  Universal chose not to decline the 
modification and develop additional evidence regarding what it was owed.  Instead,
Universal made a decision to rely upon the information provided by the agency and
accept payment for that amount.  Universal is bound by the agreement that it executed. 
Decision
Universal’s appeals of the contracting officer’s terminations for cause are
DISMISSED AS MOOT.  Universal’s appeal of the termination for convenience is
DENIED.  
___________________________
MARIAN E. SULLIVAN
Board Judge

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We concur:
______________________________ _____________________________
ALLAN H. GOODMAN RICHARD C. WALTERS
Board Judge Board Judge