NOTE: This disposition is nonprecedential.

 

United States Court of Appeals 

for the Federal Circuit ______________________ 

MPG WEST, LLC,

Appellant

v.

SECRETARY OF DEFENSE,

Appellee

______________________ 

2023-1430

______________________ 

Appeal from the Armed Services Board of Contract Appeals in Nos. 61100, 61560, 61570, Administrative Judge 

J. Reid Prouty, Administrative Judge Kenneth David 

Woodrow, Administrative Judge Richard Shackleford.

______________________ 

Decided: May 17, 2024

______________________ 

YUKI HARAGUCHI, Holmes Pittman & Haraguchi, LLP, 

Chester, MD, argued for appellant.

 KELLY GEDDES, Commercial Litigation Branch, Civil 

Division, United States Department of Justice, Washington, DC, argued for appellee. Also represented by BRIAN 

M. BOYNTON, WILLIAM JAMES GRIMALDI, PATRICIA M.

MCCARTHY, EVAN WISSER. 

______________________ 

Case: 23-1430 Document: 34 Page: 1 Filed: 05/17/2024
2 MPG WEST, LLC v. SECRETARY OF DEFENSE

Before DYK, CLEVENGER, and STOLL, Circuit Judges.

PER CURIAM. 

MPG West, LLC (“MPG”) appeals the decision of the 

Armed Services Board of Contract Appeals (“Board”) regarding its contract claims against the Defense Commissary Agency (“DeCA”). The Board erred in failing to 

determine whether the contract at issue required MPG to 

import bagged salads from the United States. For this reason, this court vacates the Board’s decision and remands 

the case to the Board for further proceedings. In other respects, we affirm.

I 

DeCA is an agency of the U.S. Department of Defense 

that operates grocery stores for the military. This appeal 

concerns the requirements contract HDEC09-15-D-0002 

(the “Contract”) which provided for the supply of fresh 

fruits and vegetables (“FF&V”) including bagged salads1 to 

commissaries in Japan and South Korea. Prior to the Contract, the government subsidized the cost of transporting 

FF&V to the Pacific region. Thereby, the transportation 

cost was not included in the FF&V prices paid by commissary customers. 

On February 3, 2014, DeCA released Solicitation No. 

HDEC09-14-R-0002 for providing FF&V to Japan, South 

Korea, and Guam. The solicitation required free on board 

(“FOB”) destination delivery, which makes the seller responsible for the cost of shipping the supplies. DeCA was 

aware that the prices for FF&V would increase because 

DeCA would no longer be subsidizing the cost of transporting FF&V to the Pacific region. 

1 After full review of the parties’ arguments, this 

court finds no error in the Board’s decision with respect to 

all other aspects of the Contract other than with respect to 

bagged salads, as discussed below.

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MPG WEST, LLC v. SECRETARY OF DEFENSE 3

The solicitation was amended six times which included 

published questions and answers. During this process, 

DeCA communicated to offerors that the winning contractor would need to “locally source as much FF&V as possible 

from the local market, which would include locally available imported items.” J.A. 4 ¶ 10 (quoting J.A. 647). 

The solicitation also required the contractor to supply 

bagged salads from a list of approved sources2 and requested offerors to identify the brand name of their salad 

supplier. Several contractors asked questions suggesting 

that the bagged salads could not be obtained locally. For 

example, in Amendment No. 1, a potential vendor stated 

that “[t]here is no local availability or even regional availability for bagged salad items like this from an approved 

source. This will require the product be airlifted.” J.A. 649; 

see also J.A. 656. DeCA responded that “[i]t is a potential 

offeror’s responsibility to source all products to include 

bagged salads locally or as close to locally as practical.” 

J.A. 648.

MPG, who was a subcontractor under the prior contract, submitted a bid on the solicitation and selected Fresh 

Express from the Worldwide Directory as its preferred 

partner to provide bagged salads. On May 22, 2015, the 

government awarded the Contract to MPG to become the 

“primary source of supply” for FF&V in Japan and South 

Korea. J.A. 127. The Contract incorporated the HDEC09-

14-R-0002 solicitation and an Attachment 11 which established Fresh Express as the sole source of bagged salads for 

the Contract. 

With respect to pricing, the Contract said that “[p]rices 

shall be firm fixed and inclusive of all costs, overhead and 

profit.” J.A. 130. However, the Contract also required 

2 Specifically, the bidder needed to select a company 

listed on the Worldwide Directory of Sanitarily Approved 

Sources for Armed Forces Procurement (“Worldwide Directory”). 

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4 MPG WEST, LLC v. SECRETARY OF DEFENSE

MPG to update its prices on a weekly basis. The Contract 

also included a provision that the “Government will monitor all other prices provided on the weekly price lists for 

being fair and reasonable considering the market conditions at the time.” J.A. 130.

Performance on the Contract began on November 1, 

2015. MPG never implemented a local sourcing plan and 

sourced most of its produce from the United States and 

Mexico. MPG shipped the Fresh Express bagged salads via 

airfreight. 

During performance, produce items were priced extremely high and there was concern about the high prices. 

At the weekly price reviews, if DeCA determined that a 

price for a certain item was “unreasonable,” it would direct

MPG either to reduce the price or remove the item from the 

weekly catalog. DeCA monitored social media sites for 

complaints and considered those complaints when directing MPG to reduce prices or remove items. DeCA did not 

independently analyze MPG’s profit or overhead when performing the weekly price analysis meetings.

MPG told DeCA that it was having trouble with the 

bagged salad requirement and requested assistance because it was losing so much money on these products. 

On March 22, 2016, MPG submitted a certified claim 

under the Contracts Disputes Act (“CDA”). MPG made a 

number of claims including that DeCA “forced MPG West 

to sell its produce at prices below MPG West’s costs of importation, and prevented MPG West from selling produce 

it imported.” J.A. 2. In July 2016, two subcontractors effectively took over all the cost and performance of the contract. 

On January 3, 2017, the government issued a contracting officer’s final decision (“COFD”) denying MPG’s claims. 

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MPG WEST, LLC v. SECRETARY OF DEFENSE 5

On March 21, 2017, MPG appealed the COFD to the 

Board.3

The Board rejected all of MPG’s theories for recovery 

because MPG’s “financial losses resulted predominantly 

from factors within its control” while noting that MPG 

“failed to timely implement a local sourcing plan” and 

“sourced most of its produce from overseas.” J.A. 29. 

MPG timely appealed the Board decision, and this 

court has jurisdiction under 28 U.S.C. § 1295(a)(10). 

II

First, MPG argues that the Board erred by “finding 

that FF&V importation was not subject to the SOFA inspection process.”4 Br. for Appellant at 57 (emphasis removed). Specifically, MPG argues that it was “obligated to 

import items under the SOFA process,” and that this enables it to recover excess costs incurred. Id. at 58. We see 

no error in the Board’s analysis. At the outset, we note that 

MPG appears to misread the Board’s conclusion that “[t]he 

[C]ontract did not require MPG West to import produce under the SOFA. The [C]ontract gave the contractor the discretion whether to import produce items pursuant to 

SOFA.” J.A. 13 ¶ 81 (citations omitted). The Board thus 

found that the Contract, with its emphasis on local 

3 MPG later filed two new claims: one for bagged 

salad costs on a theory of constructive change, and one for 

the same costs based on the government’s termination of 

the requirement. The Board consolidated these two claims 

with the appeal of the first COFD. 4 The “SOFA inspection process” refers to importation requirements under the Status of Forces Agreements 

between both the United States and Japan as well as the 

United States and Korea. These SOFAs “set[] certain 

terms and procedures for produce brought into Japan or 

Korea for consumption by U.S. Military personnel.” J.A. 13 

¶ 79.

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6 MPG WEST, LLC v. SECRETARY OF DEFENSE

sourcing, gave MPG discretion whether to import items at 

all, and that MPG made a “business decision” to import 

goods through the SOFA process. J.A. 47. Even if the Contract required utilization of the SOFA process, the Contract 

expressly placed the burden of complying with importation 

requirements on the contractor. We see no error in the 

Board’s analysis.

Second, MPG argues that DeCA failed to anticipate the 

effect on prices that would result from the new contract 

model, including by failing to conduct adequate market research, and that the Contract was therefore flawed from 

the start. MPG identifies no contract representations by 

the government of the feasibility of performing according 

to the new contract model, and no authority for the proposition that the government has an affirmative duty to study 

the prices or costs that a contractor will incur to perform a 

contract before offering a solicitation. We are aware of 

none, and this argument is without merit. 

Third, MPG argues that DeCA did not act in good faith 

during the weekly price review meetings. The Board concluded that DeCA behaved reasonably and “developed and 

applied reasonable and consistent criteria to evaluate 

weekly prices based on the past history of prices for particular items.” J.A. 29. Moreover, the Board found that MPG 

“failed to timely implement a local sourcing plan,” which 

resulted in most of MPG’s financial losses. Id. We see no 

error in that fact finding with respect to almost all of the 

FF&V products. Indeed, the solicitation made clear that 

prospective contractors would need to “locally source as 

much FF&V as possible from the local market,” which MPG 

failed to do, and MPG makes no showing here that locally 

sourcing would not have been feasible for any products except possibly for the bagged salads. J.A. 37 (quoting 

J.A. 647).

However, we think that remand is required as to the 

bagged salad requirement. MPG’s theory is that when it 

supplied bagged salads from Fresh Express at a price that 

was inclusive of all costs of transportation, customs 

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MPG WEST, LLC v. SECRETARY OF DEFENSE 7

clearance, and overhead, the price paid by patrons was 

greater than what DeCA would accept, and that DeCA 

breached the Contract by refusing to purchase bagged salads at the offered price. Br. for Appellant at 47; see also

Oral Arg. at 4:28–4:37 (“[T]he assumption, picking Fresh 

Express, was that the contractor would be able to recoup 

its costs, because this is a fixed-price contract.”).

A question arose during oral argument as to whether 

bagged salads needed to be imported because of the requirement to use Fresh Express in the Contract as the sole 

source for DeCA’s bagged salad requirements. Oral Arg. at 

12:07–15:43, 20:05–20:48, 26:04-27:13. Specifically, MPG 

argued that “there were certain items such as the bagged 

salad that it was not possible to source Fresh Express salad 

locally because it isn’t there.” Oral Arg. at 12:19–12:28.

The parties were unable to point to any fact finding by 

the Board on this specific question (Oral Arg at 27:53–

28:44, 38:53–39:05).

Consequently, we vacate the Board’s decision and remand the case for further proceedings. On remand, the 

Board is instructed to find, as a matter of fact, whether the 

Contract required MPG to import DeCA’s bagged salad requirements, and if so, to determine the effect, if any, of that 

requirement on MPG’s claims for relief with regard to the 

Contract’s bagged salad requirements.

AFFIRMED IN PART, VACATED AND REMANDED 

IN PART

COSTS

No costs.

Case: 23-1430 Document: 34 Page: 7 Filed: 05/17/2024