ARMED SERVICES BOARD OF CONTRACT APPEALS

Appeals of

-- ) ) Mission1st Group, Inc. ) ASBCA Nos. 62461, 62646 )

Under Contract No. W52P1J

- 13

- F

- 0031 )

APPEARANCES FOR THE APPELLANT: Joshuah R. Turner, Esq. Elizabeth J. Cappiello, Esq. Jason N. Workmaster, Esq.

Miller & Chevalier Chartered Washington, DC

APPEARANCES FOR THE GOVERNMENT: Scott N. Flesch, Esq. Army Chief Trial Attorney Zachary F. Jacobson, Esq.

Trial Attorney

OPINION BY ADMINISTRATIVE JUDGE D ’ A LESSANDRIS

In September 2013, the Army Contracting Command

– Rock Island Arsenal (Army or government) awarded appellant, Mission1st Group, Inc. (M1), a task order against M1’s General Services Administration (GSA) Information Technology (IT)

Schedule 70 Contract. Th e task order provided for a base period and, pursuant to Federal Acquisition Regulation (FAR) 52.217

- 9

, OPTION TO EXTEND THE TERM

OF THE CONTRACT (MAR 2000) , two option periods. In addition, pursuant to FAR

52.217

- 8

, OPTION TO EXTEND SERVICES (NOV 1999) , the task order contained an option to extend the contract for a period of up to six months. M1 encountered problems retaining staff at the labor rates it proposed in the task order, and discussed with the Army terminating the contract. After the Army i ndicated that it planned to exercise the first option period, M1 indicated that it would challenge the exercise of the option unless the government agreed to reprice certain contract line items. M1 also opposed the Army ’s suggestion that the parties agree to a reduced duration three

- month option period. The Army then exercised its right to extend services for a three

- month period , pursuant to FAR 52.217

- 8 . The task order was subsequently bilaterally

modified twice to extend the period of performance.

M1 contends that the Army improperly exercised the option to extend services

out

- of

- sequence, entitling it to a contractual price adjustment. According to M1, the option to extend services is really an option period 3 that can only be exercised following option periods 1

- 2. Additionally, M1 argues that the Army’s exercise of the option four days before expiration of the base period of performance was not “within2 90 days before the expiration of the contract.” We hold that the language of the task order p ermitted the Army to exercise the option to extend services after the base period, and that the option was timely exercised. Additionally, we note that

, even if the Army’s exercise of the option was defective, M1 waived its right to a contractual adjustme nt through a subsequent bilateral modification.

FINDINGS OF FACT

The Army Contracting Command

– Rock Island Arsenal awarded Task Order

No. W52P1J

- 13

- F

- 0031 to Mission1st Group, Inc. on September 24, 2013

, for Network and Communications, Engineering and Installation Support pursuant to M1’s

GSA IT Schedule 70 Contract No. GS35F0199Y , Special Item No. 132 51, IT Professional Services contract (R4, tab 1 at 1, 4). 1 Under the task order

, M1 provided

theater communications and networking infrastructure a nd subject matter experts to perform project management and information assurance in support of the Army primarily in Afghanistan and Kuwait (R4, tab 1 at 4).

The Army awarded the t ask o rder as a firm

- fixed price contract, with some

contract line items (CLINs) such as overtime and travel paid at cost ( id. ). The task order provided:

This is a Firm

- F ixed Price (FFP) task order with a base period and three evaluated option periods.

Base Period: 24 September 2013 to 23 June 2014

Option Period One: 24 June 2014 to 23 March 2015

Option Period Two: 24 March 2015 to 23 December 2015

Option to Extend Services: Six Month Maximu m to be completed no later than 23 June 2016

( I

d. )

. The performance work statement “Period of Performance” provides that there is a

nine

- month base period and “two (2) nine (9) month options” (R4, tab 2 at 51 ). The prices proposed by M1 and accepted by the Army included $5,355,900.79 for the

nine

- month b ase p eriod ( R4, tab 1 at 4 ). The Army also accepted M1’s proposed prices

for two nine

- month o ption p eriods

, priced at $5,382,254.68 and $5,417,880.85,

1 We have dropped all leading zeros from the B ates numbers used by the government. For documents that were not Bates numbered, we used the document’s internal

pag e numbers. Appellant’s opposition and reply brief was not paginated so we used the PDF page numbers.3 respectively ( id. ). In addition to the option years, M1 proposed a price not to exceed $3,743,169.77 for up to a total of six months of extended services, to be completed no later than June 23, 2016 ( id. ).

Noting that M1’s p rice q uote offered a significant discount from the approved GSA Schedule rates, the c ontracting o fficer noted that M1 had expressly indicated in its quote that the discount was intentional, and determined that M1 ’s quote was still responsible ( gov’t s upp. R4, tab 7 at 1

- 3 ). T he t ask o rder’s c lause a ddendum included the following standard clauses from the FAR:

52.217

- 8

, OPTION TO EXTEND SERVICES (NOV 1999)

The Government may require continued performance of any services within the limits and at the rates specified in

the contract. These rates may be adjusted only as a result of revisions to prevailing labor rates provided by the Secretary of Labor. The opt ion provision may be exercised more than once, but the total extension of performance hereunder shall not exceed 6 months. The Contracting Officer may exercise the option by written notice to the Contractor within 90 days before the expiration of the cont ract. [ 2 ]

(End of Clause)

52.217

- 9

, OPTION TO EXTEND THE TERM OF THE CONTRACT (MAR 2000)

(a) The Government may extend the term of this contract by written notice to the Contractor within the term of the

contract prior to contract expiration; provided t hat the Government gives the Contractor a preliminary written

notice of its intent to extend at least 90 days before the contract expires. The preliminary notice does not commit

the Government to an extension.

2 Relevant to the jurisdiction of the Board, but not relevant to our interpretation of the contract, the last sentence of this clause in the FAR provides : “ The Contracting Officer may exercise the option by written notice to the Contractor within _____ [insert the period of time within which the Contracting Officer may exercise the option]

. ” FAR 52.217

- 8. M1’s GSA schedule provides: “ The Contracting

Offi cer may exercise the option by written notice to the Contractor within 30 days ” ( gov’t s upp. R4, tab 10b at 46 ).4 (b) If the Government exercises this option, the extended contract shall be considered to include this option clause.

(c) The total duration of this contract, including the

exercise of any options under this clause, shall not exceed

33 months. [ 3 ]

(End of Clause)

(R4, tab 3 at 123 )

On March 25, 2014, 4 91 days prior to the end of the b ase p eriod of

p erformance, the Army provided M1 with its notice of intent to exercise the first

o ption p eriod in accordance with the terms and conditions of the contract and FAR

52.217

- 9, OPTION TO EXTEND THE TERM OF THE CONTRACT ( gov’t s upp. R4, tab 3 ). On April 25, 2014 and April 28, 2014, M1 alerted the government that it

would have difficulty con tinuin g performance on some of its contract line items unless the government obligat ed a n additional 25 percent of the estimated not

- to

- exceed price (R4, tab 15 at 489

- 90 ).

The government offered M1 a draft partial o ption p eriod for the t ask o rder on

June 10, 2014, which, if executed, would have only required M1 to perform for

three

- months

, rather than the full nine

- months contained in the contractual option period ( gov’t s upp. R4, tab 4 at 1 ). Having received no comments from M1, the government
followed

- up with M1 on June 17, 2020 (R4, tab 19 at 760 ). In response, M1 assert ed that

3 Similarly, subsection (c) of the FAR does not specify a total contract duration:

“ (c) The total duration of this contract, including the exe rcise of any options under this clause, shall not exceed ___________ (months) (years)

. ” FAR

52.217

- 9(c). M1’s GSA schedule provides “ (c) The total duration of this contract, including the exercise of any options under this clause, shall not exceed . (mon ths) (years) ” ( gov’t s upp. R4, tab 10b at 4 6).

4 The government proposed several facts regarding a purported March 21, 2014, meeting

at which the p resident of M1, met with the contracting officer to discuss M1’s difficulties staffing the contract at the pr oposed rates , M1’s efforts to retain personnel by paying higher wages , and the possibility of terminating the contract (gov’t br. at 4 ). However, the government cites to a document it identifies as

“SR 4, tab G

- 1” which was not contained in any of the government’s Rule 4

submissions . By order dated April 6, 2021, the Board notified the government that it appeared some of its cites to its Rule 4 submissions were incorrect and

request ed that the government file a corrected brief. The government’s correc ted

brief continues to cite to the non

- existent tab G

- 1 (gov’t cor r . br. at 4 ). The Board was unable to locate support for the proposed facts in the record.5 a partial o ption p eriod would require a bilateral modification, that it was suffer ing losses

, and that it would incur additional losses if the contract were extended (R4, tab 19 at 763 ).

M1 indicated that it would only agree to the partial o ption p eriod if t he government agree d to reprice the contract for “any period beyond the initial three

- month extension” ( id. ). M1 stated that an upward price adjustment would “ free the government of any liability for additional cost and profit incurred by Mission1st over the entire period of performance beginning with contract inception” (R4, tab 19 at 763

- 64 ).

M1 described the additional “consequences” for the government of implementing a modification without repricing or agreed termination at the end of the three

- months,

such as a reduction in the level of service and performance due to salary cuts of its

perso nnel ( id

. at 764 ). On June 19, 2014, t wo days after receiving appellant’s letter, the government notified M1 that it was exercising its Option to Extend Services for the

t ask order (R 4, tab 20).

On June 23, 2014, the government executed Modification No. P00009 in writing

to exercise a three

- month option period pursuant to contract clause FAR 52.217

- 8, OPTION TO EXTEND SERVICES (NOV 1999) (R4, tab 22 at 768, 770 ). The modification priced the option at $2,149,591 (R4, tab 22 at 768 ). On July 3, 2014, M1 responded to the government’s notice of execution with a letter asserting that the notice to exercise the Option to Extend Services provided by the government was un timely,

and therefore ineffective and entitl ed M1 to an equitable price adjustment (R4, tab 24

at 790

- 91 ). M1 also stated that it was able to perform during the extended period, but that it would seek compensation ( id. at 791 ).

Effective July 16, 2014, t he government and M1 bilaterally signed Modification

No. P00010, which stated that all other terms and conditions remained unchanged (R4,

tab 25 at 1 ). Effective August 22, 2014, the government and M1 bilaterally signed

Modification No. P00011, under whic h the government exercised its Option to Extend Services for the remaining three

- months, that stated:

9. The total contract value and the total funded value for the Option to Extend Services period are hereby changed from $2,149,591.00 to $4,087,141.03, a total increase of $1,937,550.03.

10. The total contract value and the total funded value for this task order are hereby changed from $7,915,976.49 to $9,853,526.52, a total increase of $1,937,550.03.

11. All other terms and conditions remain unchange d.

(R4, tab 27 at 846, 848

- 4 9 )6 On September 12, 2014, the government and M1 , without exception, bilaterally signed Modification No. P00012, which added a logistician position and provided :

7. The total contract value and the total funded value for

the Option to Extend Services period are hereby changed

from $4,087,141.03 to $4,133,723.10, a total increase of $46,582.07.

8. The total contract value and the total funded value for

this task order are hereby changed from $9,853,526.52 to $9,900,108.59, a total increase of $46,582.07.

9. All other terms and conditions remain unchanged.

(R4, tab 30 at 96 1, 1011 )

On June 24, 2019, M1 filed a certified claim in the amount of $3,694,336.73, asserting that the government improperly exercised its o ption to e x tend s ervices, and as a result, it is entitled to excess incurred costs and a reasonable profit (R4, tab 31

at 1 018 ). On March 5, 2020, the contracting officer denied M1’ s claim (R4, tab 32 ). On June 3, 2020, M1 filed a certified claim with the GSA reque sting a f inal d ecision on the same matter currently before the Board ( gov’t s upp. R4, tab 8). On June 3, 2020, M1 also filed a second certified claim with the c ontracting o fficer, stat ing that it had already appealed the March 5, 2020 final decision to the Board, and that it believed that the Board possessed jurisdiction to entertain both counts of its complaint, but was submitting a new claim out of an abundance of caution ( gov’t s upp. R4 , tab 9)

. M1 appealed to the Board from the purported deemed denial of its June 3, 2020 claim. 5

DECISION

By request of the parties, this appeal is being decided pursuant to Board Rule 11, “Submission Without a Hearing.” Unlike a motion for summary judgment, which must be adjudicated on the basis of a set of undisputed facts, pursuant to Board Rule 11, the

Bo ard “may make findings of fact on disputed facts.” Grumman Aerospace Corp.

, ASBCA No. 35 1 85, 92

- 3 BCA ¶ 25,059 at 124,886 n.13 (Kienlen, J. dissenting)

.

M1 asserts that the government improperly exercised the option to extend performance out of order, th us entitling it to a contractual adjustment (app. br. at 8). Alternatively, M1 asserts that the government did not provide it with the contractually required notice, thus, entitling it to a contractual adjustment (app. br. at 9).

5 The record does not contain a final decision issued by a GSA contracting officer.7 I. The Contract Allowed T he Army To Exercise The Option For Extension

of Services At The End Of The Base Period Of Performance

The task order clause describing the relevant options provides:

This is a Firm

- F ixed Price (FFP) task order with a base period and three evaluated option periods.

Base Period: 24 September 2013 to 23 June 2014

Option Period One: 24 June 2014 to 23 March 2015

Option Period Two: 24 March 2015 to 23 December 2015

Option to Extend Services: Six Month Maximu m to be completed no later than 23 June 2016

(R4, tab 1 at 4). Based upon the location of the option to extend services, below option periods one and two, and the reference to three option periods, M1 contends that the option to extend services should be interpreted as being, in reality, option period three. M1 additionally cites to the end of the performance period for option period three of June 23, 2016, as evidence that the option to extend services was to be exercised following option period two, whi ch had a performance period ending on December 23, 2015. (app. br. at 8).

In Glasgow Investigative Solutions

, Inc. , ASBCA No. 58111, 13

- 1 BCA ¶ 35,286 at 173,175

- 76 , we held that the option to extend services pursuant to

FAR 52.217

- 8 was not limited to use after exercise of the option periods. See also Griffin Services

, Inc. , ASBCA Nos. 52280, 52281, 02

- 2 BCA ¶ 31,943 at 157,803

- 04

. Our prior holding in Glasgow is binding on this panel and compels us to deny M1’s appeal. SW R

, Inc. , ASBCA No. 56708, 1 5

- 1 BCA ¶ 3 5 ,8 32 at 175,220

. However, even if we were not bound by Glasgow , we interpret the terms of the task order as permitting the government to exercise the option to extend services independent of exercising the option s to extend the term of the contract

.

M1 relies upon the holding of the United States Court of Appeals for the Federal

Circuit in Lockheed Martin Corp. v. Walker , 149 F.3d 1377 (Fed. Cir. 1998). In

Lockheed , the contract provided for a series of options that were to be exercised according to a schedule providing set periods of time for each option. The government exercised the option at CLIN 0006 to be exercised within 8

- 18 months after award, without first exercising the option at CLIN 0005, whi ch was t o be exercised within

8 months of award. Id. at 137 8

- 7 9. The Federal Circuit held that the government had improperly exercised the options out of sequence based upon its reading of the contract8 and the fact that the option periods contained declining uni t prices, indicating the use of a learning curve. Id. at 1380. However, the task order at issue here differs from the

schedule in Lockheed because the task order contain s only an end date, and not a beginning date for exercise of the option to extend services under FAR 52.217

- 8 , while the options to extend the term of the contract under FAR 52.217

- 9 contain both start and end dates (R4, tab 1 at 3). I n Lockheed the option periods had beginning and end

dates for the exercise of each option. Lockheed

, 149 F.3d at 1378

. Additionally, to the extent that the reference to “three evaluated option periods” (R4, tab 1 at 4) could be ambiguous, it must be read in conjunction with the performance work state ment which clearly provides in the “Period of Performance” that there is a 9 month base period and two 9 month option periods (R4, tab 2 at 5 2).

II. The Army Properly Exercised The Option For Extension Of Services Within 90 Days Of The End Of The Contract

M1 contends that, even if the Army were permitted to exercise the option to extend services without first exercising the contract options, the Army did not provide notice in accordance with the contract (app. br. at 9). As noted above, the contract provides that “[t]he Contracting Officer may exercise the option by written notice to the Contractor within 90 days before the expiration of the contract ” 6 (R4, tab 3 at 123 ) (emphasis added). The base period of the contract expired on June 23, 2014 (R4, tab 1 at 4). The government notified M1 that it was exercising its Option to Extend Serv ices for the task order on

June 19, 2014

– four days before expiration of the contract (R4, tab 20). On June 23, 2014

– the last day of the base period of the contract

-- the government executed Modification

No. P00009 to exercise three

- months of the Option to Extend Services (R4, tab 22). M1 contends that the Army’s exercise of the option was untimely because “within 90 days before the expiration of the contract” means that t he Army was required to exercise the option “ prior to or on the 90th day before the contract expired ” (app. br. a t 9). M1 additionally contends that “within” should be read as “at least” (app. re sp. at 6).

We interpret the contract based on the plain meaning of the words in their ordinary use. See

, e.g ., Access Personnel Ser

., Inc. , ASBCA No. 59900, 17

- 1 BCA ¶ 36,845 at 179,534

. Here, the word “within” means “ inside the range of (an area or boundary) . . . occurring inside (a particular period of time) ”. N EW O XFORD
A MERICAN D ICTIONARY 1985 (3d ed. 2010). Clearly, the government exercised the option “ inside ” the 90 day period of time before the end of the contract. Accordingly, we hold that the governmen t properly exercised the option to extend services.

6 As noted a bove, the language “within 90 days before the expiration of the contract” was inserted in the standard FAR clause by the Army contracting officer. Thus, this dispute does not involve interpretation of the terms of the GSA schedule contract, and does not n eed to be resolved by a GSA contracting officer. See Sharp Elec. Corp. v. McHugh , 707 F.3d 1367, 1373

- 74 (Fed. Cir. 2013)

.9 M1 asserts that the Board’s holdings in APAC

- Southeast

, Inc. N/K/A Old c astle S. Grp. , ASBCA No. 58057, 12

- 2 BCA ¶ 35

, 155 and Petchem

, Inc. , ASBCA No. 53792,

05

- 1 BCA ¶ 32

, 870 support its interpretation of “within 90 days” as requiring the government to exercise the option at least 90 days before the end of the contract (app. br. at 9). However, at best, these Board decision s involved the early exercise of options that were not challenged before the Board. Neither appeal involved a determination of whether the government timely exercised the option. APAC

- Southeast involved the

exercise of an opti on, pursuant to FAR 52.217

- 8 that exceeded the stated contract

duration. APAC

- Southeast

, 12

- 2 BCA ¶ 35,155 at 172,532

. In Petchem the
government exercise d an option to extend services, pursuant to FAR 52.217

- 8, because

it could not meet the notice requirement for exercise of options pursuant to

FAR 52.217

- 9 , but then sought to exercise the option to extend servic es beyond the period of time permitted in the contract

. Petchem , 05

- 1 BCA ¶ 32,870 at 162,900

- 01

. Neither opinion addresses the timeliness of the exercise of the options.

III. Even If The Army Had Not Properly Exercised The Extension Of Services, M1 Waived Any Potential Claim Through The Subsequent

Bilateral 7 Modifications

As an alternative basis, the government argues that, even if its exercise of the option to extend services was deficient, that M1 waived its claim by agreeing to

bilateral M odification N os. P00010, P00011, and P00012 8 (gov’t br. at 16

- 17). The government argues that by agreeing to continue performance, with all terms and conditions remaining unchanged, M1 waived its rights to object ( id. ). The government analogizes M1’s actions to that of a contractor agreeing to a new delivery schedule and waiving the right to raise pre

- existing causes of delay ( id. at 17 ). M1 contends that it did not waive any rights and that it waived, at most, its right to stop performing the contract (app. resp. at 7).

The government argues that M1 waived it s claim by agreeing to the bilateral modifications. However, waiver occurs when the parties to a contract accept modified performance without changing the terms of the written contract. Here, the parties

7 FAR 2.101 defines the term “option” as a “unilateral right in a contract by which . . . the Government may elect to purchase addit ional supplies or services . . . or may

elect to extend the term of the contract.” The exercise of an option must be unconditional and set forth terms that are in accord with the option as stated in

the contract

. A ny changes to the option s, as awarded, would necessitate a bilateral agreement. ( See Alutiiq Commercial Enterprises, LLC , ASBCA No. 61503, 20

- 1 BCA ¶ 37,506 at 182,198, citations omitted).

8 The government additionally alleges waiver through continued performance because M1 did not object to the exercise of the option until 10 days after it began performance (gov’t br. at 17). We need not reach this issue.10 m odified performance through formal written modifications. Because there was an existing dispute regarding the exercise of the option period at the time of the bilateral modifications, the change could be evaluated as an accord and satisfaction. An accord and satisfaction occurs “when some performance different from that which was claimed as due is rendered and such substituted performance is accepted by the

claimant as full satisfaction of his claim

. ” Bell BCI Co. v. United States , 570 F.3d 1337, 1340

- 41 (Fed. Cir. 2009) (quoting Cmty. Heating & Plumbing Co. v. Kelso

, 987 F.2d 1575, 1581 (Fed. Cir. 1993)). However, here the parties twice bilaterally modified the terms of the contract to redefine the very performance that M1 challenges

in its claim. The plain language of the contract, as modified, preclude s M1 ’ s claim. See, e.g., Supply & Service Team GmbH , ASBCA No. 59630, 17

- 1 BCA ¶ 36,678

at 178,60 1

.

M1 signed a bilateral modification ( Modification No. 11 )

, that extended the option period and modified the value of the option period, while provid ing that all

other terms and conditions remained the same

. “ The total contract value and the total funded value for the Option to Extend Services period are hereby changed from $2,149,591 to $4,087,141. 03, a total increase of $1,937,550.03 ” (R4, tab 27 at 849 ).

The original amount of $2,149,591 cited in M odification No. 11 was the amount of the option to extend services in M odification No. 9

– the modification being challenged by

M1 (R4, tab 22 at 768 )

. Th us, in Modification No. 11, M1 agreed to perform the option to extend services for a price of $4,087,141.03 and that amount included performance of the option to extend services during the period covered by

Modification No. 9. Therefore, giving effect to the clear and unambiguous language of the modification, M1 agreed to perform the entire option to extend services from June 24, 2014 to December 23, 2014 , including the period of June 24, 2014 to September 23, 2014 covered by M odification No. 9, for $4 ,087,141.03. This

constitutes an agreement resolving M1 ’ s dispute regarding the exercise of the option to

extend services , and its attempt to reprice its performance of the option

. Similarly, in

M odification No. 12, M1 agreed to add a logistician position and agreed to a price for performance of the option to extend services from June 24, 2014 to December 23, 2014 (R4, tab 30 at 1011 ).

M1 cites to the Board’s holding in Alutiiq Commercial Enterprises

, LLC

, 20

- 1 BCA ¶ 37,506, for the proposition that, at most

, M1 waived its right to object to the exercise of the option, but that it did not waive the right to seek additional compensation (app. resp. at 7). According to M1, “ the modifications at issue should

not be ‘ purport[ed] to resolve ’ anything outside the scope of their plain language, particularly not the waiver of a right to file a claim ” ( id. ) (quoting Alutiiq , 20

- 1 BCA ¶ 37,506 at 182,199 ). While we agree with M1 that a modification only resolves the

is sues within the scope of the plain language of the modification, here, Modification11 No. 11 9 “resolved” the payment for the performance of the option to extend performance (R4, tab 27 at 849 ).

CONCLUSION

For the reasons stated above M1’s appeals are denied.

Dated: August 1 6 , 2021

DAVID D’ALESSANDRIS Administrative Judge

Armed Services Board of Contract Appeals

I concur

RICHARD SHACKLEFORD Administrative Judge Acting Chairman

Armed Services Board of Contract Appeals I concur

OWEN C. WILSON Administrative Judge

Vice Chairman

Armed Services Board of Contract Appeals

9 We do not address the government’ s arguments regarding Modification No. 10, and make no findings as to whether those modifications also constitute a waiver or

accord and satisfaction.12 I certify that the foregoing is a true copy of the Opinion and Decision of the Armed Services Board of Contract Appeals in ASBCA Nos. 62461, 62646

, Appeals of Mission1st Group, Inc. , rendered in conformance with the Board’s Charter.

Dated: August 17, 2021

PAULLA K. GATES

- LEWIS

Recor der, Armed Services Board of Contract Appeals