ARMED SERVICES BOARD OF CONTRACTAPPEALS
Appeals of

-- DODS, Inc.

Under ContractNo. W31P4Q-ll-C-0133

APPEARANCE FORTHEAPPELLANT:

APPEARANCES FORTHE GOVERNMENT: ) ) ) ) ) ASBCANos. 57746, 58252

1"1r. David Storey

President
Raymond M. Saunders, Esq.

Army ChiefTrial Attorney LTC Mark A. Ries, JA Erica S. Beardsley, Esq.

Trial Attorneys

OPINION BYADMINISTRATIVE JUDGE PEACOCK

These disputes underthe captioned contract, for the supply ofthe centerwing sections for the government's "workhorse" aerial target system, involve an appeal from a termination for default for failure to make progress (ASBCANo. 57746) and related affirmative contractor claims for alleged delay (ASBCANo. 58252). We deny both appeals.

FINDINGS OF FACT

The Solicitation and Pre-Contract Communications

1. The U.S. Army Contracting Command, Aviation and Missile Command (AMCOM) Contracting Center (the "government") issued SolicitationNo. W31P4Q-lO-T-0079 (the "solicitation")toprocure one first article and eightproductionunits ofthe centerwing section for the MQM-107 aerial target system (ATS) on behalfofthe Targets Management Office (TMO) (R4, tab 2). The ATS is the government's workhorse and most versatile aerial target, used for testing and evaluating weapons systems andtraining military personnel. Itis about 18 feet long with a 10-footwingspan, is self-propelledby a turbojetengine, is capable of aerodynamic maneuvers sufficientto engage in air-to-air combattraining with manned fighter jets, and is recoverable for reuse. (R4, tabs 69, 85, 86; tr. 2/192-94) The centerwing section consists ofa panel that is about 5 feet by 3.5 feet in size and is about 2 inches thick, along with the leading edges, which form the curved, aerodynamic shape ofthe wing front (tr. 2/195-96, 3/120).

2. The government distributed the solicitation and its accompanying technical datapackage (TDP) directly to potential contractors on 21 July 2010. The TDP wasprovided only on a compact disc (CD) (hereinafterthe "TDP CD"), and contained all technical datarequired to build the centerwing section. (Tr. 1/29-30) The paperversion
was not providedto DODS or any otherpotential contractor (tr. 1133). 1 The TDP CD contained files in pdfor C4 format (hereinafter "pdf') consisting ofdozens of governmentpart number drawings and also contained a "readme" file with instructions for accessingthe information on the TDP CD and a helpdesktelephone number for troubleshooting assistance (tr. 3/199-200). Some ofthe drawings provided on the TDP CD are called digital data drawings, which provided instructions onhow to use the three-dimensional computer aided design (CAD) models depicting the outer surface and shape ofthe centerwing section (tr. 2/194, 202, 3/196, 199).

3. The CAD models provided onthe TDP CD were developed from, andreplaced, the original master lines, commonlyreferred to as Mylars. The IMO stopped using Mylars and began including CAD models in the TDPprovidedto prospective contractors in the 1990sbecause CAD models provide greater accuracy. (Tr. 21198-99, 202) The CAD models were meantto be imported into computernumeric control (CNC) milling machines, andthe CNC milling machines in turn would make molds, otherwise known as "tooling" or "special tooling" to make the physical parts for the end item (tr. 2/196, 199-200). The centerwing section could not have beenproduced without using the CAD files providedby the government on the TDP CD (tr. 3/198-99). The CAD files were provided in at least six different specific CAD programs as well as otherneutral, or generic, file formats. The neutral formats allowed for the CAD models to be used by many CADprograms otherthan the specific program versions provided on the TDP CD. The digital data drawings onthe TDP CD provided instructions for using the CAD files. (Tr. 2/205-10)

4. Amongthepotential contractors sentthe solicitation and TDP was a company called TTF, LLC (TTF) (tr. 1/31). Although the government sentthe solicitation and accompanying TDPto TTF, Mr. David Storey acknowledged receipt ofthe solicitation and TDP on behalfofDODS on 27 August 2010 (R4, tab 4 at 28; tr. 1/30-31). Mr. Storey is the president or manager ofTTF (R4, tabs 78, 80; app. supp. R4, tabs 40, 41; exs. G-2 at 1, G-5 at 1, G-12 at 1). Mr. Storey is the sole owner ofboth DODS and TTF (R4, tabs 78, 80; exs. G-2 at 1, G-5 at I, G-6 at 3). TTF is located at 1400 Mills Highway, BreauxBridge, Louisiana. DODS consists ofa "lean-to" against the side of the TTF buildingwith an address of 1402 Mills Highway, BreauxBridge, Louisiana. DODS and TTF operate out ofshared office space. (R4, tabs 78, 80)

5. DODS submitted its unqualified quote inresponse to the solicitation on 29 August 2010 (R4, tabs 4, 78, 80). The governmentreceived a total ofthree quotes in response to the solicitation, and awarded a contractto the bidderwith the lowest priced quote. Within one week ofaward, the awardee notified the governmentthat it could not

1Tab 3 in the Rule 4 file is a physical representation ofthe data contained on the TDPCD.produce the centerwing section andrequested that its contractbe cancelled. (R4, tab 5; tr. 1132)

6. On 19 October 2010, while the cancellation ofthe initial award was processing, the contract specialist contacted the next lowest quote, DODS, by email to determine whether its quoted price was still valid and to seek assurance that DODS could produce the centerwing section. The contract specialist informed DODS that the initial awardee was unable to performthe contractbecause it was incapable ofproducing the requiredwing section, and requestedthat DODS confirm its ability to produce or access the proper tooling to make "the main channels (i.e., -15, -16, etc.) or the leading edges (i.e., -3, -2, etc.) orthe bonding for the main body." (R4, tab 5) The contract specialist questioned these specific capabilities because they directly relatedto the inability ofthe initial awardee (R4, tab 5; tr. 1/33-35). The channels are extrudedparts on the right-hand and left-hand sides ofthe centerwing section for interface withthe outboard wing assemblies (R4, tab 3 at 104; tr. 2/212-13). Extrudedparts, generally, are "long narrow item[s] of continuous cross-section

...made by forcing a material through a die, such thatthe material takes onthe shape ofthat die" (tr. 2/213). An everyday example ofan extrudedpart is a trainrail (id.). The channels for the center wing section have a specific cross-section, and
are therefore not "off-the-shelf' items (tr. 3/208-09).

7. On 20 October 2010, DODS responded to the contract specialist's 19 October 2010 email stating that it was "pleasedto accept [her] offer" and asking several questions regarding the requirement:

In an effortto expedite the FirstArticle delivery would you please request clarity for the following questions:

1. BR-127 is ourpreferred Adhesive Primer. Is there any objections [sic] as MIS-26333K does not identify a primer otherthan one compatibleto the adhesive system.

2. Hysol's 9628, FM-132-2, orAF-126-2 for the film adhesive or equivalents.

3. ISO 9001-2000 until Novemberthen ISO 9001-2008 for
our Quality System.

4. DOD's [sic] Autoclave is rated at 50 PSI.and 350 F.

MIS-26333K on page 3, Section 3.1.1 requires an Autoclave [sic] capable ofpressures 10 to 100 PSI at 350 F.

3(R4, tab 6) However, the Center Wing Structure Cure Cycle is at 260-280 F, 9 F max heat up rate perminute, 10 to 80 PSI, for 55-140 minutes.

Well within our capabilities. Is this acceptable?

5. A sample part. Can be from a crashed unserviceable unit for clarity to engineering drawings.

8. Also on 20 October 2010, DODS respondedto the contract specialist's email and affirmed its capability to produce the part (R4, tabs 7, 78, 80). DODS specifically assured the contract specialist that, "[w]e have the capability or access to or can acquire through a vendorthe propertooling to make all the main channels (i.e., -15, -16, etc.) or the leading edges (i.e., -3, -2, etc.) orthe bonding for the main body." DODS also states that, "in addition DODS, Inc has a HAAS VF 9 with a bed 36 by 96 inches, [t]hree Hydraulic Presses with the largest bed 120 by 36 inches rated at 800 tons, one heat treat oven, and two Autoclaves." (R4, tab 7) However, although not yet known by the contracting officer (CO) TTF, not DODS, owned the hydraulic presses, heattreat oven, and autoclaves (R4, tab 54 at 22-25; tr. 1/96, 5/71-78).

9. On 3November 2010, the contract specialistprovided DODS with responses to its questions from 20 October2010. Ofparticularrelevance to these appeals, DODS was informed on 3 November 2010 that the government agreed to DODS' use ofthe BR-127 adhesive primer and that the Hysol 9628, FM-132-2, and AF-126-2 film adhesives were all suggested by the specification and DODS could choose one to use. (R4, tab 3 at 171, tabs 8, 78, 80; tr. 4/11-15) DODS did not seek any additional clarificationregarding any ofthe issues raised in its 20 October2010 email priorto contract award (tr. 1137).

10. On 3 November 2010, DODS thankedthe contract specialist for the information and informed herthat DODS was ready toproceed with the contract (R4, tabs 10, 78, 80). On 29 November 2010, DODS sent an email to the contract specialist stating, "[c]an youplease provide status as I have a few people already working on this (at my own risk)" (R4, tab 13). DODS requested updates on the status ofthe contract award several more times between 29 November 2010 and 3 January 2011 (R4, tabs 15, 17,19,21).

11. On4 January 2011, the contract specialistrequested that DODS inform the government ofthe date by which DODS would deliverthe inspected first article so that the contract wouldreflect accurate dates (R4, tab 22). DODS responded the same day that the first article would be complete, including the first article inspection, within 206 "DARO," or days afterreceipt oforder (R4, tab 23; tr. 1/39). From 4 January 2011, 206 days would have been 29 July 2011, but DODS' email indicatedthe date of2 August
42011 (R4, tab 23). The contract as eventually awarded actuallyprovidedDODS more time than it requested by setting the first article delivery date as 31 August 2011, or 217 days after contract award (R 4, tab 1at 3).

12. On 21 January 2011, the contract specialistrequestedthat DODS "please review the attached contract for errors or changes needed on your end" (R4, tab 26). The "attached contract"referredto bythe contract specialist andprovidedto DODS prior to contract award was identical to the document contained in the Rule 4 file at tab 1, with the exception ofsignatures and one error noted by DODS and correctedpriorto award (tr. 1/42-43). On 24 January 2011, DODS responded indicating that DODS had reviewed the contract andthat the "Contract looks good. I only found one correction and that would betheproduction delivery date ofDecember 31, 2011 (CLIN OOOlAB). That is the date the FirstArticle review wouldbe due. The Production is to follow at 113 days or April 25, 2012." (R4, tabs 27, 78, 80; tr. 1/40-43) The production delivery date was adjustedto 30 April 2012 before the contractwas signed, again providing DODS more time that it requested (R4, tab 1at 4; tr. 1/42-44).

13. On26 January 2011, the government awarded ContractNo. W31P4Q-11-C-0133 (the "contract")to DODS (R4, tabs 1, 78, 80). The final signed copy was providedto DODS on 27 January 2011 (R4, tab 28). The contractwas awarded as a firm fixed-price contractwith one contract line item number (CLIN) 0001, for PartNumber 13458239, NSN 1560-01-386-8205, the centerwing section ofan ATS. The CLIN was subdivided into two subCLINs OOOlAA and OOOlAB. SubCLIN OOOlAA was for the first article production and delivery by 31August2011 at a price of$84,900. SubCLIN OOOlAB was for the remaining eight productionunits at a unit price of$51,900 each, for a total amount for subCLIN OOOlAB of$415,200. Thetotal contractprice for the first article and the production units was $500,100. (R4, tab 1at 1, 3-4) The contract incorporated by reference FAR 52.249-8, DEFAULT (FIXED-PRICE SUPPLY AND SERVICE) (APR 1984)clause. The contract also included FAR 52.209-4,FIRST ARTICLE APPROVAL

- GOVERNMENTTESTING (SEP 1989),ALTERNATE I (JAN 1997)clause. (R4, tab 1at 17)

14. The contractprovided for government inspection at origin and acceptance at destination for both subCLINs. The destination for the first article was designated as Redstone Arsenal, Alabama, andthe destination for the production quantity was designated as FortBliss, Texas. (R4, tab 1at 3-4; tr. 1144) Contract administration was delegatedto the Defense ContractManagementAgency (DCMA) Dallas (R4, tab 1at 1; tr. 2/8, 4/44).

15. The contract incorporatedby reference FAR 52.246-2, INSPECTION OF SUPPLIES-FIXED-PRICE (AUG 1996)clause. This clause stated, in relevantpart:
(b) The Contractor shall provide and maintain an inspection system acceptable to the Government.... Aspart ofthe system, the Contractor shall prepare records evidencing

5

### all inspections made under the system and the outcome. These records shall be kept complete and made available to the Government during contractperformance and for as long afterwards as the contract requires. The Government may perform reviews and evaluations as reasonably necessary to ascertain compliance with this paragraph. These reviews and evaluations shall be conducted in a manner that will not unduly delay the contractwork. The right ofreview, whether exercised or not, does not relieve the contractor ofthe obligations underthe contract. [Emphasis added]
(c) The Government has the right to inspect and test all supplies called for by the contract, to the extent practicable, at all places and times, includingthe period of manufacture, and in any event before acceptance. The Government shall perform inspections and tests in a manner that will not unduly delay the work. The Government
assumes no contractual obligation to perform any inspection and test for the benefit ofthe Contractorunless specifically set forth elsewhere in this contract.
(d) If

### the Government performs inspection ortest on the premises ofthe Contractor or a subcontractor, the Contractor shall furnish, and shall require subcontractors to furnish, at no increase in contractprice, all reasonable facilities and assistance for the safe and convenient performance ofthese duties

....

(i)(1) If

### this contract provides for the performance of Government quality assurance at source, and ifrequested by the Government, the Contractor shall furnish advance notification ofthe time (i) when Contractor inspection ortests will be performed in accordance with the terms and conditions ofthe contract and (ii) when the supplies will be ready for Government inspection.
(2) The Government's request shall specifythe period and method ofthe advance notification and the Government representative to whom it shall be furnished. Requests shall not require more than 2 workdays ofadvance notification if the Governmentrepresentative is in residence in the

6Contractor's plant, nor more than 7 workdays in other instances.
(R4, tab 1at 6)

16. The contract incorporated by reference FAR 52.246-11,HIGHER-LEVEL CONTRACT QUALITY REQUIREMENT (GOVERNMENT SPECIFICATION) (FEB 1999) clause. The contract filled-in the clauseby specifying that, "THE CONTRACTOR SHALL COMPLY WITH THE HIGHERLEVEL CONTRACT QUALITYREQUIREMENT ANSl/AQSC Q9002 OREQUIVALENT." (R4, tab 1at6) The higher level quality clause was included because ofthe critical nature ofaircraftparts. Compliance with the higher level quality clause required a more structured manufacturing environment. (Tr. 1/45, 4/49-50) The higher level quality system requires the contractorto have a quality manual and other implementing documents that comply with the quality requirement, and requires thatthe contractor comply with its quality documents (tr. 4/142-43).

17. The contract incorporatedby reference FAR 52.242-17, GOVERNMENT DELAY OF WORK (APR 1984) clause. This clause stated, in relevantpart:
(a) Ifthe performance ofall or any part ofthe work of this contract is delayed orinterrupted

.... (2) by a failure of the Contracting Officerto act withinthe time specified in this contract, orwithin a reasonabletime ifnot specified, an adjustment (excluding profit) shall be made for any increase in the cost ofperformance ofthis contract caused by the delay
orinterruption andthe contract shall be modified inwriting accordingly. Adjustment shall also be made in the delivery or performance dates and any other contractual term or condition affected by the delay orinterruption. However, no adjustment shallbe made underthis clause for any delay or interruption to the extentthatperformance wouldhave been delayed or interruptedby any other cause, including the fault
or negligence ofthe Contractor, or for which an adjustment is provided or excluded under any otherterm orcondition of this contract.
(b) A claim underthis clause shall notbe allowed (1) for any costs incurred more than 20 days before the contractor shall have notified the Contracting Officerin writing ofthe act or failure to act involved; and (2) unless the claim, in an amount stated, is asserted in writing as soon as

7practicable afterthe termination ofthe delay orinterruption, butnot laterthan the day offinal payment underthe contract.
(R4, tab 1at 7)

18. The contractrequiredthat DODS comply with Aerospace Material Specification (AMS) 2770, a process specification for the heat treatment ofwrought aluminum alloy parts (R4, tab 3 at 16-25, tab 70 at 1; tr. 5/32-34). Although some parts lists notes within the TDP contained references to the military heat treatment specification MIL-H-6088, the technical data parts list (TDPL), incorporated into the TDP, dictated which specifications actually appliedto the contract (R4, tab 3 at 107; tr. 5/31). The TDPL lists the drawings and specifications included in the TDP (tr. 5/31).

19. AMS 2770H, paragraph 3.1.2.1, "Heating Media,"provided in pertinentpart that, "[t]heproducts ofcombustion and other materials that could contaminate parts shall not come into contact with parts" (R4, tab 70 at 2).

20. AMS 2770H, paragraph 4.1, "Responsibility for Inspection," provided that:
[T]he processor shall beresponsible fortheperformance of all tests and inspections specified herein. Theprocuring activity reserves the right to perform any surveillance ortests
orinspections ofparts, and to review heat treating records and results ofprocessor's tests and inspections to verify that heat treating conformedto the specifiedrequirements.
(R4, tab 70 at 8)

21. The contract directed compliance with MIS-26333, a military process specification for adhesive bondingrequirements for the ATS (R4, tab 3 at 16; tr. 3/8, 4/13). MIS-26333, paragraph 3.3.4.5, "Controlled area," referencedto by the parties as "cleanroom" required that "[t]he application onprimer and adhesive films shall take place in a clean, protected, dust-free area. The temperature shall be 75 [degrees, plus or minus 10 degrees] and the relative humidity shall not exceed 80 percent." (R4, tab 3 at 155)

22. MIS-26333K, paragraph 6.2.2, "Approved sources,"provided that "[o]nlythe following listedproducts are approved for use on the MQM-107 target system." Paragraph 6.2.2.1, "Adhesive SystemA," provided in relevantpart: American Cyanamid Co., Part Number "FM-123-2, or equal"; Hysol Division, The Dexter Corp., PartNumber "EA9601, orequal[;] EA9602, or equal"; and Minnesota Mining & Mfg. Co., PartNumber "AF-126-2, or equal." (R4, tab 3 at 171) The inclusion of"orequal" after listing the specific manufacturer and product allowed the contractorto use any of

8the listedproducts orthe updated versions then available from the manufacturer (tr. 2114, 162, 31105-06, 161, 4/14-15, 5/8-9, 23).

23. Shortly after award ofthe contract, the contract specialist queried DODS regarding its capability toproduce the center wing section (R4, tab 30; tr. 1/49). On 8 February 2011, DODS sent an email to the contract specialist in response to questions about DODS' capability to performthe contractwork and producethe centerwing section as required bythe contract. In the email, DODS affirmed that "DODS has the capability to manufacture this item in-house. DODS is in the process ofquoting details and materials, designing the tooling

.... Will probably outsource Skin Cleaning and Adhesive Primer application." (R4, tabs 30, 78, 80)

24. Unknown at thattime to the contract specialist orthe CO, or anyone else at the buying command, DODS actually consisted only ofa "lean-to" againstthe side ofthe building ownedby TTF (R4, tabs 78, 80; tr. 1/96, 5/57-58). DODS had insufficient manufacturing space, facilities, orequipment ofits ownto manufacture the centerwing section (R4, tab 54 at 22-25; tr. 5171-78).

25. On 7 April 2011, a DCMA Quality Assurance Representative (QAR), held a "QA OnlyPost-Award Conference" with DODS (R4, tab 32; tr. 5/138). A QA only post-award conference is one ofthe DCMA's surveillance mechanisms to ensure the quality ofa product, and is held onlypursuantto and consistent with internal DCMA policy.

26. Amongthe matters discussed at the post-award conference and recorded on the Post-Award ConferenceRecord were the following: Mr. Storey statedthatDODS
was preparing requests for quotes (RFQs) and the QARreminded DODS to provide copies ofall releasedpurchase orders (POs) to the QARfor review and delegation determination; Mr. Storey twice stated, without qualification, that DODS would meet the 31 August 2011 FirstArticle delivery date; the QARnoted that as ofthe date ofthe conference, there was noproduction and noproduction employees in DODS plant; Mr. Storey statedthat no "specialtooling" wouldbenecessary to manufacture the subject item; the QARreminded DODS that its heattreating process and equipmentmustbe validated and certifiedbefore beingplaced in the production flow; the QARdiscussed the contract'shigher level quality requirement, and DODS stated it understood; DODS expressed the need for clarification concerning a drawing, andthe QARadvised DODS to contact engineering support for the buying command for clarification (R4, tabs 32, 78, 80; app. supp. R4, tab 7; tr. 51139-58).

27. DODS was requiredto forward POs to the QAR so that the QARcould verify that the contractrequirements were actually included in the PO and to determine whether the item or service that DODS was purchasing required a DCMA QARto visit and inspect that vendor (R4, tab 1 at 6, tab 32 at 1; tr. 41103-06). The contractrequired

9

### DODS to flow down the quality and inspection requirements to any vendor or subcontractor.

28. At no time priorto 7 April 2011 did DODS inform the government or DCMA that DODS' work on the contract was delayed while waiting for the post-award conference (R4, tabs 78, 80; tr. 1/85-86, 2/138-40, 5/155-58). On 7 April 2011, during the post-award conference, DODS twice specifically stated, without qualification, that it would meet the first article delivery date of31 August 2011 and made no reference regarding any alleged government delay (R4, tabs 32, 78, 80; app. supp. R4, tab 7; tr. 5/155-58). In fact, the first time that DODS raised the timing ofthe post-award conference as an alleged government delay was in a letterto the government on 6 July 2011 (R4, tabs 42, 78, 80; tr. 1/85-86, 2/138-40, 51155-58). The timing ofthe post-award conference did not delay DODS performance (tr. 5/155-58). No contract clause or other direction from the CO required that apost-award conference be held.

29. Following receipt ofa contractor'sproduction plan, the DCMA QAR establishes "GMIPs" or government mandatory inspection points, by noting those points
orprocesses during production for which the QARrequires advance notice and the opportunity to witness. These GMIPs do not hold up production. The DCMA QAR cannot notify the contractorregarding those inspectionpoints without knowing the contractor's production plan. Once the DCMA QARreceives the productionplan, the DCMA QARcan notify the contractor ofthe inspectionpoints, or GMIPs, and then the contractor must notify the DCMA QARat least seven days in advance ofperforming one ofthe GMIP processes. The notification allows but does not require, the DCMA QARto be presentto witness the process, but does not holdup the contractor'sproduction. There is no evidence that DODS providedDCMAwith any production plan priorto its 20 July 2011 response to the cure notice, as discussed below. (Tr. 4/94-97, 51108-09)

DODS' Request for Assistance

- Hidden Line

30. On 16 May 2011, DODS emailed a letterto the former contract specialist and raised for the first time with the CO its request for assistance regarding the drawing that the QARtold DODS to take to the engineering support for the buying command for clarification at the post-award conference on 7 April 2011 (R4, tab 32 at 4, tab 37; tr. 5/152-53). The complete text ofthe question in the letter was: "Regarding Contract W31P4Q-11-C-0133, we at DODS request engineering assistance. On the left and right hand end ofthe attach bracket is a hidden line (long rectangle) that is unidentifiable. Is this part ofthe next higher assembly? Please advise." (R4, tab 37) There were no drawings, explanations or other attachments to the letter (id.; 

### app. supp. R4, tab 1; tr. 4/15). The letter did not indicate that the request for assistance was urgent or delaying production (R4, tab 37; app. supp. R4, tab l; tr. 1186, 88-89).

31. The TMO engineerresponsible for responding to the CO regarding technical questions for the MQM-107 was away on temporary duty (TDY) until 23 May 2011.
10

### Upon his return, he researched the question and developed a response. (Tr. 1/65-66) To determine the answer, the engineer wentto the TDP and locatedthe top part drawing, and worked his way through the drawings to deduce the basis ofDODS' question (R4, tab 3 at 112; tr. 4/16). On the top part drawing, the engineer located several "hidden lines," which are depicted as dashed lines on drawings andrepresent something underneath the current drawing's perspective. The drawing contains directions to find another drawing from a different viewpoint, a cut-away view, to determine whatthe hidden line represents (tr. 2/214-15, 4/16, 18).

32. The TMO engineerthen proceededthrough several steps to read the drawings and determine thathe thoughtthe answerto DODS' question was that the hidden line represented a nut assembly, apart included in the parts list for the centerwing section (tr. 4116-26). The process to determine this answertookthe TMO engineer, who had worked at the TMO for less than a year and had neverreviewed the MQM-107 drawings priorto determining the answer to DODS' hidden line question, about one hour (tr. 3/232, 4/32-33, 5/12-13). Althoughthe specific hidden lines examined by the engineer could only have represented the nut assembly (tr. 3/135-37, 211, 4/25-32), as a result ofthe vagueness ofDODS' question, the engineer still was not certainthat DODS' question pertained to these particularhidden lines until the hearing in these appeals (tr. 4/34).

33. Once the engineer had determined his answerto DODS' hidden line question, the response had to be approvedby a senior government TMO representative, but that personwas on TDY until the following week (tr. 1/65-66).

34. On 21 June 2011, DODS submitted arequest for assistance, reiterating its "hidden line" query and asking seven additional questions. Although DODS' letter is dated 16 June 2011, DODS did not email the letteruntil 21June2011 (hereinafter, "DODS' 21June2011 letter"). (R4, tab 38; tr. 1175) The text ofDODS' request was as follows:

This is a follow-up to ourprevious request for engineering assistance sentMay 16, 2011. DODS requests engineering assistance for the following:

1. On the left andrighthand end ofthe attach bracket is a hidden line (long rectangle) that is unidentifiable. Is this part ofthe next higher assembly? Please advise.

2. Request to use Hysol EA9628.06 ILO EA9601 or EA9602 as the equal alternative.

3. Requestto use BR-127 Adhesive Primer.
11

### 4. Request to use MA-562 BMS 5-90 Core Splice Foaming Adhesive ILO FM-37 as the equal alternative.

5. Request to use EA960F ILO EA960 as the equal alternative.

6. Request to use BAC 5555 Phosphoric Acid Anodize ILO ASTM-3933 as the equal alternative.

7. Part NumberPL13458219-4 is not listed in the Parts List but is shown on the corresponding drawing, Sheet 4, D7. Please advise material and thickness.

8. Request to use AMS 2770 ILO MIL-H-6088.

Please advise.
(R4, tab 38) DODS' 21June2011 letter included two attachedpages with what appears to be copied drawings. The first document had handwriting circling portions ofthe drawing and referencing "Question#7." The second document matches the drawing description in DODS' 21June2011 letter request number 7. (R4, tab 3 at 105, tab 38) Nothing in DODS' 21 June 2011 letter informed the CO that DODS' issues were impacting production or indicated urgency in any way (R4, tab 38).

35. The CO answered DODS' "hidden line" request in a letter dated and emailed 22 June 2011, stating:

We assume the long hidden line rectangle mentioned by the vendor is the one by the FindNo. 1callout in section D 1of drawing 13458239. If

### you follow Find No. 1to drawing 13458219 sheet 3 Section N-N, you will see FindNo. 37 (-19 channel, 11557862) and FindNo. 19 (-20 nut assembly, NAS689Pl6-8. The hidden lines indicate the nut assembly.
(R4, tab 39) The "We assume" language was included because DODS failed to adequately explain or describe its question to ensure that the TMO engineers would review the specific uncertainty (R4, tab 39; tr. 1/66, 4/35). The CO's email with her 22 June 2011 letter attached was incorrectly addressed, omitting the "c" in "com." The CO however, did notrealize the errorbecause she received an automated delivery confirmation notice. (R4, tabs 39, 40; tr. 1166-68, 73-74)

1236. On 6 July 2011, DODS sent an email to the government and requested a 120-day extension citing materials unavailability, government delay in responding to requests to use alternateproducts, and the time between contract award and the post-award conference with DCMA (R4, tab 42). DODS' 6 July 2011 letter was the first instance in which DODS informed the government ofany alleged government delay for any cause, includingthe hidden line issue (R4, tabs 42, 78, 80; tr. 1185-86, 2/138-40, 5/155-58).

37. On 8 July 2011, the CO notified DODS in a letter attachedto an email that the CO had answered DODS' hidden line question in her 22 June 2011 letter (R4, tab 44; tr. 1/69-70). This email message was missing the "c"in "com"for Ms. Beniest's (Mr. Storey'spersonal assistant) email address, but it was correctly addressed to Mr. Storey's email address.

38. On 11 July 2011, DODS sent an email acknowledging receipt ofthe CO's 8July 2011 letter, and requested thatthe CO sendDODS a copy ofthe letter dated 22 June 2011 (R4, tab 46; tr. 1/93). Onthe same day, 11 July 2011, the CO emailedto DODS another copy ofher 22 June 2011 response to DODS regarding its "hidden line" request (R4, tab 47; tr. 1/73-74). Appellantpresentedno evidence detailing to what extent, ifany, the timing ofthe government's response to its question impacted DODS' performance underthe contract.

39. Resolution ofDODS' "hidden line" requestwas not required to proceedwith assembly. DODS should have been able to determine whatthe hidden line represented
on its own (tr. 4/12-13). The answer was readily apparent from reading the drawings (tr. 3/223, 4/32-33). DODS could also have easily workedbackwards from the parts list to cross-checkwhatthe hidden line represented (tr. 4/29). DODS could also have ordered the parts required for assembly and determined through assembly thatthe only possibility was thatthe hidden line represented the nut assembly (tr. 5/12-15). There is
no evidence establishinghowthe hidden line request preventedDODS from ordering the parts andbeginning assembly. DODS couldhave assembled the center wing section without knowing what the hidden line represented and still have been able to add the nut assembly because it sits in a channel easily accessible after assembly. (Tr. 5/15)

40. Requests 2 and 3 in DODS' 21 June 2011 letterrepeated questions that DODS posed in its email of20 October 2010 and that the government answered on 3 November 2010 (R4, tabs, 6, 8, 38). BothDODS' requests wereunnecessary (tr. 5/8-9). With respect to request 2, the TDP in MIS-26333K listed several alternative products andprovidedthe contractorwith the authorityto use an "equal" (R4, tab 3 at 171; tr. 2114, 162, 3/105-06, 161, 4/14-15, 5/8-9, 23). DODS could have chosen one ofthe otherproducts listed in MIS-26333K or it could have simply used the Hysol EA9628.06 as an equal alternative to the Hysol EA9601or9602 (tr. 2/14, 162, 3/105-06, 161, 4/14-15, 5/8-9, 23). Even if DODS wanted government approval, it did notneedto hold up its production while
13waiting for the response to eitherrequest 2 or 3. DODS couldhave ordered materials, cut materials, developed the tooling neededto create the leading edges, among other production steps, while it waited for the government approval. (Tr. 5/12, 17-18, 34-35)

41. Requests 4 and 5 in DODS' 21 June 2011 letterpresented a new request regarding use ofspecific adhesives but again lacked any explanation or indication of production impact orurgency. With respectto request 4, the TDP did notrequire the use ofone specific adhesive; rather, the contractor was provided with suggested sources of supply, including three vendors and five different adhesives. DODS could have used any ofthose listed, orcouldhave used other adhesives because the ones listed in this instance
were merely suggested. (R4, tab 3 at 73; tr. 5/20-22, 34-35) With respect to request 5, the TDP in MIS-26333K listed a product and providedthe contractorthe authority to use
an "equal" (R4, tab 3 at 172; tr. 2/14, 162, 31105-06, 161, 4/14-15, 5/8-9, 23). According to the TMO engineer, the adhesive DODS requestedto use was very clearly the same adhesive as the listed product exceptthatthe manufacturerhad denoted F to indicate that it was a faster curing adhesive (tr. 5/23). Even ifDODS wanted government approval, it did not needto hold up its process waiting for the government's response to either request 4 or 5. DODS couldhave ordered materials, cut materials, developed the tooling needed to create the leading edges, among otherproduction steps, while waiting for the government's response. (R4, tab 3 at 73; tr. 5/20-24, 34-35)

42. Requestnumber 6 in DODS' 21June2011 letterpresented a newrequestbut again lacked any explanation orindication ofproduction impact orurgency (R4, tab 38; tr. 2/162-63, 3/164, 5/14, 39). This request dealt withphosphoric acid anodizing specifications, and DODS requestedtouse the Boeing specificationBAC-5555 instead of the industry standard specification included inthe TDP, ASTM-3933. Inthis instance, the TDP did notprovide the contractorwith the choice ofan "orequal" replacement. The government denied DODS' request unless DODS provided a detailed explanation as to why the Boeing specificationwas equal orbetterthan the TDP specificationbecause the government did not have access tothe Boeing specification. Even ifDODS had some legitimate reason for desiring to adhereto the BAC-5555 specification rather than the ASTM-3933 specification, it did not need tohold up its process waiting for the government'sresponse. DODS could have ordered materials, cut materials, developed the tooling neededto createthe leading edges, among otherproduction steps, while waiting for the government's response. (R4, tab 3 at 148, tab 50; tr. 1/90, 5/24-27, 34-35)

43. Request 7 in DODS' 21 June 2011 letterrequested clarification ofa drawing, and provided some explanation andtwo attached drawing sheets (R4, tab 38). DODS statedthat: "PartNumberPL13458219-4 is not listed in the Parts Listbut is shown on the corresponding drawing, Sheet4, D7. Please advise material and thickness." (R4, tab 38; tr. 5/27) The answerto Request 7 was readily determinable from the drawings (tr. 5/27-30). Part numbers are called "dash" numbers and are contained in the parts list portion ofthe drawings (tr. 5/27, 30). The Sheet4, D7, however, does not indicate a part
or a "dash4"butpoints the readerto a FindNumber4, indicated onthe drawing as
14

### "(FN4)" (R4, tab 3 at 105; tr. 5/27-30). Following the FindNumber4 to the parts list leads to the Dash Number 7part, a doubler, and the parts list provides the material and thickness (R4, tab 3 at 109; tr. 5/30-31). DODS did not need to hold up its process waiting for the government's response. DODS could have ordered materials, cut materials, developed the tooling needed to create the leading edges, among other production steps, while waiting for assistance in reading the drawings. (Tr. 5/31, 34-35)

44. Request 8 in DODS' 21 June 2011 letterpresented a new request but again lacked any explanation or indication ofproduction impact orurgency (R4, tab 38). This request dealt with the heattreating specification, and DODS' request to use the AMS 2770 instead ofthe Military Specification H-6088 (MIL-H-6088) (R4, tab 38; tr. 5/31-32). This requestwas unnecessary because the TDP already required the use of the AMS 2770 specification (tr. 5/32). The TDPL includes a list ofevery drawing and specification included in the TDP (tr. 5/31). Several drawing notes in the TDP reference the MIL-H-6088 specification. The TDPL shows that MIL-H-6088 was replaced by AMS-H-6088, and shows that AMS-H-6088 was replaced by AMS 2770, 2771, and 2772. (R4, tab 3 at 22, 25, 27; tr. 5/31-33) In otherwords, the TDP already indicated that DODS should use AMS 2770 instead ofMIL-H-6088. Even ifDODS wanted government verification, it did not need to hold up its process waiting for the government's response. DODS couldhave ordered materials, cut materials, developed the tooling needed to create the leading edges, among otherproduction steps, while waiting for the government's verification (tr. 5/34-35).

45. In its 6 July 2011 letter, DODS' first mention ofan alleged government delay, DODS statedthat the extension request was "dueto unavailability ofmaterials as stated in letters dated May 16, 2011 and June 20, 2011 [sic] requests for alternate products have gone unanswered for 2 months, causing a delay" (R4, tab 42). However, neither DODS' 16 May 2011 letter, nor its 21 June 2011 letter, indicated that its requests were based on unavailability ofmaterials (R4, tabs 37, 38; tr. 1/85-86, 88-89). In fact, DODS' 16 May 2011 letter included only DODS' "hidden line" issue (R4, tab 37; tr. 1188-89). Apart from not having raised the material availability issue until its 6 July 2011 letter, DODS provided no support for its assertion that materials were unavailable. The materials and specifications questioned in DODS' 21 June 2011 letter were actually still available. (R4, tabs 81-84; tr. 3/99-102)

46. On 8July 2011, the CO denied DODS' 6 July 2011 request for an extension in the contract delivery date. In her letter, the CO informed DODS that she did not understand DODS' reference to DCMA delay. She also corrected DODS' assertions in its 6 July 2011 letter in which DODS statedthat it had raised material unavailability in its 16 May 2011 letter. The CO informed DODS that she had answered its first question ("hidden line") in a letter dated 22 June 2011, its second and third questions in an email dated 3November 2010, and that the answers to DODS' questions 4-8 (received on 21 June 2011) were awaiting engineeringresponses. The CO also requested that DODS provide the reasons andjustifications for each ofits questions or requests. (R4, tab 44;

15tr. 1187-90) DODS neverprovidedthe requested reasons andjustifications (tr. 1190). The CO's 8July 2011 letterwas received by DODS on 8 July 2011 (R4, tabs 44-46; tr. 1192).

47. On 13 July 2011, the CO sent an email to DODS with her letterresponding to the remaining five requests for assistance from DODS' 21June2011 letter. The CO's letterreminded DODS that questions 1through 3 hadbeenpreviously answered viaemail
on 3November 2010 and by letter dated 22 June 2011; approved DODS' request numbers 4, 5, and 8; denied DODS' request number 6 unless DODS provided a detailed explanation as to why its request was equal orbetter; and provided an explanation for DODS' request number 7. (R4, tab 50)

The CureNotice and Response

48. The governmentreceived other information regarding DODS and the potential for performance problems beginning in late April 2011 (R4, tabs 33-36, 43, 58, 73, 74; tr. 1152, 2/45-46). At thattime, the CO received two Delay Notice

- Review documents (the "Delay Notices") regardingthe contract, dated 13 and 20 April 2011 respectively, and issued by the DCMA Industrial Specialist (IS). The IS is responsible for monitoring contractorperformance andevaluatingwhether the contractorwill meet the delivery date required under the contract. Ifthe IS considers that the contractor may miss the delivery date, DCMApolicy directs the IS to input a Delay Notice that alerts the buying command to the potential delivery delay. DelayNotices do not impactthe contractor'sproduction; do not causeproduction delays; do not stop production; and do not require any action on the part ofthe buying command. Rather, Delay Notices provide information from the IS, who is located in the general vicinity ofthe contractor, to the buying command, which is generally located a significant distance away. (R4, tabs 33, 34; tr. 2/43-50, 166-67, 4/72-75, 5/208, 211-12, 215-16) Priorto issuing the first DelayNotice on 13 April the IS contacted DODS, and DODS statedthat it would meetthe August 2011 first article delivery date (R4, tab 33; tr. 5/215). The Delay Notices did not directly lead to any overt action by the CO (tr. 2/49-50, 166-67). There is no evidence in the record that DODS was aware ofthe Delay Notices priorto receipt ofthe Rule 4 file in these appeals.

49. On 8 June 2011, in response to her request, the CO received additional documents and information from DCMAregarding DODS and TTF (R4, tab 58 at 3; tr. 11195-96). Among the information thatthe CO received were 18 additional Delay Notices on other DODS' contracts (R4, tab 73), areport showing nine unacceptable pre-award surveys covering both DODS and TTF (R4, tab 74), and a level III Corrective Action Request response rejection letter indicating that TTF had serious quality problems and that its system was unacceptable to the government (R4, tab 31). Like the Delay Notices above, the CO was cognizant ofthe information received, considered the information as a "heads up" that DODS may have delay issues, and that she neededto look more closely at the situation (tr. 1/94-105). As ofearly June 2011, however, the CO had not yet been informed that DODS intended to subcontract work to TTF; and therefore, she did not give any weightto the TTF information (tr. 1196-97).
1650. On 27 June 2011, the CO met with the TMO engineers to discuss the contract, as well as otherTMO managed items. The TMO engineers explained to the CO the importance ofthe centerwing section and the critical processes that were required for its manufacture. The TMO engineers explained that the centerwing section manufacturing required about 12 weeks to complete afterreceipt ofmaterials. (R4, tabs 41, 58; tr. 1/80-85)

51. On 8July 2011, the CO received an email from the DCMA IS regarding his visit to DODS on 7July 2011. The email informed the CO that DODS had received
some quotes for materials from vendors buthad not yet ordered any material for the contract, and that DODS represented that it would take three weeks to produce the first article once all materials were received. The email also informed the CO that, relevant to another contract, Mr. Storey failed to properly conduct a heattreating test, introduced materials that could contaminateparts in the heattreating process, and the cleanroom was not ready for production. (R4, tabs 43, 58 at 4)

52. On 13 July 2011, the CO issued a CureNotice to DODS. The cure notice explainedthat the government considered DODS had failed to make satisfactory progress endangering contract performance and that appellant's failure to cure its deficiencies within 10 days ofreceipt ofthe notice would providethe governmentthe right to terminatethe contract for default. The cure notice requested that DODS provide adequate
assurances to the governmentthat DODS could deliverthe first article and other contract requirements on time. The CO outlined seven specific failures, including: (1) failure to meetperformance standards in the contract and reiterated the 7 April 2011 post-award conference; (2) failure toprovide a Clean Room; (3) failure to acknowledge the tooling requirement; (4) failure to obtain materials, parts, and supplies; (5) failure toput in place procedures, mechanisms, and requirements to implementthe required ANSI/AQSC Q9002 quality assurance standards; (6) failure tovalidate and certify the heattreatingprocess and artificial aging process; and (7) failure to obtain necessary materials. The CO also provided a general description ofrequired actions by DODS to assure the governmentthat DODS would meetthe contractrequirements, and she listed five specific documents to be provided: (1) certification ofa fully implemented Quality Control Plan compliantwith the higher quality level required by the contract; (2) a detailed Manufacturing Plan; (3) a comprehensive Production Plan listing all tooling and equipment; (4) documentation to support receipt ofmaterials; and (5) a specific timeline to meetthe 31 August 2011 delivery ofthe First Article. (R4, tab 52; tr. 1/106-08)

1753. On 20 July 2011, DODS responded to the cure notice, substantially as follows:

1. DODS, INC's Quality System is acceptable to the Government. DODS, INC will be outsourcingportions of productiontoTTF, LLC with flow down requirements. Please see DODS's QCP attached (Exhibit A).

2. Attached please find the Manufacturing Plan (Exhibit B).

3. Attached please find the Production Plan, with equipment list (Exhibit C).

4. Requests for quotes havebeen sent out, andpurchase orders were preparedpending confirmation for the use of alternate products. OnJuly 13, 2011, a letterwas received answering questions DODS, INC had on alternate material
use and engineering clarity. Waiting for a response has delayedthe purchasing ofmaterials. Purchase Orders
were faxed to vendors on July 15, 2011 (Exhibit D).

As mentioned in a letter dated, July 06, 2011, DODS requested an extension for an additional two months as requests for engineering assistant [sic] werebeingresearched. Nowthat responses have beenreceived, DODS has been able to release the purchase orders. Someproducts purchase [sic] have a lead time of 10 weeks. This would not have created a problem ifthe requests were answered timely. [I]n addition, the PostAwardwas held April 06, 2011, 2 months afterbeing awarded this contract, and as this has a FirstArticle, DCMA has advised thatparticipation is 100%, that all work performed without affording him the opportunity to plan and insert GMIP's during Post Awards would be rejected and a Corrective Action Report issued (ExhibitE). Waiting on DCMA is [sic] perform the Post Award and advise ofGMIPs has delayedproduction by 2 months.

DODS's objective is to deliverthis productperthe Production Plan, andwe believes [sic] we are in good shape to successfully complete and deliverthe FirstArticle with a shipment date ofOctober 24, 2011.

DODS requests a modification extendingthe First Article delivery date to October 24, 2011, allowing 120 days
18(R4, tab 54) for FAA [first article approval], with a new delivery date of June 29, 2012 for the production articles.

54. DODS' cure notice response letter alerted the CO, for the first time, that DODS would "out sourceportions [ofproduction] to TTF, LLC with flow down requirements" (R4, tab 54 at 2; tr. 1/109). DODS' Manufacturing Plan, provided in response to the CO's direction in the cure notice and included in the cure notice response as exhibit B, stated thatparts are "sentto TTF, LLC to be bonded. The skins are brought into the clean room

...where adhesive is applied

...and parts are placedtogether." (R4, tab 54 at 18) Coupled with DODS' cure notice response letter, it became clearto the CO that DODS plannedto subcontract bonding to TTF (tr. 11109). The CO already knew that TTF had been found to have inadequate documentation ofinternal procedures for the bondingprocess because she received notice ofsuchpriorto issuing the cure notice (R4, tab 31; tr. 11109-11, 123). The CO also received notice from DCMA during its cure notice response review thatTTF'sbonding methods and facilities were incapable of complying with contractrequirements (R4, tabs 57, 72 at 5; tr. 11141-43).

55. In response to the CO's direction to provide "acomprehensive Production Plan listing all tooling and equipment," DODS provided exhibit C to its cure notice response (R4, tabs 52, 54 at 2, 21; tr. 1/123). The "Production Plan"providedby DODS
was a one-page document dated 30 June 2011, began with a date of4 July 2011 and showed a first article shipment date of24 October2011, two months afterthe contract delivery date of31 August 2011. TheProduction Plan was unsigned, and lacked a detailed description ofactual production dates andprocesses. (R4, tab 54 at 21; tr. 1/116, 124, 3/108, 117, 4/120-38, 5/172) In fact, otherthan "PaintPart" listed as planned for the weeks of5 and 12 September2011, no otherproduction processes appeared on DODS' production plan (R4, tab 54 at 21; tr. 4/132-33). Notooling or equipmentwere listed on the Production Plan (R4, tab 54 at 21), but DODS did include a separate generic equipment list in exhibit C (R4, tab 54 at 22-25). The equipment list identifiedthree pieces ofequipment ownedby DODS and sixteen ownedby TTF; all ofthe bonding and heattreating equipmentbelonged to TTF (R4, tab 54 at 22-25; tr. 11125-26, 571-75).

56. In response to the CO's direction to provide "adetailed Manufacturing Plan," DODS provided exhibit B to its cure notice response (R4, tabs 52, 54 at 2, 16; tr. 11117-18). The first sentence ofthe Manufacturing Planreferenced using Mylars, a mediumthe TMO had not used in more than a decade, ratherthanthe CAD data provided by the government on the TDP CD (R4, tab 54 at 16; tr. 1/119). Itwas impossible to buildthe centerwing sectionwithout using the CAD dataprovided onthe TDP CD (R4, tab 58 at 8; tr. 11119, 3/88, 198), DODS' cure notice response made no mention ofusing the CAD dataprovided by the government (R4, tab 54 at 16; tr. 1130-31, 3/195-96).

1957. Regarding the RFQs, none were provided for the subcontracting workto TTF or DynamicPaint Solutions as indicated in its cure notice response letter and Manufacturing Plan (R4, tab 54 at 2, 17-18, 27-43). On at least two RFQs, DODS sought quotes simply by referencing Army drawing numbers out ofthe TDP from which the vendors would have had
no way ofproviding a quote. In each instance, the vendorresponded by indicating that it couldnotprovide a quote. (R4, tab 54 at 28, 31; tr. 3/96-97) Several necessary parts and bulk material were not reflected anywhere in the RFQs orthe POs, including nut assemblies, primer, label stock, adhesive, trailing edge, other small hardware items, and, notably, the channels (R4, tab 54 at 27-43, tab 3 at 107-11; tr. 3/92-96, 208-09). The channels are the extrudedparts, bonded into the centerwing section assembly for interface with the outboardwing assemblies and the left and right leading edges (R4, tab 3 at 104; tr. 2/212-13, 3/208-09). The channels are not off-the-shelfitems readily available to DODS (tr. 3/208-09). DODS confirmed its ability to provide these channelspriorto contract award, but did not explain how it would obtainthe channels in its cure notice response (R4, tabs 7, 54).

58. Although appellant submitted documents purporting to bePOs with its cure notice response, uncontradictedtestimony established that appellant did not issue several ofthe POs (tr. 4/115). The one POthat couldbe verified as having beenplaced, was the PO for honeycomb material with a ten-week lead time. Thehoneycomb material is the roughly two-inch thick core ofthe wing structure thatwill have aluminum skins bonded
on its top andbottom to createthe wing (tr. 3/86). Although nothing prevented DODS from orderingthe honeycomb material earlier (tr. 5/35), DODS allegedly waited until 13 July 2011 to placethe PO with Plascore despite the fact that it had a ten-week lead time for delivery (R4, tab 54 at 3, 38-39). Compoundingthe issue, DODS did not actuallyplace the PlascorePO for the honeycomb material on 13 July 2011 as the PO indicates; DODS placedthatPO three weeks later, on or about 3 August 2011 (tr. 4/116).

59. Bondingwas a critical process requirement for production ofthe centerwing section (R4, tab 41; tr. 1194, 3/112, 5/83). In August 2010, the DCMA QARand a DCMA engineerhad conducted an in-depthprocess review ofthe TTF bondingprocess, which resulted in a determinationthat TTF methods and facilities were incapable of complying with the imposed contractrequirements atthattime. Further, "[the] Clean Room and Autoclaves (which were 'not operational' atthe time) mustberepaired, returnedto full functionality and certified before beingplacedback into production. Additionally, his bondingprocedures must undergo process validation (his internal validation) beforebeingused inproduction." (R4, tabs 31, 57, 72; tr. 11142, 51118-21) TTF remained incapable ofperformingbondingthrough theperformance ofthe contract (tr. 51121, 181).

60. The TMO engineers identifiedthe cleanroom as critical to the manufacture of the centerwing section in the 27 June 2011 meeting with the CO (R4, tab 41; tr. 1184, 94). DODS' clean room was not ready for production (R4, tab 43; tr. 1194-95). Therefore, the CO identified DODS' failure to provide a cleanroom specifically in her
cure notice (R4, tab 52). DODS did not address the clean room issue in its cure notice
20

### response, but it did state its plan to outsource bonding to TTF and thus made relevant any issues involving TTF's clean room (R4, tab 54 at 2; tr. 11141). The clean room is used for adhesive application, and it is vitally importantthat no contaminants are presentto compromise the adhesive seal (tr. 3/112-13, 5/120-21). The TTF "cleanroom" was not clean

- it had apopcorn ceiling that generated thick dust, peeling paint and mildew on the walls, three doors that open directly into other areas including one directly into a sanding
area. NeitherDODS norTTF had an acceptable cleanroom (tr. 5/181).

61. TTF was likewise incapable ofproperly conducting the required heat treating process (R4, tabs 31-34, 43; tr. 1194-95, 5/197-98, 200-01, 203-06). On 7July 2011, TTF failed toproperly test its heat treatmentprocess and conducted its heattreatment in violation ofthe AMS 2770 specification (R4, tabs 43, 70 at 2; tr. 5/197-206). Neither DODS nor TTF had a conforming heat treatment process (tr. 5/181).

The Termination

62. On 27 July 2011, the CO issued a final decision terminating the contract for default. After considering DODS' performance, DODS' cure notice response, input from government technical experts, and the factors in the FAR, the CO determined that DODS had "failedto make satisfactory progress and has failed to provide adequate assurance that DODS would be able to deliver the First Article item that would successfully pass performance testing by 31 August 2011, and that said failures did not arise out ofcauses beyond DODS' control." (R4, tab 58 at 9; tr. 11144-46)

63. On 3 August 2011, the DCMA QARhanded Mr. Storey a copy ofthe modification terminating the contract (R4, tab 62). On 17 August 2011, DODS appealed the termination.

64. On 14 July 2011, the governmentposted a synopsis on FedBizOps for a requirement for additional spare centerwing structure assemblies. This synopsis was not
a replacementprocurement action for the items covered by appellant's contract, but was rather to fill aneed for an additional quantity ofthe same items. Afterthe termination of the instant contract, the CO added nine additional items when the solicitation was posted
on 3August 2011. The contract was competed on a full and open competitionbasis, and the solicitation did not close until September 2011. The resulting contractprice was unknown to anyone priorto the termination ofappellant's contract for default. (R4, tab 76; app. supp. R4, tab 68; tr. 2/140-45)

65. By letter dated 9April 2012, appellant submitted a certified "Delay Claim" in the amount of$2,057,477.40 to the CO. The CO denied the claim in its entirety in her final decision dated 13 June 2012. DODS' appeal ofthe final decision by letter of 31August2012 was docketed as ASBCA No. 58252. DODS failed to briefthe issues associated with the affirmative claims except as they pertain to the excusability ofthe

21

### default. No evidence was admitted at trial concerning the affirmative claims except as they concern appellant's defenses to that termination.

DECISION

These appeals involve thepropriety ofthe government's termination ofthe contract for default (ASBCANo. 57746) and appellant's allegations2 

### that it was excusably delayed in the performance ofthe contract as a defense regarding the termination as well as a separate affirmative claim for monetary compensation (ASBCA No. 58252).

Termination for default is a "drastic sanction" that may be imposed only when there are "good grounds and on solid evidence." Matrix Research, Inc., 

### ASBCA Nos. 56430, 56431, 11-2 BCA**~** 

### 34,789 at 171,239 (citingABSBaumaschinenvertrieb GmbH, 

### ASBCA No. 48207, 00-2 BCA**~** 

### 31,090). The government bears the initial burden ofshowing that the termination was reasonable andjustified. Lisbon Contractors, Inc. v. UnitedStates, 

### 828 F.2d 759, 765 (Fed. Cir. 1987). To support atermination for default for a contractor's failure to make progress so as to endangerperformance ofthe contract, the CO must have areasonable beliefthat there is no reasonable likelihood that the contractor canperform the entire contract effort within the time remaining for contractperformance. Lisbon Contractors, 

### 828 F.2d at 765. Afterthe government makes that showing, the burdenthen shifts to the contractor toprovide evidence of
excuse for its default. DCX, Inc. v. Perry, 

### 79 F.3d 132, 135 (Fed. Cir. 1996); Matrix Research, 

### 11-2 BCA**~** 

### 34,789 at 171,239 (citing Centurion Electronics Service, 

### ASBCA No. 48750,**00-1BCA~30,642).** 

### We find that the contractwas properly terminated for default, that appellant failed to provide adequate assurances that it could timely perform in its response to the cure notice of 12 July 2011 and that DODS was not excusably delayed in the performance of the contract.

2 

### It mustbe emphasized at the outset that appellant's briefs are replete with allegations that are not supportedby trial testimony and other evidence in the record. Appellant elected not to appear for the final two days ofthe five-day hearing and submitted its case for decision on the existing record, including the transcript of the initial three days ofthe hearing. Appellant expressly recognized and acknowledged that the remainder ofthe hearing would proceed in appellant's absence. Consequently, appellant did not present a case-in-chief. In particular, Mr. Storey, appellant'sprincipal did not appearto offertestimony under oath and subject himselfto cross-examination. The briefs in substantial part consist of Mr. Storey's unsworn views thatthe government had no opportunity to rebut at trial. To the limited extentthat appellant does cite to the record, the citations are often inaccurate and/or do notpersuasively corroborate the allegations made.
22

### A. Propriety ofthe Termination for Default for Failure to Make Progress

1. No Reasonable Likelihood ofTimely Performance

The CO's assessment ofappellant's poorprogress wasjustified and supportedthe reasonableness ofher conclusionthat there was no reasonable possibility that appellant couldhave timelyperformed the contract. Appellantwas awarded the contract on 26 January 2011. The first article delivery date was 31 August 2011, 217 days after award. The contract includedthe First Article Approval-GovernmentTesting clause, providing that contractor failure to deliver the first article on time would be treated as a failure to deliver underthe Default clause. At the time ofissuance ofthe cure notice, 75% ofthe performance period had expired. As ofthe date ofthe termination, 182 (84%) ofthe 217 days allotted for delivery had elapsed. There was no reasonable likelihoodthat appellant could have timely performed.

DODS implicitly conceded as much. Its "ProductionPlan," submitted to the CO in response to the cure notice, called for shipment ofthe first article on 24 October 2011. CfSmartPower Systems, Inc., ASBCA No. 56743,**11-1BCA~34,615** 

### (granting summaryjudgmentin favor ofgovernment where appellant admitted that it needed an additional 12 weeks to completethe first article requirement). Not only did DODS admit that it could not deliver by the contract date, there is no persuasive evidence that it was capable ofperforming by the date proposed in its cure notice response regardless ofthe excusability ofthe alleged delays discussed below. Particularly problematic for appellant
was the failure to timely purchase materials. Ordering ofthe critical "honeycomb" material was not impacted by any delay associated with appellant's requests for assistance and should have been procured promptly. In fact, the purchase order for the "honeycomb"material was issued at an indeterminate time on the same day as the CO issued her final decision terminatingthe contract for default. Appellant's unsupported assertions in its briefs notwithstanding, the only evidence in the record indicates that the material required a ten-week lead time for delivery to DODS. Consequently, appellant would not have received the material until 12 October2011. Production time, assuming the honeycomb materials and all other all requisite materials were on hand, would have required approximately an additional three months. Thus, the dates in the production plan were obviously not feasible. Not only did the plan provide for delivery ofthe first article approximately nine weeks after the contractually-specified date of31 August 2011, delivery would not have occurred until about mid-January 2012. Even iftheCO had extended the delivery date as requested by appellant, DODS could not have delivered by its proposed extended date. CfABCKnitwear Corp., ASBCANo. 22575, 81-1 BCA**~** 

### 14,826 at 73,169 (default terminationproperpriorto first article delivery date where contractor failed to ordernecessary yarn).

23

### 2. Lack ofPurchasing Activity and Materials

The record contains a few RFQs purportedly issued by appellantto gather quotes for certain materials. However, there is no evidence RFQs were prepared by DODS for othernecessaryparts and materials, including the channels which the evidence indicates likely would not be readily available to DODS. Although DODS confirmed its ability priorto award to provide the channels, there is no persuasive explanation ofhow it would obtain the channels in its cure notice response. With minor exceptions, the materials generally could have been ordered before responses to the technical clarifications were provided. At least two ofthe RFQs contained insufficient information for potential vendors to base a quote.

No "Purchase Orders" werepurported by DODS to have beenplaced priorto 15 July 2011. With the exception ofthe "honeycomb" material discussed above, however, there is no proofthat DODS actually placed these "Purchase Orders" even though they were suppliedto the CO in response to the cure notice. In addition, contracts with subcontractors, most importantly TTF, were notprovided. We concludethatthe lack ofnecessary materials was a significant factorjustifyingthe termination. Cf Universal Fiberglass Corp. v. UnitedStates, 537 F.2d 393, 398 (Ct. Cl. 1976); Smart PowerSystems, 11-1BCAii34,615.

3. Lack ofAcceptable Facilities

The termination is also supported by appellant's deficient manufacturing facility and that ofits proposed subcontractor TTF, a firm also owned by Mr. Storey that was located at the same address and with whom DODS shared facilities. In particular, bonding and heattreatment were critical requirements for production ofthe center wing section. TTF, which was to fulfill bonding and heat treating requirements, was incapable ofproperly performing the requisite operations during the performance period ofthe contract. In addition, we have found that the proposed clean room was deficient and equipment required significantrepairs and certification before being returned to full functionality and placed back in operation. DODS in its briefchallenges these conclusions, minimizes their significance and attributes them to DCMA malice and maladministration. However, appellant fails to cite to record evidence that impugns the government's evidence and our findings based thereon. ·
B. 

### Failure to Give Adequate Assurances in Response to Cure Notice

In accordance with the contract's Default clause, DODS was required to give adequate assurances oftimelyperformance in response to the CO's cure notice. E.g., 

### Danzigv. AECCorp., 224 F.3d 1333, 1338 (Fed. Cir. 2000), cert. denied, 532 U.S. 995 (2001); National Union Fire Insurance Co., ASBCANo. 34744, 90-1BCAii22,266 at 111,855. Here, the termination was furtherjustifiedby appellant's failure to give sufficient assurances ofits capability oftimely performing in a specification-compliant

24

### manner. Its response in general was vague and largely unsubstantiated by persuasive evidence that it was taking adequate steps to perform. First, as detailed above, DODS had not yet ordered requisite materials even as late as the date oftermination.
Moreover, both appellant's production and quality assurance plans, submitted to the CO in response to the cure notice, were deficient. CfL&MThomas Concrete Co., ASBCA No. 49198, 03-1BCAi!32,194. The perfunctory, unsigned, one-page "ProductionPlan," dated approximately two weeks prior to issuance ofthe cure notice,
was particularly flawed and unacceptable. Among otherthings, it beganwith a date of 4 July 2011 (more than six months after award) and proposed a first article delivery date of24 October2011. The principal assumption underlying the plan was that appellant
was entitled to time extensions ofapproximately two months. As explained herein, appellant was not entitled to any time extension.

The production plan also failed to identify basic production milestones and inspection points for critical manufacturing assembly operations. In this regard, it lacked fundamental understanding ofthe interrelation ofthe production and government quality
assurance process. A primary purpose ofthe plan was to approximate dates during performance, sometimes referred to as government mandatory inspectionpoints (GMIPs), to permit DCMAto plan its involvement and any site visits to fulfill its quality
assurance role. Without advance notice and scheduling ofGMIPs, this primarypurpose ofthe plan was defeated.

We also considerthat appellant's cure notice responses to the CO regarding its facilities, equipment and quality considerations generally did not meaningfully nor satisfactorily address known and documented deficiencies with its equipment and facilities discussed above. The equipment list generically identified three pieces of equipment owned by DODS and 16 pieces ownedby TTF. All ofthe bonding and heat treating equipment was owned by TTF. Without subcontracting, DODS did not have the requisite equipment to complete the contract. To the extentthat DODS intended to subcontract outthe heat treating operations to a firm other than TTF as it alleges in its brief, it also failed to so informthe CO.

C. Excusable Delay Allegations Appellant contends that it was excusably delayed and entitled to time extensions
as a consequence ofgovernment-caused delays associated with the DCMA conduct ofa post-award conference and late government responses to its technical inquiries. In addition, appellant generally cites government maladministration and actions tantamount to bad faith in support ofits arguments that it

### was excusably delayed. These alleged delays attributable to the government also underlie appellant's claims for monetary adjustments comprising the subject matter ofASBCA No. 58252.

251. Post-Award Conference

The timing ofthe post-award conference with DCMA also did not delay appellant. In short, the record in this case does notjustify appellant's allegations that DCMA prevented appellant from proceedingprior to the conduct ofthe conference.
First, the conference is for DCMA'sbenefit not the contractors. Although the conference is called for in DCMA internal regulations, it is not a contractrequirement and there are no specific timing requirements for its conduct. As discussed below, appellant's cursory written productionplan is dated well afterthe conference. Since an obvious purpose ofthe conference is to facilitate coordinationwith DCMA, productive discussion and scheduling ofDCMA involvement could not occur without appellant approximating critical production/inspection milestones in its manufacturing/assembly operations. A plan, establishing critical manufacturing points to facilitate coordination with DCMA inspection needs, was one ofthe primaryrequisites for a meaningful meeting. Appellanthas not established that it was ready for aproductive meeting. In any event, conducting the conference was not a prerequisite to performance. As a minimum, the contractor couldproceedwiththe ordering ofmaterials and accomplish other preliminary tasks priorto the start ofactual assembly/manufacturing. There is no evidence here that appellant placed any purchase orders until the approximate time of termination, ifat all.

In addition, the post-award conference was rescheduled to accommodate appellant's schedule. Even the actual meeting date in earlyApril was not unreasonably late. This is particularly true here given appellant's state ofpreparedness and since DODS expressly stated at the conference it would timely complete the first article with
no mention ofdelay. Appellant first notified the government that it had been delayed three months after the conference.

2. Responses to Technical Inquiries

DODS alleges thatthe information contained in the TPD was "defective, outdated, obsolete and incorrect." Consequently, appellant alleges that it was necessary to ask three series oftechnical questions to clarify and resolve perceived deficiencies. The initial questions were posedto the government in October 2010 afterreceipt ofthe RFQ and priorto submission ofits quotation. Approximately 3

### Y2 to five months following award, appellant sent further inquiries on 16 May and 21 June 2011. The first article was due on 31 August 2011. Appellant claims it was excusably delayed the entireperiod from the dates ofits 16 May and 21 June 2011 inquiries until it was furnished with government responses.

We need not dwell at length on the various subjective factors to be considered in assessing the reasonableness ofthe time taken by the government to reply to the inquiries and/or dissectprecisely when appellant and/or Mr. Storey were furnished the government
26

### responses. To establish excusable delay, DODS not only mustprove that the government's response time was unreasonable, but must also establish that it was actually delayed for a specific period while awaiting the government's response.3 

### See, e.g., Rivera Construction Co., ASBCANos. 29391, 30207, 88-2 BCA**~** 

### 20,750; ElterS.A., ASBCA No. 52832 etal.,**02-1BCA~31,672;** 

### Sonora Manufacturing, Inc., ASBCA No. 31587 etal., 91-1 BCA**~** 

### 23,444. Here, regardless ofwhetherthe government's response time was reasonable, the evidence wholly fails to establish that appellant was actually delayed pending receipt ofthe government's responses. First, neither appellant's 16 May nor 21June2011 letters advised that its production could notproceed withoutthe answers. Contemporaneously, no urgency was expressed by appellant. It

### was not until 6 July 2011, that appellantprovided notice that the government's delay in responding to the "hidden line" question was allegedly impacting production. After learning that its 22 June response to that question had been emailedto the incorrect address, the government provided the response to appellant, Mr. 

### Storey, on 11 July 2011.

In addition, the record affirmatively demonstrates thatproduction was not impacted. There was no need to await aresponse before basic ordering ofessential materials and extensive manufacturing and assembly commenced. Thetestimony of government technical personnel is the only detailed evidence in the recordregarding the impact ofthe questions/replies, or lackthereof, on appellant's ability to make progress. Not only is that testimony unrefuted, we have no reason to doubt its credibility. In short, the governmentpersuasively demonstrated that extensive ordering, manufacturing and assembly operations could have been accomplished pendingreceipt ofthe answers and that they were unaffected by those answers. Unaffected critical activities in significant part did not occur. Unsupported and conclusory assertions in appellant's briefs are insufficientto overcome this record evidence. Appellant's inquiries primarily involved requests to use alternate, "equal" binders/adhesives and products that allegedly were new and/or improved versions of supersededversions ofolder adhesives. The TDP listing ofthese products generally also provided listings ofmultiple alternatives that appellant also could have used without inquiry. There is no suggestionthat the alternatives already listed were also obsolete. The government emphasizes that appellantprovided no manufacturer literature or technical descriptive data establishing their equivalence which affectedthe time that the government required to research and approve use ofthe substitutes. Again, we need not dig deep into the details to conclude that appellant was not excusably delayed by lack ofa government answer. The overarchingproblem for appellant was that it has not demonstrated that it

### was ever approaching a stage in the productionprocess where it would actually use the products in question. Regardless ofwhether the government's

3

### We need not address the government's contentions regarding whether appellant gave sufficient notice ofthe alleged delaying events. 27response time was unreasonable, any delay had no impact onperformance. Most obviously, even ifthe government had responded to the appellant's belated 21 June 2011 inquiries on the same date, the "honeycomb" material could not have been ordered and delivered to appellant until the end ofAugust 2011, a few days before the first article was due. With all necessary materials on hand, actual productionrequired approximately an additional 11 weeks assuming performance proceeded without further delays.

3. Government Maladministration and Allegations Tantamount to BadFaith Generally

Persuasive proofis most lacking in appellant's allegations ofgovernment "confusion" and maladministration generally ofthe contract. The record fails to support allegations oflack ofgood faith by the government. Perhaps most significantly, even if vague allegations bore some seeds oftruth, there is simply no convincing evidence that government actions actually delayed appellant'sperformance. Moreover on this record, iftherewas any "confusion," it was not attributable to the governmentbutto appellant's lack ofunderstanding ofits own obligations underthe contract.

The "confusion" and maladministration arguments are largely based on appellant's misinterpretation and misanalysis ofour decision in another appeal, 

### DODS, Inc., ASBCA No. 57667, 12-2 BCA

### ii 35,078, 

### recon. denied, 13 BCA

### ii 35,203 (hereinafterASBCA No. 57667). Our decision in ASBCA No. 57667 is inapposite. That case involved a different governmentparty and a different, unrelated contract and end item. The primary issue in ASBCA No. 57667 involved a fact-specific waiver ofthe termination date, not a failure to make progress as in the present case. No trial was conducted in ASBCA No. 57667 and the case was submittedby the parties for decision on the record pursuant to Board Rule 11. Thatrecord, the factual circumstances and bases for the decision are not in evidence in this appeal. The Army has rebutted in particular appellant's allegations ofDCMAmisconduct and maladministration. The primary DCMA individuals in question and involved in administering the contract testified under oath, explainedthe communications at issue and were subject to cross-examination in the instant appeal, unlike Mr. Storey. We also notethatthe allegedproblems with DCMA surfaced in the spring of2010, long before DODS submitted its quote and was awarded the contract in late January 2011. Consequently, the schedule proposedby appellant in mid-January 2011 and adopted bythe governmentpresumablytook into consideration perceived difficulties and instructions allegedly issuedby DCMA. Appellant's emphasis onthe perceived accuracy ofroutinely-prepared and required "DelayNotices" also diverts the focus from the primary issue in this appeal, i.e., whetherthere was any reasonable possibility that appellant could haveproduced the instant contract's end items on time. The notices involve unique facts and assessments regarding performance under other contracts and other end items. To examine their accuracy and how assessments and conclusions were reached in the context oflitigating performance problems underthe present contract, is a highly questionable excursion into


### 28the outer fringes ofrelevance. In short, the CO was fullyjustified in reaching her termination decision withoutthe reports based on the totality ofthe information available to her.4 There is no evidence that the notices had a disproportionate orunreasonable influence on the termination decision. Other more significant factors concerning the details ofthe performance ofthis specific contract made that decision reasonable. We also do not considerthat appellant has proved that these reports were prepared maliciously or in bad faith.
Appellant alleges that subsequentprocurement ofthe end items also calls into question thepropriety ofthe termination suggesting that the CO "had already made up her mind." Apparently appellant is referencing the 14 July 2011 posting ofa synopsis on the FedBizOps website and subsequent 3 August 2011 solicitation for the items. The laterprocurement had no proven bearing onthe CO's decision. There is no evidence tending to indicate thatthe synopsis was anything more that aroutine notice to potential offerors ofthe government's recurring future needs. Only after appellant's default were an additional nine end items added to the solicitation. The CO could not have known at the time ofher decision thatthe items wouldbeprocured post-termination in September 2011 at a substantially reduced cost, a cost savings which effectivelybenefitted appellant inasmuch as no excess cost assessmentwas made by the government as a consequence of the reprocurement.

D. ASBCA No. 58252
Appellant's briefs do not address its claims comprising the subject matter of ASBCA No. 58252 for compensable delay. We need not decide whetherthe claims were effectively abandoned as arguedby the government. The claims lack merit and are unproven in any event. As we have detailed above, appellant has not shown that itwas excusably delayed as a defense tothe termination for default. Forthe same reasons, appellanthas failed to establish that it is entitled to a monetary adjustment for the alleged
causes ofdelay in dispute. Appellanthas notprovedthat it is entitled to a time extension for any government-caused delay. Accordingly, it is unnecessary to discuss additional issues relatingto whetherDODS concurrently caused such delays orits failure to detail its methodology in computing the delay period andthe amount claimed.

4 Itwarrants emphasis that appellant inexplicably argues that the CO was negligent in not promptly taking termination action sooner given thepurported seriousness ofthe delay information contained in the notices. Apparently DODS considers that her alleged failure to take prompt action constituted a waiverofthe government's right to terminate. The "waiver" doctrine ofcourse, inter alia, requires the actual passage ofthe delivery date which had not occurred here.
29The appeals are denied.

Dated: 22 July 2014

I concur

# ~~(fA= Administrative Judge Acting Chairman Armed Services Board ofContractAppeals Administrative Judge Armed Services Board ofContractAppeals

I concur

PETERD. TING AdministrativeJudge Acting Vice Chairman Armed Services Board ofContract Appeals 

### • 

# ,,

I certify that the foregoing is a true copy ofthe Opinion and Decision ofthe Armed Services Board ofContractAppeals in ASBCANos. 57746, 58252, Appeals ofDODS, Inc., rendered in conformance with the Board's Charter.

Dated:

30 JEFFREYD. GARDIN Recorder, Armed Services Board ofContract Appeals