ARMED SERVICES BOARD OF CONTRACT APPEALS
Appeal of--

PhoenixManagement, Inc.

Under ContractNo. FA6648-12-C-0019

APPEARANCES FORTHE APPELLANT: ) ) ) ) )

APPEARANCES FORTHE GOVERNMENT: ASBCA No. 59273

Johnathan M. Bailey, Esq. Kristin E. Zachman, Esq.

Bailey & Bailey, P.C. San Antonio, TX

Lt Col James H. Kennedy III, USAF

Air Force ChiefTrial Attorney CaptAmy K. Siak, USAF Carrie W. Fogle, Esq. Sarah L. Stanton, Esq.

Trial Attorneys

OPINION BYADMINISTRATIVE JUDGE FREEMAN ON THE GOVERNMENT'S MOTION FOR SUMMARYJUDGMENT

This appeal arises under an AirForce base operations contract (hereinafter Contract 0019). The contractor, Phoenix Management, Inc. (PMI), appeals a contracting officer's final decision denying its claims for declaratory reliefand equitable price adjustment for the government's failure to disclose superiorknowledge and defective estimate ofthe workload requirements. The government moves for summaryjudgment onthe grounds that PMI has not shown any loss from the alleged failure to disclose orthe alleged defective estimate. We find genuine issues of material fact in dispute and deny the motion.

STATEMENT OF FACTS (SOF) FORPURPOSES OF THE MOTION

1. Contract 0019 was solicited on 10 November 2011 and awarded to PMI

on 26 September 2012. The contractrequired PMI to provide specified operating services at Homestead Air Reserve Base, Florida, for an initial ten-month period from 1November2012 to 31August2013 with four consecutive one-year options exercisable by the government for continued performance thereafter. (R4, tab 1at 1, 4, 19,27-28,35,43)2. Contract line item number (CLIN) 0006, entitled "Operation ofReal Property Maintenance (RPM)," was a firm-fixed-price CLIN in the amount of$39,241 per month for the ten months ofthe initial term ofthe contract (R4, tab 1 at 6). Tab F ofthe Contract 0019 Performance Work Statement (PWS) specified the RPM work (R4, tab 21 at 1, 5). Section FS.18 oftab F specified the work to be performed on the base fire detection, protection and suppression systems (hereinafter "the fire systems")

as follows:



### FS.18 FireDetection, Protection, and Suppression Systems: The SP [Service Provider] shall maintain, inspect, and test all fire detection/integrated mass notification and fire suppression system, controllers, pumps, engines, and water supply tanks IAW UFC 3-601-02, UFC 4-021-01 and where applicable NFPA 72. (See F-TE-2h for quantities and locations).



### FS.18.1 The SP shall repair all defects or malfunctions as
an emergency orurgent service call underthe Labor for Service Call CLIN ofthe contract.



### FS.18.2 The SP shall perform all RWP [recurring work program] maintenance, inspections, tests, and repairs using NICET certified individuals, certified in the appropriate classification andproficient on fire detection, protection, and suppression systems. Technicians mustbe supervised by a state certified fire inspector or NICET certified technician. All RWP maintenance, inspections, tests, and repairs shall be coordinatedwith the Fire Department. Submit a written report ofall inspection and test findings to the Fire Department and BCEwithin five workdays after monthly inspections in accordance withF-TE-3, F48.

(R4, tab 21 at 130)

3. Pursuant to section FS.18.1 ofthe PWS, the labor for repair ofdefects and malfunctions ofthe fire systems was not performed under the inspection, test and maintenance (ITM) fixed-price CLIN 0006, but underthe Labor for Service Call CLINs at specified hourly labor rates. The directparts and materials for the repairs were compensated under cost-reimbursement CLINs. (R4, tab 1 at 9, 12) The contract also allowed PMI to subcontractthe service call repair workunder section H- Special Contract Requirements as follows:



### 2H-5 AFRC SERVICE CALL SUBCONTRACTS

In the event a subcontract is contemplated for which Labor Categories are established underthe Service Call CLIN, the contractor shall prepare a 'make orbuy' analysis with prime (make) versus subcontract (buy) pricing. The prime (make) estimate shall be developed in the Inter[i]m Work Information Management System (IWIMS). The total allowable price shall be the lesser ofthe price to subcontractthe work orthe price ofthe IWIMS estimate utilizing the applicable labor rates.
(R4, tab 1 at 62)

4. PWS Technical Exhibit F-TE-2, "WORKLOAD ESTIMATES," specified the number, type and location ofthe various fire systems on the base. This workload consisted ofabout 79 building fire detection and alarm systems, 62 base-wide fire hydrants and yard monitors, 5 diesel fire pumps, 5 water supply tanks, and 49 building fire suppression systems ofvarious types (36 wet, 4 foam/wet, 1wet & pump, 2pumps, 2 foam/wet/pump, 1 standpipe, 1C02, and 2 Halon). (R4, tab 21 at 143, 160-63) The frequency, components, and tasks for the ITM ofeach ofthese fire systems was specified in detail in UFC 3-601-02 atpages 11-14, 25-37, 40-44. 1 PWS Technical Exhibit F-TE-2bprovided a service call workload estimate of2 emergency and 44 urgent service calls over a 12-monthperiod for the entire Real Property Maintenance CLIN 0006, ofwhich the fire systems were apart (R4, tab 21at143).

5. PMI contends thatthe government failed to advise bidders that "most" of the fire detection/suppression systems were "proprietary systems which can only be serviced by firms that are authorized and licensed by the OEM" (app. resp. at 3). The government contends that: "Itis known throughout the industry that any fire system contains proprietary components/information/software." The government further contends that "[t]he fire systems at Homestead ARB are manufactured by Digitize and the only proprietary portion ofthe system is the wireless notification portion ofthe alarm system." (R4, tab 50 at 2)

6. From 31 August to 10 October 2012, the fire suppression systems in 37 of the 49 buildings listed in the PWS as having those systems were inspectedby another previous contractor. The suppression systems in 20 ofthe buildings passed the inspection. The suppression systems in 17 ofthe buildings had 1or more failures. (R4, tab 21 at 162-63; app. supp. R4, tab 6 at 54-56)

1 Compliance with the UFC 3-601-02 is specified in the PWS (see SOF**~** 2) and we admit the entire document dated 8 September 2010 in evidence as Bd. ex. 1.

37. PMI alleges that on 28 November 2012 it "found out thatthe Unified Facilities Criteria (UFC 3-601-01) [sic] is the official document used for Fire Protection and Suppression Systems at Homestead ARB" and that "no inspections

were ever done on the Fire Alarm Systems in the past 5 years, and the inspections on the Suppression System were started only in Aug. 2012" (R4, tab 49 at 12-13).

8. On 19 February 2013, PMI submitted a request for "Contract Modification

or Equitable Adjustment

...regarding the Fire Detection/Suppression System inspection, certification and maintenance backlog

...so that [for] these systems, all required inspections, testing/certifications and repairs may be broughtup to industry standards underthe UFC and NFPA, as applicable" (app. supp. R4, tab 4 at 1). On the presentrecord, there is no evidence ofany response by the contracting officer to this request.

9. The UFC 3-601-02, Table 2-1 entitled "Fire Detection and Alarm System ITM Tasks," shows 18 tasks to be performed cumulatively over a 5-yearperiod. There is 1monthly task, 10 annual tasks, 6 bi-annual tasks and one 5-year task. (Bd. ex. 1) Thus, ifas PMI alleges, and the government does not deny, thatthere had been no fire alarm tests in the past 5 years, PMI would have to perform in the initial 10-monthterm ofthe contract not only the required monthly tasks, but also in each ofthe 79 buildings having fire alarm systems, the other 17 tasks in the 5-yearprogram to bring the alarm systems into compliance with UFC 3-601-02.2

10. On 24 February 2014, PMI submitted a claim under the Contract Disputes Act of 1978, 41 U.S.C. §§ 7101-7109. The claim alleged that, (i) prior to the contract, the government had notproperly maintained the fire systems to the industry standards, (ii) the solicitation did not disclose the government's estimated $300,000 ofurgently needed inspections and repairs ofthe systems, (iii) the government's estimate ofthe number ofemergency and urgent service calls in the PWS did not "reflectthe volume ofwork it actually knew would be required," and (iv) the government failed to advise offerors (otherthan the incumbent) that "most ofthe fire detection/suppression systems are proprietary systems which can only be servicedby firms that are authorized and licensed by the OEM"3 (R4, tab 49 at 2-4). PMl's claim concluded with the following demand for relief:

2 Table 2-1 for the alarm systems is only the first ofthe ITM task schedules in UFC 3-601-02. There are 15 other schedules similarly structured as to frequency, component, and tasks for each ofthe fire suppression system types commonly in use. (See SOF 

### if 4) 3 PMI's concern about the fire systems beingproprietary was that ifithad to subcontract the work on the proprietary systems to the firms authorized by the

41) Declaratory relieffinding that PMI is not responsible under its firm, fixed price for the cost ofinspection, certification and any and all repairs ofany fire detection, suppression and notification systems, but that any and all such work is to be performedby subcontractors under work order on a cost-reimbursement basis; and 2) Declaratory relieffinding that under Paragraph H-5 where work is required on a proprietary system such that it is impossible for PMI to perform such work with its own efforts, the amount ofapproved work orders shall be the amount actually charged by qualified vendors under competitive quotations in a make orbuy analysis, and not limited to the rates in PMI's contract; and 3) An equitable adjustmentto the contractprice to make PMI whole for the increased costs ofperforming inspections, certifications and associated repairs where work orders have not been approved by the Government. Atpresentthat amount stands at $2,678.00. This is a continuing claim, and the amount claimed will be increasedby future work for which the Government does not approve payment as requestedby PMI.

(R4, tab 49 at 33-34)

11. PMI's specific monetary claim of$2,678.00 was for "the semi-annual halon system inspection and certification at [B]uilding 4055, for which the Government has refused to issue a work order" (R4, tab 49 at 2). However, in its response to the government's motion for summaryjudgment, PMI states that "onJuly 2, 2013 the Government approved paymentfor Halon Inspection at Building 4055 in the amount of $2,600.00 by Advanced Systems, Inc. as a certified subcontractor to PMI." PMI also states that the government has "approved a further work order in the amount of $21,300.00 for paymentto Advanced Systems, Inc. to make repairs to Building 4055 that were shown to be necessary during that inspection due to the long neglect ofthose systems." (App. resp. at 25-26)

OEM, the government underparagraphH-5 ofthe contract ''would only pay for work

...atthe labor rates provided for PMI's own efforts" (R4, tab 49 at 4).

512. On 24 April 2014, the contracting officer issued a final decision denying the claim entirely. The final decision answered the three requests for reliefas follows:

PMI is requesting relieffinding that it is not required to perform the inspections and preventative maintenance and any and all repairs ofthe fire systems at Homestead ARB underthe FFP CLIN 0006 contained in [Contract 0019]. PMI has neverbeen obligated under the FFP CLIN to provide repairs under the FFP CLIN.

.. . PMI is and will continue to be required to provide the inspection and preventative maintenance on the fire systems at Homestead ARB IAWthe terms and conditions ofthe contract. If PMI makes the corporate decision to subcontractthe inspections to a subcontractorthat is its business decision butno increase in the FFP will be allowed.

a. Additionally, PMI is requesting relieffrom Provision H-5 ofthe contract. As stated numerous times above, the entirety ofthe fire systems are notproprietary; therefore, itwouldbe inappropriate to provide PMI with a blank check regarding repairs ofthe fire systems at Homestead ARB. By requiring PMI to submit an analysis ofcosts it will enable the Governmentto receive the best value for the funds expended inthe repair ofthe fire systems. To date PMI has not hired the Fire Alarm Systems Mechanic that it proposed so it would be impossible for PMI to provide the repairs in house. PMI

was awarded the Homestead ARB BOS contract in part because its proposal was found to be technically acceptable basedupon the requirements in the RFP. A portion ofthat evaluation was how they proposed to maintain, inspect and test all fire detection/integrated mass notification and fire suppression systems. PMI'sproposal specifically demonstrated that they would have both a Fire Alarm Systems Mechanic and Plumber on staffto perform this requirement.

b. Finally, PMI is seeking an equitable adjustment in the amount of$2,678.00. PMI has not submitted any justification for this amount otherthan it is for a work order denied by the Government. PMI did not specify if the workorderwas for inspection and maintenance, or repair. Ifthe claim is for inspection and maintenance then

6the amount is a portion ofthe FFPunder CLIN 0006 ofthe
contract. Ifthe amount claimed is for repair, PMI has not provided any information as to ifthe repair was to a proprietary portion ofthe system orto another potion of the system. Additionally, IAW the terms and conditions of the contract PMI is not authorized to perform any service calls over $500 without the approval ofthe BCE. Ifthe
amount claimedwas in fact for a repair PMIhas violated the terms and conditions ofthe contract.

(R4, tab 50 at 7-8)

13. On 24 April 2014, PMI appealed the contracting officer's final decision to this Board. On 4 June 2014, the government moved for summaryjudgmentonthe grounds that there was no genuine issue ofmaterial fact that (i) the contract required PMI to inspect and maintain all fire systems, (ii) the government made no representation as to how much inspection and maintenance was required, (iii) PMI made no attemptto assess how much mightbe required priorto submitting its bid, (iv) even iftherepair work was many times more than whatPMI had assumed, since it is paid for on a cost-reimbursable basis for both labor and materials, PMI is unable to establish that it will suffer any loss, and (v) "as no inspections have taken place, they have no grounds to assert they should be afforded relief' (mot. at 9-10).

14. The PMI "Response"to the motion contends that there are genuine issues ofmaterial fact as to, among otherthings, (i) the government's characterization ofthe Labor for Service Call CLINs as "costreimbursable" CLINs, (ii) the reasonableness of PMI's fixed-price bid for CLIN 0006 considering the government's undisclosed knowledge ofthe poor maintenance condition ofthe fire systems, and (iii) the extentto whichthe fire systems were proprietary with servicing limited to firms authorized by the OEM (app. resp. at 26-27).

DECISION

Summaryjudgment is properly granted only where there are no genuine issues ofmaterial fact and the movingparty is entitledtojudgmentas a matter oflaw. Mingus Constructors, Inc. v. UnitedStates, 812 F.2d 1387, 1390 (Fed. Cir. 1987). On the record before us onthe motion, we find genuine issues ofmaterial fact that preclude a grant ofsummaryjudgment.

With respect to the fixed-price ITM work under CLIN 0006 ofthe contract, there is a genuine issue ofmaterial fact as to whetherthe government made any representation as to how much inspection, test and maintenance ofthe systems would be required. The government states that it did not (mot. at 9). However, in the PWS

7and in the UFC 3-601-02 specifiedtherein, the government specifiedthe number, type and location ofthe fire systems to be serviced and the specific ITMtasks and frequency ofperformingthose tasks. There is also a genuine issue ofmaterial fact as to whetherthe cost ofperforming the fixed-price CLIN 0006 ITM work, which did not include any repair work on any defects or malfunctions in the fire systems, was increased by the fact thatthe systems previously had notbeen inspected, tested and maintained to industry standards.

Withrespect to the laborrepair workto be performedunderthe Labor for Service Call CLINs at contractually agreed hourly rates, the government did not provide an estimate ofthe service calls specifically for the fire systems, but it did provide anestimate for the entire RPM CLIN 0006 ofwhichthe fire systems were a part. That estimate was a total of2 "emergency" calls and 44 "urgent" calls for the first 12 months ofthe contract. 

### (See SOF**~** 4 above) There is a genuine issue ofmaterial fact as to the number of"emergency" service calls and the number of "urgent" service calls that were actually made inthe first 12 months ofthe contract. There is also a genuine issue ofmaterial fact as to how many ofthese calls were for defects and malfunctions known to the governmentbeforethe solicitation ofPMI's contract and not included in the estimate ofemergency and urgent service calls.

The government's contentionthat PMI is unable to establish that itwill suffer any loss onthe repair workbecause it is paid for "on a costreimbursable basis for both labor and materials" is incorrect (gov'tmot. at 10). The material for repairs is reimbursed at cost butthe labor is reimbursed based on fixed hourly rates in the contract, and ifthe contractor cannot make the repair atthe contractually agreed hourly labor rates it mustbearthe loss. There are genuine issues ofmaterial fact as to the extent ofthe proprietary components ofthe fire systems, and the extent ifany to which thehourly labor rates ofthe firms authorized by the OEMto make repairs exceed the hourly rates specified in PMI's contract.

The foregoing is not an exhaustive list ofthe genuine issues ofmaterial fact in dispute in this appeal but it is sufficient for purposes ofthe motion.

8The motion for summaryjudgmentis denied.

Dated: 8 April 2015

I concur

# ~~~ Administrative Judge Acting Chairman Armed Services Board ofContract Appeals MONROE E. FREEMAN, JR. Administrative Judge Armed Services Board ofContractAppeals 

# 'ff!£

RICHARD SHACKLEFORD Administrative Judge Vice Chairman Armed Services Board ofContract Appeals

I certify thatthe foregoing is a true copy ofthe Opinion and Decision ofthe Armed Services Board ofContract Appeals in ASBCA No. 59273, Appeal ofPhoenix Management, Inc., rendered in conformance with the Board's Charter.

Dated:

9 JEFFREYD. GARDIN Recorder, Armed Services Board ofContract Appeals