ARMED SERVICES BOARD OF CONTRACT APPEALS Appeals ofSandPoint Services, LLC Under ContractNo. NNG14WA50C APPEARANCES FORTHE APPELLANT: 

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APPEARANCES FORTHE·GOVERNMENT: ASBCA Nos. 61819, 61820

Traeger Machetanz, Esq. Nathan W. Rouse, Esq.

·Davis Wright Tremaine LLP

Seattle, WA Scott Barber, Esq.

NASA ChiefTrial Attorney David S~ Schuman, Esq.

Trial Attorney NASA Goddard Space Flight Center Greenbelt, MD OPINION BYADMINISTRATIVE JUDGE SWEET ONTHE GOVERNMENT'S MOTION TO DISMISS AND/ORFOR SUMMARYJUDGMENT These appeals involye disputes arising out ofa contractbetween the National Aeronautics & Space Administration (NASA or government) and appellant Sand Point Services, LLC (SPS) to repair the Wallops FlightFacility's aircraftparking apron. SPS alleges that it incurred extra costs and encountered delays as a result ofa differing site condition-namely unsuitable soil. 

### It also alleges thatNASA constructively changed the contractwhen it waived minor deviations from the contract specifications, and then insisted upon strict compliance with those specifications. Further, SPS alleges, that insistence upon strict compliance with the specifications resulted in economic waste. NASA moves to dismiss, arguing that we lackjurisdictionbecause the contracting officer's (CO's) final decision (COFD) was basedupon a suspicion offraud. Inthe alternative, NASA moves for summaryjudgment, arguing that SPS admitted that its failure to comply withthe contract was the fault ofAtlantic Contracting and Material, Inc. (ACM)-SPS's subcontractor. Moreover, NASA argues that a bilateral modification released SPS's differing site condition claim. For the reasons discussed below, we deny the motion to dismiss because the COFD was notbased solely upon a suspicion offraud, and we may resolve these appeals without making factual determinations offraud. We also deny NASA's motion for summaryjudgment. SPS did not admit that the failure to comply withthe specifications was ACM's fault, and that issue is not material to SPS's constructive change and wasteappeal. Further, there are genuine issues ofmaterial fact as to whether SPS signed the modification under duress. STATEMENT OF FACTS (SOF) FORPURPOSES OF THE MOTIONS 

### I. 

### The 5OC Contract 1. On September 8, 2014, NASA entered into ContractNo. NNG14WA50C (50C Contract) with SPS to repair the Wallops FlightFacility's aircraftparking apron (R4, tab 1 at 1-2, 4, tab 3 at 3). 2. Under the 50C Contract, certain soils were,unsatisfactory for this project (R4, tab 66 at 83). The 50C Contract required that SPS remove and replace unsatisfactory soils, as directed by the CO 

### (id. at 84). 3. The 50C Contract also required SPS to obtain a bond (R4, tab 1 at 4). 

### JI. 

### Performance 4. On September 9, 2014, SPS obtained a bond from a surety (R4, tab 74, ex. 6). 5. On June 9, 2015, SPS sentNASA a Request for Information (RFI), which indicated that SPS had encountered unsuitable soil. The RFI presented two options to address the problem, and soughtNASA's guidance. (R4, tab 66 at 86) 6. OnJune 11, 2015, and July 6, 2015, NASA sent SPS Requests for Proposals (RFPs) concerning soil removal (R4, tab 66 at 91, 140). 7. Inresponse, SPS submitted a proposal on July 13, 2015, and revisedproposals on July 21, 2015, and July 27, 2015 (R4, tab 66 at 144-70). 8. On August 12, 2015, NASA sent SPS a list ofcontract violations purportedly causing delays (R4, tab 18). 9. OnAugust 20, 2015, NASA sent SPS a Show Cause Notice, stating that SPS failed to performthe SOC Contract within the requiredtime, and requiring SPS to demonstrate why the contract should notbe terminat~d for cause (R4, tab 19 at 1). 10. OnAugust 28, 2015, SPS responded that it had failed to complete performance on time because NASA hadnotprovided guidance cin howto proceed in light ofthe purported differing site condition which was the subject ofan RFI submitted on June 9, 2015 (R4, tab 22 at 2).

211. By letter dated September 4, 2015, NASA responded that a differing site condition did not cause the delays (supp. R4, tab 2 at 1). 12. After further exchanges, NASAwrote to SPS requesting that it execute ModificationNo. 000002. The letter stated that not signing ModificationNo. 000002 "will leave the Government no choice but to continue with termination for default proceedings." (R4, tab 25 at 1-2) 13. On September 16, 2015, SPS signed ModificationNo. 000002 (R4, tab 28 at 1). ModificationNo. 000002 changed the scope ofthe contract at no additional cost to NASA, and extendedthe completion date (id. at 2). ModificationNo. 000002 also contained the following release:



### (Id. at 2-3) In consideration ofthe modification agreed herein as complete equitable adjustment for the Contractor's proposal for adjustment dated June 19, 2015, July 27, 2015, and August 19, 2015 in response to [the RFPs]

...and all claims related to this project; the Contractorhereby releases the Government from any and all liability under. this Contract for further equitable adjustments attributable to such facts or,circumstances giving rise to the items describedherein.

14. OnNovember

### 4, 2015, ACMnotified NASAthat ithad completed major concrete paving operations, and requested a punch list (R4, tab 67 at 35). 15. On December 4, 2015, NASAprovided a punch list. Thepunch list noted, 

### inter alia, that the concrete texture and the mooring eyes did not meet the specifications. (R4, tab 67 at40) NASA required completion ofall punch list items within 45 calendar days. NASA also stated that final acceptance and paymentwere predicatedupon successful punch list completion. 

### (Id. at 37) 16. SPS requested variances from the concrete texture and mooring eyes specifications. NASA took the request regarding the concrete texture under advisement. Regarding the mooring eyes, NASA stated that the request wouldrequire an aircraft tie-down hook inspection. NASA further stated that "[i]fthemooring eyes are found to be good enough to be used in some fashion then only a credit will be needed for the improperly installed eyes." (R4, tab 67 at 278, supp. R4, tab 10) 17. 'On January 21, 2016, SPS sentNASA an email indicating that the mooring eyes had beenhooktested, and NASAhad accepted those results (R4, tab 67 at 107).

3, 

### NASA responded that "[a]llmooring eyes can be hooked. Mooring eyes are not installed within tolerance perplan." (Id. 

### at 106) · 18. On May 12, 2016, the CO sent SPS an email inquiring about the punch list status. Inparticular~ the CO stated that "[i]t is immaterial ifthe mooring eyes can be used for tie-downs as they are tripping hazards and fail to meet the contract requirement of within a 1/4 

### [inch] to flush with the surface." (R4, tab 67 at 404, Item No. 67) Regarding the concrete texture, the CO indicated that SPS either had to correct the surface, or provide a credit (id. 

### at 401-02, Item Nos. 2, 19). 19. The parties exchanged multiple correspondence regarding punch list completion (R4, tab 67 at 411-588). SPS proposed addressing the mooring eyes with grinding, orthe addition ofplates (icl. 

### at 460-61, 471). SPS also insisted that the concrete texture was functional, even though it did not strictly comply with the specifications (id. 

### at 438, 470). III MillerActAction 

### 20. On January 12, 2017, ACM filed an action in Federal District Court seeking compensation under the bond from SPS's surety due to SPS's failure to pay ACM pursuantto 40 U.S.C. Title 3131, etseq 

### (Miller Act Action) (R4, tab 74, ex. 6). The Miller Act Action complaint alleged that "[ u]pon information and belief, [SPS] has entered into an Agreementwith NASA whereby [SPS] waived any rightto recovery for the delays that were encountered by" ACM (id.; see also 

### R4, tab 62 at2, 8). ACMmakes no allegation as to whether that release is enforceable, or whether SPS executed the release under duress (id.). 

### 20. OnFebruary 27, 2017, SPS moved to intervene, and to dismiss or stay the Miller ActAction.· SPS argued that the Miller ActAction was premature because ACM had not "completed its subcontract work to NASA's satisfaction." (R4, tab 74, ex. 7) 22. In support ofthe motion, Christopher Woodruff-SPS's General Manager-submitted a declaration (R4, tab 74, ex. 8, Woodruffdecl.). Mr. Woodruff declared that ACM had notperformedto NASA's satisfaction, stating that "ACM's subcontract work has not yetbeen completed, nor has ACM's subcontract workbeen accepted by NASA. To the contrary, NASA has rejected portions ofACM's subcontract work as nonconformingto the contractrequirements." (Id. 

### at 2) Likewise, Mr. Woodruff declared that "ACMhas acknowledged the nonconformity ofthe ACM subcontractwork rejected byNASA, and has agreed to correct the NASA rejected work" (id.). 

### After discussing how SPS had submitted a Corrective Work Plan, Mr. Woodruffdeclared that "ACMhas not fully and duly performed its subcontract work under the terms ofthe ACM subcontract" (id. 

### at 4). Mr. Woodruffdid not declare that the deficiencies were ACM's fault (id. 

### at 2-4). Onthe contrary, Mr. Woodruff-declared thatthere was a differing site condition that impacted time and costs (id. 

### at 4). 4

### IV. ProceduralHistory (
· 23. On October 27, 2017, SPS submitted a Request for Equitable Adjustment (REA), seeking compensation for the alleged differing site condition ofunsuitable soil (R4, tab 66 at 1, 7-10). 24. OnJanuary 19, 2018, SPS submitted an REA seeking compensation for an alleged constructive change and economic waste regarding the punch list items (R4, tab 67). 25. By letters dated June 5, 2018, SPS notified the CO that it was converting its REAs into certified claims, and provided certifications (R4, tabs 69-70).

. 26. On September 19, 2018, the CO issued a COFD (R4, tab 74). First, the CO stated that SPS released the differing site condition claim in Modification No. 000002, and that a differing site condition did not cause increased costs or delays 

### (id. at 1-2). Second, the CO rejected SPS's constructive change and waste claim onthe grounds that pilot safetyrequired compliance with the specifications, and the projectwas not functional

### (id. at 2-3). Finally, the CO statedthat the claims appeared fraudulent because Mr. Woodruffadmitted in the Miller ActAction that ACM failed to perform in accordance withthe specifications 

### (id. at 3-5). 27. There is no evidence thatthe CO referred the matterto the agency official responsible for investigating fraud. 28. SPS filed a notice ofappeal and complaint, which we docketed as ASBCA No. 61819 (constructive change and waste appeal). Inthat appeal, SPS admits that the concrete texture and mqoring eyes were deficient, but alleges that those deficiencies involved "minor issues" (compl. , 69). Moreover, SPS alleges thatNASA constructively changedthe contract when it waived strict compliance withthe specifications by accepting the concrete texture andthe mooring eyes, butthen insisted upon strict compliance with the specifications 

### (id. at 57-66). SPS also alleges that insisting upon strict compliance with the specifications caused economic waste because the concrete texture and mooring eyes "did not fall withinthe specified tolerances under the contractbutwere otherwise fully functional" 

### (id. at 17, 67-76). 29. SPS also filed a separate notice ofappeal and complaint, which we docketed as ASBCANo. 61820 (differing site condition appeal). Inthat appeal, SPS concedes that there were delays, but alleges that those delays were due to NASA's failure to provide directions after SPS notified it ofa differing site condition (compl. ,,34-4~). 30. Discovery has not commenced yet.

5DECISION 

### I NASA'sMotion to Dismiss We deny NASA's motion to dismiss because we possessjurisdiction over these appeals. A valid COFD is a prerequisite for ContractDisputes Act (CDA)jurisdiction, 

### PROTEC, GmbH, ASBCANos. 61161, 61162, 61185, 18-1 BCA

## ,r 37,010 at 180,244, and an agency does nothave the authority to settle, compromise, pay, or otherwise adjust any claim involving fraud. 41 U.S.C. § 7I03(c)(1). However, "[t]he Board does havejurisdictionunder the CDA to decide the contractrights oftheparties even when fraud has been alleged." 

### SIA Constr., Inc., ASBCANo. 57693, 14-1 BCA

## ,r 35,762 at 174,984 (quoting

### Pub. Warehousing Co. K.S.C., ASBCANo. 58078, 13 BCA

## ,r 35,460 at 173,896). Inparticular, "[t]hat fraud allegedly may have beenpracticed in the drafting or submission of

...[a] claim does not deprive this Board of jurisdictionunder the CDA." 

### Nexus Constr. Co., ASBCANo. 51004, 98-1 BCA

## ,r 29,375 at 146,017 (citing

### Anlagen und-Sanierungstechnik GinbH, ASBCANo. 37,878, 91-3 BCA

## ,r 24,128 at 120,753). We possessjurisdictionwhen a COFD is not based so~ely upon a suspicion offraud. 

### Daff v. UnitedStates, 78 F.3d 1566, 1572 (Fed. Cir. 1996); 

### PROTEC, 18-1 BCA

## ,r 37,010 at 180,244. Moreover, we possessjurisdiction over an appeal ifwe do not have to make factual determinations offraud. 

### Laguna Constr. Co., Inc. v. Carter, 828 F.3d 1364, 1368-69 (Fed. Cir. 2016); 

### SIA Constr., 14-1 BCA

## ,r 35,762 at 174,985. Here, the CO's assertion that SPS's claims involve fraud is undermined by the fact that she did not refer the matter to the agency official responsible for investigating fraud (SOF 

## ,r 27), which she wouldhave been obligated to do ifshe concluded that there was evidence offraud. 

### PROTEC, 18-1 BCA

## ,r 37,010 at 180,244 (citingFAR33.209). Further,the COFD is notbased solely upon a suspicion offraud (SOF 

## ,r 26). In addition, we do not have to make factual determinations offraud to resolve these appeals, We do nothave to determine whether any incorrect statements were made knowingly and with the intent to deceive. 

### SIA Constr., 14-1 BCA

## ,r 35,762 at 174,984 (quoting

### Pub. Warehousing, 13 BCA

## ,r 35,460 at 173,896). Indeed, we need not even have to make a factual determination as to whether any statement inthe claims were incorrect. The statements in the claims thatthe CO found were incorrect were those that purportedly were inconsistent with Mr. Woodruffs declaration that ACM failed to perform in accordance withthe specifications. (SOF 

## ,r 26) Forpurposes of this appeal, SPS concedes that it and ACM did not perform in accordance with the specifications, (SOF 

## ,r,r 28-29). Inparticular, ln its differing site condition appeal, SPS admits performance delays, but-consistentwith Mr. Woodruffs declaration-asserts that those delays were due to a differing site condition (SOF 

## ,r,r 22, 29). Moreover, in its constructive change and waste appeal, SPS concedes that the concrete texture and mooring eyes did not meetthe specifications, but asserts that those defects were minor, NASAwaived strict compliance with those specifications, and enforcing those specifications would result in economic waste (SOF 

## ,r 28). Because we need not make 6factual determinations offraud to resolve those arguments, we possessjurisdiction over these appeals. 

### II NASA's Motionfor SummaryJudgment A. Standardof Review Summaryjudgment is appropriate only ifthere is no genuine issue as to any material fact, and the moving party is entitled tojudgment as a matter oflaw. 

### Celot~x Corp. v. Catrett, 477 U.S. 317, 322-23 (1986). A material fact is one'that may affect the outcome ofthe decision. 

### Anderson v. LibertyLobby, Inc., 477 U.S. 242, 248-49 (1986). There is a "genuine" dispute as to such a fact if"the evidence is suchthat a reasonable [fact-finder] could return a verdict for the nonmovingparty." 

### Id. B. $PSDidNotAdmit ThatNon-Performance Was its Fault NASA is not entitled tojudgment as a matter oflaw on SPS's claims onthe grounds that Mr. Woodruffadmitted that non-performance was ACM's fault (gov't mot. at 15-16). While Mr. WoodruffconcededthatACM did notperform in accordance with the specifications, he did not declare that that failure was ACM's fault (SOF 

## ,r 22). Regarding the differing site condition appeal inparticular, Mr. Woodruffspecifically declared that a differing site condition caused delays and increased costs (SOF 

## ,r 22). Therefore, Mr. Woodruffs declaration is consistent with the allegations in the differing site condition appeal. Regarding the constructive change and waste appeal, Mr. Woodruff did not admit that the deficient concrete texture and mooring eyes were ACM's fault (SOF 

## ,r 22). Even ifhehad, that admission would not dispose ofthe constructive change and waste appeal. That is because on appeal, SPS's argument is that, even ifit was ACM's fault that the concrete texture and mooring eyes did not meetthe specifications, NASAwaived strict compliance with those specifications, and strict enforcement ofthose specifications wouldresult in economic waste (SOF 

## ,r 28). Therefore, not only does Mr. Woodruffs declaration fail to establish a lack ofa genuine dispute as to whether the concrete texture and mooring eyes defects were ACM's fault, that issue is notmaterial to this appeal. 1 C. 

### There Is a Genuine Issue of Material Fact as to Whether SPSReleased its DifferingSite Condition Claim

1NASA incorrectly argues thatwe should defer to the CO's fact findings (gov'tmot. at 16; gov't reply br. at 1-2). Our ''jurisdiction is 

### de novo and the CO's findings are not subjectto any presumption ofcorrectness nor are they binding on appeal." 

### AeroVironment, Inc:, ASBCANos. 58598, 58599, 16-1 BCA

## ,r 36,337 at 177,178 

### (citing Wilner v. United States, 24 F.3d 1397, 1401-03 (Fed. Cir. 1994) 

### (en bane)). 7

### Nor is NASA entitled tojudgment as a matter oflaw on the grounds that ModificationNo. 000002 released the differing site condition claim because there is a genuine issue ofmaterial fact as to whether SPS signed ModificationNo. 000002 under duress. A release is the product ofduress-andtherefore is not enforceable-when (1) a person compels another to as~ent to a release against his will; (2) such assent is induced by wrongfully threatening action the person has no legal right to take; and (3) the threatened action, iftaken, will cause irreparable damage to the other person. Enviro. Tectonics Corp., 

### ASBCA No. 23374, 86-1BCA118,649 at 93,784. "It

### is not duress to threaten to make good faith use ofthe remedies prescribed under the contract." Id. 

### at 93,782 (quoting Johnson, Drake & Piper, Inc. v. UnitedStates, 

### 209 Ct. Cl. 313 (1976)). However, the government must have a good faith beliefthat it is entitled to take the threatened action. Id. 

### at 93,782-83; see also Urban Plumbing & Heating Co. v. UnitedStates, 

### 408 F.2d 382, 388-92 (Ct. Cl. 1969). Moreover, the government's actions-even ifauthorizedbythe contract-cannotviolate ~otions offair dealing. Enviro. Tectonics, 

### 86-1BCA118,649 at 93,784-85. · Here, it is premature to decide the factual issue ofwhetherNASA's threatto terminate the contract was made in good faith, or violated notions offair dealing. 2 

### Resolution ofthose issues involve fact-intensive inquiries. Id. 

### at 93,785. However, discovery has not even commenced in these appeals (SOF 1 30). Therefore, we deny NASA's motion for summaryjudgment. See 

### FED. R. CIV. P. 56(d). 3 

### CONCLUSION NASA's motion to dismiss and its motion for summaryjudgment are denied

.

. Date: August 5, 2019

(Signatures continued) Administrative Judge Armed Services Board ofContract Appeals

2 

### Likewise, it is premature to decide the factual issue ofwhether there was economic waste (gov'tmot. at 22-26). 3 

### NASA's assertion that ACMtook the position in the Miller Act Action that Modification 000002 was binding is inaccurate (gov'treply br. at 6). While acknowledging thatNASA signed a release, ACM made no allegation as to whether that release was enforceable, orwhether SPS signed it under duress (SOF 120). 8I concur



### RICHARD SHACKLEFORD Administrative Judge Acting Chaimian Armed Servic~s Board ofContract Appeals I concur

OWEN C. WILSON Administrative Judge Vice Chairman Armed Services Board ofContract Appeals

I certify that the foregoing is a true copy ofthe Opinion and Decision ofthe Armed Services Board ofContractAppea1s in ASBCANos. 61819, 61820, Appeals of Sand Point Services, LLC, rendered in conformance with the Board's Charter. Dated:

9 PAULLAK. GATES-LEWIS· Recorder, Armed Services Board ofContract Appeals