ARMED SERVICES BOARD OF CONTRACT APPEALS Appeal of

-- ) ) NexagenNetworks, Inc. ) ASBCANo. 60641 ) Under ContractNo. Wl5P7T-13-D-E077/KX01 ) APPEARANCES FORTHE APPELLANT: David A. Rose, Esq.

APPEARANCES FORTHE GOVERNMENT: Rose Consulting LawFirm Valdosta, GA Kendall R. Enyard, Esq. Caitlin T. Conroy, Esq.

Steptoe & Johnson LLP Washington, DC ScottN. Flesch, Esq.

Army ChiefTrial Attorney DanaJ. Chase, Esq.

Trial Attorney OPINION BY ADMINISTRATIVE JUDGE O'CONNELL ON THE GOVERNMENT'S MOTION FORPARTIAL SUMMARYJUDGMENT The Army has filed its second motion for partial summaryjudgment. In Nexagen Networks, Inc., ASBCANo. 60641, 19-1BCA137,258,the Board granted the government's first motion for summaryjudgment in part with respect to the majority ofthe damages sought in Nexagen's claim for consequential damages. In its new motion, the Army contends: 1) that appellant's claim is barred by the doctrine of resjudicata as a result ofthe Court ofFederal Claims' decision inNexagen Networks, Inc. v. UnitedStates, 124 Fed. Cl. 645 (2015); and 2) the damages Nexagen seeks for the task order option year are too remote and uncertain to be recoverable. Nexagen has filed a lengthy opposition in which it disputes some ofthe government's proposed facts and proposes 96 additional facts, and contests the government's legal arguments. The government has not filed a reply briefor otherwise disputed any ofNexagen's 96 proposed findings. Because the Board believes it is not necessary for purposes ofthe pending motion to detail Nexagen's proposed findings, it suffices to state thatNexagen has a long list ofgrievances with respect to the government's handling ofthe task order.STATEMENT OF FACTS (SOF) FORPURPOSES OF THE MOTION A longer description ofNexagen's claims is included in the Board's first opinion in this appeal 

### (Nexagen, 19-1BCA137,258). The Board supplements the facts from that opinion where necessary, including with facts drawn from the Court of Federal Claims' opinion, whichhas not been appealed and is now final. As described inthe Board's first decision, in May 2013 the Army awarded Nexagen a multiple award indefinite-delivery/indefinite quantity contract to provide software and systems engineering services. The appeal arises from a task order for data strategy service and software support awarded in February 2015. The task order containedbase and optionyears and provided that "[t]he Government reserves the rightto exercise the optionpursuantto FAR 52.217-9, 'Optionto Extend the Term of the Contract' found in Section I ofthe basic contract." (R4, tab 2 at 2) This clause provides thatthe government "may" exercise the optionbutmust give the contractor notice at least 60 days beforethe contract expires. However, even ifthe government gives this notice, it is not obligatedto exercise the option. FAR 52.2l7-9(a). As related in our first opinion, on May 4, 2015, (that is, during the base year) the contracting officerterminatedthe task order for default. He changed it to a termination for convenience less than two weeks later. 

### Nexagen, 19-1BCA137,258 at 181,325; (R4, tab 13-15). On May 6, 2015, a different contracting officer canceled the task orderbecause she had concludedthatmaterial flaws in the evaluationrecord made a re-evaluation and subsequent award impossible. The Army subsequently issued a new task order request. 

### Nexagen, 124 Fed. CL at 649-50; (R4, tabs 60-61). On June 26, 2015, Nexagen filed a complaint atthe Court ofFederal Claims. The action was in part a bidprotest challenging the decisionto issue a new task order, and in part a claim for damages arising from the canceledtask order. 

### Nexagen, 124 Fed. CL at 652-54. On August 1, 2015, Nexagen for the first time submitted a certified claimto the contracting officer seeking $40,244,379.94 related tothe termination and an alleged breach ofthe contract. The contracting officer notifiedNexagen two weeks laterthat she did notpossessjurisdictionto considerthe claim due tothe pending action at the Court ofFederal Claims. 

### Nexagen, 124 Fed. CL at 649, 652. On December 21, 2015, the Court dismissedNexagen's claim for damages for lack of jurisdictionbecause it had not submitted a claimto the contracting officer before it filed suit. The Court further ruled that, to the extent that the action could be read to challenge the termination for default, that claim was moot due to the

2contracting officer's conversion ofthe termination to one for the convenience ofthe government prior to Nexagen filing the law suit.* Nexagen, 124 Fed. Cl. at 652-54. On December 22, 2015, Nexagen submitted to the contracting officerthe claim at issue in this appeal (R4, tab 20). It sought $37,597,526.94 for "Compensatory Consequential Damages: Breach ofimplied covenant ofgood faith and fair dealing," and $2,646,853 for "Compensatory Expectation Damages: Breach ofcontractbased upon wrongful termination" (id. at 9). The contracting officer denied the claim except for a prorated fee (profit) on the base year of$151,424.54 (R4, tab 22). Nexagen timely appealed this decision to the Board. DECISION I. Nexagen 's Claim is NotBarredby the Doctrine of ResJudicata Afterthe Board's decision onthe government's first summaryjudgment motion, Nexagen's $2,646,853 claim for expectation damages remained pending. With respect to Nexagen's consequential damages claim, $7,409,260 remained pending. The government contends that these claims are barred by the doctrine of resjudicatabased on the Court ofFederal Claims opinion described above. A claim is barredby resjudicatawhen "(1) the parties are identical or in privity; (2) the first suitproceeded to a finaljudgment on the merits; and (3) the second claim is based on the same set oftransactional facts as the first." Cunningham v. UnitedStates, 748 F.3d 1172, 1179 (Fed. Cir. 2014) (citation omitted). The second prong ofthis test is clearly a problem for the government because the Court ofFederal Claims dismissed Nexagen's money claim for lack of jurisdiction. Nexagen, 124 Fed. Cl. at 652. The governmentpoints to the section ofthe Court ofFederal Claims opinion where it stated that itpossessesjurisdictionto consider challenges to default terminations. While that is correct, the Court neverreached the merits ofthe termination because it observed thatthe contracting officerhad already provided the only reliefit could have awarded

- conversion to a termination for convenience. This was the only reliefthat the Court believed it couldprovide because a challenge to a termination for default (a government claim) does not grant the Courtjurisdictionto consider a money claim that the contractor failed to submit to the contracting officer. Nexagen, 124 Fed. Cl. at 652-54; DePonte Investments, Inc. v. United States, 54 Fed. Cl. 112, 115 (2002).

*The Court also dismissedNexagen's challenge to the corrective action for lack of jurisdiction. Nexagen, 124 Fed. Cl. at 654.

3Based on its determination that there was no reliefit could provide, the Court dismissed as moot the portion ofthe complaintraising allegations challenging the termination. Nexagen, 124 Fed. Cl. at 654. The government contends that this was an adjudication on the merits ofNexagen's claim that the termination was wrongful (gov't mot. at 9) and, therefore, it bars litigation ofNexagen's claim that it is entitled to damages as a result ofa wrongful termination. The government does not cite precedent supporting its position. As the Supreme Court has explained, "[a] case that becomes moot at any point during the proceedings is 'no longer a 'Case' or 'Controversy' for purposes ofArticle III,' and is outside thejurisdiction ofthe federal courts." UnitedStates v. Sanchez-Gomez, 138 S. Ct. 1532, 1537 (2018) (quotingAlready, LLCv. Nike, Inc., 568 U.S. 85, 91 (2013)). Becausethe contracting officer converted the termination to one for the convenience of the governmentbefore Nexagen filed suit, Nexagen, 124 Fed. Cl. at 649, there never was a case or controversy related to the termination, or a money claim, for which the Court possessedjurisdiction and there can be nojudgmenton the merits. Accordingly, the government's contention that the Court's decision on the default termination bars future litigation ofNexagen's money claim based on resjudicata, is incorrect. II. The Government is notEntitledto SummaryJudgment on the Option Year The Board's initial decision in this matterhighlighted the challenges that Nexagen faces in recovering on its claim for a wrongful termination for convenience. As we stated, a termination for convenience is conclusive unless the contractor can show a clear abuse ofdiscretion orthat the government acted in bad faith. Nexagen, 19-1 BCA 

### ,i 37,258 at 181,328 (citing T&MDistributors, Inc. v. UnitedStates, 185 F.3d 1279, 1283 (Fed. Cir. 1999)). A similar standard applies with respect to a decision not to exercise an option. Nexagen, 19-1 BCA 

### ,i 37,258 at 181,329 (citing IMSEngineers-Architects, P.C., ASBCANo. 53471, 06-1BCA133,231, at 164,674, recon. denied, 07-1 BCA ,i 33,467, aff'd, IMSEngineers-Architects, P.C. v. Geren, 274 F. App'x. 898 (Fed. Cir. 2008)). The Board's first decision observed that the contracting officerterminated the task order seven months before the deadline for the preliminary notice to exercise the option. This was far enough in the future that the Board was uncertain as to whether we should treat the option like a claim for damages on a future contract, which is considered too remote and speculative to award damages. Because the parties had not addressed the optionyear in theirbriefs, the Board declined to rule. Nexagen, 19-1BCA137,258 at 181,328-29. In its new motion, the government cites OperationalServices Corporation, ASBCANo. 38703 etal., 93-3 BCA 

### ,i 26,190, in which the governmentterminated for convenience a contracttwo months into the performance ofthe first oftwo option

4years. The Board ruled in favor ofappellant on entitlement, finding that it had proven that the government had acted in an arbitrary and capricious manner. The Board held, however, that the appellant's damages would be limited to the first option year because there was no assurance that the government would exercise that option, nor was there any right ofappellant to insist that the government exercise it. Id., 93-3 BCA 

### ,i 26,190 at 130,374. While OperationalServices Corporation is consistent with the government's position, the Board declines to enter summaryjudgmentin its favor. The Board issued the decision in OperationalServices after a hearing. OperationalServices, 93-3 BCA 

### ,i 26,190 at 130,374. The record in this appeal is not as developed. For one thing, Nexagen has disputed some ofthe government's proposed findings offact. Further, the government has notresponded to Nexagen's lengthy counter statement offacts, which alleges facts that, according to Nexagen, demonstrate bad faith or an abuse of discretion. The Board believes that a hearing with witness testimony subject to cross examination will be necessary to resolve the factual disputes. In a context where a hearing is already necessary to determine whether Nexagen can demonstrate an abuse ofdiscretion orbad faith during the base year, the Boardbelieves that there will be little additional burden on the parties to introduce evidence concerning the option year. The Board denies the government's motion with respectto the option year. CONCLUSION The government's motion for summaryjudgment is denied. Dated: February 5, 2020

(Signatures continued)



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# 1¥\~')1.01~ MICHAEL N. O'CONNELL Administrative Judge Armed Services Board ofContract Appeals i: ji ;; 1: l/ ii i 1: I Ii Ii Ii i 

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# I I concur

RICHARD SHACKLEFORD Administrative Judge Acting Chairman Armed Services Board ofContract Appeals I concur

J. REIITPROUTY 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 ofContract Appeals in ASBCA No. 60641, Appeal ofNexagen Networks, Inc., rendered in conformance with the Board's Charter. Dated:

6 PAULLA K. GATES-LEWIS Recorder, Armed Services Board ofContract Appeals