ARMED SERVICES BOARD OF CONTRACT APPEALS 

Appeal of -- ) 

) 

Seven Seas Shipchandlers LLC ) 

) 

Under Contract Nos. W91B4L-09-P-0318 ) 

W91B4L-09-P-0518 ) 

W91B4L-09-P-0436 ) 

W91B4L-09-P-0465 ) 

W91B4L-09-P-0585 ) 

APPEARANCE FOR THE APPELLANT: 

APPEARANCES FOR THE GOVERNMENT: 

ASBCA No. 60602 

Joseph E. Schmitz, Esq. 

Schmitz & Socarras LLP 

McLean, VA 

Raymond M. Saunders, Esq. 

Army Chief Trial Attorney 

LTC Jose A. Cora, JA 

Trial Attorney 

OPINION BY ADMINISTRATIVE JUDGE NEWSOM 

Appellant, Seven Seas Shipchandlers, LLC (Seven Seas), appeals from the deemed 

denial of its claim for Prompt Payment Act (PPA) interest on five contracts. Because of a 

dispute that ripened into a claim under the Contract Dispute Act, 41 U.S.C. §§ 7101-7109 

(CDA), Seven Seas did not receive payment on these contracts until more than five years 

after it submitted invoices. That dispute was resolved by this Board in Seven Seas 

Shipchandlers, LLC, ASBCA No. 57875 et al., 15-1 BCA ~ 35,908 (Seven Seas/). 

Seven Seas elected use of the Board's expedited procedures under Rule 12.2. 1 

Both parties filed motions for judgment on the record pursuant to Rule 11. 2 We deny 

the appeal. 

1 A decision under Board Rule 12.2 shall have no value as precedent, and in the 

absence of fraud, shall be final and conclusive and may not be appealed. 

2 The government filed a motion for summary judgment on 7 September 2016, then 

converted it to a Motion for Judgment on the Administrative Record under 

Board Rule 11 (Bd. corr., gov't mot. dtd. 26 Sept. 2016). By Board order dated 

13 September 2016 the appellant's 8 September 2016 Legal Memorandum 

Addressing the Merits of the Appeal was deemed a motion for judgment on the 

administrative record under Board Rule 11. 
SUMMARY FINDINGS OF FACT 

The predicate for the present appeal is the Board's decision in Seven Seas I. 

Familiarity with that decision is presumed, although we highlight certain aspects of 

that decision that are relevant to this appeal. 

1. Seven Seas I concerned five firm-fixed-price supply contracts that the 

Kandahar Regional Contracting Center awarded to appellant in 2009: Contract 

Nos. W91B4L-09-P-0318 (Contract 318); W91B4L-09-P-0436 (Contract 436); 

W91B4L-09-P-0465 (Contract 465); W91B4L-09-0518 (Contract 518); and 

W91B4L-09-P-0585 (Contract 585). The contracts called for appellant to provide 

supplies to Kandahar Air Field in Afghanistan. Seven Seas I at 175,527 (findings 1-3, 6). 

2. Seven Seas delivered the supplies required by all five contracts and was 

entitled to payment on the contracts. Seven Seas I at 175,529 (finding 28). Seven Seas 

submitted invoices for payment between 1 and 9 June 2009 (R4, tab 12 at 120-24). 

3. The government payment office disbursed to an individual named 

Muhammad Qahir (Mr. Qahir) some $240,549.90 in Afghan cash which was intended 

as payment to Seven Seas. Seven Seas I at 175,529-30 (findings 35, 37). On prior 

occasions, the government had disbursed cash to Mr. Qahir in payment to Seven Seas, 

without incident. Id. at 175,528 (finding 18). However, on this occasion, Mr. Qahir 

disappeared with Seven Seas' money and was not seen again. Id. at 175,530 (finding 39). 

4. Seven Seas reported its money stolen. Seven Seas I at 175,530 (findings 40, 

42)). Asserting that it never received payment, Seven Seas submitted certified claims 

seeking contract payments from the government. The contracting officer denied the 

claims. Id. at 175,530 (finding 46). 

5. During the ensuing appeals before this Board, the government disputed 

Seven Seas' claims on the ground that Seven Seas had already been paid. It argued 

that Seven Seas failed to object on prior occasions when the government disbursed 

cash to Mr. Qahir that was intended for Seven Seas, therefore Mr. Qahir had apparent 

authority to accept payment for Seven Seas. Seven Seas I at 175,531-32. 

6. By decision dated 4 March 2015, the Board sustained the appeals, holding 

that the government failed to prove that it had paid Seven Seas and that appellant was 

entitled to $240,579.90 plus applicable interest. Seven Seas I at 175,531. 

7. Inferring from the foregoing findings, we find that the reason for the 

government's delay in payment from July 2009 to the date of the Board's decision was 

the dispute between the parties over whether Seven Seas had already been paid. 

2 
8. On 3 April 2015, Seven Seas submitted a new claim to the contracting 

officer seeking payment of PPA interest on the $240,579.90 principal balance (PPA 

Claim) (R4, tab 7). 

9. In its PPA claim, appellant asserted entitlement to PPA interest from "30 days 

after a proper invoice" was received until 8 September 2011, the date that the Board 

found that the government received appellant's CDA claims (R4, tab 7 at 85-86). 

10. On 26 December 2015, more than nine months after the Board's 4 March 

2015 decision, the government transmitted payment to Seven Seas in the amount of 

$261,262.25 which included $240,579.90 in contract payments plus $20,682.35 in CDA 

interest measured from 8 September 2011 to the date of payment (R4, tab 14 at 1 ). 

11. After receiving the government's payment, appellant revised its calculation 

of PP A interest upwards to charge PP A interest upon the CDA interest already paid, 

and to extend the period that PP A interest accrues, beyond the date the invoices were 

paid in December 2015, to some future date (R4, tab 14 at 3; compl. ilil 13-23). It now 

claims at least $38,328.07 in PPA interest (compl. at 5). 

12. The contracting officer did not issue a final decision on the PPA claim (R4, 

tab 17 at 139). Appellant filed this appeal on 25 May 2016 (R4, tab 17). 

DECISION 

The PP A entitles vendors to interest on unpaid or delayed contract payments in 

certain circumstances. It provides that the head of an agency acquiring property or 

service from a business concern, who does not pay the concern for each complete 

delivered item of property or service by the required payment date, shall pay an 

interest penalty to the concern on the amount of the payment due, in accordance with 

regulations prescribed by the Secretary of the Treasury. 31 U.S.C. § 3902(a). 

The PP A also provides an important exception, however, stating that no PP A interest is 

due ifthe nonpayment was "because of a dispute between the head of an agency and a 

business concern over the amount of payment or compliance with the contract."3 

3 Regulations implementing the PP A repeat and reinforce this limitation. Office of 

Management and Budget regulations state that "[i]nterest penalties are not 

required ... [w]hen payment is delayed because of a dispute between a Federal 

agency and a vendor over the amount of the payment or other issues concerning 

compliance with the terms of a contract." 5 C.F .R. § 1315 .10 (emphasis 

added). The Federal Acquisition Regulation (FAR) further provides that "The 

payment office will not pay interest penalties if payment delays are due to 

disagreement between the Government and contractor concerning - (i) The 

payment amount; (ii) Contract compliance; or (iii) Amounts temporarily 

3 
31U.S.C.§3907(c) (emphasis added). The Act also prohibits PPA interest from 

accruing either after a CDA claim has been submitted, or for more than one year. 

31 U.S.C. § 3907(b )(1 )(B). 

Here, Seven Seas seeks to charge PPA interest from June 2009, when the 

government received the invoices, beyond the date that the government paid the 

invoices to some date in the future (finding 11). The reason for the government's 

delay in payment was the parties' dispute over whether Seven Seas had already been 

paid (finding 7). This appeal thus turns on whether the prior appeals involved "a 

dispute between the head of an agency and a business concern over the amount of 

payment" within the meaning of the PPA. 31 U.S.C. § 3907(c). 

We have no trouble holding that in the circumstances presented here, the matter 

falls squarely within the PPA exception in section 3907(c) as a dispute "over the amount 

of payment." The dispute centered on which party bore the risk of the theft of the money: 

the government, because it paid the wrong person, or Seven Seas, because it failed to 

notify the government of its concerns about Mr. Qahir. The amount of payment was at 

the heart of the parties' disagreement. From the government's perspective, the dispute 

concerned whether it should pay double for the same goods. From Seven Seas' 

perspective, the dispute concerned whether it would be paid at all. This dispute thus very 

much concerned the amount of payment, and falls within the PP A interest penalty 

exception. Our precedent generally supports the view that the PP A does not require an 

interest penalty in similar circumstances. See generally Vistas Construction of Illinois, 

Inc., ASBCA No. 58479 et al., 16-1BCAiJ36,236 (citing authorities). Moreover, Seven 

Seas could not continue to accrue PP A interest for the lengthy duration that it claims 

(finding 11 ), because the PP A limits penalty interest either to the date the CDA claim was 

filed or for one year. 5 C.F.R. § 390l(b)(l). 

Seven Seas argues that the issue in the prior dispute was "that the government 

never paid Seven Seas the undisputed amount that was indisputably due" (app. br. dtd. 

26 Sept. 2016 at 6 (app. br.). That argument ignores the fact that the government did 

pay in June 2009. Its payment evidently did not reach Seven Seas. The dispute arose 

because the government objected to paying double that amount, while Seven Seas 

objected to receiving zero. 

Seven Seas next cites United States v. Heth, 7 U.S. (3 Cranch 399) (1806); and 

Mesa Air Group, Inc. v. Department of Transportation, 87 F.3d 498 (D.C. Cir. 1996), 

arguing that the PP A is ambiguous and should be construed against the government. 

(app. br. at 7). Both cases are inapposite. Heth considered whether a statute should be 

applied retroactively, which is not at issue here. 7 U.S. at 402. Mesa Air considered 

withheld or retained in accordance with the terms of the contract." 

FAR 32.907(d)(l) (emphasis added). 

4 
whether certain transportation subsidy agreements were contracts or regulations. 

87 F.3d at 500. It is irrelevant to this dispute. 

Finally, Seven Seas argues that the government acted in bad faith by taking 

eight months to process the payment after the Board's decision and failing to pay PPA 

interest (app. br. at 12). It is not bad faith for the government to refuse to pay PPA 

interest when none is due. To the extent that the government took time to process the 

payment, appellant was compensated with additional CDA interest (finding 10). 

In summary, we hold that Seven Seas is not entitled to PPA interest. We 

expressly do not address the government's remaining arguments: that 5 C.F.R. 

§ 1315.10(b)(2) bars PPA interest on Contract 585 and that appellant waived any 

entitlement to PP A interest. 

The appeal is denied. 

Dated: 25 October 2016 

CONCLUSION 

Administrative Judge 

Armed Services Board 

of Contract Appeals 

I certify that the foregoing is a true copy of the Opinion and Decision of the 

Armed Services Board of Contract Appeals in ASBCA No. 60602, Appeal of Seven 

Seas Shipchandlers, LLC, rendered in conformance with the Board's Charter. 

Dated: 

5 

JEFFREY D. GARDIN 

Recorder, Armed Services 

Board of Contract Appeals