ARMED SERVICES BOARD OF CONTRACT APPEALS Appeal of

-- Environmental Safety Consultants, Inc. Under ContractNo. N62470-95-B-2399 APPEARANCE FORTHE APPELLANT: ) ) ) ) )

APPEARANCES FORTHE GOVERNMENT: ASBCA No. 58343

Mr. Peter C. Nwogu

President Ronald J. Borro, Esq.

Navy ChiefTrial Attorney Ellen M. Evans, Esq.

Senior Trial Attorney OPINION BYADMINISTRATIVE JUDGE FREEMAN ON THE GOVERNMENT'S MOTION TO DISMISS FORLACK OF JURISDICTION Environmental Safety Consultants, Inc., (ESCI) appeals the deemed denial of its termination settlement claim under the captioned contract (hereinafter "Contract 2399"). The Board, sua sponte, noted the possible lack of jurisdiction over a substantial amount ofthe claim and requested the parties to briefthe issue. The government's briefconcludes that: "the board lacks authority overthe entire case," and that "the appeal should be dismissed for lack of jurisdiction." We construe this conclusion as in substance a motion to dismiss. ESCI opposes the motion on the grounds of(i) equitable tolling ofthe statute oflimitations and (ii) that the claim for increased costs over and above the contract price did not accrue until 12 June 2012 when the government withdrew its appeal to the Federal Circuit from the Board's 28 September 2011 decision converting the termination for default to a termination for convenience. We grant the government's motion in part. STATEMENT OF FACTS (SOF) FORPURPOSES OF THE MOTION 1. This appeal arises out ofour decision of28 September 2011 converting the government's termination for default ofContract 2399 to a termination for convenience ofthe government. See Environmental Safety Consultants, Inc., ASBCA No. 51722, 11-2 BCA

### if 34,848. Familiarity with that decision is assumed.2. Contract 2399 was a firm-fixed-price construction contract. At award on 13 November 1995, the firm-fixed-price was $561,764.25 (R4, tab 1at15). 1 On 7 April 1997, ESCI submitted to the contracting officer a comprehensive proposal for an increase of$205,463.60 in the contract price for the costs ofadditional work and delays allegedly caused by the government (R4, tab 12 at 9). 3. In bilateral Modification No. P00006, effective 24 June 1997, the parties modified the contract deleting five items ofspecified work and adding nine items of additional work. The additional work items included among others: j. Subcontract all remaining work, including supervision, quality control, and punchlist items. k. Provide additional overhead costs incurred due to subcontracting.

m. Provide additional labor and time for entering, leaving, and working in the Q-Area.

n. Provide extended overhead for the Government delays under this contract. (R4, tab 2 at 11-12) 4. Modification No. P00006 concluded with a summary ofthe agreed price adjustment and contract completion date for the additions and deletions ofwork and a general release as follows: 2. TOTAL AMOUNT OF ADDITIONAL WORK TOTAL AMOUNT OF CREDITS The total contractprice is increased by $109.00 from $561,764.25 to $561,873.25. $199,301.00 $199, 192.00

The contract completion date is extendedby 308 calendar days from August 26, 1996, to June 30, 1997. The foregoing is agreed to as constituting full and equitable adjustment and compensation (both time and

1 All Rule 4 citations refer to the Rule 4 filed in ASBCANo. 51722.

2money) attributable to the facts of[sic] circumstances giving rise to the change directed hereby, including but not limited to, any changes, differing site conditions, suspensions, delays, rescheduling, accelerations, impact, or other causes as may be associated therewith. (R4, tab 2 at 2)
5. Modification No. P00006 was signed by PeterNwogu on behalfofESCI without reservations on 23 June 1997 (R4, tab 2 at 1 ). Also on 23 June 1997, PeterNwogu signed ESCI's Invoice No. 7 which among otherthings stated that the total contractvalue was $561,873.25 (the amount agreedto in Modification No. P00006) (R4, tab 14).
6. No work wasperformed onthe contract after 16 June 1997. Environmental Safety Consultants, 11-2 BCA**~** 34,848 at 171,430, finding 19. On 12 June 1998, the contract was completely terminated for default for failure to make progress to ensure completion ofthe work and failure to perform the workwithin the specified time (R4, tab 2 at 13). There were no contract modifications increasing the contractprice after Modification No. P00006. Attermination, the contractprice was the price agreed to by theparties in Modification No. P00006 ($561,873.25). Overthe course ofthe contract, the governmentpaid ESCI a total amount of$303,990.00 in progress payments (R4, tab 13 at 1, tab 14 at 1).
7. Pursuantto paragraph (c) ofthe FAR 52.249-10, DEFAULT (FIXED-PRICE CONSTRUCTION) (APR 1984) clause ofthe contract, and as a result ofour decision sustaining the appeal from the default termination, "the rights and obligations ofthe parties will be the same as ifthe termination had been issued for the convenience of the Government" (R4, tab I at 69). 8. The 52.249-2, TERMINATION FOR CONVENIENCE OF THE GOVERNMENT (FIXED-PRICE) (APR 1984}-ALTERNATE I clause in Contract 2399 stated in pertinent part: (d) Aftertermination the Contractor shall submit a final termination settlementproposal to the Contracting Officer in the form and with the certification prescribed by the Contracting Officer

.... (e) Subject to paragraph (d) above, the Contractor and the Contracting Officermay agree upon the whole or any part ofthe amount to be paid because ofthe termination

.... However, the agreed amount, whether

3under this paragraph (e) orparagraph (t) below, exclusive ofcosts shown in subparagraph (t)(3) below, [ZJ may not exceed the total contract price as reduced by (1) the amount ofpayments previously made and (2) the contract price ofwork not terminated

.... (t) Ifthe Contractor and Contracting Officer fail to agree on the whole amount to be paid the Contractor because ofthe termination ofwork, the Contracting Officer shall pay the Contractor the amounts determined as follows, but without duplication ofany amounts agreed upon underparagraph (e) above: (1) For contract workperformedbefore the effective date oftermination, the total (without duplication ofany item) of- (i) The cost ofthis work; (ii) The cost ofsettling and paying termination settlementproposals underterminated subcontracts that are properly chargeable to the terminated portion ofthe contract ifnot included in subdivision (i) above; and (iii) A sum, as profit on (i) above, determined by the Contracting Officerunder 49.202 ofthe Federal Acquisition Regulation, in effect on the date ofthis contract, to be fair and reasonable, however, ifit appears that the Contractor wouldhave sustained a loss on the entire contract had it been completed, the Contracting Officer shall allow no profitunderthis subdivision (iii) and shall reduce the settlementto reflect the indicated rate ofloss. (2) The reasonable costs ofsettlement ofthe work terminated, including2 There is no subparagraph (t)(3) in the Alternate I clause, but the same provisions that are in subparagraph (t)(3) ofthe basic clause are in subparagraph (t)(2) of the Alternate I clause.

4(i) Accounting, legal, clerical, and other expenses reasonably necessary for the preparation oftermination settlementproposals and supporting data; (ii) The termination and settlement ofsubcontracts (excluding the amounts ofsuch settlements); and (iii) Storage, transportation, and other costs incurred, reasonably necessary for the preservation, protection or disposition ofthe termination inventory.
9. On 5 July 2012, ESCI submittedto the contracting officer a Standard Form (SF) 1436 "SETTLEMENTPROPOSAL (TOTAL COSTBASIS)" for the termination ofContract 2399. The netproposed settlement was $1,183,366.59. (App. supp. R4, vol. I, tab 3 at 1-4) The contracting officer did notrespond to this proposal. On 14 September 2012, ESCI submitted the proposal as a certified claim underthe Contract Disputes Act of 1978 (CDA), 41 U.S.C. §§ 7101-7109 (app. supp. R4, vol. I, tab 5 at 1-2). The contracting officerrefused to either negotiate a settlement agreement or issue a final decision on the claim. In her opinion, the claim was "conceivedin fraud and is permeated by fraud, [and] the contracting officer lacks authority to decide it or settle it." (Answer

### if 8) 10. On 29 September 2012, ESCI appealed the deemed denial ofits termination settlement claim. The appeal was docketed as ASBCANo. 58343. The monetary elements ofESCI'stermination settlement claim were: DirectMaterial DirectLabor OtherCosts General & Administrative Profit Settlementwith Subcontractors SettlementExpenses Finished Product Invoiced Disposal & Other Credits NetProposed Settlement (App. supp. R4, vol. I, tab 3 at 1) $ 0.00 1,021,306.00 13,000.00 17,000.00 155,145.90 252,503.97 175,248.40 (268,326.62) (182,511.19) $1,183,366.59

11. Pursuanttoparagraph (e) ofthe Termination for Convenience clause the termination settlement, exclusive ofthe termination settlement expenses, cannot exceedthe total contractprice as reduced by (1) the amount ofpayments previously made and (2) the contractprice ofwork not terminated (see SOF 

### if 8). The total

5amount ofcosts and profit in ESCI'stermination settlement claim, excluding the settlement expenses ($175,248.40), was $1,458,955.87. This claimed amount was $897,082.62 more than the total contractprice at termination. (See SOF**~** 10) 12. ESCI contends that the settlement amount it claims in excess ofthe contractprice at termination is due to the increased cost it incurred in performing the work as a result ofgovernment changes and delays which require an equitable adjustment to the contractprice. We assume for purposes ofthe motion that this contention is correct. 13. The FAR 52.233-1, DISPUTES (MAR 1994) clause in Contract 2399 stated in pertinent part: (a) This contract is subject to the Contract Disputes Act of 1978, as amended (41 U.S.C. 601-613). (b) Except as provided in the Act, all disputes arising under orrelating to this contract shall be resolved under this clause. (c) "Claim," as used in this clause, means a written demand or written assertion by one ofthe contracting parties seeking, as a matter ofright, the payment ofmoney in a sum certain, the adjustment or interpretation ofcontract terms, or otherreliefarising under orrelating to this contract.... However, a written demand or written assertion by the Contractor seeking the payment ofmoney exceeding $50,000 is not a claim underthe Actuntil certified as required by subparagraph (d)(2) below.

(d)(1) A claim by the Contractor shall be made in writing and submittedtothe Contracting Officer for a written decision. (R4, tab 1 at 68) 14. When Contract 2399 was awarded, Section 605(a)3 ofthe CDA stated in pertinent part: "Each claim by a contractor against the Federal Government relating

3 Now 41 U.S.C. § 7103(a)(4)(A).

6to a contract shall be submitted to the contracting officer for a decision," and "Each claim by a contractor againstthe Federal Governmentrelating to a contract.

..shall be submitted within 6 years afterthe accrual ofthe claim." When Contract 2399 was awarded, FAR 33.201 stated that: '"Accrual ofa claim' occurs on the date when all events, which fix the alleged liability ofeither the Government or the contractor and permit assertion ofthe claim, were known or should have been known." FAC 90-32, October 1, 1995 at 33-7. 15. Consideringthat ESCI's proposal for a price adjustment for government-responsible changes and delays ofthe work was submitted to the government in the amount of$205,463.60 on 7 April 1997, and that no work on the contract was performed after 16 June 1997, we conclude that all ofthe events fixing the liability ofthe government, and permitting the assertion ofa claim for equitable adjustment ofthe contractprice for the alleged increased incurred cost ofthe contract work, were known or should have been known by ESCI no later than the date the contract was terminated for default on 12 June 1998. 16. ESCI's 7 April 1997 letter was a "proposal" for a price adjustment in the amount of$205,463.60. Itdid not request a contracting officer's final decision on the proposed adjustment. Itdid notprovide the certification for a claim in that amount as required by the CDA. (R4, tab 12) Neither the 7 April 1997 proposal nor any other communication in the record before us on the motion was a CDA claim for an equitable adjustment in the Contract 2399 price prior to the inclusion ofthese increased costs in the 14 September 2012 termination settlement claim. DECISION Ourjurisdiction over the claimedprice adjustment for excess costs included in ESCI's 14 September 2012 termination settlement claim depends on (i) when did the claim or claims for price adjustment for the alleged increased costs "accrue," and (ii) when did ESCI submit a CDA claim to the contracting officer for a price adjustment for those costs. ESCI does not contest the fact that it did not submit a certified CDA claim for its alleged costs that exceeded the contractprice until it included those costs in its termination settlement claim submitted on 14 September 2012. That submission was 14 years afterthe claim for equitable adjustment had accrued and eight years afterthe six-year statute oflimitations had run. CitingArcticSlope NativeAss'n, Ltd. v. Sebelius, 699 F.3d 1289 (Fed. Cir. 2012) (hereinafter "Arctic Slope II"), ESCI argues thatthe running ofthe CDA statute oflimitation for its increased cost claim was tolled until the default termination was converted to a termination for convenience because: "Appellant could not have reasonably filed for payment ofcompleted work and increases [sic] contract costs while it was pursuing government's default termination from June 30, 1997 to September 28, 2011" (app. br. at 7).

7Equitable tolling ofa statute oflimitations applies where the litigant proves: "(l)that he has been pursuing his rights diligently, and (2) that some extraordinary circumstance stood in his way andprevented timely filing." ArcticSlope IIat 1295. InArcticSlope II, the courtheld that the plaintiffIndian tribe had diligently monitored a class action suit againstthe government, and as a putative member ofthe class reasonably believedthat it was not necessary to file an individual claim on the same matter that the class action was prosecuting. The court also held that, as an extraordinary circumstance, "the federal government's 'unique and continuing relationship with, and responsibility to, individual Indian tribes and to the Indian people as a whole"' required that "we mustjudgethe government's conduct with the Indian tribes by 'the most exacting fiduciary standards."' Id. at 1297-98. There are no such extraordinary circumstances in ESCI's case here. ESCI is not an Indian tribe or otherentity with which the governmenthad to conduct its business by "the most exacting fiduciary standards."
ESCI contends that "the government's default termination claim had to be resolved before appellant could reinstate its request for equitable adjustment pursuant to [the] CDA" (app. br. at 12). We disagree. All events necessary to fix liability on the government for any incurred increased costs ofperforming the contractwere known or should have been known no later than 12 June 1998, the date the contract was terminated for default (see SOF**~** 15). There were no legal or other impediments at that time orthereafter toESCI submitting an affirmative claim for equitable adjustment ofthe contractprice.
A timely written notice to the contracting officer demanding as a matter of right a price adjustment in a sum certain for the increased costs, and certifying that demand as required by the CDA, was all that was necessary for ESCI to assert its claim for a contractprice adjustment for purposes ofthe statute oflimitations. There is no evidence that some ''trickery" ormisleading action ofthe government caused the untimely submission ofsuch a claim. Absent evidence otherwise, we believe that ESCI's untimely submission was causedby its lack ofdue diligence in preserving its legal rights under the contract. Such "garden variety claim ofexcusable neglect," is not a basis for equitable tolling ofthe statute oflimitations. See Bernard Cap Company, ASBCANo. 56679 etal.,**10-1BCA~34,387** at 169,801. Excluding the claimedtermination settlement expenses ($175,248.40), the total amount ofESCI's termination settlement claim for the cost and reasonable profit ofperformingthe contract up to the date oftermination ($1,458,955.87) exceeded the total contractprice ($561,873.25) by $897,082.62 (see SOF**~** 11). Since a CDA claim for a price adjustment for those alleged increased costs was not timely submitted to the contracting officer, we have nojurisdiction overthat claimed amount in this appeal and give it no further consideration. Voices R Us, Inc.,

8ASBCA Nos. 51565, 52307, 01-1BCAif31,328 at 154,748; Skip Kirchdorfer, Inc., ASBCA No. 40515 

### etal., 93-3 BCAif 25,899 at 128,837. The government argues that, without ESCI "properly segregating the costs associated with the time-barred claims, the entire appeal should be dismissed (gov't br. at 6). We disagree. The termination settlement expenses ($175,248.40) that are excluded from the paragraph (e) limit, and the termination settlement amount up to the contract price ($561,873.25) remain within ourjurisdiction. The motion to dismiss is granted with respect to the $897,082.62 that exceeds the contract price and is denied in all other respects. Dated: 25 July 2014

I concur

# ~~~ Administrative Judge Acting Chairman Armed Services Board ofContract Appeals I concur

# ~~**~ ~c>-~~~-_.,.**  ?-- JACK-DELMAN Administrative Judge Acting Vice Chairman Armed Services Board ofContractAppeals
I certify that the foregoing is a true copy ofthe Opinion and Decision ofthe Armed Services Board ofContract Appeals in ASBCA No. 58343, Appeal of Environmental Safety Consultants, Inc., rendered in conformance with the Board's Charter. Dated:

9 JEFFREY D. GARDIN Recorder, Armed Services Board ofContract Appeals