ARMED SERVICES BOARD OF CONTRACTAPPEALS Appeal of

-- ) ) Snowdon, Inc. ) ) Under Contract No. HDTRAl-10-C-0065 ) APPEARANCE FORTHE APPELLANT:

APPEARANCES FORTHE GOVERNMENT: ASBCA No. 59705



### Mr. William J. Welsh

Owner E. Michael Chiaparas, Esq.

DCMA ChiefTrial Attorney Gregory T. Allen, Esq.

Trial Attorney Defense Contract Management Agency Chantilly, VA OPINION BYADMINISTRATIVE JUDGE MCILMAIL INTRODUCTION Appellant, Snowdon, Inc. (Snowdon), appeals from a contracting officer's final decision demanding paymentto the government of$47,500, the amountthat Snowdon received from a third party to which it sold governmentproperty used to perform a contractthat Snowdon had with the Defense Threat Reduction Agency (government). We deny the appeal, and award to the government $47,500, plus interest. Appellant has elected toproceedpursuant to Board Rule 12.3. FINDINGS OF FACT In July 2010, Snowdon entered into a research and development contract with the government (R4, tab 1). The contract incorporated by reference Federal Acquisition Regulation (FAR) clause 52.245-1, GOVERNMENT PROPERTY (JUN 2007) and FARclause 52.232-17, INTEREST (OCT 2008) (R4, tab 1 at G-17). The contract's performance period ended in August 2011 (R4, tab 4). In the course ofand for the purpose ofcontract performance, Snowdonpurchased two pieces ofequipment for which the governmentreimbursed Snowdon, vesting title in the equipmentto the government (see compl. at 2; R4, tab 7 at 76, 81, tab 16 at 1-2). In 2012, Snowdon and the government engaged in a series ofcommunications regarding the disposition ofthe government-owned equipment (R4, tab 7 at G-77-81). On 17 May 2012, the government informed Snowdon by email that "[i]fnone oftheequipment is deemed good for use here ortransferred to anotherprojectthen it will be left to Snowdon," ending the email with the postscript "More to follow

...." (id. at G-78-79). Later the same day, in response to Snowdon asking when the government might make its decision, the government's representative stated "I think 2 weeks at the most" (id. at G-78). On 20 June 2012, Snowdon followed up, requesting that the governmentprovide equipment disposition instructions because, Snowdon advised, it was vacating its facility at the end ofthe month (id. at G-73). On 30 July 2012, Snowdon sold the equipment to TAXIS Pharmaceuticals (TAXIS) for $47,500 (compl. at 4; R4, tab 7 at G-85). There is no evidence that upon sale ofthe equipment, Snowdon offered to remit theproceeds to the government. In June 2014, the government inquired ofSnowdon regarding the equipment (id. at G-81). Snowdon informed the government that "no instructions [regarding the equipment] were everprovided to Snowden" (id. at G-77), and that "[a]bsent guidance from the [contracting officer], the company was forced to take responsibility for the equipment and sold it" (id. at G-73). On 27 August 2014, the contracting officer issued a final decision demanding paymentto the government of$47,500, finding that Snowdon had soldthe equipment, for that amount, without government approval (R4, tab 11). DECISION Snowdon owes the government $47,500, plus interest. FAR clause 52.245-1, GOVERNMENTPROPERTY (JUN 2007) provides, at paragraph 0)(9), that "[a]s directed by the Contracting Officer, the Contractor shall credit the net proceeds from the disposal ofContractor inventory to the contract, orto the Treasury ofthe United States as miscellaneous receipts." The same clause defines, atparagraph (a), "Contractor inventory" as including "[a ]ny property acquired by and in the possession ofa Contractor

...under a contract for which title is vested in the Government and which exceeds the amounts needed to complete full performance under the entire contract." There is no dispute, and we so find, that the equipment that Snowdon sold to TAXIS was "Contractorinventory," and thatthe net proceeds that Snowdon realized from the disposal ofthat equipment is $47,500. Consequently, pursuant to FARclause 52.245-10)(9), Snowdon owes the government $47,500. Snowdon contends thatthe government abandoned the equipment, butwe disagree. FARclause 52.245-l(k)(2) provides that "[t]he Government, upon notice to the Contractor, may abandon any nonsensitive Governmentproperty in place," but Snowdon received no such notice. Atmost, the communications between Snowdon and the government establish that the government was considering its options for disposing ofthe equipment, including abandonment, but did not communicate any disposal decision to Snowdon. Indeed, without any instructions orguidance from the government, Snowdon took matters into its own hands and sold the equipment to a third party. 2In view ofour decision, we find it unnecessary to address the parties' other arguments. CONCLUSION Forthe reasons stated, the appeal is denied, and the government is awarded $47,500, plus interestpursuant to FARclause 52.232-17, INTEREST (OCT 2008), from 27 August 2014, the date ofthe contracting officer's final decision demanding payment, until the date ofpayment. Dated: 20 May 2015

I concur

RICHARD SHACKLEFORD Administrative Judge Vice Chairman Armed Services Board ofContractAppeals

# ~~**·~ffiL** Administrative Judge Armed Services Board ofContract Appeals

I certify that the foregoing is a true copy ofthe Opinion and Decision ofthe Armed Services Board ofContractAppeals in ASBCA No. 59705, Appeal of Snowdon, Inc., rendered in conformance with the Board's Charter. Dated:

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