ARMED SERVICES BOARD OF CONTRACT APPEALS Appeal of

-- ) ) American General Trading & Contracting, )

WLL ) ) Under ContractNo. DABM06-03-C-0009 )

APPEARANCES FORTHEAPPELLANT:

APPEARANCES FORTHE GOVERNMENT: ASBCANo. 56758

Vonda K. Vandaveer, Esq.

V.K. Vandaveer, P.L.L.C. Washington, DC

Michael F. Brown, Esq.

Peterson, Berk & Cross Appleton, WI Raymond M. Saunders, Esq.

Army ChiefTrial Attorney LTC BrianJ. Chapuran, JA

Trial Attorney

OPINION BYADMINISTRATIVE JUDGE MELNICK UPON THE PARTIES' SECOND SET OF CROSS-MOTIONS FOR SUMMARYJUDGMENT

American General Trading & Contracting, WLL (appellant orAGT) was awarded
a contractbythe United States Army to provide laundry services at five military camps established in Kuwaitpriorto the 2003 invasion ofIraq. Italleges the Army negligently estimated its laundry needs in the camps, which virtually emptied shortly after award due to the invasion. It seeks damages resulting from that alleged breach. Separately, AGT also claims it entered into an implied-in-fact contractto provide laundry services at two additional camps in Kuwait, which it contends the government also breached. Previously, we denied cross-motions for summaryjudgmentrespecting the first claim related to the five camp express contract, denied a government motion to dismiss the second claim, and ruled that cross-motions for summaryjudgmentrespecting the second claim were moot. American General Trading & Contracting, WLL, ASBCA No. 56758 12-1 BCA

### iJ 34,905.

The parties now cross-move for summaryjudgment again. AGT contends that the undisputed facts showthat the government breached both contracts. The government contends the five camp express contract is not subjectto a negligent estimate claim, and that no additional implied-in-fact contract was formed. We deny the government's motion respecting the first claim and deferruling upon AGT's motion on that claim untildiscovery is completed. We grant the government's motion respecting the second claim and deny appellant's motion on the second claim.

STATEMENT OF FACTS (SOF) FORPURPOSES OF THE MOTIONS

I. ContractNo. DABM06-03-C-0009

1. On 17 February 2003, the U.S. Army Central Command-Kuwait awarded ContractNo. DABM06-03-C-0009 ("09 contract") to AGTto perform laundry services at five military camps in Kuwait. As modified, the 09 contract was for six months, with an option to extend for six months. (R4, tabs 3, 4) The solicitation, issued 23 January 2003, and awarded contract provided that it was a firm-fixed unit-priced contract with total item numbers adjustment. Thus, the contractor's payment depended on the actual number of items laundered. (R4, tab 1 at 1-2, 21, 29, tab 3 at 2, 14) The solicitation and contract estimated thatthe laundry requirements for each camp would be 1,000 soldiers, capable ofsurging up to 7,000 soldiers per camp on a monthlybasis, withthe number ofitems to be laundered ranging up to 17,640,000 (R4, tab 1at2, 7, 22, tab 3 at 2, 9, 15). The solicitation and contract also estimated the average number ofsoldiers in each camp would be 3,500, equating to 8,820,000 items (R4, tab 1 at 2, tab 3 at 2). The solicitation informed bidders that "[t]he contract is based on the average number oftroops for each camp" (R4, tab 1 at 29). However, the Price Quote Guidelines in the solicitation provided differently that bids shouldbe based on "7,000 troops x 5 Camps x 4 weeks/mo
x 21piecesx6 mo= 17,640,000 pieces" (R4, tab 1at23). The parties agreedto a set of item rates under the contract (app. prop. findings i! 31; gov'tprop. findings i! 38). The contract does not contain the FAR 52.216-21, REQUIREMENTS (OCT 1995)clause, nor does it containthe FAR 52.216-22, INDEFINITE QUANTITY (OCT 1995)clause.

2. AGTperformed laundry services underthe contract (gov'tprop. findings i!il 1-2; George decl. i! 19 1). AGT invoiced for its services underthe contract and was paid by the government (app. prop. findings i! 32; gov'tprop. findings iii! 81-84).

3. On 20 March 2003, the president orderedthe invasion ofIraq (1st amended compl. and answer, partIi! 33).

II. Camps Victory and 35th Brigade

4. In late June, 2003, Ms. ColleenRodriguez, a contracting officerwith the Kuwait Directorate ofcontracting, contacted Ms. Sheila Gittens, AGT'spresident. Ms. Rodriguez asked AGTto establish laundry facilities at two additional camps named Victory and 35th Brigade. Ms. Rodriguez requested Ms. Gittens to provide apricing scheme that would meetthe costs ofthe operation. (Gittens decl. i! 7) Ms. Gittens'

1 Mr. George declares that he is AGT's Middle East manager (George decl. i! 1). 222 June email response addressed Camp Victory. She provided a list ofequipment to performthe services, and quoted item rates thatwere higherthan those agreed upon for the 09 contract. (Id.**~** 8, ex. L; George decl.**~** 41; Cockerham tr. 55-562). Ms. Rodriguez verbally instructed Ms. Gittens to proceed (Gittens decl.**~** 9).

5. On 25 June 2003, Ms. Gittens emailed Ms. Rodriguez that AGThad "setup" purchase orders for equipment and coordinated with a Lt. Tuckerto designate a site for the laundry at Camp Victory. She therefore requested a written notice to proceed. Ms. Rodriguez's response instructed AGT to "keepproceeding with [its] efforts." She explained that she was in the process of"preparing a change order" and hoped to have
one for AGT later in the week. However, no modification was sent. (Gittens decl.**~** 11,
ex. M) AGT then proceeded with the procurements and mobilization for Camp Victory (id.**~** 12).

6. On 26 June 2003, Ms. Rodriguez emailed Ms. Gittens, inquiring about when AGT could have "afull service laundry" at 35th Brigade. Ms. Gittens responded that a laundry couldbe available at that location by 12 July, depending on when she received a notice to proceed. She continued that Ms. Rodriguez should "notethatboth Victory and 35th [Brigade] will be at the new rates previously given." (Gittens decl.**~** 13, ex. N) On 30 June 2003, Ms. Gittens emailed Ms. Rodriguez that she was still waiting for a notice to proceedto establish the facility at 35th Brigade, and requested confirmation ofthe prices she had previously provided. Ms. Rodriguez's response providedthe notice to proceed, but requested documentation regarding AGT's price increases. (Id.**~** 14, ex. 0)

7. Based onthe notices to proceed it received, and with the government's approval, AGT built and operated laundry facilities at both camps (Gittens decl. 

### if 16,
ex. P; Rodriguez tr. 34-37). AGT claims to have incurred KD 39,476.400 establishing and operating the facilities (George decl.**~** 38). However, it did not invoice the government for those services at the rates it had quoted. Instead, because the government did not issue a contractmodification approving those rates, AGT charged the samerates that were in effect for the 09 contract. Between commencement ofservices at the additional camps in July, and 31 August, AGT laundered 151,107 items. The numbers
are consistent with soldier counts in the hundreds in each camp. AGT'stotal revenues for those services were KD 23,357.000.**(Id.~~** 39-40)

III. AGT's Claim
8. On 12 October 2003, AGT submitted a certified claim for KD 1,271,991. AGT claimed the government had negligently estimated its requirements for the 09 contract, and failed to pay amounts owed for services at the two additional camps. (R4, tab 8) On

2 CPT Cockerham was assigned to the contracting command (Cockerhamtr. 24). 311 August 2004, AGT submitted a "corrected" certified claim for KD 1,358,241.400 that "replaced" the original (R4, tab 15).

9. On 2 December 2008, the contracting officer issued a final decision denying AGT's claim (R4, tab 16).

10. By letter dated 26 February 2009, AGT appealedthe denial ofits claim to this Board (R4, tab 17).

DECISION Summaryjudgment should be granted ifithas been shown that there are no genuine issues ofmaterial fact and the moving party is entitledtojudgment as a matter of law. Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). Summaryjudgment shall be entered against aparty that "fails to make a showing sufficientto establishthe existence ofan element essential to thatparty's case, and on which thatparty will bearthe burden ofproofat trial" because "failure ofproofconcerning an essential element ofthe nonmoving party's case necessarily renders all other facts immaterial." Id. at 322-23.

I. The 09 Contract

AGT claims the governmentbreached the 09 contractby negligently estimating its laundry requirements. Itcontends that, priorto award ofthe contract, the government knew thatthe soldiers in the camps would be ordered to invade Iraq, significantly reducing the number ofpersonnel in the camps belowthe estimated average of3,500
overthe contract's 6-monthterm. It argues the government's negligent estimate constitutes a breach ofcontract, entitling it to arecovery. Bothparties have moved for summaryjudgment on this claim. AGT's motion contends that the undisputed facts dictate it should recover. The government's cross-motion maintains the 09 contract is not subject to a negligent estimate claim as a matter oflaw. Becausethe government's cross-motionpresents the threshold issue whetherthe contract is subjectto the claim, we address it first.

A. The Government's Motion

As we previously held in this appeal, when estimates are placed in certain types of contract solicitations, contractors are entitled to rely upon them. A negligent estimate as to a material matter is a breach ofcontract. American General Trading & Contracting, 12-1BCAii34,905 at 171,635. However, not all types ofcontracts are subject to such claims. As we observed, indefinite quantity contracts are not. Id. at 171,635-36. Neither party claims the 09 contract is an indefinite quantity contract, and we agree. It does not contain the Indefinite Quantity clause, nor does it committhe government to

4purchase a minimum quantity ofservices, which is the key characteristic ofsuch a contract. Id.

One type ofcontractthat is subjectto negligent estimate claims is arequirements type contract. 12-1BCAii34,905 at 171,635. Such contracts do not guarantee any minimum purchase, butthey commit the governmentto fill all ofsome particularly defined requirements for services with the contractor during a specifiedperiod. Id. We agree with the governmentthat the 09 contract is not a requirements type contract. The contract does not contain the Requirements clause, nor does it otherwisepromise AGT that it would be an exclusive source oflaundry services. See Modern Sys. Tech. Corp. v. UnitedStates, 979 F.2d 200, 205-06 (Fed. Cir. 1992).

The government implies thatbecause it was not obligated to purchase either its requirements or a stated minimum ofservices from AGT underthe 09 contract, the government was not committedto purchase any particular quantity ofservices. It contends such an illusory arrangement is not subjectto a negligent estimate claim, which it implies only applies to requirements type contracts.
Given that the 09 contract contains neither a minimum quantity clause nor a requirements clause, it was not enforceable at its inception since the government was not obligated to take any ascertainable quantity oflaundry services. Willard, Sutherland & Co. v. UnitedStates, 262 U.S. 489, 493-94 (1923). However, the contract "became valid and binding to the extentthat it was performed." Id. at 494; see also Coyle 's Pest Control, Inc. v. Cuomo, 154 F.3d 1302, 1306 (Fed. Cir. 1998). Itis undisputed that AGT performed services under the contract, and received payment from the government (SOF ii 2). Thus, the 09 contract is now "definite and binding" as a result ofthe "conduct and performance ofthe parties." Willard, Sutherland & Co, 262 U.S. at 494. As abinding contract, it is subjectto a claim for breach. The only question is whether it is somehow exempt from the kind ofbreach claim arising from a negligent estimate.

As we have already noted, requirements type contracts are not the only kind of contracts subjectto negligent estimate claims. American General Trading & Contracting, 12-1BCAii34,905 at 171,635. In Womackv. UnitedStates, 389 F.2d 793 (Ct. Cl. 1968), the government negligently underestimatedthe size ofajob annotating title plats for which it sought fixed-price bids for the whole project. Recognizing thatthe estimate was intendedto guide bidders, the court held the contractor was entitled to recover. In Timber Investors, Inc. v. UnitedStates, 587 F.2d 472 (Ct. Cl. 1978), a timber sale contractrequired the contractor to constructroads on forest land for a fixed credit on the timberpurchase price. The credit was based on a government estimate ofthe work and related costs that the contractor claimed were unreasonably inaccurate. The court recognized that an inaccurate estimate could support a recovery by the contractor ifit proved its claim, which it did not. In Rumsfeldv. AppliedCompanies, Inc., 325 F.3d 1328, 1340-41 (Fed. Cir. 2003), the court acknowledged that a negligent estimate claim
5had previously been sustained in a case that did not involve a requirements contract. What mattered was not the type ofcontract butwhether "estimates ofvolume are material to the contract." Id. at 1340; see alsoRavens Grp., Inc. v. UnitedStates, 112 Fed. Cl. 39 (2013) (acknowledging the applicability ofa negligent estimate claimto the firm-fixed price portion ofa contractto respond to monthly service calls).

Estimates ofvolume are material to the 09 contract. The solicitation and contract representthat the number ofpersonnel would vary from 1000-7000 perCamp. They also state thatthe average number ofsoldiers percamp will be 3,500. The solicitation expressly instructs AGTto bidbased on its receipt oflaundry pieces from 7000 soldiers in each camp, but warns that it will only be paid for the total number ofitems it actually receives. (SOF 

### ii 1) AGThas presented evidence that it relied onthe government's estimates to establish its item rates, indicating that the prices ultimately paidto it under the binding contract that was formed were driven by those representations (George decl. 

### iii! 8-17). To the extentthe estimates underlying the 09 contract's prices were negligently prepared, and that AGT reasonably relied on them, there is no reasonAGT cannotpursue a claimbased on that negligence. See Konitz Contracting, Inc., ASBCANo. 52299, 01-2 BCA

### ii 31,572 at 155,902 (acknowledging that a contract lacking both a requirements and indefinite quantities clause, and only enforceable to the extentperformed, remains subject to a claim for equitable price adjustment); Envtl. QualityMgmt., Inc. v. Environmental ProtectionAgency, CBCANo. 3072, 13 BCA

### ii 35,300 (observingthat, even ifa contract is neither requirements nor indefinite quantity, a claim basedupon a variation in estimated quantities is still cognizable). Though relied upon heavily by the government, EasternNew Mexico University-Roswell, ASBCANo. 57110, 12-2 BCA

### ii 35,090, does not dictate otherwise. There, the Boardruled thatthe contract at issue was neither an indefinite quantities contract, a requirements contract, nor a definite quantities contract. Therefore, the Board rejected the contractor's claim that the government failed to order an alleged minimum quantity. Eastern New Mexico University-Roswell did not hold that, to the extent performed, the contractwas immune from a negligent estimate claim. That issue was not presented.

We recognize that since the 09 contract was only binding to the extent it was performed, and therefore AGT couldhave declined toperform at the contractrates, AGT may have little to complain about pastthe pointintime it became reasonably clearthe government's estimates were negligentlyprepared. Whether and whenthat might have beenthe case requires more thorough development ofthe record. Right now we only conclude thatthe contract is not immune from a negligent estimate claim as a matter of law.

6Because the government has not shown that it is entitled to summaryjudgment upon AGT's negligent estimate claim, its motion for summaryjudgmenton that claim is denied.

B. AGT's Motion

AGTpresents detailed evidence in support ofits contention that the government's estimates were negligently prepared and that it was damaged. The governmenthas responded, but AGT has also separately moved to compel responses to document requests it states are relevant to its motion. We grantedpart ofAGT's motion to compel. Therefore, we will defer ruling upon AGT's motion for summaryjudgment on the 09 contractuntil its discovery is complete.

II. The Implied-In-Fact Contract Claim

In addition to its negligent estimate claim arising from the 09 contract, AGT also claims that the**~overnment** breached an implied-in-fact contractrelating to Camps Victory and 3 5 Brigade.3 

### It contends that the contracting officer agreed to compensate AGT for all its costs providing laundry services at those camps. Accordingly, it seeks the difference between its alleged KD 39,476.400 cost ofperforming and its KD 23,357.000 invoice receipts. Both parties seek summaryjudgment. The government contends there is no evidence that the parties formed an implied-in-fact contract in which the government agreed to pay more than the 09 contract's rates for AGT's services at the two camps, or to pay all ofAGT's costs providing facilities at those locations. To defeat the government's motion for summaryjudgment, AGT must proffer evidence ofan implied-in-fact contract obligating the governmentto pay its excess costs. Celotex, 477 U.S. at 322 (requiring summaryjudgmentto be entered against aparty that "fails to make a showing sufficient to establish the existence ofan element essential to thatparty's case, and on which that party will bearthe burden ofproofat trial").

As we have held in this appeal, an implied-in-fact contract is based on a meeting ofthe minds not embodied in an express contract, but inferred from conduct ofthe parties showing their tacit understanding. American General Trading & Contracting, 12-1 BCA 

### ii 34,905 at 171,639. To prove an implied-in-fact contract, AGT must demonstrate the party acting for the governmenthad contracting authority, andthen facts showing mutuality ofintent, consideration, and lack ofambiguity in offer and acceptance. Id. Assuming without deciding that Ms. Rodriguez was authorized to bind the government to the alleged contract for the two camps, AGT has failed to present evidence that the government agreed to pay all ofAGT's costs. AGT's evidence shows that

3 Previously, we ruled we lackedjurisdiction over an additional claim by AGT that it is entitled to compensation for these services under FAR 50.103-2(c).
7Ms. Rodriguez requested AGT to establish laundry facilities at the two additional camps, and Ms. Gittens responded by quoting new, higher item rates for Camp Victory (SOF 

## if4). Ms. Rodriguez replied that AGT shouldproceed (SOF

## if 5). She then reiterated her request for the 35th Brigade site. In response, Ms. Gittens provided a date that location could be ready, and made clear that services at both facilities would be at the new rates. She sought confirmation ofthose prices from Ms. Rodriguez. Ms. Rodriguezprovided the notice to proceed for 35th Brigade, butrequested documentation supporting the new prices. (SOF

## if 6) AGT constructed facilities at the two sites, provided laundry services, and invoiced the government. However, AGT did not invoice for the newprices. Because the government never approved the new rates, AGT only charged the rates applicable to the 09 contract. The governmentpaidthose invoices. (SOF

## if7)

This evidence demonstrates statements and conductby the parties consistentwith
an intent by all to contract for AGT's services at the two sites; and it shows that consideration was providedby bothparties. However, it does not show an unambiguous promise by the governmentto pay AGT's costs, whateverthey were. AGTpresents no evidence that it demanded, or the government accepted, some form ofcost reimbursement arrangement. There is evidence AGTproposed new, higher item prices given its actual experienceperforming the 09 contract, butAGT concedes that the parties
never agreed to those prices (app. mot. at 37). That concession is consistent with AGT's evidence that it performed services atthe two camps while only invoicing the government atthe lowerrates it had charged underthe 09 contract. AGT implies that its lower charges are somehowMs. Rodriguez's fault because she never issued a modification (presumably to the 09 contract) approving thehigherprices AGT quoted (app. prop. findings 

## if96). The suggestion does not assist AGT. Ifanything, it is simply
more evidence that the government never agreed to AGT's higher rates and that AGT consented anyway to the lower rates it ultimately invoiced. Given AGT's failure to present any evidence that the government agreed to pay costs above the invoices it has already paid, its motion for summaryjudgmentupon its implied-in-fact contract claim is denied, and the government's motion is granted.

8CONCLUSION

The government's motion for summaryjudgment on the 09 contract claim is denied. AGT's motion for summaryjudgment on the implied-in-fact contract claim is denied. The government's motion for summaryjudgmenton the implied-in-fact contract claim is granted.

Dated: 23 April 2014

I concur

Administrative Judge Acting Chairman Armed Services Board ofContract Appeals

# ~~-~**~MELNICK** Administrative Judge Armed Services Board ofContractAppeals

I concur 

# lllfV\

RICHARD SHACKLEFORD 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 ofContractAppeals in ASBCANo. 56758, Appeal ofAmerican General Trading & Contracting, WLL, rendered in conformance withthe Board's Charter.

Dated:

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