### ARMED SERVICES BOARD OF CONTRACT APPEALS Appeal of

-- ) ) 

### Precision Standard, Inc. ) ) 

### Under Contract No. SPM4A7-08-M-B239 ) APPEARANCE FOR THE APPELLANT:

APPEARANCES FORTHE GOVERNMENT: ASBCA No. 59116

Nancy M. Camardo, Esq.

Camardo Law Firm, P.C. Auburn, NY Daniel K. Poling, Esq.

DLA ChiefTrial Attorney Robert E. Sebold, Esq.

Trial Attorney DLA Aviation Richmond, VA OPINION BYADMINISTRATIVE JUDGE HARTMAN ON THE GOVERNMENT'S MOTION FOR SUMMARYJUDGMENT The government moves for summaryjudgment, asserting that its contracting officer (CO) appropriately terminated appellant's contract for default because Precision Standard, Inc. (PSI) was delinquent in submittingthe contractually required first article and PSI has provided no evidence ofexcusable delay. Appellant asserts the government's motion should be denied because there are genuine issues ofmaterial fact regarding: (1) why the CO did not exercise her discretion to terminate the contract at "no cost" and (2) why its lack ofdelivery ofthe first article here was not "excusable." According to PSI, it could not schedule the quality assurance representative (QAR) inspection necessary for first article delivery due to QAR scheduling problems arising from the "sequester" and furlough ofgovernment employees. STATEMENT OF FACTS FORPURPOSES OF THE MOTION
In June 2008, the Defense Supply Center, Richmond (which has been renamed Defense Logistics Agency Aviation), a field activity ofthe Defense Logistics Agency (DLA), awarded a contract, No. SPM4A7-08-M-B239, for the supply of32 aircraft "formers" for A-10 aircraft, National Stock Number (NSN) 1560-01-553-7553, part number 160414007-74, to appellant, PSI (R4, tab 1at1, 3). Aircraft "formers" are a "CRITICAL APPLICATION ITEM," where "failure

...could injure personnel orjeopardize a vital agency mission" (R4, tab 1 at 5; Federal Acquisition Regulation (FAR) 46.203(c)). The parties' contract required PSI to submit a first article for testing by the Engineering SupportActivity (ESA) for the A-10 aircraft program at Hill Air Force Base in Ogden, Utah (R4, tab 1 at 4-5, 10, 13-14). The first article was due 9 February 2009, and ESAhad 120 days to evaluate that article. IfESA approved the article, the production quantity of32 was due 200 days after the approval. (R4, tab 1at 2, 9) The parties' contract incorporated by reference various standard clauses, including FAR 52.209-4, FIRSTARTICLE APPROVAL

- GOVERNMENTTESTING (SEP 1989); and FAR 52.249-8, DEFAULT (FIXED-PRICE SUPPLY AND SERVICE) (APR 1984). (R4, tab 1at15;FAR 52.252-2, CLAUSES INCORPORATED BY REFERENCE (FEB 1998)) The initial clause states: (a) The Contractor shall deliver

__unit(s) of Lot/Item

__within

__calendar days from the date of this contractto the Government at [insert name and address of the testing facility] for first article tests
.... (b) Within

__calendar days after the Government receives the first article, the Contracting Officer shall notify the Contractor, in writing, ofthe conditional approval, approval, or disapproval ofthe first article

.... (c) Ifthe first article is disapproved, the Contractor, upon Government request, shall submit an additional first article for testing

.... The Contractor shall furnish any additional first article to the Government underthe terms and conditions and within the time specified by the Government

.... (d) Ifthe Contractor fails to deliver any first article on time, orthe Contracting Officer disapproves any first article, the Contractor shall be deemed to have failed to make delivery within the meaning ofthe Default clause of this contract. The latter clause states: (a)(l) The Government may, subjectto paragraphs (c) and (d) ofthis clause, by written notice ofdefault to the

2Contractorterminate this contract in whole or in part ifthe Contractor fails to

- (i) Deliverthe supplies

...within the time specified inthis contract or any extension;

(c) [Unless] the failure to perform the contract arises from causes beyondthe control and without the fault ornegligence ofthe Contractor. PSI did not submitthe first article by its due date, 9 February 2009 (R4, tab 8 at 6). Overthree months after the due date, on 21May2009, PSI submitted a first article but material certifications, as well as process specifications for the passivate and heattreatment, were missing (R4, tab 8 at 6-21, tab 9 at 1-2). When PSI did not respond to requests for the missing materials, ESA disapproved the first article (R4, tab 10). By letter dated 17 November 2009, DLA's CO advised PSI that ifitpaid extra costs incurred for governmenttesting and offered DLA some other consideration for its contractor-caused delay, it could re-submit the disapproved first article after it had corrected the following discrepancies:
1. Print requirement is .32 R +/- .03; Actual measurement is one side is .28[,] the other is .32. 2. As perthe contractpage 4 item numbers 4, and 5 require that all material certs, and process certs and purchase orders; None were sent with the First Article, and these certifications were requested again through the DLA contracting office. The contractor sent none ofthe requested certifications. The CO added that, onresubmission ofthe first article, a new delivery date would be established and memorialized in a contract modification. The CO further advised that PSI could alternatively: (1) submit a rebuttal letterregarding the first article test for reviewby both DLA and ESA or (2) request a no-cost cancellation/termination ofthe parties' contract and, ifthe request was acceptable to DLA, the parties' contract would be "cancelled orterminated." The CO stated PSI shall respond to her letter within ten workdays after receipt ofher letter and, ifit did not, the "contract may be cancelled orterminated without further notification." (R4, tab 10) PSI submitted a rebuttal in January 2010 asserting, among otherthings, that it rejected any "no-cost"termination; the disparity in first article dimension could be readily corrected in production at minimal cost; and the sole material certification was

3

### attached to the test report it submitted with the first article. It did not, however, furnish a copy ofthat certification (R4, tabs 13, 16). In June 2011, DLA's CO gave PSI the opportunity to submit a second first article and propose arevised delivery schedule for the contract (R4, tab 17 at 2). By bilateral contract Modification No. POOOOl executed 18 December 2012, the parties established a new delivery date of22 January 2013 for the first article (R4, tab 2 at 1-2, tabs 18, 19). PSI, however, did not submit a second first article by the specified date (R4, tab 21). By letter dated 29 July 2013, DLA's CO sent PSI a letter stating she was considering terminating the parties' contract for default and PSI was being given the opportunity to present facts bearing on the question within ten days after receipt (R4, tab 21). While PSI received the CO's letter, it did not respond within the time specified (R4, tabs 22, 23). DLA, however, provided PSI a third opportunity to submit a first article. By bilateral contractModification No. P00002, the parties established a new delivery of 18 October 2013 for the first article. The parties also modified their contract to provide:

(R4, tab 3) [I]fthe First Article re-submission is not delivered by the date

...[due] or iftheFirst Article is disapproved, (second disapproval), this contract may be terminated in its entirety at no cost to the Government.

PSI again failed to submit a first article by the specified date (R4, tab 23 at 3, tab 24). By final decision dated 13 December 2013, DLA's CO notified PSI that its contract was "terminated for default effective immediately" based on its "failure to perform in accordance with the terms and conditions ofthe contract, specifically your failure to deliverthe supplies in accordance with the established delivery schedule" (R4, tabs 4, 25). PSI timely appealed the CO's decision to this Board. DLA filed a motion for summaryjudgment in the appeal. PSI filed an opposition to DLA's motion asserting, among otherthings, that it was delayed in submitting a first article due to unavailability ofan inspector and appending an affidavit from its chiefoperating officer providing in pertinentpart: The Government, in its Motion, attempts to allege that the only effectthat the sequesterwould have on the inspection was during the five-day furlough period, occurring between October 1through October 5, 2013. However,

4

### what the Motion failed to note [was] that the sequester affected a time period far beyond those date[s]. For a number ofmonths the QARs were allowed to work only four days a week. This made scheduling inspections significantly more difficult. This difficulty is exacerbated by the fact that each QAR services numerous contractors and contract[]s. (App. resp., aff. at 3, 

### ii 7) Nowhere in the affidavit, however, does the affiant state that he or anyone else from PSI ever actually attempted to schedule an inspection ofthe first article with a QAR (id. 

### at 1-3). DLA appended to its reply an affidavit from a quality assurance specialist with the Defense Contract Management Agency in Detroit, Michigan, who was assigned to PSI between September and December of2013 stating: During the Septemberthrough December of2013 time frame I was in Precision Standard's facility for several different business matters and had no knowledge that the first article test for contract SPM4A7-08-M-B239 was ready for inspection. To the best ofmy knowledge this first article test was neverpresented to the government for inspection. (Gov'treply, decl. 

### ii 2) DECISION DLA terminated PSI's contract for default basedupon a failure to deliverthe first article by the contractually specified date. It seeks summaryjudgmentthat its default termination was properbased upon the fact it is undisputed that PSI did not deliverthe first article by its due date. (Gov't mot. at 2; compl. 

### ii 16(c)) The standards set forth in FED. R. C1v. P. 56 guide us in resolving summary judgmentmotions. J 

### W Creech, Inc., ASBCA Nos. 45317, 45454, 94-1 BCA 

### ii 26,459 at 131,661;AlliedRepairService, Inc., ASBCA No. 26619, 82-1 BCA 

### ii 15,785 at 78,162-63; Board Rule 7(c)(2). We will grant a summaryjudgment motion only ifpleadings, depositions, interrogatory answers, and admissions on file, together with any affidavits or other evidence, show that there is no genuine issue as to any material fact, andthe moving party is entitledtojudgment as a matter oflaw. DLA, theparty here seeking summaryjudgment, has the burden ofdemonstrating both ofthese elements. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986); Mingus Constructors, Inc. v. UnitedStates, 812 F.2d 1387, 1390 (Fed. Cir. 1987); Comptech Corp., ASBCA No. 55526, 08-2 BCA

### ii 33,982 at 168,082. PSI, who is the nonmoving party, is entitled to have all reasonable inferences drawn in its favor.

5Celotex Corp., 

### 477 U.S. at 322-24; Elekta Instrument

### SA. v. 0. UR. Scientific Int'!, Inc., 

### 214 F.3d 1302, 1306 (Fed. Cir. 2000). It is well established that a default termination is a drastic sanction, which shouldbe imposed and sustained only upon "good grounds and on solid evidence." E.g., Lisbon Contractors, Inc. 

### v. UnitedStates, 

### 828 F.2d 759, 765 (Fed. Cir. 1987); J.D. Hedin Constr. Co. 

### v. UnitedStates, 

### 408 F.2d 424, 431 (Ct. Cl. 1969). Contract provisions authorizing termination for default are a species of"forfeiture" and are to be strictly construed. DeVito 

### v. UnitedStates, 

### 413 F.2d 1147, 1153 (Ct. Cl. 1969); King

### v. UnitedStates, 

### 37 Ct. Cl. 428, 434 (1902). DLA bears the burden ofproving that a termination for default wasjustified. Once DLAhas established aprima facie 

### case in thatregard, the burden ofproduction

- or ofgoing forward

- shifts to PSI. DCX, Inc. 

### v. Perry, 

### 79 F.3d 132, 134 (Fed. Cir.), cert. denied, 

### 519 U.S. 992 (1996); Lisbon Contractors, Inc., 

### 828 F.2d at 764-65; Hanley Indus., Inc., 

### ASBCA No. 56584,**14-1BCA~35,699** 

### at 174,812. The parties' contract expressly provides that DLAmay "by written notice of defaultto [PSI] terminate this contract in whole or in part if[PSI] fails to

- (i) Deliver the supplies

...within the time specified in this contract or any extension," unless "the failure to performthe contract arises from causes beyond the control and withoutthe fault or negligence of[PSI]." FAR 52.249-8(a)(1 ), ( c). DLAhas shown, and it is undisputed, that PSI did not deliverthe First Article by the contractually specified date. DLA, thus, has made aprima facie 

### demonstration that its default termination wasjustified and the burden ofproduction shifts to PSI to show "excusability." See DCX, 

### 79 F.3d at 134; HanleyIndus., 

### 14-1 BCA**~** 

### 35,699 at 174,812; CapyMach. Shop, Inc., 

### ASBCA No. 59085,**14-1BCA~35,783** 

### at 175,044. PSI contends that its failure to submit the first article by the contractually-agreed date was excusable because it had the article "test and report ready for QAR inspection/approval before the due date ofOctober 18, 2013," but "was unable to have the inspection performedby the due date, or at anytime shortly thereafter," due to the "sequester." Accordingto PSI, because its contract had a "C"rating (the lowest in terms of priority) and QARs were only working four days a week, the scheduling of its inspection was made more difficult. (App. resp. at 10-11) As support for these contentions, PSI submitted an affidavit from its chiefoperating officerproviding: The Government, in its Motion, attempts to allege that the only effectthat the sequesterwould have on the inspection was during the five-day furlough period, occurring between October 1through October 5, 2013. However, what the Motion failed to note [was] thatthe sequester affected a time period far beyond those date[s]. For a number ofmonths the QARs were allowed to work only

6four days a week. This made scheduling inspections significantly more difficult. This difficulty is exacerbated by the fact that each QARservices numerous contractors and contract[]s. (App. resp., aff. at 3) Nowhere in the affidavit however does the affiant state that he or anyone else from PSI ever actually attempted to schedule an inspection ofthe First Article with a QAR (id. at 1-3).
DLA asserts there is no evidence ofthe government delaying PSI in obtaining an inspection ofa First Article during fall 2013. Itnotes that PSI does not offer any evidence inthe form ofan email or other correspondence that it attempted to schedule an inspection. DLA also appends to its reply a declaration from the quality assurance specialist with the Defense Contract Management Agency in Detroit, Michigan, who was assigned to PSI between September and December of2013, stating: During the Septemberthrough December of2013 time frame I was in Precision Standard's facility for several differentbusiness matters and had no knowledge that the first article test for contract SPM4A7-08-M-B239 was ready for inspection. Tothe best ofmy knowledge this first article test was neverpresentedto the government for inspection. (Gov'treply, decl. 

### ii 2) PSI may notrest upon vague, unsupported allegations ofa delay in government inspection ofthe FirstArticle to defeat DLA's summaryjudgment motion. "The very mission ofthe summaryjudgmentprocedure is to pierce thepleadings and to assess the proofin orderto see whetherthere is a genuine issue for trial." Penn Screw and Machine Works, Inc., ASBCANo. 32382, 89-3 BCA

### ii 22,205 at 111,694. Based on our examination ofthe evidence presented and cited in response to DLA's motion, and drawing all reasonable inferences in favor ofPSI, the nonmovant, we conclude PSI has failed to showthat a reasonable fact finder could decide PSI was delayed in obtaining a FirstArticle inspection as a result ofthe sequesterwhenthere is no evidence PSI requested such an inspectionpriorto its contractually-required delivery date. See DCX, Inc., 79 F.3d at 134 (no evidence actual contractor inspection delayedto meet requirements ofhigherpriority contracts; contractorthus failed to meetburden to show excusable delay in inspection); Mingus Constructors, 812 F.2d at 1390-91 (party opposing summaryjudgment must show an evidentiary conflict on record; mere denials or conclusory statements are insufficient).

7PSI further contends in opposition to DLA's motion that, by entering into bilateral Modification No. P00002 extending the First Article delivery date, DLA represented a no-cost termination could be issued ifPSI failed to timely deliver and PSI consentedto a "no-costtermination" (app. resp. at 9-10). PSI argues that there are "[m]aterial questions offact" in this appeal "whetherthe Government even considered a no-cost termination for convenience as promisedin the agreed-upon Modification P00002," whichrequire the factual record be more fully developed concerning the reasonableness ofthe COs' action and whichpreclude grant ofsummaryjudgmentto DLA (id.).
DLA argues thatthe CO's actions were wholly consistent withthe language of contract Modification No. P00002 and thatthere are no genuine issues ofmaterial fact regarding compliance with that modification because the question ofwhether the language in the modificationprecludedthe CO from terminating the contract for default is a question of"law,"not a question of"fact." According to DLA, contract Modification No. P00002 simply authorizes the parties' contractto be terminated in its entirety "atno cost to the Government," not at no costto PSI. (Gov'treply hr. at 3-5)
DLA is correctthat contract interpretation is a question oflaw and therefore amenable to resolution by motion for summaryjudgment. 

### E.g., Sevenson EnvironmentalServs., Inc. v. Shaw Environmental, Inc., 477 F.3d 1361, 1364 (Fed. Cir. 2007); 

### P.J Maffei Building Wrecking Corp. v. UnitedStates, 732 F.2d 913, 916 (Fed. Cir. 1984). We interpret a contract in accordance with its express terms and begin with the plain language ofthat agreement. 

### E.g., C. 

### Sanchez & 

### Son, Inc. v. UnitedStates, 6 F.3d 1539, 1543 (Fed. Cir. 1993); 

### Gould, Inc. v. 

### UnitedStates, 935 F.2d 1271, 1274 (Fed. Cir. 1991). Ifthe "provisions are clear and unambiguous, they mustbe given their plain and ordinary meaning." 

### E.g., UnitedInt'!Investigative Servs. v. UnitedStates, 109 F.3d 734, 737 (Fed. Cir. 1997);

### AlaskaLumber & 

### Pulp Co. v. Madigan, 2 F.3d 389, 392 (Fed. Cir. 1993). Modification No. P00002 to the parties' contract expressly provides that, "ifthe First Article re-submission is not delivered by the date [due]

..., this contract may be terminated in its entirety at 

### no cost to the Government" (emphasis added). While PSI appears to desire a termination ofthe contract for the convenience ofthe government that would result in 

### no cost to PSI, the modification does not require a termination at no cost to PSI ifPSI fails to deliver by the due date. Nor does it mention a termination for the convenience ofthe government. By its plain language, it simply authorizes a termination which results in 

### no costto DLA. A termination for default is such a termination and clearly within the express terms ofthe contract modification. 

### See LockheedMartin IR Imaging Sys., Inc. v. West, 108 F.3d 319, 322 (Fed. Cir. 1997) (words ofa contract are deemedto have their ordinary meaning); 

### Churchill Chemical Corp. v. UnitedStates, 602 F.2d 358, 362 (Ct. Cl. 1979) (it is well established that a contract may be terminated for defaultpursuantto default clause ifcontractor fails to

8comply with the delivery schedule);

### ArtisanElectronics Corp. v. UnitedStates, 499 F.2d 606, 611 (Ct. Cl. 1974) (default may lie even where an incremental delivery date is missed); 

### EnvironmentalDevices, Inc., ASBCANo. 37430 

### etal., 93-3 BCA

### ii 26,138 at 129,934 (ifparties execute modification establishing new delivery date, contractor must deliver by new date unless delayed by excusable causes arising 

### after contract modification execution). PSI asserts additionally that FAR49.101(b) mandates the CO effect a no-cost settlement instead ofa termination for default where it is known the contractorwill accept one, no governmentproperty was furnished the contractor, and there are no outstandingpayments or debts that the contractor owes the government, as PSI asserts is the case here, and there are "[m]aterial questions offact" in this appeal whether DLA "considered a no-costtermination for convenience." We have held, however, that the government, i.e., DLA, "owes no duty to contractors" to terminate contracts in default for the "convenience ofthe government," which generally results in the governmenthaving to pay monies to the contractor for the costs that the contractor has incurred. 

### ContactInt'! Corp., ASBCANo. 44636, 95-2 BCA

### ii 27,887 at 139,119, 

### aff'd, 106 F.3d 426 (Fed. Cir. 1996) (table); 

### RotairIndus., Inc., ASBCANo. 27571, 84-2 BCA

### ii 17,417 at 86,749-51; 

### see generally FAR49.20l(a).* Moreover, it is well established a fact is "material" only ifit may affect the outcome, i.e., the finding ofthat fact is relevant and necessary to the proceeding. A genuine dispute arises regarding that material fact ifsufficient evidence is presented that a reasonable fact finder could decide that fact in favor ofthe nonmoving party. 

### Anderson v. LibertyLobby, Inc., 477 U.S. 242, 248-50 (1986); 

### Opryland USA Inc. v. GreatAmericanMusic Show, Inc., 970 F.2d 847, 849-50 (Fed. Cir. 1992). In sum, as the nonmoving partyhere, PSI mustpresent sufficient evidence showing that a specific conflict exists regarding a "material fact." 

### Opryland USA, 970 F.2d at 850; 

### Lemelson v. TRW, Inc., 760 F.2d 1254, 1261 (Fed. Cir. 1985). PSI, however, has failed to show that there is any genuinely disputed question ofmaterial fact which precludes grant of summaryjudgmentto DLA here.

* We note that, while PSI asserts FAR49.101(b) requires a CO to consider a "no-cost" settlement instead ofa default termination when it is known that the contractor will accept one and certain other factors exist (app. opp'n at 8), even ifwe were to assume PSI's interpretation ofFAR49.lOl(b) was correct, there is no reason to believe here thatthe CO thought PSI would accept such a settlement since PSI expressly rejected such a "no-cost"termination for convenience when it was previously offered by the CO.

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### CONCLUSION We grant the government's motion for summaryjudgment. The appeal is denied. Dated: 13 July 2015

I concur 

# //;;?;/ / L ,/ /'

# /~~~~~··· Administrative Judge Acting Chairman Armed Services Board ofContractAppeals TERRENCES.HARTMAN Administrative Judge Armed Services Board ofContractAppeals

I concur

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 ASBCA No. 59116, Appeal of Precision Standard, Inc., rendered in conformance with the Board's Charter. Dated:

10 

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