Court Opinion

ID: 2747663
Source: CourtListenerOpinion
Date Created: 2014-11-03 20:00:11.994505+00
Date Added: 2024-06-11T11:26:35.049165
License: Public Domain

ARMED SERVICES BOARD OF CONTRACT APPEALS

Appeal of --                                  )
                                              )
Capy Machine Shop, Inc.                       )      ASBCA No. 59085
                                              )
Under Contract No. SPE4A6-13-M-S227           )

APPEARANCE FOR THE APPELLANT:                         Mr. Salvatore Capacchione
                                                       President

APPEARANCES FOR THE GOVERNMENT:                      Daniel K. Poling, Esq.
                                                      DLA Chief Trial Attorney
                                                     Edward R. Murray, Esq.
                                                     Adrienne D. Bolton, Esq.
                                                      Trial Attorneys
                                                      DLA Aviation
                                                      Richmond, VA

    OPINION BY ADMINISTRATIVE JUDGE TUNKS ON THE GOVERNMENT'S
                  MOTION FOR SUMMARY JUDGMENT

       The government moves for summary judgment, alleging that there are no
material facts in dispute and appellant's alleged default is unexcused. As a result, the
government asserts that it is entitled to summary judgment as a matter of law.

           STATEMENT OF FACTS FOR PURPOSES OF THE MOTION

       1. On 25 September 2013, Mr. John Vlachos, general manager of Capy,
accepted Order No. SPE4A6-13-M-S227 in the amount of $37,431.60. 1 The order
required Capy to supply 27 splice fairings and a first article to the Defense Logistics
Agency Aviation (DLA Aviation), a field activity of the Defense Logistics Agency.
(R4, tab 1 at l(A), 2of24) The delivery date for the production quantity was
18 February 2015 (R4, tab 2 at 2of2). 2

1
  The order resulted from a Request for Quotations issued by the government on
       16 August 2013 (R4, tabs 3, 4).
2
  The order required the delivery of a First Article Unit, 30 days after the production
       quantity. This obvious mistake is not alleged to be relevant to this appeal.
        2. The order incorporated FAR 52.249-8, DEFAULT (FIXED-PRICE SUPPLY AND
SERVICE) (APR 1984) by reference (R4, tab 1 at 23of24). The clause provides, in
part, as follows:

                   (a)(l) The Government may, subject to paragraphs
            (c) and (d) of this clause, by written notice of default to the
            Contractor, terminate this contract in whole or in part if the
            Contractor fails to--

                   (i) Deliver the supplies or to perform the services
            within the time specified in this contract or any extension;

                    (c) Except for defaults of subcontractors at any tier,
            tqe Contractor shall not be liable for any excess costs if the
            failure to perform the contract arises from causes beyond
            the control and without the fault or negligence of the
            Contractor. Examples of such causes include (1) acts of
            God or of the public enemy, (2) acts of the Government in
            either its sovereign or contractual capacity, (3) fires,
            (4) floods, ( 5) epidemics, ( 6) quarantine restrictions,
            (7) strikes, (8) freight embargoes, and (9) unusually severe
            weather. In each instance the failure to perform must be
            beyond the control and without the fault or negligence of
            the Contractor.

                    (d) If the failure to perform is caused by the default
            of a subcontractor at any tier, and if the cause of the default
            is beyond the control of both the Contractor and
            subcontractor, and without the fault or negligence of either,
            the Contractor shall not be liable for any excess costs for
            failure to perform, unless the subcontracted supplies or
            services were obtainable from other sources in sufficient
            time for the Contractor to meet the required delivery
            schedule.

       3. On 7 November 2013, Mr. Vlachos emailed Mr. Donnie W. Graves, the
contracting officer (CO), as follows:

            Please cancel the above contract at no cost to Capy
            Machine.

                                          2
                Our forming vendor can't locate his tooling[.]

(R4, tab 6)

         4. On 13 November 2013, CO Graves issued a show cause notice to Capy:

                       Because you have indicated in an e-mail dated
               07 NOV 2013 citing an inability to locate tooling on
               contract SPE4A7-13-M-S227 within the time required by
               its terms and thereby requesting termination for
               convenience, the Government is considering terminating
               this contract under the provisions for default. Pending a
               final decision in this matter, it will be necessary to
               determine whether your failure to perform arose from
               causes beyond your control and without your fault or
               negligence. Accordingly, you are given the opportunity to
               present, in writing, any facts bearing on the question to
               me ... within 10 days after receipt of this notice ....

                     If you have any questions, please contact
               Len DuPilka, Contract Administrator....

(R4, tab 7)

       5. On 26 November 2013, Mr. Vlachos emailed Mr. Len J. DuPilka, the
contract administrator, as follows:

               The cost of new tooling is $19,647.00 total which wasn't
               included on the quote.
               That is the reason for asking to cancel this contract.

(R4, tab 8)

      6. The record contains a quotation from Banner Metalcraft, Inc., dated
18 October 2013, 3 which includes a one-time tooling charge of $19,647.00
(compl., attach.).

      7. On 12 December 2013, Ms. Janice Hicks, the terminating contracting officer
(TCO), terminated the contract for default, stating as follows:

3
    The contract having been awarded on 25 September 2013.

                                            3
               You are hereby notified that contract SPE4A6-13-M-S227
               is terminated for default effective immediately. Your right
               to proceed further with performance of this contract is
               terminated. The termination is based on your failure to
               perform in accordance with the terms and conditions of the
               contract. The terminated supplies may be procured against
               your account and you will be held liable for excess costs.

(R4, tab 10)

      8. On 19 December 2013, Capy appealed the TCO's final decision to this
Board where it was docketed as ASBCA No. 59085.

                                      DECISION

        Summary judgment is properly granted only where the moving party has met its
burden of proving the absence of any genuine issue of material fact and proven that it
is entitled to judgment as a matter oflaw. Mingus Constructors, Inc. v. United States,
812 F.2d 1387, 1390 (Fed. Cir. 1987). In this appeal, the government bears the burden
of proof to justify the default termination. If the government establishes a prima facie
case that the termination was justified, the burden shifts to the contractor to
demonstrate that the default was excusable. Hanley Industries, Inc., ASBCA
No. 56584, 14-1 BCA if 35,699.

        The government argues that there are no material facts in dispute and that it is
entitled to summary judgment on the ground of anticipatory repudiation. By email
dated 7 November 2013, Mr. Vlachos, Capy's general manager, requested CO Graves
to cancel the contract at no cost because its forming vendor could not find its tooling.
On 26 November 2013, Mr. Vlachos emailed Mr. DuPilka, the contract administrator,
again requesting that the government cancel the contract. Capy stated that the reason
for its request was that the cost of new tooling was $19,647 and that it could not afford
to perform the contract.

       The government has not demonstrated that Capy repudiated the contract.
Anticipatory repudiation requires a "positive, definite, unconditional, and
unequivocal" manifestation on the part of the contractor that he will not perform the
contract. Cascade Pacific International v. United States, 773 F.2d 287, 293 (Fed. Cir.
1985). Capy communicated with the CO twice before the contract was terminated.
On 7 November 2013, Capy requested a no cost cancellation, stating that its "forming
vendor can't locate his tooling." On 26 November 2013, Capy advised that the "cost
of new tooling is $19,647.00 total which wasn't included on the quote. That is the

                                            4
reason for asking to cancel this contract." These communications do not reflect a
positive, definite, unconditional and unequivocal refusal to perform.

       Accordingly, the government's motion for summary judgment is denied.

       Dated: 22 October 2014

                                                           (}/,                              r/
                                                  ~
                                               ......_ ,/""'11\_....,,/__.?1(.r(c{-;,   'I
                                                                                             ·1~
                                                                                             J_    -·,_~-
                                                        ELIZ~ETH      A. TUNKS
                                                        Administrative Judge
                                                        Armed Services Board
                                                        of Contract Appeals

I concur                                                I concur

      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. 59085, Appeal of Capy
Machine Shop, Inc., rendered in conformance with the Board's Charter.

      Dated:

                                                       JEFFREYD. GARDIN
                                                       Recorder, Armed Services
                                                       Board of Contract Appeals

                                           5