Court Opinion

ID: 2734456
Source: CourtListenerOpinion
Date Created: 2014-09-19 01:19:24.577929+00
Date Added: 2024-06-11T09:12:31.951198
License: Public Domain

ARMED SERVICES BOARD OF CONTRACT APPEALS

Appeal of--                                  )
                                             )
Commissioning Solutions Global, LLC          )      ASBCA No. 59254
                                             )
Under Contract No. N55236-13-D-0001          )

APPEARANCE FOR THE APPELLANT:                       Mr. Victor Ogunniyi
                                                     President

APPEARANCES FOR THE GOVERNMENT:                     Ronald J. Borro, Esq.
                                                     Navy Chief Trial Attorney
                                                    Stephen D. Tobin, Esq.
                                                     Trial Attorney

            OPINION BY ADMINISTRATIVE JUDGE LOPES ON THE
                  GOVERNMENT'S MOTION TO DISMISS

       The Department of the Navy (Navy or government) moves to dismiss
Commissioning Solutions Global, LLC's, (CSG or appellant) appeal for failure to state
a claim upon which relief can be granted. In the alternative, the government moves to
dismiss all damages sought by appellant. The Board grants the government's motion
to dismiss this appeal for failure to state a claim.

       STATEMENT OF FACTS (SOF) FOR PURPOSES OF THE MOTION

       1. The Navy Southwest Regional Maintenance Center (SWRMC) awarded
Contract No. N55236-13-D-0001 (the contract) to CSG on 1November2012 for
hydraulic/lube oil flush services on Navy vessels located within a 50-mile radius of
San Diego, California (R4, tab 1 at 1, 221). The contract's period of performance
includes a base period of one year from effective date of award (30 October 2012) plus
four one-year option periods (R4, tab 1 at 247). The government exercised Option
Year one on 30 October 2013 (compl. at 1; gov't mot. at 3). The contract incorporated
by reference the FAR 52.233-1, DISPUTES (JUL 2002) clause (R4, tab 1at263).

        2. The contract is an indefinite quantity (IQ) type (R4, tab 1 at 265). Work
is issued through the award of fixed-price delivery orders in accordance with
FAR 52.216-18, ORDERING (OCT 1995); FAR 52.216-19, ORDERING LIMITATIONS
(OCT 1995); and FAR 52.216-22, INDEFINITE QUANTITY (OCT 1995), which are
incorporated by full text (R4, tab 1 at 264-65). The Indefinite Quantity clause
provides in pertinent part as follows:

              (a) This is an indefinite-quantity contract for the supplies
              or services specified and effective for the period stated, in
              the Schedule. The quantities of supplies and services
              specified in the Schedule are estimates only and are not
              purchased by this contract.

              (b) Delivery or performance shall be made only as
              authorized by orders issued in accordance with the
              Ordering clause. The Contractor shall furnish to the
              Government, when and if ordered, the supplies or services
              specified in the Schedule up to and including the quantity
              designated in the Schedule as the "maximum". The
              Government shall order at least the quantity of supplies or
              services designated in the Schedule as the "minimum".

(R4, tab 1 at 265)

       3. The Minimum Contract Guarantee and Maximum Potential clause provided:

              (a) The guaranteed minimum amount for this contract shall
              be a total of $3,000, as met through the issuance of one or
              more delivery orders within five years of contract award.

              (b) The Government has no obligation to issue delivery
              orders to the Contractor beyond the amount specified in
              paragraph (a) of this clause. Once the conditions of
              paragraph (a) have been met, the Contract will continue to
              have the "fair opportunity" to be issued delivery order(s)
              under this contract unless notified by the CO ....

              (c) The maximum dollar amount that may potentially be
              awarded under this contract is $100,729,000.

(R4, tab 1 at 255) Thus, the government has no obligation to issue orders to the
contractor beyond the stated minimum guarantee, and once the guaranteed minimum
has been met, the contractor will continue to have the fair opportunity to be issued
orders.

       4. The Navy issued requests for proposals (RFPs) for two orders during the
contract base year: RFP 0001 and RFP 0002 (compl. at 11-12; gov't mot. at 3).

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RFP 0001 was cancelled by the government (id.). CSG withdrew its proposal for
RFP 0002 (id.).

        5. In an earlier matter, the Board granted the government's motion to dismiss
CSG's petition for the Board to direct the CO to render a decision because the claim
was not in a sum certain. The dismissal was without prejudice to CSG submitting a
claim in a sum certain in accordance with the CDA. Commissioning Solutions Global,
LLC, ASBCA No. 59007-945, 14-1BCAif35,523. On 13 February 2014, CSG filed a
certified claim with the SWRMC contracting officer (R4, tab 4). CSG claimed lost
profits of $3,599,668.17 on anticipated requirements for the contract base year,
$1,000,000 to restore equipment to original functionality and $5,000,000 for emotional
stress, instability and family reputation (compl. at 24, appx. I; gov't mot. at 3).

       6. On 4 April 2014, the contracting officer issued a contracting officer's final
decision denying the claim (R4, tab 5).

         7. On 10 April 2014, GSC filed this appeal.

                                       DECISION

       In its complaint CSG alleges that the Navy breached the contract by assigning
or directing work to shipyards that otherwise could have been ordered under the
contract (compl. at 7). CSG also alleges that the Navy, in bad faith, awarded an IQ
contract with a $3,000 order minimum over five years instead of what properly should
have been a "retainer type of contract" (comp I. at 11). 1 Further, CSG alleges it was
not awarded the two delivery orders issued in the contract base year because, in the
case ofRFP 0001, the Navy awarded the work to a shipyard, and in the case of
RFP 0002, CSG withdrew its proposal in view of "unrealistic time requirements
(Period of Performance) and expectations as originally proposed" (compl. at 11-12).

       In response to these allegations, the government argues that: the contract is an
IQ type contract and that the guaranteed minimum amount for the contract is $3,000 as
met through the issuance of one or more delivery orders within five years of contract
award (R4, tab 5 at l); CSG has characterized the contract as a requirements contract
yet has provided no facts to support this characterization (gov't mot. at 7); and that
CSG had a fair opportunity to bid on the delivery orders issued during the contract
base year, but that RFP 0001 was cancelled and CSG voluntarily withdrew its offer for
RFP 0002 (gov't mot. at 8; R4, tab 5 at 1).

1
    We presume appellant refers to a requirements contract.

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          In Bell/Heery v. United States, 739 F.3d 1324, 1330 (Fed. Cir. 2014), the court
states:

                        To survive a motion to dismiss, a complaint must
                contain sufficient factual matter, accepted as true, to "state
                a claim to relief that is plausible on its face." Ashcroft v.
                Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell At!. Corp. v.
                Twombly, 550 U.S. 544, 570 (2007)). In deciding a motion
                to dismiss, the court must accept well-pleaded factual
                allegations as true and must draw all reasonable inferences
                in favor of the claimant. Kellogg Brown & Root Servs.,
                Inc. v. United States, 728 F.3d 1348, 1365 (Fed. Cir.
                2013).

The court further explained that a breach of contract claim requires assessment of two
components:

                ( 1) [A]n obligation or duty arising out of the contract and
                (2) factual allegations sufficient to support the conclusion
                that there has been a breach of the identified contractual
                duty. In making this assessment, the court must interpret
                the contract's provisions to ascertain whether the facts
                plaintiff alleges would, if true, establish a breach of
                contract. [Citations omitted]

In making an assessment of the claim before us, we "must interpret the contract's
provisions to ascertain whether the facts [appellant] alleges would, if true, establish
breach of contract." Id.

       We find that CSG had not met these requirements. First, the contract is an IQ
type contract, and CSG has not alleged that the Navy failed to meet the contract's
$3,000 minimum ordering requirement. Appellant has pointed to no contractual
prohibitions against the Navy ordering hydraulic/lube oil services from shipyards or
from other parties provided that it meets its $3,000 minimum ordering requirement
during the term of the contract. Nor have we found any such prohibitions.
Accordingly, such actions even iftrue do not constitute a breach of contract.

       Second, the record establishes that CSG and the Navy properly executed the
contract, and that CSG knowingly entered into an IQ type contract (SOF ifil 1, 2). The
Board understands CSG's contention that the contract should have properly been a
"retainer type of contract" to mean it should have been a requirements contract -
namely a contract that "provides for filling all actual purchase requirements of
designated Government activities for supplies or services during a specified contract

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period (from one contractor), with deliveries or performance to be scheduled by
placing orders with the contractor." The time for appellant to have complained about
the type of contract being solicited was before award. Flight Refueling, Inc., ASBCA
Nos. 46846, 48503, 97-2 BCA ~ 29,000 at 144,486 (contractor contended contract type
other than firm-fixed price should have been awarded), afj"d, 168 F.3d 1318 (Fed. Cir.
1998) (table); AGS-Genesys Corporation, ASBCA No. 35302, 89-2 BCA ~ 21,702
at 109,108 (contractor contended solicitation was improper). This Board, of course,
has no jurisdiction over bid protests. Coastal Corp. v. United States, 713 F.2d 728,
730 (Fed. Cir. 1983).

       Third, CSG states that the reason that the Navy cancelled RFP 0001 was
because the work was no longer required, but that CSG suspects that the work was
intentionally cancelled so that the government could reassign the work to a MSMO
contract (i.e., to a shipyard) (compl. at 11 ). Even assuming these facts as true, it still
would not have constituted a breach of the contract. The Navy had no contractual
obligation to order the work for RFP 0001 from CSG and the Navy was not
contractually prohibited from awarding the work to a shipyard. Concerning RFP 0002,
CSG states that it was not provided sufficient time to prepare its proposal, and that the
order had unrealistic period of performance requirements (compl. at 12). The Navy
had no more contractual obligation to award RFP 0002 to appellant than it did
RFP 0001. Even assuming appellant's factual allegations to be true, they do not
constitute a breach of contract. Accordingly, even assuming that CSG's alleged facts
for RFP 0001 and RFP 0002 are true, such facts still would have not constituted a
breach of contract.

                                     CONCLUSION

      Appellant has failed to state a claim upon which relief can be granted. The
government's motion to dismiss is granted.

       Dated: 7 August 2014

                                                  CRANE L. LOPES
                                                  Administrative Judge
                                                  Armed Services Board
                                                  of Contract Appeals

(Signatures continued)

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I concur                                         I concur

d~£~
Administrative Judge
                                                 RICHARD SHACKLEFORD
                                                 Administrative Judge
Acting Chairman                                  Vice Chairman
Armed Services Board                             Armed Services Board
of Contract Appeals                              of Contract Appeals

      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. 59254, Appeal of
Commissioning Solutions Global, LLC, rendered in conformance with the Board's
Charter.

       Dated:

                                                 JEFFREY D. GARDIN
                                                 Recorder, Armed Services
                                                 Board of Contract Appeals

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