Court Opinion

ID: 4321259
Source: CourtListenerOpinion
Date Created: 2018-10-16 16:00:05.731055+00
Date Added: 2024-06-11T13:28:25.310027
License: Public Domain

ARMED SERVICES BOARD OF CONTRACT APPEALS

Appeals of --                        )
                                     )
Avant Assessment, LLC                )              ASBCA Nos. 61358, 61407, 61442
                                     )
Under Contract Nos. W9124N-10-C-0109 )
                    W9124N-11-C-0015 )
                    W9124N-11-C-0033 )

APPEARANCES FOR THE APPELLANT:                     Dirk D. Haire, Esq.
                                                   Sean Milani-nia, Esq.
                                                   Rachel M. Severance, Esq.
                                                   Kelsey O'Brien, Esq.
                                                   Alexa Santora, Esq.
                                                    Fox Rothschild LLP
                                                    Washington, DC

APPEARANCES FOR THE GOVERNMENT:                    Raymond M. Saunders, Esq.
                                                    Army Chief Trial Attorney
                                                   CPT Harry M. Parent III, JA
                                                   MAJ Douglas A. Reisinger, JA
                                                    Trial Attorneys

                OPINION BY ADMINISTRATIVE JUDGE MCILMAIL

                                FINDINGS OF FACT

        These three appeals, concerning three contracts for the development and delivery
of foreign-language test items (contracts 15, 33, and 109), were consolidated for hearing
and decision. Appellant, Avant Assessment, LLC, seeks compensation pursuant to the
contracts' termination-for-convenience clauses, subsequent to our decisions converting
the default terminations of those contracts by the U.S. Army Mission Contracting
Command (the government) to ones for its convenience. Avant Assessment, LLC,
ASBCA No. 58903 et al., 17-1 BCA if36,837 at 179,513 (contract 15); ASBCA
No. 58866, 16-1 BCA if 36,511 at 177,886 (contract 33); ASBCA No. 58867, 15-1 BCA
,r 36,067 at 176,128 (contract 109). The United States Court of Federal Claims
transferred to us the termination-for-convenience matter regarding contract 109. Avant
Assessment, LLC v. United States, 134 Fed. Cl. 323, 336 (2017). We dismissed as moot
previous appeals in which Avant advanced breach claims that the government improperly
rejected test items. See Avant Assessment, 17-1 BCA ,r 36,837 at 179,513 (contracts 15
and 33); 16-1 BCA ,r 36,505 at 177,862-63 (contract 109).
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           Contract 109 was awarded in 2010; contracts 15 and 33 were awarded in 2011
    (ASBCA No. 61358 (61358) R4, tab 1 at 1; ASBCA No. 61407 (61407) R4, tab 1 at l;
    ASBCA No. 61442 (61442) R4, tab 1 at 2). Contract 15 originally required the
    delivery of 4,620 test items; contract 33 originally required the delivery of 1,300 test
    items; contract 109, 3,300 test items. Avant Assessment, 17-1 BCA ,r 36,837
    at 179,509-10 (contracts 15 and 33); 16-1 BCA ,r 36,505 at 177,862 (contract 109).
    Contract 15 was modified to require only 4,437 test items; contract 33 was modified to
    require only 1,244 test items; contract 109 was modified to require only 3,174 test
    items (app. hr. at 17-18; see tr. 1/11 (reciting a slightly different set of numbers)). The
    government has paid Avant the contract prices for those modified totals (tr. 1/11).

            Contracts 33 and 109 provide that "[i]t is expected that a certain proportion of
    passages and/or items submitted by the Contractor will be rejected during the
    [government's] review process"; contract 15 provides that "[i]t is probable that not all
    submitted items will be accepted" (61358 R4, tab 1 at 11; 61407 R4, tab 1 at 8; 61442
    R4, tab 1 at 14). Additionally, the three contracts together reference "historic"
    rejection rates ranging from 30% to 60% for other such contracts (61358 R4, tab 1
    at 14; 61407 R4, tab 1 at 8; 61442 R4, tab 1 at 14).

           In addition, contract 15 provides:

                  [I]n order to produce 4,620 usable items, the Contractor
                  typically needs to overproduce by 30% or
                  approximately 6,000 items in order to net 4,620 items.
                  The government will only pay for 4,620
                  usable/approved items.

    (61407 R4, tab 1 at 8) Contract 33 provides that "[t]he Contractor shall provide
    acceptable reading passages and items as summarized in the table below," and that "it
    is likely that successful completion of the contract will entail the initial development
    of more items than listed in the above charts, to account for loss during review"
    (61358 R4, tab 1 at 10-11). Contract 109 similarly provides that the government:

                  [W]ill work closely with the Contractor to improve
                  items ... but work plans developed by [the government]
                  will entail the initial development of more items than
                  listed in the above charts, to account for loss during
                  review.

    (61442 R4, tab 1 at 14)

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      Each contract includes FAR 52.212-4, CONTRACT TERMS AND CONDITIONS-
COMMERCIAL ITEMS (JUN 2010), "Termination for the government's convenience,"
which, in the third sentence of paragraph 1, provides:

             Subject to the terms of this contract, the Contractor
             shall be paid a percentage of the contract price
             reflecting the percentage of the work performed prior
             to the notice of termination, plus reasonable charges
             the Contractor can demonstrate to the satisfaction of
             the Government using its standard record keeping
             system, have resulted from the termination.

(61358 R4, tab 1 at 32; 61407 R4, tab 1 at 32; 61442 R4, tab 1 at 33) The U.S. Army
Mission Contracting Command (the government) terminated the contracts for cause in
2013. 17-1 BCA ,r 36,837 at 179,510 (contracts 15 and 33); 16-1 BCA ,r 36,505
at 177,862 (contract 109). We converted the terminations of contract 109 in 2015,
contract 33 in 2016, and contract 15 in 2017 to ones for the convenience of the
government. 17-1 BCA ,r 36,837 at 179,513 (contract 15); 16-1 BCA ,r 36,511
at 177,886 (contract 33); 15-1 BCA ,r 36,067 at 176,128 (contract 109). Familiarity
with the facts of these previous decisions is presumed.

       In December 2010, after the award of contract 109 but before the award of
contracts 15 and 33, the government held a meeting regarding contract 109, notes of
which meeting include the following:

             6. Deliverable ownership: government maintains full
             control
                    a. The contractor inquired who retains ownership of
                       rejected items
                    b. According to the contract, the government retains
                       ownership of all deliverables, which includes
                       rejected items
                    c. C.6.12.2 The Government will retain sole
                       ownership of and exclusive rights to all
                       deliverables and Government-Furnished
                       Materials provided to the Contractor (for
                       example, intellectual property).

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              Follow Up Action:
                    Dean Hays will have Legal review [of] the
                    contract to see if the government does in fact
                    retain ownership of rejected items[.]

(Ex. 11 at 1, 4)

        In 2016, Avant presented to the contracting officer its termination settlement
proposals for the three contracts (61358 R4, tab 15 at 1; 61407 R4, tab 16 at 1; 61442
R4, tab 14 at 1). In each, Avant requested compensation "for costs incurred for
completed items delivered to the Government above the contracted for amount of
items," as well as an additional amount for settlement expenses (61358 R4, tab 15 at 2;
61407 R4, tab 16 at 2; 61442 R4, tab 14 at 2). For contract 109 those amounts are
$5,185,849.61 and $30,966.25, respectively; for contract 33: $1,514,271.98 and
$3,133.00; for contract 15: $2,310,240.87 and $3,405.00 (id.). The settlement
expenses in the contract 33 and contract 15 proposals appear to be for the time of
non-attorney personnel (61358 R4, tab 15 at 58; 61407 R4, tab 16 at 56). Only
$10,354 of the settlement expenses in the contract 109 proposal appears to be for such
time; the rest appears to be for the time of attorneys (61442 R4, tab 14 at 165-71 ).
None of the termination for convenience settlement proposals alleges that the
government asserted a contractual or other ownership right to rejected test items; that
the government retained rejected test items inconsistent with Avant's ownership rights;
or that the government denied Avant the right or ability to possess, retain, reuse, or
repurpose rejected test items (see 61358 R4, tab 15 at 1-2; 61407 R4, tab 16 at 1-2;
61442 R4, tab 14 at 1-2).

        The contract 15 and contract 33 proposals include Standard Form 1436, which
includes certification language that is different from that specified by the Contract
Disputes Act (CDA), 41 U.S.C. § 7103(b)(l), for claims exceeding $100,000 (61358
R4, tab 15 at 55; 61407 R4, tab 16 at 52). The contract 109 proposal includes an
incomplete Standard Form 1436 that is missing the page with the form's certification
language (61442 R4, tab 16 at 156-58). In all three proposals, Avant requested a
contracting officer's final decision within 30 days (61358 R4, tab 15 at 1; 61407 R4,
tab 16 at 1; 61442 R4, tab 14 at 1). Not having received any such decisions, Avant
declared impasses with respect to the contract 15 proposal on November 2, 2016; and
on November 17, 2016, with respect to the contract 33 and contract 109 proposals
(61358 R4, tab 16; 61407 R4, tab 17). The contract 15 impasse declaration contains a
section 7I03(b)(1) claim certification (61407 R4, tab 17 at 2). Avant provided
section 7103(b)( 1) claim certifications for the contract 109 claim on June 14, 2017
(ex. 1), and for the contract 33 claim on August 9, 2018 (Aug. 10, 2018 filing, ex. C).

       Avant concedes that it has been paid in full for the number of acceptable
foreign-language items required (after modifications) by each of the three contracts

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(see tr. 1/11 ). That is, Avant concedes that the government has paid in full for the
3,174 test items required by contract 109; for the 4,437 test items required by
contract 15; and for the 1,244 items required by contract 33 (see id.; app. br. at 16-17).
In addition, at the hearing of these appeals, Avant represented that it is not arguing that
the government should pay for rejected items that Avant says were acceptable
(tr.1/17-18).

                                       DECISION

Prong 1: Additional compensation for work performed

       "Prong l" of the third sentence of FAR 52.212-4(1) provides that "the
Contractor shall be paid a percentage of the contract price reflecting the percentage of
the work performed prior to the notice of termination." Avant says that it is entitled
under Prong 1 to $9,601,815.22, consisting of contract prices for test items that the
government rejected (see app. br. at 19). Specifically, because Avant concedes that it
has been paid the contracts' prices for the number of test items required by the
contracts (tr. 1/11), it appears to be saying that, not taking into account those
payments, Prong 1 entitles Avant to 164% of the contract 15 price, 225% of the
contract 33 price, and 254% of the contract 109 price (see app. br. at 6-17). That
means that, under Prong 1, Avant seeks an additional 64% of the contract 15 price, an
additional 125% of the contract 33 price, and an additional 154% of the contract 109
price for (in the words of its claims), "items delivered to the Government above the
contracted for amount of items."

       Avant's Prong 1 claims rest upon two, alternative theories. First, contrary to its
representation at the hearing, Avant now says that the government has not paid
for acceptable test items that it improperly rejected (app. br. at 19-24). Second, Avant
says that the government has not paid for rejected test items that Avant delivered but
the government "constructively accepted" "through its exclusive ownership and
control for the last five years," in denying Avant "the right to possess the 'rejected'
items or reuse them in any way," and in retaining all the rejected items instead of
returning them to Avant (id. at 10, 19-20, 24-29). A valid CDA claim must contain a
clear and unequivocal statement that gives the contracting officer adequate notice of
the basis and amount of the claim. Northrop Grumman Computing Systems, Inc. v.
United States, 709 F.3d 1107, 1112 (Fed. Cir. 2013). We possess jurisdiction to
entertain none of Avant' s Prong 1 claims, because those claims are based upon
operative facts that were not already presented in the 2016 claims that are the subject
of these appeals. See GSC Construction, Inc., ASBCA No. 59046, 15-1 BCA ,r 35,882
at 175,429. Those claims assert that the government has not paid for test items
delivered "above the contracted for amount of items," but do not further assert facts
regarding the improper rejection of acceptable test items or the constructive
acceptance ofrejecte_d test items through exclusive government ownership and control

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    and the denial of Avant' s rights to possession and reuse. For example, although Avant
    cites an exhibit containing meeting notes that say "the government retains ownership
    of all deliverables, which includes rejected items" (app. br. at 5), Avant did not claim
    to the contracting officer that the government retained ownership of rejected test items.
    For these reasons, Avant' s claims for additional compensation under Prong 1 are
    dismissed for lack of jurisdiction.

    Prong 2: Reasonable charges resulting from the terminations

             "Prong 2" of the third sentence of FAR 52.212-4(1) provides that the contractor
    shall be paid "reasonable charges the Contractor can demonstrate ... have resulted from
    the termination." Avant seeks as such Prong 2 "reasonable charges" the same amount
    that it seeks under Prong 1 (app. hr. at 19, 29). However, Avant does not demonstrate
    that the $9,601,815.22 that it claims (which it explains is "payment for the 'rejected'
    items at the Contract Line Item rate" (app. hr. at 20)) "resulted from the termination," in
    the words of Prong 2. Avant says that it is entitled to its "reasonable costs for
    delivering test items in excess of the Contracts' ... delivery requirements, plus profit on
    those costs" (app. hr. 19, 30), but, presumably in deference to the clauses in the
    contracts that contemplate that the government will reject some delivered test items,
    Avant admits that "the Contracts inherently required Avant [to] over-perform,"
    explaining that "[e]ach of the Contracts required Avant...to produce an excess of the
    stated delivery requirement" (app. reply at 4 (emphasis in original)). Given the posture
    of these appeals, and to decide Avant's Prong 2 claims only, we do not recognize what
    Avant calls the cost of "over-performance" as "reasonable charges ... [that] have resulted
    from the termination[s]" within the meaning of Prong 2. Rather (and without deciding
    any claims that are not properly before us), we see the cost of any such
    "over-performance" as the cost of full performance of Avant' s contract obligations, for
    which it has been compensated by payment of the contracts' prices, also in full.

           To the extent that Avant relies here upon SWR, Inc., and its "fair compensation"
    discussion, ASBCA No. 56708, 15-1 BCA ,r 35,832 at 175,223 (see app. hr. at 17), that
    very different case offers no help. There, the government terminated the contract before
    any work was performed, see id. at 175,225; here, the contracts have been fully
    performed, and the government has paid the contracts' prices in full. Nor does TriRAD
    Technologies, Inc., ASBCA No. 58855, 15-1 BCA ,r 35,898, which Avant cites (app.
    reply at 7), require a different result; that appeal did not involve a contractor that had
    earned the contract price. See id. at 175,498. Finally, Casket Forge, Inc., and Douglas
    Corp. (app. reply at 15), offer Avant no help; neither involves the two-pronged clause at
    issue here or a contractor that earned the contract price. See Casket, ASBCA No. 7638,
    1962 BCA if 3318 at 17, 104-07; Douglas, ASBCA No. 5550, 60-1 BCA if 2531
    at 12,113-15.

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       Nevertheless, Avant is entitled to recover under Prong 2 the reasonable expense
of preparing and presenting its termination settlement proposals, including reasonable
legal expenses. See Dellew Corp., ASBCA No. 58538, 15-1 BCA ,i 35,975
at 175,783. Avant claims $37,153.25 in such expenses, consisting of$30,966.25 for
the contract 109 proposal; $3,054.00 for the contract 15 proposal; and $3,133.00 for
the contract 33 proposal (app. hr. at 12 n.4). The government says that ifwe find
entitlement for settlement proposal costs, it does not contest Avant's requests for
$3,054 for the contract 15 proposal and $3,133 for the contract 33 proposal, and would
not contest recovery of settlement expenses in the amount of $10,000 for all three
proposals (gov't br. at 26, 29).

        We do not find sufficient support for the $30,966.25 in settlement expenses
claimed for the contract 109 proposal. The documents that Avant cites (app. hr. at 12 n.4
(citing 61358 R4, tab 14, at 165-71)) consist of (1) a table, depicting rates and hours
totaling $10,345 for four individuals, that provides no indication of the work those
persons performed (id. at 165); and (2) an invoice, presumably for the time that attorneys
spent on the settlement proposal and other issues, that segregates but does not sum the
19 separate amounts that Avant presumably seeks for work on that proposal, ostensibly
leaving that calculation to the Board (id. at 166-71 ). Under these circumstances, and
considering that the amount requested for the contract 109 proposal is on the order of ten
times the amount requested for each of the other proposals despite the similarity of all
three, we award the amounts that the government represents it would not contest and we
determine to be reasonable and supported by the record: $3,133 for the contract 33
settlement proposal; $3,054 for the contract 15 proposal; and, for the contract 109
settlement proposal, $3,813 (the difference between the sum of the first two amounts and
the $10,000 that the government says it would accept for all three proposals). Cf
ESCgov, Inc., ASBCA No. 58852, 17-1 BCA i! 36,772 at 179,188-80 (accepting
government's alternative, $5,489 itemization of $15,651 in legal fees claimed for
preparation of termination settlement proposal, including because contractor made a
mostly conclusory effort to contest government's position).

Interest

      Finally, Avant is entitled to interest with respect to the contract 15 proposal
from November 2, 2016; and with respect to the contract 33 proposal from
November 17, 2016; the dates that the parties reached impasses with respect to those
proposals (and whose original certifications were ultimately perfected), until payment.
Rex Systems, Inc., ASBCA No. 52247, 00-1 BCA ,i 30,671 at 151,491; see also
Magnus Pacific Corp. v. United States, 133 Fed. Cl. 640, 705 (2017) (citing 41 U.S.C.
§ 7109(a)(2)). With respect to the contract 109 proposal, Avant is entitled to interest
from June 14, 2017, when it certified its claim (having not done so earlier), until
payment. Magnus Pacific, 133 Fed. Cl. at 705.

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                                    CONCLUSION

       Avant's constructive acceptance claims and improper rejection claims are
dismissed for lack of jurisdiction. The appeals are sustained in the following amounts,
with interest under 41 U.S.C. § 7109, from the following dates, until payment:
ASBCA No. 61358 (regarding contract 33): $3,133, from November 17, 2016;
ASBCA No. 61407 (regarding contract 15): $3,054, from November 2, 2016; and
ASBCA No. 61442 (regarding contract 109): $3,813, from June 14, 2017.

       Dated: October 3, 2018

                                                  Administrativ Judge
                                                  Armed Services Board
                                                  of Contract Appeals

 I concur                                         I concur

 RICHARD SHACKLEFORD                              OWEN C. WILSON
 Administrative Judge                             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 Nos. 61358, 61407, 61442, Appeals of
Avant Assessment, LLC, rendered in conformance with the Board's Charter.

      Dated:

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

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