Court Opinion

ID: 6319948
Source: CourtListenerOpinion
Date Created: 2022-03-03 21:00:14.210613+00
Date Added: 2024-06-11T09:18:50.604052
License: Public Domain

ARMED SERVICES BOARD OF CONTRACT APPEALS
 Appeal of -                                  )
                                              )
 AECOM Technical Services, Inc.               )   ASBCA No. 62800
                                              )
 Under Contract No. W912DY-15-R-ESP7          )

 APPEARANCES FOR THE APPELLANT:                   Manju Gupta, Esq.
                                                  William D. Edwards, Esq.
                                                  Jonathan R. King, Esq.
                                                   Ulmer & Berne LLP
                                                   Cleveland, OH

 APPEARANCES FOR THE GOVERNMENT:                  Michael P. Goodman, Esq.
                                                   Engineer Chief Trial Attorney
                                                  Karen L. King Vanek, Esq.
                                                  Margaret P. Simmons, Esq.
                                                   Engineer Trial Attorneys
                                                   U.S. Army Engineer District, Huntsville

OPINION BY ADMINISTRATIVE JUDGE MCILMAIL ON THE GOVERNMENT’S
         MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM

        On December 6, 2021, the Board denied the government’s motion to dismiss this
appeal for lack of jurisdiction, holding that appellant, AECOM Technical Services, Inc.
(AECOM), had set forth a non-frivolous allegation of a contract with the government,
and that AECOM’s allegations that the government wrongfully converted AECOM’s
designs and work product for its own use was a claim of tortious breach of contract that
we possess jurisdiction to entertain. AECOM Technical Services, Inc., ASBCA
No. 62800, 2021 WL 6103547 (Dec. 6, 2021). Familiarity with that opinion is presumed.
The government had also moved to dismiss Counts II and IV of the complaint for failure
to state a claim (gov’t mot. at 11-15). We deferred decision upon that motion, and
address it now.

      Count II alleges:

               Count II: CEHNC Is Required To Pay AECOM Fair
               Compensation for the Value of Its Goods and Services,
               Including Termination for Convenience Costs

               27. [Multiple Award Task Order Contract (MATOC)] III
               expressly includes [Federal Acquisition Regulation (FAR)]
               clause 52.249-2, which provides that [Huntsville Center,
U.S. Army Corps of Engineers (CEHNC)] is to compensate
AECOM for the fair value of services provided and received
by CEHNC. When the government cancels a contract for its
convenience, the government contractor may claim certain
damages as provided for in the contract’s termination for
convenience clause, such as costs expended prior to
termination, lost profits on work actually completed, and any
professional fees incurred towards the preparation and
presentation of a termination settlement.

28. FAR 49.201 provides that a terminated contractor must
receive fair compensation. AECOM’s recovery of
precontract costs to perform the contract are justified because
AECOM fully relied upon CEHNC’s repeated assurances of
an impending [task order (TO)] award issuance. AECOM
accommodated all of the changes requested by CEHNC
because, in part, the value of the cost savings was anticipated
to be significant and would have been paid over the life of the
contract, and AECOM was delivering the Project
requirements as directed by CEHNC.

29. The government has acknowledged the inequities of
cancelling viable projects after the [Investment Grade Audit
(IGA)], including the potential liability for certain costs.
Specifically, in an October 22, 2019, guidance letter, the
Deputy Assistant Secretary of the Air Force for Environment,
Safety, and Infrastructure (SAF/IEE) wrote as follows:

Project Cancellation after IGA: Should the Installation
Commander recommend cancellation or it is thought to be in
the best interest of the Air Force to cancel or reduce the scope
of the project due to a technically non-responsive submittal
by the contractor, a cancellation notification must be provide
[sic] to SAF/IEE via memorandum to include explanation.
All other cancellation requests must submit to the
Headquarters Air Force Facility Energy and Water Board
(FEWB) via memorandum an explanation of level of effort,
timeline, and detailed cause for cancellation. In the event of a
cancellation, the installation may be liable to the contractor
for IGA or other development expenses. If viable projects are
cancelled after the IGA, the installation will not be authorized
to select high return ECMs from an IGA report and

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             accomplish those ECMs as independent Government funded
             projects.

             30. Once AECOM reached the latter stages of the IGA phase
             and was close to a CEHNC-assured TO, AECOM never
             envisioned that it would spend the time and resources that it
             did in direct response to government directions and not be
             awarded a TO. It would be contrary to law and equity for
             ESPC contracts to have such a loophole that would allow
             CEHNC to obtain such benefits without providing any
             compensation to an [energy services contractor (ESCO)].

             WHEREFORE, AECOM prays for judgment in its favor and
             against CEHNC as to Count II in an amount of at least
             $681,469.70, together with costs incurred in making demands
             upon CEHNC for payment, plus interest, attorney fees, costs
             and for such further relief as the ASBCA deems appropriate.

(Compl. at 5-6 (bracketed material added)) Count IV alleges:

             Count IV: CEHNC Breached the Contract by
             Wrongfully Converting AECOM’s Work Product and
             Intellectual Property for Its Own Use

             35. CEHNC breached the contract when it violated the
             implied duty of good faith and fair dealing and MATOC III,
             Section C.26.4, by converting AECOM’s ECM designs and
             work product for its own use. As stated previously,
             CEHNC’s statement that it “has no plans to exercise its
             option to obtain ownership of any submitted documentation
             pertinent to this project” is disingenuous. CEHNC has never
             returned AECOM’s submitted documentation, which
             contained hundreds of pages of design, measurement,
             calculation analysis and cost estimating documents. The
             Base’s own news articles elaborate on the importance of
             energy efficiency and demonstrate that CEHNC used
             AECOM’s ideas and designs to implement ECMs after
             CEHNC cancelled the Project.

             WHEREFORE, AECOM prays for judgment in its favor and
             against CEHNC as to Count IV in an amount of at least
             $681,469.70, together with costs incurred in making demands

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              upon CEHNC for payment, plus interest, attorney fees, costs
              and for such further relief as the ASBCA deems appropriate.

(Compl. at 7-8)

       Dismissal for failure to state a claim upon which relief can be granted is
appropriate where the facts asserted in the complaint do not entitle the claimant to a legal
remedy; the Board will deny a motion to dismiss for failure to state a claim when the
complaint alleges facts plausibly suggesting a showing of entitlement to relief. See
Parsons Gov’t Servs., Inc., ASBCA No. 60663, 17-1 BCA ¶ 36,743 at 179,100. In
deciding a motion to dismiss for failure to state a claim, the Board must accept
well-pleaded factual allegations as true and must draw all reasonable inferences in favor
of the claimant; we decide only whether the claimant is entitled to offer evidence in
support of its claims, not whether the claimant will ultimately prevail. Id. at 179,101. In
addition to reviewing the allegations contained in the complaint, the Board may consider
matters incorporated by reference or integral to the claim, items subject to judicial notice,
and matters of public record. Parwan Grp. Co., ASBCA No. 60657, 18-1 BCA ¶ 37,082
at 180,498 (considering contract terms in deciding Rule 12(b)(6) motion). Here,
MATOC III is referenced in the complaint and integral to AECOM’s claim; accordingly,
we may consider it in deciding the government’s motion. See id. (considering contract
terms in deciding Rule 12(b)(6) motion).

        With respect to Count II, the government argues that “[a]ppellant fails to state a
claim under which relief can be granted because it cannot and has not alleged that the
Government terminated any contract cognizable under the [Contract Disputes Act]”
(gov’t mot. at 12 (alteration added)). In view of our earlier decision that AECOM has set
forth a non-frivolous allegation of a contract with the government, we deny the
government’s motion to dismiss Count II for failure to state a claim.

       With respect to Count IV, the government argues that “[b]ecause the directives of
FAR Part 4.803(a)(10) govern the Government’s retention of offerors’ proposal materials,
Appellant’s allegation that the Government’s [] simple retention of its proposal materials
amounted to ‘wrongful conversion’ is invalid as a matter of law, and the Government
moves to dismiss said allegation for failure to state a cause of action upon which relief
may be granted under [Federal Rule of Civil Procedure (FRCP)] Rule 12(b)(6)” (gov’t
mot. at 13 (alteration added)). FAR 4.803(a)(10) provides:

              The following are examples of the records normally
              contained, if applicable, in contract files:

                     (a) Contracting office contract file.

                                                  ...

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                      (10)       A copy of each offer or quotation, the
                                 related abstract, and records of
                                 determinations concerning late offers or
                                 quotations. Unsuccessful offers or
                                 quotations may be maintained separately,
                                 if cross-referenced to the contract file.
                                 The only portions of the unsuccessful
                                 offer or quotation that need be retained
                                 are—

                         (i)     Completed solicitation sections A, B,
                                 and K;

                         (ii)    Technical and management proposals;

                         (iii)   Cost/price proposals; and

                         (iv)    Any other pages of the solicitation that
                                 the offeror or quoter has altered or
                                 annotated.

       In response, AECOM quotes (app. resp. at 24-25) MATOC III, section C.26.4,
Option to Obtain Ownership to Submitted Documentation and Concepts, which Count IV
of the complaint cites, and which provides:

            The Government shall have the option to obtain ownership of
            all surveys, feasibility studies, designs, and proposals
            submitted to the KO, including the content and technical
            approach presented. If after the ESCO has performed
            feasibility study, designs, proposals, and/or site surveys the
            Government chooses to pursue a project by means other
            than this contract, the Government may exercise its option to
            obtain ownership of all surveys, proposals, and designs
            submitted to the KO, including the content and technical
            approach presented, for the individual ECM in question.
            The ESCO shall receive appropriate consideration for the
            ESCO effort on the particular ECM (i.e., recovery of study
            and design costs as estimated and submitted to the KO via the
            site survey report and the feasibility study report plus
            the cost to perform the site survey plus an appropriate mark-
            up [sic] [missing end parenthesis]. This contract language is
            included to allow the best use of taxpayer funds by allowing

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             the Government to develop its resources through the best
             manner possible, while compensating the ESCO for his
             efforts. If the ESCO and Government are unable to agree on
             price and terms for execution work efforts and the
             Government utilizes another ESCO, the Government should
             only pay those costs that are fair and reasonable for the work
             performed.

(App. resp., ex. 1 at 281; R4, tab 6 at 129) In view of MATOC III, Section C.26.4,
Count IV of the complaint alleges facts that plausibly suggest that the government owes
AECOM money for having kept AECOM’s work product without paying for it;
consequently, we deny the government’s motion to dismiss Count IV for failure to state a
claim.

      For the foregoing reasons, the government’s motion to dismiss Counts II and IV of
the complaint for failure to state a claim is denied.

      Dated: February 7, 2022

                                                  TIMOTHY P. MCILMAIL
                                                  Administrative 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

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      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. 62800, Appeal of AECOM
Technical Services, Inc., rendered in conformance with the Board’s Charter.

      Dated: February 8, 2022

                                              PAULLA K. GATES-LEWIS
                                              Recorder, Armed Services
                                              Board of Contract Appeals

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