Court Opinion

ID: 2744173
Source: CourtListenerOpinion
Date Created: 2014-10-21 18:00:07.937599+00
Date Added: 2024-06-11T09:53:45.087670
License: Public Domain

ARMED SERVICES BOARD OF CONTRACT APPEALS

Appeals of --                                 )
                                              )
Lulus Ostrich Ranch                           )      ASBCA Nos. 59252, 59450
                                              )
Under Contract Nos. 48695390, 48695391        )
                    48695490,48695290         )

APPEARANCE FOR THE APPELLANT:                        Mr. William R. Hayward
                                                      Owner

APPEARANCES FOR THE GOVERNMENT:                      Daniel K. Poling, Esq.
                                                      Chief Trial Attorney
                                                     Robin Walters, Esq.
                                                      Trial Attorney
                                                      DLA Disposition Services
                                                      Battle Creek, MI

             OPINION BY ADMINISTRATIVE JUDGE STEMPLER
            ON APPELLANT'S MOTION TO STAY PAYMENTS AND
        APPELLANT'S MOTION TO STAY TERMINATION OF CONTRACT

        Lulus Ostrich Ranch (appellant) has requested the Board grant its 29 July 2014
Motion to Stay Payments to order the Defense Logistics Agency Disposition Services
(DLA or the government) to forbear from collecting payments, both disputed and
undisputed, allegedly owed by appellant under the four referenced government sales
contracts for the disposition of scrap metal. Appellant has also requested the Board
grant its 17 August 2014 Motion to Stay Termination of Contract and order the
government to refrain from terminating appellant's four referenced contracts. We
deny appellant's motions.

            STATEMENT OF FACTS FOR PURPOSES OF THE MOTIONS

       1. The government issued Invitation for Bid No. 39-3606 (IFB) for the sale
and removal of scrap property, defined in the solicitation as "property that has no
value other than i[t]s basic material content" (R4, 1 tab 1 at 1, 4). The IFB identified
four discrete categories of scrap to be sold and removed: "Metallic/Non-Metallic
Scrap with Required Demilitarization and/or Mutilation Performed by the Purchaser";
"Metallic/Non-Metallic Scrap Vehicles and Vehicular Related with Required
Demil[itarization] and/or Mutilation Performed by the Government";

1
    All Rule 4 cites are to the Rule 4 filed in ASBCA No. 59252 unless otherwise noted.
"Metallic/Non-Metallic Scrap Non-Vehicular Related With Required Demilitarization
and/or Mutilation Performed by the Government"; and "Deformed Brass Scrap" (R4,
tab 1 at 4).

       2. The IFB contained "Conditions of Sale," incorporated by reference, terms and
conditions set forth in DLA Disposition Services pamphlet Sale by Reference, July 2012,
available "from the DLA Disposition Services Web site, www.dispositionservices.dla.mil"
(R4, tab 1 at 12). One of the terms incorporated by reference was a "Default" provision,
Condition No. 9 of Part 2, "General Sale Terms and Conditions," which provided in
pertinent part:

              If, after the award, the Purchaser breaches the contract by
              failure to make payment within the time allowed by the
              contract as required by Condition No. 6 [Payment], or by
              failure to remove the property as required by Condition
              No. 8 [Delivery, Loading, and Removal of Property], then
              the Government may send the Purchaser a 15-day written
              notice of default (calculated from date of notification), and
              upon Purchaser's failure to cure such default within that
              period (or such further period as the Contracting Officer
              may allow) the Purchaser shall lose all right, title, and
              interest which he/she might otherwise have acquired in and
              to such property as to which a default has occurred.

(Sale by Reference at 6-7, http://www.dispositionservices.dla.mil/sales/Pages/forms-
references.aspx) Another of the terms incorporated from Part 2 of the Sale by Reference
pamphlet was Condition No. 33, "Disputes," which provided that [a]ny contract awarded
as a result of this sale is subject to the Contract Disputes Act [of] 1978" (CDA), 41 U.S.C.
§§ 7101-7109 (id. at 16).

       3. The "Conditions of Sale" section of the IFB also contained the following
pertinent provisions:

              ARTICLE PC: FAILURE TO PERFORM.
                      Notwithstanding the provisions of Condition 7 of
              Part 4, Special Sealed Bid Term Conditions of the DRMS
              pamphlet "Sale by Reference", July 2012, entitled "Failure
              to Perform", the U.S. Government shall be entitled to
              retain or collect as liquidated damages a sum equal to 20%
              of the contract price for the quantity estimated to be
              generated within a 60-day period.

                                           2
              ARTICLE PF: TERMINATION.
                      Notwithstanding the provisions of Condition 6 of
              Part 4, Sale of U.S. Government Property Special Sealed
              Bid-Term Conditions (Standard Form 114C-2, Jan 70) of
              DLA Disposition Services pamphlet "Sale by Reference",
              July 2012, this contract may be terminated by either party
              without cost to the U.S. Government upon 60 days written
              notice to the other, to be calculated from the date the notice
              is mailed. The U.S. Government may or may not require
              additional removals during this time frame.

(R4, tab 1 at 14)

        4. On 21 January 2014, the government awarded appellant the following
contracts for the sale and removal of: scrap requiring demilitarization and/or
mutilation for a price of $0.5/lb (Contract No. 48695390); vehicle-related scrap and
scrap tires for $0.6/lb (Contract No. 48695391); miscellaneous, non-vehicular scrap
for $0.6/lb (Contract No. 48695490); and scrap consisting of fired, deformed, and
incinerated brass for $6/lb (Contract No. 48695290). Each contract contemplated the
sale and removal of a minimum of 40,000 lbs of scrap and referred to the IFB for
contract maximums, complete descriptions of the various kinds of scrap, and other
contract terms and conditions including those discussed above. (R4, tab 8)

       5. Subsequent to award of the contracts, appellant sent the government an
email, dated 3 February 2014, alleging that its bid price was "off by one dismal [sic]
point (e.g., .60 should have been .06/lbs)" (R4, tab 10 at 1).

       6. By email dated 9 February 2014, appellant requested that its bid price for
removal of deformed brass scrap be modified either to its bid prices for removal of
scrap requiring demilitarization/mutilation, vehicular scrap and tires, or miscellaneous
non-vehicular scrap, or else to $0.9/lb. The government responded, by email dated
10 February 2014, that the price for removal of deformed brass was "set," and that the
government "cannot change prices to another bid item." (R4, tab 11 at 1, 2)

        7. Appellant then informed the government, by email dated 10 February 2014,
that the mistake in its bid price was due to a math error that occurred when converting
the prices per kilogram to the prices per pound (R4, tab 12 at 1). Appellant alleged
that, but for the conversion error, its prices per pound should have been $0.10/lb for
scrap requiring demilitarization/mutilation; $0.12/lb for vehicular scrap and tires;
$0.12/lb for miscellaneous non-vehicular scrap; and $1.2372/lb for deformed brass
scrap (R4, tab 12 at 5).

                                            3
       8. The sales contracting officer (SCO) issued a final decision denying
appellant's claim for a price adjustment by email dated 10 February 2014 (R4, tab 13).

       9. On 9 April 2014, appellant timely appealed from the SCO's 10 February
2014 final decision. The Board docketed the appeal as ASBCA No. 59252.

        10. By email dated 22 May 2014, appellant submitted a certified claim to the
SCO requesting either "a refund amount of $244,912 ... or [to] adjust bid prices to
reflect [the] original work sheet" (ASBCA No. 59450 (59450), R4, tab 2 at 5, 6).

       11. By letter dated 22 July 2014, the SCO issued a final decision denying
appellant's 22 May 2014 certified claim (59450, R4, tab 3).

       12. On 25 July 2014, appellant appealed from the SCO's 22 July 2014 final
decision. The Board docketed the appeal as ASBCA No. 59450.

       13. On 29 July 2014, appellant filed a "Motion to Stay DLA Payments." The
government responded to appellant's motion to stay payments on 29 August 2014, and
appellant replied on 7 September 2014.

        14. By letter dated 16 August 2014, the SCO notified appellant:

                      Per your default notice dated July 29, 2014, which
               provided a cure date of 13 August 2014, and in accordance
               with Part 4 Special Sealed Bid- Term Conditions, Paragraph
               6, Termination, and Part 4 Paragraph 7 Failure to Perform, of
               the Sale by Reference pamphlet dated July 2012, this
               contract is terminated effective September 16, 2014.

(App. mot.