Court Opinion

ID: 4389735
Source: CourtListenerOpinion
Date Created: 2019-04-23 17:00:04.380939+00
Date Added: 2024-06-11T14:23:12.334801
License: Public Domain

ARMED SERVICES BOARD OF CONTRACT APPEALS

Appeal of --                                    )
                                                )
NMS Management, Inc.                            )      ASBCA No. 61519
                                                )
Under Contract No. N00244- l 5-C-0020           )

APPEARANCES FOR THE APPELLANT:                         Johnathan M. Bailey, Esq.
                                                       Hector M. Benavides, Esq.
                                                        Bailey & Bailey, P.C.
                                                        San Antonio, TX

APPEARANCES FOR THE GOVERNMENT:                        Craig D. Jensen, Esq.
                                                        Navy Chief Trial Attorney
                                                       Kevin Lyster, Esq.
                                                        Trial Attorney
                                                        Naval Fleet Logistics Center
                                                        San Diego, CA

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

       This is a timely appeal of a contracting officer's (CO's) final decision denying
appellant NMS Management, Inc.' s (NMI' s) claim in an amount of $183,003.24 for
non-exercise of a fixed-price contract line item number (CLIN). The Contract Disputes
Act, 41 U.S.C. §§ 7101-7109, is applicable. The government filed a motion for summary
judgment, appellant filed an opposition brief, and the government filed a reply brief. Based
upon the existence of a genuine issue of material fact, we deny the motion.

              STATEMENT OF FACTS FOR PURPOSES OF THE MOTI0N 1

         I. On September 18, 2015, the Navy and NMS entered into fixed-price contract
No. N00244-15-C-0020 in a total amount of$4,375,688.67. As awarded, the contract
contained six CLINs for provision of food service attendant services for various naval
facilities in the San Diego, California, area. (R4, tab 2 at 1-4) The performance period for
the base contract was one year, extending from October 1, 2015, to September 30, 2016.
The contract also provided for four option years, each commencing on October 1 and
extending to September 30. Thus, total contractual performance was contemplated as
expiring on September 30, 2020. (Id. at 33)

1
    We state these fact solely for the purpose of resolving the motion.
I
I          2. On March 7, 2017, the Navy forwarded an email to NMS in which it stated its
    intention to close "temporarily" the Oceanside galley which was the subject of CLIN

l
I
    2006 (R4, tab 8, ex. 1 at 2). In August 2017, in anticipation of the exercise of the
    contract's second option year, the Navy determined that it would close the Oceanside
    galley permanently. Accordingly, on August 9, 2017, Mr. Labao, the Navy's food
    service manager, forwarded the following email to Mr. Guaderrama, NMS's president:

                    You will eliminate the additional services provided under
                    CLIN 2006.121 You will still provide the same service as
                    before based on the statement of work from the original
                    contract. There should have [sic] a separate serving line for
                    BUDS, I believed one line vice two lines and breakfast
                    should start 0600 vice 0545. The hours of operation [are]
                    still the same as the original contract at NAB. Based on the
                    average number of meals served, there were more meals
                    served before September 2016 compared from Oct 2016 to
                    June 2017 when the students start eating at NAB galley.
                    We are still going to feed the BUDS student[s]Pl

    (Id., ex. 5) Mr. Guaderrama responded to Mr. Labao's email on August 9, 2017, as
    follows:

                   We understand the government[']s position, but the CLIN
                   2006 is tied into the entire contract with regards to overhead
                   costs, vehicle costs and management costs. The BUDS
                   feeding and students are not normal customers and require
                   extensive workload and cleanup because of the mud, dirt,
                   water, sand, etc. brought into the galley, which the
                   government is fully aware of. We feel strongly that this
                   change should be negotiated per normal contract changes.
                   We request a contracting officer's decision concerning this
                   change, as the government told us this was a temporary
                   closure, and we request the right to negotiate changes that are
                   now permanent.

    (Id., ex. 6 at 1-2)

    2
        The different option years for CLIN 1006, 2006, and so forth.
    3
        The "BUDS students" were Navy SEAL trainees who required separate dining facilities
             near the beach (compl., 7). The Navy was proposing to transfer the "BUDS
             students" to the existing dining facility at the Naval Amphibious Base Coronado
             (NAB) which, was the subject of the original CLIN 0005 (R4, tab 2 at 4).

                                                  2
      On August 31, 2017, Mr. Guaderrama forwarded an email to the Navy's CO in
which he stated:

             We are requesting the Contracting Officer's decision on the
             validity of exercising this option period without the BUDS
             support CLIN included.

             The government is asking us to perform work without
             payment for services. The exercise of the option should not
             be a negotiation because the BUDS CLIN has been
             previously negotiated when services were moved from
             Amphibious Base galley to the Oceanside Beach galley. The
             contractor gave back money on the Amphibious base galley
             CLIN when services were moved to the Oceanside beach
             galley. Then when services were moved back to Amphibious
             base galley, we gave the government back money for
             combining services, but still require funding for the amount
             of work involved in supporting the BUDS students.

             The amount of additional work required to support the BUDS
             students has been recognized by the government when
             agreeing on past negotiations. The BUDS students are not
             normal customers and require extensive workload and
             cleanup because of mud, dirt, water, sand, etc. brought into
             the galley at every meal. The additional work requires many
             man-hours to accomplish on a daily basis.

             However, the government is now asking us to provide the
             additional BUDS students support at no cost. We do not
             agree and are asking for your decision on exercising this
             option.

(R4, tab 8, ex. 7 at 1-2) On September 15, 2017, the Navy responded as follows:

             Under the subj contract, the government has a right to or not
             to exercise option CLINs prior to 30 September each year.
             Today is 15 September. If the government does not exercise
             the CLIN in question by 30 September 2017, please consider
             submitting a claim.

(Id. at 1)

                                           3
       3. On August 9, 2017, Mr. Brian O'Donnell, the Navy's CO, executed contractual
Modification No. POOOl 1 and subsequently forwarded it to NMS. The modification,
which was issued pursuant to the contract's "Changes" clause, Federal Acquisition
Regulation (FAR) 52.212-4(c) (DEC 2014), exercised option CLINs 2001, 2002, 2003,
2004 and 2005 with full funding; however, it did not exercise option CLIN 2006, the
Oceanside galley. (R4, tab 7 at 2) Mr. Guaderrama of NMS executed the modification
on September 21, 2017 (id.), but he did so under protest. Through an email of that same
date, he stated:

              In support of NA VSUP Fleet Logistics Center San Diego, I
              am providing N00244-l 5-C-0020 Modification POOO 11 Food
              Svc Attendant Services Option 2. By executing this
              modification, NMS accepts the Government's direction to
              perform as directed, but does not agree that the option was
              properly exercised, nor does it waive its right, or that of its
              subcontractors through a lawful pass through agreement, to
              seek an equitable adjustment under the terms of the contract
              for any additional costs flowing from that improper exercise
              and accompanying change to the contract terms.

(Id. at 1)

        4. On December 5, 2017, NMS submitted a properly certified claim to the CO in
which it challenged "the Government's improper attempt at a partial exercise of its
option ... to extend the term of the contract to exclude the fixed price line item for BUDS
trainee feeding" (R4, tab 8 at 1-2).

       5. On January 18, 2018, the CO denied the claim in its entirety. He stated, in
pertinent part: "On 21 September 2017 NMS Management Inc. signed the bilateral
modification [POOO 11 ], thus, agreeing to the revised terms and conditions, but now seeks
to recover cost associated with closing the galley." (R4, tab 9 at I)

       6. This appeal followed.

                                        DECISION

        On April 13, 2018, the Navy filed a motion for summary judgment, stressing that it
"went the extra mile and did a bilateral modification that NMS signed" (gov't br. at 5).
Nowhere in its brief does the Navy even mention that NMS executed the modification
under protest and reserved its right to file a claim. In its response, NMS emphasizes these
facts, contending that they constitute a genuine issue of material fact (app. br. at 4 ).
Accordingly, it also concludes that Modification No. POOOl l does not constitute either a
waiver or an accord and satisfaction (id. at 11 ). In it reply brief, the Navy contends that

                                             4
NMS acted improperly when it executed Modification No. POOO 11 under protest (gov't
reply br. at 1-2).

        A grant of summary judgment is appropriate when a review of the record
demonstrates that there is no genuine dispute as to any material fact and that the movant
is entitled to judgment as a matter of law. FED. R. C1v. P. 56(a), (c)(l); Mingus
Constructors, Inc. v. United States, 812 F.2d 1387, 1390 (Fed. Cir. 1987). Further, the
movant has the burden of showing the absence of a genuine issue of material fact.
Celotex Corp. v. Catrett, 477 U.S. 317,323 (1986). In this instance, the Navy has not
met its burden. Ignoring NMS 's protest letter, it points to the jointly executed
Modification No. POOO 11 and concludes that it must prevail. But NMS is correct that its
email forwarding the fully-executed modification and explicitly reserving its rights to
dispute the alleged contract change materially alters the factual predicate of the Navy's
motion. This is so because the email dispels any notion that Modification No. POOO 11 is
the only writing to consider when evaluating the legal consequences of the modification.
See, e.g., Relyant LLC, ASBCA No. 58172, 16-1BCA136.228 at 176,748
(interpretation of a contract as a whole requires consideration of all documents that are
part of the same transaction together). Thus, the Board must deny the Navy's motion.

                                     CONCLUSION

      The motion for summary judgment is denied.

      Dated: April 11, 2019

                                                  MICHAEL T. PAUL
                                                  Administrative Judge
                                                  Armed Services Board
                                                  of Contract Appeals

 I concur                                         I concur

RICHARD SHACKLEFORD                              J . ~
Administrative Judge                             Administrative Judge
Acting Chairman                                  Vice Chairman
Armed Services Board                             Armed Services Board
of Contract Appeals                              of Contract Appeals

                                            5
     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. 61519, Appeal of NMS
Management, Inc., rendered in conformance with the Board's Charter.

      Dated:

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

                                            6