Court Opinion

ID: 3214828
Source: CourtListenerOpinion
Date Created: 2016-06-20 18:00:06.435337+00
Date Added: 2024-06-11T14:27:07.975507
License: Public Domain

ARMED SERVICES BOARD OF CONTRACT APPEALS

Appeal of --                                    )
                                                )
Rhodes Research                                 )      ASBCA No. 59414
                                                )
Under Contract No. W9124D-14-P-0133             )

APPEARANCE FOR THE APPELLANT:                          Ms. Stephenne L. Rhodes
                                                        Owner

APPEARANCES FOR THE GOVERNMENT:                        Raymond M. Saunders, Esq.
                                                        Army Chief Trial Attorney
                                                       MAJ Jamal A. Rhinehardt, JA
                                                        Trial Attorney

                   OPINION BY ADMINISTRATIVE JUDGE PAUL

        This is a timely appeal of a contracting officer's (CO's) final determination of
appellant Rhodes Research's (Rhodes') settlement proposal following the termination
of its commercial items contract for the convenience of the government. The Contract
Disputes Act, 41 U.S.C. §§ 7101-7109, is applicable. The CO found that Rhodes had
completed work in the amount of $7, 186.21; and Rhodes contends that it is entitled to
an additional payment. We deny the appeal.

                                   FINDINGS OFF ACT

        1. The Army promulgated Solicitation No. W9124D-14-Q-5105 in order to
install a new audio/visual (A/V) system in the chapel at Fort Knox, Kentucky. This
was a small business set-aside, and the end date for submitting bids was 10 February
2014 at "13:30 EST." (R4, tab 3) A detailed Performance Work Statement (PWS)
accompanied the solicitation. Subparagraph 1.1, "Scope of Work," described the
contractor's general responsibilities, in part, as follows:

               1.1    ... The contractors [sic] shall design and install
               [a] sanctuary eight speaker system, video
               teleconference system, video presentation system,
               mixing console, and bluray player. This is a non-
               personnel services contract to provide the removal of
               old A/V equipment and installation of an audio and
               video solution to include multimedia capabilities.

(R4, tab 2 at 1)
       2. An "EQUIPMENT LIST" attached to the PWS described the various
components to be installed in detail to include 45 specific components. All of the
components were listed by brand name and model number. For example, the
contractor was required to install four Bose Room Match speakers, four Bose Panaray
31 OM speakers, two Bose PowerMatch amplifiers, a BSS Soundweb signal processor,
a Radial Engineering Pro Class Passive 1 Channel Multimedia Direct Box with RCA
inputs, a Sennheiser Wireless Microphone system, a Countryman E6 directional earset,
a Sennheiser Active splitter kit, an Evolution G3 Rackmount kit, and a Sharp
BD-AMS20U Blu-ray DVD player. In addition, the contractor was to install a Furman
PS-8RII Sequenced Power Distribution System, a Furman MP-20 Duplex Outlet
amplifier, a Soundcraft Expression 1 sound system, an AMX panoramic tabletop touch
panel, a Mediasite RL HD-SDI Media Recorder, a Vaddio High Definition Camera
Control System, a Vaddio Production View Rack, Vaddio Pre View rack mount
monitors, a WallView CCU HD-19 CAT-5 system to enable adjustments of color
balance and brightness, a Cisco Codec C40 system, a ChiefRPMAU Medium Duty
Universal Projector Mount, a Da-Lite wall screen, and a Roland grand piano.
(R4, tab 1 at 1-3) The solicitation required bidders "to submit bids that either meet or
exceed the requested specification." It also stated: "Sellers MUST enter exactly what
they are bidding (including make, model, and description) .. .in order for the bid to be
considered." (R4, tab 4 at 3)

      3. The Army received five bids in response to the solicitation. The highest bid
was $293,080.32; Rhodes submitted the lowest bid of $205,897. (R4, tab 5 at 2)

       4. In its bid, Rhodes stated that it was "an authorized vendor for all the
products listed" in its bid and that its "personnel have completed all necessary
manufacturer's certifications" (R4, tab 4 at 8). As a part of its bid, Rhodes offered to
supply virtually all of the equipment set forth in the solicitation, including the Bose
speakers and amplifiers (id. at 30-32). However, at the time when it submitted its bid,
Rhodes was not an authorized dealer or vendor of Bose products. Moreover, it had not
received any training on Bose systems, nor was it certified on Bose speakers. In early
2014, Bose examined Rhodes' application to become a Bose dealer and denied it
(exs. G-4, -7 at 14-19; tr. 1/52-57). 1

        5. On 27 February 2014, the Army awarded Rhodes Contract No. W9124D-14-P-0133
in a total, fixed-price amount of $205,897. Item No. 1 was the AN equipment and was

1
    We deny Rhodes' motion for ruling on the applicability of the deposition of
        Mr. Perez, the Bose representative involved with this contract which we deem
        to be a motion to strike. The deposition was taken with adequate notice to
        Rhodes, contains relevant material, and was helpful to the Board in resolving
        this appeal. We further note that Mr. Perez was unavailable at the time of
        hearing.

                                            2
priced at $166,742.58; and installation and training was Item No. 2 and comprised the
remaining $39,154.42. The contract defined the latter in these terms:

              Replace and install complete audio and video system
              according to attached PWS. Includes travel,
              engineering, documentation, installation, programming
              audio tuning, and project management.

(R4, tab 6 at 3) Consistent with both the solicitation and Rhodes' bid, the contract
included an equipment list of 45 components, including the Bose speakers and
amplifiers (id. at 19-20).

      6. The contract incorporated by reference, inter alia, Federal Acquisition
Regulation (FAR) clause 52.212-4, CONTRACT TERMS AND CONDITIONS-
COMMERCIAL ITEMS (SEP 2013 ), which contained a host of provisions. Among them
was "Termination for the Government's convenience" which provided:

             The Government reserves the right to terminate this
             contract, or any part hereof, for its sole convenience. In
             the event of such termination, the Contractor shall
             immediately stop all work hereunder and shall
             immediately cause any and all of its suppliers and
             subcontractors to cease work. 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. The Contractor shall not be required to
             comply with the cost accounting standards or contract
             cost principles for this purpose. This paragraph does
             not give the Government any right to audit the
             Contractor's records. The Contractor shall not be paid
             for any work performed or costs incurred which
             reasonably could have been avoided.

The clause also contained a "Termination for cause" provision which stated in part:

             The Government may terminate this contract, or any
             part hereof, for cause in the event of any default by the
             Contractor, or if the Contractor fails to comply with any
             contract terms and conditions, or fails to provide the

                                           3
                Government, upon request, with adequate assurances of
                future performance.

(R4, tab 6 at 5)

       7. The contract set forth a performance period of 30 days. Accordingly, all of
the contractual items were to be delivered and installed by 1April2014. (R4, tab 6 at
1, 4) At the hearing, appellant's owner (Ms. Rhodes) admitted that she never intended
to perform the contract within the 30-day performance period. Ms. Rhodes stated:
"We were never going to do 30 days. When I accepted it, I lied, but they always say
30 days but we were going to do it in 35 or so just, given everything." (Tr. 1/40)

       8. On 27 February 2014, Ms. Rhodes forwarded an email to COL Byron J. Simmons,
the chaplain in charge of the chapel, in which she stated: "You will have seen our technical
proposal which covers much of the detail. However, if there are any changes you would like
now is the time to fix them." She also suggested a site visit and inquired as to whether
COL Simmons possessed any architectural drawings of the chapel. (R4, tab 7 at 3-4)
On 28 February 2014, COL Simmons responded to appellant's email. He welcomed a visit.
COL Simmons also stated: "No, I am sorry, I do not have any architectural drawings of the
chapel. This is the reason we had the site visit. " 2 In addition, he wrote: "At this point, I am
not authorized to make any changes to the contract. It is as it stands." (Id. at 3)

      9. On 2 March 2014, Ms. Rhodes forwarded an email to Mr. Manny Perez,
Bose's territory manager for the Southwestern United States (ex. G-7 at 4), in which
she wrote, in part:

                We have an engineering problem which I clean forgot
                to mention in the midst of the political fracas last week.
                The speaker system defined by the contract has no
                subwoofers which means that we will see a steep roll
                off below 60Hz. I tried to get this looked at in the
                bidding phase but the contracts officer was adamant
                that we bid what was asked.

Ms. Rhodes also wrote:

                To cut to the chase if we stick with the current design I
                am sure the customer is going to be very disappointed
                with the overall sound. How do we play the blame
                game? The contract at the moment is specific so there

2
    Rhodes did not conduct a site visit prior to contractual award (ex. G-3 at 20). In fact,
        it was alone among the five bidders in not conducting a site visit (tr. 1/142-43).

                                               4
             is no legal problem. However, I am very jealous of our
             reputation and hate to put our name to a substandard
             system. I suspect the design was given to government
             as being authorized by Bose [so] are you happy to have
             your name attached to shoddy work?

Ms. Rhodes completed her email by stating:

             We can then at least generate a proper design of what
             the speaker system should be. I will have to some
             extent come clean with the customer about my concerns
             to protect our position. They will doubtless tell me that
             there is no more money and ask us what we suggest. I
             would be very grateful if you could muse on the best
             strategy after that.

(Ex. G-4)

       10. On 2 March 2014, Mr. Perez responded to appellant's email. He stated:
"Please find attached contact info for Keith Stengl of AXXIS. AXXIS is the company we
hope you can come to terms with to procure" the Bose Speaker System. (Ex. G-4 at 17)

       11. In early March 2014, Ms. Rhodes conducted her first site visit of the chapel.
She testified that she spent "a day-and-a-half down there doing the proper site survey and
more critically acoustic measurements" (ex. G-3 at 21; tr. 1/67).

        12. During the site visit, Ms. Rhodes informed COL Simmons that "she didn't
really think the ... system was going to work." He stated to her that the other bidders
performed site visits to determine the government's needs. Ms. Rhodes then "proposed
totally reworking the whole thing, which was frustrating, because COL Simmons did not
"have the power to say what can or can't be contracted for." (Tr. 1/182-83)

       13. Early on in the contract, Ms. Lisa Efird, the CO, asked that Rhodes coordinate
matters with the contracting office (R4, tab 17 at 1). However, Ms. Rhodes continued to
contact COL Simmons directly. On 13 March 2014, she sent an email to COL Simmons
in which she wrote:

             I have been doing a lot of work with the audio
             performance of the system. The speaker arrangement
             contracted what might be used in a typical church
             setting when there is a single speaker talking to a
             congregation and overall quality is not a major issue.
             In this chapel we have very strong reflections from the

                                           5
balcony and the rear wall which interfere with the
outgoing sound; listeners in the front and center
experience very deep fades in parts of the frequency
spectrum (15-20db). The intelligibility in these parts of
the chapel drops well below 0.5. Even if this was
acceptable for local use it cannot be tolerated when
there is sound augmentation when teleconferencing as
the AES system will not be able to cope and we will get
all kinds of nasty noises.

What to do? I have been working with the Bose
engineers to try and find a good solution; as yet we
have yet to reach consensus but we are closing in. We
are agreed that we will need to add more speakers to
cancel out the effect of the reflections; my preference is
for two element arrays at the comers of the balcony
(which would also include the subwoofers we need).
After equalization the simulations shown this produces
a very flat frequency response across the whole seating
area and removes the deep fades completely. We also
achieve intelligibility levels over 0.8 for the majority of
the congregation. This approach does however reduce
the localization (sound coming from the front)
somewhat and maybe the system would need to be
configured differently depending upon the use of the
chapel (this is all under software control). An
alternative suggestion is to incorporate additional
speakers at the front to improve the localization but I
remain to be convinced this is the better option - for
one thing we can use the rear speakers to provide
surround sound when replaying recorded video.

I am giving you an informal heads up that whatever
architecture is settled upon we will need additional
speakers and amplifiers to achieve the high quality
result I think you are looking for. If we agree on my
approach we would need four more RoomMatch
speakers, two small subwoofers and two more eight
channel amplifiers. There is no change to the rest of the
hardware as the system is fully digital and everything
else is managed in the software. Conventionally the
subwoofers would be hung with the center cluster but

                              6
              by putting them out of the way in the rear will to my
              mind be much better.

              I understand we cannot change anything without going
              through contracts but I am trying to keep you in the
              loop with these design debates and feel out your
              opm10n.

(R4, tab 10 at 2)

        14. In mid-March 2014, Rhodes made its second and final visit to the job site. It
removed approximately 150 feet of old cable from the chapel and installed an equivalent
amount of new cable. This was the only equipment which Rhodes installed at the
chapel. (Tr. 1/68-69, 183-84) During this visit, Ms. Rhodes stated to COL Simmons her
belief that "there was going to be a need for many more speakers" and that the "sound
board" needed to be redesigned significantly. She also spoke to COL Simmons
regarding the need for a contractual modification. He testified that he referred her
repeatedly to the contracting office. (Tr. 11184-85) The CO never agreed to add any
equipment to the contract (tr. 1163).

        15. Also in mid-March 2014, it became clear that Bose would not provide
speakers to appellant (exs. G-4, -7 at 14-19). Thereupon, on 20 March 2014, Rhodes sent
an entirely new technical proposal to the government's contracting office. It prefaced its
proposal by stating: "It has become clear that the speaker system specified in the contract
does not have the level of performance required to meet the different purposes planned
for the building." Accordingly, Rhodes proposed the use of new QSC speakers and
amplifiers, as well as other equipment not specified in either the solicitation or in
Rhodes' original proposal. It quoted an additional cost of $39,870. (R4, tab 11, proposal
at 3, 6-7)

      16. On 25 March 2014, Rhodes sent an email to Ms. Michelle Bell, the contract
administrator, explaining why the contract needed to be modified. She wrote, in part:

                      As soon as we received the contract we visited
              the site to make measurements. It soon became clear
              when we ran the numbers that the speaker system
              specified would neither deliver the level of sound nor
              the quality needed. Furthermore no account had been
              taken of the augmented teleconferencing deemed
              essential or provide support for piano music and
              surround sound. Over the next couple of weeks many
              hours were spent working with the acoustic models and
              the Bose engineers to see if we could devise an

                                           7
              architecture that could meet the performance objective
              by simply augmenting the specified units. Finally I had
              to accept that there was no practical solution given the
              building structure and even without that str[u ]cture the
              costs were going to be prohibitive.

                     I then turned to a couple of other companies and
              eventually a solution was arrived at using QSC
              components that was both practical, reasonably priced
              and could fulfill everything asked of it and that is
              covered in the proposal. I also considered using Bose
              amplifiers with the QSC speakers but although this
              might be made to work, I was concerned that if we had
              post installation problems neither supplier would accept
              responsibility. QSC have underwritten the design now
              offered.

(R4, tab 13 at 2)

        17. The CO was "somewhat blindsided when we got this additional proposal
which increased costs by about $40,000" (tr. 11132). As of 27 March 2014, Rhodes
had not delivered or installed any equipment at the job site other than cables
(finding 14). The CO's initial response was to terminate the contract for default
(tr. 1/133); however, she ultimately decided to terminate the contract for the
convenience of the government (R4, tab 20 at 1-3). Accordingly, the CO directed
Rhodes to "[i]mmediately stop all work" and to "submit a detailed, final settlement
proposal supported by adequate accounting data no later than 9 April 2014" (id. at 3).

       18. On 4 April 2014, Rhodes forwarded its termination settlement proposal to
the CO. Although it had only installed the cables and conducted two site visits,
appellant contended that it was entitled to a recovery of $27,555.38 (R4, tab 22 at 6).
As part of its proposal, Rhodes stated that it had cancelled all equipment orders, aside
from the cables, at no cost (id. at 4-5).

        19. On 4 April 2014, the CO forwarded an email in which she informed Rhodes
that it would have to file documentation to support its claim. She wrote, in part:

              Following is a list of the documentation we would
              need to see, in either case.

              1. On your man-hours, we would need to see your
              payrolls. Additionally, we would need a description of
              what work was being completed .... and the area of the

                                            8
             PWS where that requirement is listed/where does it
             apply. (Basically, just bumping the work up against the
             PWS on man-hours).

             2. On the license, we would need a copy of the license
             and the receipt showing payment. We'd also need a
             brief description of why this was needed (similar to
             what you provided on email).

             3. Cable and Cable Shipping .... we just need to see
             the invoices.

             4. Airport Shuttle, Air Fares, Accommodations and
             rental car .... we would need to see the receipts for these.

             5. Per diem, we really don't have to see anything on
             this but we need to match up your trips, # employees
             and such to substantiate the number of days.

(R4, tab 24 at 6) In response to the CO's request for documentation, Rhodes submitted
an invoice for equipment and shipping in a total amount of $764.88 (R4, tab 25) and a
Microsoft Project File purporting to show a progress schedule for the project
(R4, tab 28 at 4). It did not provide any other documentation to support its proposal.

       20. After examining the documentation proffered by appellant and conducting
a walk through of the chapel, the government's contracting officials prepared this
assessment of Rhodes' settlement proposal:

                                            9
                   CONTRACTOR'S PROPOSAL 3 APR 2014
Activity/Material    Grade      Qty         Cost           Ex Cost
Technical Proposal   SME                 20       $173.50      $3,470.00
System Engineering   SME                 22          173.5     $3,817.00
Acoustic Analysis    SME                 37          173.5     $6,419.50
Network Studies      SME                  8          173.5     $1,388.00
Install Planning     Eng Tech V          16           44.3       $708.80
Remove old wiring    Eng Tech V          12           44.3       $531.60
Install new wiring   Eng Tech V          52           44.3     $2,303.60
AFMGEase SW          License     1760 euros      $2,427.00     $2,427.00
Cable                                       lot                  $631.54
Cable Shipping                              lot                  $133.34
Airport Shuttle      ground               6         $72.00       $432.00
Airfares ELP/CVG     round trip           6       $454.00      $2,724.00
Per Diem             GSA            14 days         $61.00       $854.00
Accommodation        GSA            14 days         $95.00     $1,330.00
Car Rental                           7 days         $55.00       $385.00
                                                              $27,555.38

                           GOVERNMENT ALLOWANCE
Activity /Material     Grade        Qty        Cost      Ex Cost
Technical Proposal- never requested                              0
System Engineering EngV                     5 $38.03      $190.15 SCA
Acoustic Analysis - never requested                              0
Network Studies - never requested                                0
Install Planning       Engl                 8      19.98    159.84
Remove old wiring Eng 1                    12      19.98    239.76
Install new wiring     Eng 1               16      19.98    319.68
AFMGEaseSW             License                                   0
Cable                                          lot        $631.54
Cable Shipping                                 lot        $133.34
Airport shuttle - allowed rental car, not both                   0
Airfares ELP/CVG round trip                 4 $454.00 $1,816.00 (Per Chaplain, only 2
                                                                   trips X 2 people)
Per Diem             GSA                  5   $61.00     $552.00
Hotel                GSA                                 $415.00
Car Rental                          7 days    $55.00     $385.00
Health & Welfare                        14     $3.81     $156.21
Profit                                                     1,000
                                                         5998.52

                                         10
(R4, tab 36 at 3) They concluded that appellant was entitled to recover the amount of
$5,998.52. The CO also tried independently to verify Rhodes' costs, but was unable to
do so. She testified: "But it all came down to when she submitted that initial listing of
her cost. I had no way of substantiating it. The only invoice I received was for the
cabling and the shipping ofthe cabling." (Tr. 11137)

       20. On 29 May 2014, the CO sent to appellant "the finalized modification of
the Termination for the Government's Convenience." Based upon Rhodes' sole
invoice, the CO allowed the amount of $764.88 for the cable and shipping. She
concluded that appellant had completed 16.4 percent of the work under the contract's
Contract Line Item No. 0002, which amounted to $6,421.33. Accordingly, the
government's final determination allowed a total of$7,186.21 in termination costs.
(R4, tab 38)

         21. This appeal followed.

        22. Following the termination of Rhodes' contract, the government entered into a
follow-on contract to complete the work. The contractor successfully installed the A/V
system in the chapel, using the specifications set forth in the original solicitation with
only minor modifications (tr. 11175-76). According to COL Simmons, the A/V system
installed in the chapel "[w]orks beautifully" (tr. 1/185).

                                        DECISION

        Pursuant to FAR 52.212-4, the Termination for the Government's Convenience
clause, appellant is entitled to recover "( 1) a 'percentage of the contract price reflecting
the percentage of work performed,"' as well as "(2) 'reasonable charges' that...'have
resulted from the [contract] termination."' Dellew Corp., ASBCA No. 58538,
15-1 BCA if 35,975 at 175,783. Here, despite the lack of documentation, the CO
labored to reach a fair result. She determined the percentage of work completed was
16.4% and paid Rhodes the full amount of its sole invoice. 3 Appellant is, thus, not
entitled to an additional recovery.

3   The government has not challenged the CO's settlement determination in this
         litigation and we do not disturb it.

                                             11
                                     CONCLUSION

       The appeal is denied.

       Dated: 7 June 2016

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

I concur

   /://;?/JI 4:~./
  /.7//~ ~t------- --'---------
1CiARK'N. STEMPLER               j             RICHARD SHACKLEFORD
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 No. 59414, Appeal of Rhodes
Research, rendered in conformance with the Board's Charter.

      Dated:

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

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