Court Opinion

ID: 4312943
Source: CourtListenerOpinion
Date Created: 2018-09-17 17:00:05.319124+00
Date Added: 2024-06-11T14:44:42.356854
License: Public Domain

ARMED SERVICES BOARD OF CONTRACT APPEALS

Appeal of --                                   )
                                               )
Parsons Evergreene, LLC                        )      ASBCA No. 5 8634
                                               )
Under Contract No. FA8903-04-D-8703            )

APPEARANCES FOR THE APPELLANT:                        Douglas S. Oles, Esq.
                                                      James F. Nagle, Esq.
                                                      Adam K. Lasky, Esq.
                                                      Howard W. Roth III, Esq.
                                                       Oles Morrison Rinker & Baker LLP
                                                       Seattle, WA

APPEARANCES FOR THE GOVERNMENT:                       Jeffrey P. Hildebrant, Esq.
                                                       Air Force Deputy Chief Trial Attorney
                                                      Michelle D. Coleman, Esq.
                                                       Trial Attorney

              OPINION BY ADMINISTRATIVE JUDGE CLARKE
         ON THE GOVERNMENT'S MOTION TO PARTIALLY DISMISS
                      FOR LACK OF JURISDICTION

        The Air Force (AF) moves to dismiss Section V of Parsons Evergreene, LLC's
(PE' s) certified claim for lack of jurisdiction. As decided in our decision on the larger
claim issued today, we have jurisdiction to consider this motion pursuant to the Contract
Disputes Act of 1978 (CDA), 41 U.S.C. §§ 7101-7109. We deny the motion.

                                      DISCUSSION

       The AF identifies the issue presented in its motion as:

               Whether the Armed Services Board of Contract Appeals
               has jurisdiction to decide the modified total cost claim in
               section V of Parsons Evergreene, LLC's certified claim
               dated 29 June 2012 when section V of the claim lacked
               sufficient information and detail that would have allowed
               the CO to meaningfully consider the claim?

(Gov't mot. at 4) (Footnotes omitted) Claim Section V was previously Request for
Equitable Adjustment (REA) No. 8 (id. at 8).
Summary Chronology

        PE's REA No. 8 was submitted on 30 November 2011 (R4, tab 1540; gov't
mot. at 5). The AF did not agree with the REA and PE filed a certified claim on
29 June 2012 (R4, tab 21; gov't mot. at 8). A final decision denying the claim was
issued on 27 March 2013 (R4, tab 214; gov't mot. at 10). This appeal was docketed by
the Board on 24 April 2013. A hearing was held from 2 to 27 March 2015. The final
brief, PE's reply brief, was received by the Board on 25 May 2016. The AF's motion
to partially dismiss for lack of jurisdiction was received by the Board on 28 December
2017. Therefore, the AF's motion was filed after the case was fully litigated and over
five years from the AF's receipt of the claim.

PE's Claim

       PE's 29 June 2012 detailed certified claim had 127 pages, 7 discrete sections,
only Section V (previously REA No. 8) is the subject of the AF's motion. Section V,
Government Management and Administration of the Design-Build Process during the
Build Phase, claimed $28,157,994; it was identified by PE as a Modified Total Cost
(MTC) claim. (R4, tab 21 at PDF 53, 56)

The Technical Review

        Claim Section V was submitted to the AF Center for Engineering and the
Environment (AFCEE) (R4, tab 213 at 33 7) for technical evaluation. AFCEE issued the
results of its evaluation on 4 September 2012 (id. at 306). AFCEE reviewed the 22
"events" in Section V of the claim and recommended that AF "reject PE's unsupported
claim of a 'Cardinal Change' doctrine" 1 (id. at 307). The AFCEE discusses each
"event" in its 31-page report (id. at 306-3 7). The events were: Structural Change,
Structural Brick (id. at 309); Design Deficiencies-Denial of Design Flexibility (id.
at 311 ); Government Interference with Implementing Approved Design (id. at 312);
Issuance of Improper Cure Notice (id.); Title II Representative Malfeasance (id. at 313 );
Base Entry Issues (id. at 314); Final Inspection Process (id.); Late Material Submittals
Approvals (id. at 315); Standing Seam Metal Roof, Material Approvals (id. at 317);
EIFS versus Stucco (id.); Manhole 35 Asbestos Extension (id. at 319); TLF Windows
(id.); Delegation of Field Authority (id. at 321); Standing Seam Metal Roof, Oil Canning
(id.); TLF Windows (Size) (id. at 323); Retention Pond (id. at 324); TLF Mechanical
Room Noise and Vibration (id. at 327); Roof Steel and Walkway in VQ Roof (Catwalks)
(id.); High Temperature Hot Water (id.); Switch to Tri-Arch Paint (id. at 328); Sewage
in VQ Caused by CE Service Call (id. at 329); and Government Audit of Prevailing

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    We have no idea why AFCEE and the Defense Contract Audit Agency (DCAA)
        focused on a "cardinal change."

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Wages (id. at 330). The report included 27 attachments (id. at 334-35). The AFCEE
report did not cite lack of detail and information on costs as a basis for its conclusions.

DCAA Audit

       On 18 January 2013 DCAA issued its report of the results of its audit of PE's
claim (R4, tab 213). DCAA, relying heavily on AFCEE's technical analysis,
questioned the vast majority of PE's claimed costs (id. at 6).

Final Decision

        Contracting officer (CO) Gregory Santiago issued his 142-page final decision
on 27 March 2013 (R4, tab 214 at 1). The decision relating to Section V considered
each of the elements of the claim (id. at 58-110). The CO denied Section Vin its
entirety stating, "PE has not established that it has met the prerequisites for use of the
modified total cost method" (id. at 110).

Statement of Costs & Balance of Construction Phase

        The parties prevailed upon the Board to decide both entitlement and quantum at
the hearing in this appeal. When the Board is to decide quantum it typically issues an
order on Proof of Costs which we did in this case. The order requires that appellant
file a Statement of Costs (SOC) that provides an auditable accounting of claimed costs.
PE submitted its 301-page SOC on 14 March 2014 (R4, tab 3001). The AF cites the
additional detail in the SOC as evidence that the original claim was unsupported (gov't
mot. at 16-18, 30). Likewise it relies upon Mr. Rosenfeld's, PE's accounting expert,
refinement of Section V claim, referred to as the "Balance of Construction Phase"
claim, into discrete claims as evidence that the claim was unsupported when initially
submitted (gov't mot. at 19-25, 31-32). The SOC, however, was only required
because both parties requested that the Board decide both entitlement and quantum.

                                       DECISION

Prerequisites for a Valid CDA Claim

       The central issue of this motion is if PE gave "adequate notice" of the claim and
amount at the time it was submitted, not what occurred much later during litigation.
Madison Lawrence, Inc., ASBCA No. 56551, 09-2 BCA ~ 34,235 at 169,207 (That the
amount of a claim might change as additional information is developed does not
invalidate it as a qualifying CDA claim.).

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       By law, we do not possess jurisdiction to consider an appeal in the absence of a
valid claim. And for a writing to be a valid claim, among other things, it must convey
to the CO:

                "[A] clear and unequivocal statement that gives the
                contracting officer adequate notice of the basis and amount
                of the claim." Contract Cleaning Maintenance, Inc. v.
                United States, 811 F.2d 586, 592 (Fed. Cir. 1987). In our
                view, in order to be "adequate," the contractor's statement
                must be sufficient to enable the contracting officer to
                undertake a meaningful review of the claim ....

                       Whether a communication is a "claim" within the
               meaning of the CDA as interpreted above is a question of
               judgment, which must be exercised on a case by case basis
               as the particular facts present themselves.

Holk Dev., Inc., ASBCA Nos. 40579, 40609, 90-3 BCA i123,086 at 115,938. As will
be seen, in our judgment, based upon the facts presented here, we find that the CO was
given sufficient information to engage in a "meaningful review" of the claim, which,
in fact, the CO did.

        The first problem the AF has is that CO Santiago apparently believed 2 he had
adequate notice because he requested and received a detailed technical analysis by
AFCEE (R4, tab 213 at 337), and issued a detailed 142-page final decision (R4,
tab 214 ). The AF cryptically states that the fact the AF CO in this case issued a final
decision on PE's claims is "inconsequential" (gov't mot. at 26). The AF relies on
Holk Dev., 90-3 BCA ,i 23,086, where the Board dismissed Holk's appeal for lack of
jurisdiction and stated:

                       Finally, appellant argues that the Board has
               jurisdiction of these appeals --because the Contracting
               Oflicer did not timely notify Appellant that further
               information was needed .... " (ASBCA No. 40609,
               Appellant's Opposition to Respondent" s Motion to Dismiss
               at 10). Assuming that to be true. the contracting officer
                                              . his or her inaction to waive
               does not have the authoritv., bv
               a jurisdictional requirement.

Id. at 115,939. Holk dealt with the requirement for a sum certain and the Board held
that Holk provided "no explanation of how it arrived at" the stated sum (ASBCA

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    There is no declaration from CO Santiago supporting the AF's motion.

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No. 40579) and failed to identify "in any way" the claimed, over 400, changes in the
scope of work. Id. at 115,938. This was not at all the factual circumstances presented
here.

       The AF also relies on Madison Lawrence, 09-2 BCA ~ 34,235 at 169,206, for
the proposition, "When a contractor's claim does not meet the CDA requirements for a
claim, any final decision rendered therefrom is null and void" (gov't mot. at 26).
We agree with this holding and emphasize that, in considering the CO's apparent
satisfaction with PE's claim, we are not holding that the CO may waive this CDA
requirement; rather, we consider it, in the context here, as evidence that the claim
provided the CO "adequate notice" of the claim. Thus, the Board in Madison
Lawrence also stated:

              Whether a communication from a contractor constitutes a
              CDA claim is determined on a case by case basis, and we
              employ a common sense analysis. The contractor must
              submit a clear and unequivocal statement that gives the CO
              adequate notice of the basis and amount of the claim ....

                   ... [A contractor] can supply "adequate notice" of the
              amount of the claim without accounting for each cost
              component.

Id. at 169,206-07 (citations omitted, emphasis added). This quote also evidences the
"common sense analysis" exercised when evaluating if a claim gives "adequate
notice." In Madison Lawrence the challenge to the adequacy of the claim was
immediate. The chronology in Madison Lawrence is a bit complicated but on 21 April
2008 Madison Lawrence submitted an REA and on 20 May 2008 the CO issued a final
decision denying the "claim." Madison Lawrence sent a 10 June 2008 letter to the CO
stating the REA was not a claim, but to preserve its appeal rights, it appealed the CO's
decision on 24 Jurie 2008. On 8 August 2008 the government moved to dismiss the
appeal for lack of jurisdiction arguing that the REA was not a claim and the CO' s final
decision was a nullity. Id. at 169,203, 169,205. The Board denied the government's
motion stating:

                    Appellant's claim was in the sum certain amount of
             $196,982.62, plus estimated additional costs of $18,088.24
             per month, starting in March 2008 and continuing through
             the end of contract performance-an additional amount
             readily subject to calculation. The CO so understood the

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              claim, reflecting that he had adequate notice of the claim
              amount.

Id. at 169,207 (emphasis added). It is significant that the Board gave weight to the
CO's "understanding" inferred from the fact that the CO issued a final decision. We
do the same in this decision.

Other Cases Relied Upon by the AF

        We agree with many of the legal propositions stated in the AF's motion. We
agree that the motion is timely because the issue of jurisdiction may be raised at any
point in the proceedings (gov't mot. at 25). We agree that PE bears the burden of
proving jurisdiction (id. at 23-26).

       The AF relies upon the following six cases in support of its motion:

•      JL. Ewell Construction Co., ASBCA No. 37746 et al., 90-1BCA122,485
•      (gov't mot. at 28, 30, 32-33).
•      Anchor Fabricators, Inc., ASBCA No. 40893, 91-3 BCA 124,231 (id. at 32).
•      Bio-Temp Scientific, Inc., ASBCA No. 41388, 91-1 BCA 123,548 (id.).
•      Holk Dev., Inc., 90-3 BCA 123,086 (id. at 26, 32, 34).
•      Gauntt Constr. Co., ASBCA No. 33323, 87-3 BCA 120,221 (id. at 32-33).
•      Leonard Pevar Co., ASBCA Nos. 27247, 27392, 84-3 BCA 1 17,591 (id. at 32).

        In its motion the AF fairly characterized these decisions except for one glaring
omission. In each of these cases the criticism of the adequacy of the claim was
essentially immediate. In Ewell the claim was dated 20 May 1988 and the CO's letter
citing insufficient detail was dated 27 September 1988. Ewell, 90-1 BCA 1 22,485
at 112,852. In Anchor the claim was submitted on 26 October 1989 and certified on
6 November 1989. The government's response citing insufficient detail was dated
7 November 1989. Anchor, 91-3 BCA 124,231 at 121,187. In Bio-Temp the "claim"
was submitted by letter on 7 May 1990. The contract was terminated for default on
11 May 1990. The Board found that the 7 May 1990 claim letter failed to present "a
clear and unequivocal statement that gives the contracting officer adequate notice of
the basis and amount of the claim.'' Bio-Temp, 91-1BCA123,548 at 118,085-86. In
Holk the claim was submitted on 17 October 1989. The CO denied the claim on
20 December 1989 stating it was not accompanied by any substantiation. Holk, 90-3
BCA 1 23,086 at 115,937. In Gauntt the claim letter was received by the government
on 24 March 1986. On 26 June 1986 the claims manager informed Gauntt that the
letter did not contain specific information concerning the basis of the claim. Gauntt,
87-3 BCA 1 20,221 at 102,409-10. In Leonard Pevar a letter dated 17 May 1982
discussed various claims including delay damages. The Corps of Engineers district
counsel responded on 27 May 1982 stating that the claim for delay damages should be

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sent to the area engineer along with supporting documentation so that the claim could
be evaluated. Leonard Pevar, 84-3 BCA ,i 17,591 at 87,646-47.

        The AF cites not one case that involves a situation similar to ours where the CO
receives claims, obtains detailed technical review, DCAA audit, and issues a detailed
final decision that is challenged for lack of claim substantiation five years later after
the case was fully litigated. The AF's motion in this appeal is a challenge to a
jurisdictional requirement, adequate notice, that involves the exercise of discretion.
The AF's motion contains no testimony supporting the contention that PE's claim
failed to provide adequate notice. The CO obtained a technical review of the claim
and DCAA audit. To the extent that the CO had questions about PE's substantiation
he was apparently satisfied enough to issue a detailed lengthy final decision. The AF's
motion asks the Board, at this late date, to second-guess the CO, i.e., find that he
should not have issued his decision. The AF incorrectly focuses on what happened
during the litigation when it should have focused on what lead up to the final decision.
Just as in Madison Lawrence we rely on the fact the CO issued a final decision
evidencing his understanding that he had adequate notice, presumably with legal
concurrence, and we decline to override that decision. We reach our conclusion by
exercising our discretion and applying common sense to the facts of this case.

                                    CONCLUSION

       For the reasons stated above, the AF's motion is denied.

       Dated: September 5, 2018

                                                  CRAIG s.fCLARKE
                                                  Administdtive Judge
                                                  Armed Services Board
                                                  of Contract Appeals

 I concur                                         I concur

RICHARD SHACKLEFORD                               J.IDPROlJTY
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. 58634, Appeal of Parsons
Evergreene, LLC, rendered in conformance with the Board's Charter.

      Dated:

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

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