Court Opinion

ID: 4078945
Source: CourtListenerOpinion
Date Created: 2016-10-03 17:00:23.980213+00
Date Added: 2024-06-11T14:33:15.070581
License: Public Domain

ARMED SERVICES BOARD OF CONTRACT APPEALS

Appeal of--                                   )
                                              )
Ft. McCoy Shipping & Services                 )       ASBCA No. 58673
                                              )
Under Contract No. MCC 08-205                 )

APPEARANCE FOR THE APPELLANT:                         Ms. Jane Barnas
                                                       Owner

APPEARANCES FOR THE GOVERNMENT:                      Raymond M. Saunders, Esq.
                                                      Army Chief Trial Attorney
                                                     MAJ Matthew A. Freeman, JA
                                                     Kyle E. Chadwick, Esq.
                                                      Trial Attorneys

               OPINION BY ADMINISTRATIVE JUDGE YOUNGER

       This is an appeal under a negotiated concession contract with the Army & Air
Force Exchange Service (AAFES). Appellant, Ft. McCoy Shipping & Services
(Ft. McCoy or appellant), agreed to operate a business center on a military facility and
seeks costs that are said to result from alleged mismanagement of its contract. AAFES
argues that appellant seeks ordinary business losses for which the contract affords no
basis for recovery. We deny the appeal.

                                 FINDINGS OF FACT

        1. By date of 30 April 2008, AAFES awarded Contract No. MCC 08-205 to
Ft. McCoy, which was "a negotiated contract for concession operation of a business
center located at Ft. McCoy, WI." The stated period of performance was for five years,
from 1 May 2008 through 30 April 2013, "unless extended or sooner terminated
according to contract general provisions." (R4, tab 1 at 2)

        2. The contract contained a clause setting forth historical sales data. The clause
provided, however, that "AAFES makes no warranty, express or implied, of the gross
sales to be realized" by appellant in operating the business center (R4, tab 1 at 2).

        3. The contract contained General Provisions (GP). GP 1, AUTHORITY TO
BIND (Nov 95), defined the term "contracting officer" and provided in part that:
"AAFES has no obligation to recognize or accept waivers or changes to this contract
that result from the actions of officials other than the contracting officer. Claims based
on such actions may be denied." (R4, tab 1 at 5)
        4. GP 4, ORAL REPRESENTATIONS (JAN 94), stated that "[a]ny changes or
amendments [to the contract] may not be recognized by AAFES unless committed to
writing and incorporated by reference into the contract by the contracting officer" (R4,
tab 1 at 5).

       5. The contract also contained a Termination clause. GP 8, TERMINATION
(JUN 94 ), provided that the "contract may be terminated in whole or in part by either
party immediately upon written notice to the other party in the event of breach of this
contract by the other party," or otherwise, "upon thirty (30) days notice .. .in writing to
the other party" (R4, tab 1 at 6).

       6. The contract also contained a Disputes clause. GP 11, DISPUTES (FEB 95),
provided, inter alia, that "[t]his contract is subject to the Contract Disputes Act." It
also provided that the contractor could appeal a contracting officer's final decision on
a claim to the Board within 90 days of receipt, or to the Court of Federal Claims within
one year of receipt. (R4, tab 1 at 6-7)

      7. The contract also contained Special Provisions (SP). SP 3, EQUIPMENT,
FURNITURE, AND MovABLE TRADE FIXTURES (DEC 07), provided in part that

              Concessionaire will provide and install all the equipment,
              furniture and movable trade fixtures required by this
              contract .... Concessionaire will maintain and repair or
              replace, as necessary, all concessionaire furnished
              equipment, furniture and fixtures.... Concessionaire
              investment in equipment, furniture and fixtures for this
              contract is a business risk of the concessionaire. It is
              expressly understood and agreed that neither AAFES nor
              any other agency or instrumentality of the United States is
              or will be liable to concessionaire for [the] costs of
              concessionaire's investing in equipment, furniture or
              movable trade fixtures in the event of termination of this
              contract without extension.

(R4, tab 1 at 24)

        8. SP 12, UTILITIES (APR 05), provided in part that "[c]oncessionaire will pay
all costs for telephone service used in performance of this contract" (R4, tab 1 at 25).

       9. In Exhibit E to the Special Provisions, Fee Schedule, the parties agreed that
appellant would pay to AAFES 15 percent of adjusted gross sales for services and

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retail product offerings, and 12.5 percent of adjusted gross sales for parcel/package
delivery and mail services (R4, tab 1 at 39).

        10. The parties agreed to several amendments of the contract. By Amendment
No. 2, effective 15 June 2010, they agreed to "[r]evise the fee percentage [that appellant
paid to AAFES, see finding 9] to 8% for all services and sales" (R4, tab 3 at 1). By
Amendment No. 3, effective 1 June 2010, they agreed to reduce the concession fee,
calculated as a percentage of gross receipts paid by appellant to AAFES (R4, tab 4).

       11. By email dated 20 February 2012, to a contract specialist, Jane Barnas,
Ft. McCoy's proprietor, stated that appellant was having financial difficulties. Despite
SP 12 (see finding 8), Ms. Barnas stated that she had been "under the assumption"
when she signed the contract "that internet/phone service was included" and she asked
"[h]ow to dissolve my contract/business if and when it comes to that." (R4, tab 6 at 3)

        12. In March 2012, Dylan Blount, the contracting officer's representative, had
a base telephone installed in appellant's facility at no cost to appellant (tr. 114,
123-24). Thereafter, by email to Mr. Blount dated 7 March 2012, Ms. Barnas stated
that this analog telephone was "not the service needed," and that, instead, "[i]t is the
internet/phone service that I need" (R4, tab 6 at 1-2).

       13. The record reflects that, during contract performance, appellant paid $146.11
to Band Box Cleaners & Laundry, Inc., to lease and clean certain rugs (compl., ex. D).
We find no contract provision requiring AAFES to lease or clean rugs. We further find,
from the testimony of Mr. Blount, that it is not AAFES' practice to supply rugs to
concessionaires (tr. 127).

        14. By letter to AAFES dated 23 May 2012, appellant served its "official
notice to terminate" the contract, and stated that it planned to "close [the] doors at
Ft McCoy Shipping no later than July 15, 2012" (compl., ex. 10 at 1).

        15. Inexplicably, when appellant's termination notice reached AAFES, it was
not referred internally to a contracting officer for action (tr. 109, 112). The record
contains testimony from the AAFES service business manager that "[ o]nee you submit
a 30 day notice, you can walk away from a contract" (tr. 109). Nonetheless, when the
30-day notice provision in the Termination clause elapsed on or about 22 June 2012,
appellant continued performing and continued to perform after the "no later than" date
of 15 July 2012.

      16. By email to appellant dated 24 May 2012, a contract specialist inquired,
"[w]hat type of financial urgency are you having? Please advise." (Compl., ex. 11)
Thereafter, following exchanges stretching over four months, appellant submitted a

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second notice of termination by undated letter from Ms. Barnas to Mr. Blount and a
contract specialist seemingly sent on 20 September 2012 (compl., ex. 16).

       17. The contracting officer replied by letter to appellant dated 25 September
2012 and referred to "your letter of 20 September 2012 providing a notice of
termination of the contract" (R4, tab 10), and we find that the second termination
notice was dated 20 September 2012.

         18. By letter dated 29 November 2012, La Crosse Talent Services Inc.
(La Crosse) submitted a claim to the contracting officer for "undue costs in the amount
of $17 ,000," which was said to be "a direct result of on-going contract
mismanagement" (R4, tab 13). The record contains evidence that La Crosse does
business as Ft. McCoy (tr. 8, 150). Thereafter, by letter dated 11 January 2013 the
contracting officer denied the claim and stated that her decision could be appealed to
this Board (R4, tab 14). After further written exchanges with AAFES, appellant
appealed to the Board by letter dated 23 May 2013. We previously held that appellant
timely complied with the appeal requirements when it disputed the final decision in a
letter to the contracting officer on 16 January 2013. Ft. McCoy Shipping & Services,
ASBCA No. 58673, 13 BCA i/ 35,429.

       19. By date of 14 February 2008, La Crosse had entered into a separate
contract with the U.S. Postal Service to operate a Contracted Postal Unit (CPU) at
Ft. McCoy (compl., ex. B). The CPU was co-located with the business center to
provide a "one stop shop," combining both shipping and postal services for military
and civilian personnel who were either being posted overseas, or were returning home
for demobilization (tr. 45-48, 53, 69-70, 142-43).

                                     DECISION

      In the claim that it submitted to the contracting officer on 29 November 2012,
Ft. McCoy asserted entitlement to $17, 110 .06 (finding 18). In its complaint,
Ft. McCoy asserts the same amount, which it itemizes as follows:

      • Phone/Internet                    $1,392.33
      • Rug runners                         $146.11
      • Accounting Services                 $900.00
      • Loss of Wages                     $9,333.31 (7 months CPU earnings)
      • Accrued wages                     $5,338.31
      • Total                            $17,110.06

We consider these categories of costs in tum below.

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       With respect to the $1,392.33 in phone/internet costs, we conclude that
appellant is not entitled to recover. In advancing this component of the claim,
appellant disregards SP 12, which provides that "( c]oncessionaire will pay all costs for
telephone service used in performance of this contract" (finding 8). We cannot treat a
contract provision as "useless, inexplicable, inoperative, [or] void" Gould, Inc. v.
United States, 935 F.2d 1271, 1274 (Fed. Cir. 1991), and, giving effect to SP 12, deny
recovery.

        With respect to the $146.11 for rug runners (finding 13), we conclude that
appellant is not entitled to recover. Appellant cites no contractual basis for its claim
for this item. Regardless, we cannot harmonize appellant's argument with SP 3, which
provides that appellant's "investment in equipment, furniture and fixtures for this
contract is a business risk of the concessionaire" (finding 7). Cf International Hair,
ASBCA Nos. 50948, 51053, 01-1BCA~31,393 at 155,099, modified, 02-1 BCA
~ 31,768 (denying recovery for unamortized investment in facilities).

       With respect to the $900.00 claimed for accounting services, we conclude that
appellant is not entitled to recover. Appellant cites no contractual basis for recovering
such expenses, and they otherwise appear to constitute a contractor's ordinary and
necessary business expense.

       With respect to the $9,333.31 in loss of wages, the claimed amount relates to
the contracted postal unit, which was the subject of a separate contract (see finding
19), which is not before us in this proceeding.

       With respect to the $5,338.31 in accrued wages, appellant's owner characterizes
them further as an investment "which would have never occurred if AAFES would
have accepted my initial termination notice in May of 2012" (comp!. at 4). Taking
appellant's characterization on its face, we conclude that appellant invested these
funds to continue performance as a volunteer. As the AAFES service business
manager testified, "[ o]nee you submit a 30 day notice, you can walk away from a
contract" (finding 15). Work as a volunteer is not compensable. E.g., COSTAR !IL
LLC, ASBCA No. 55296 et al., 10-1 BCA ~ 34,341 at 169,608, aff'd on recon., 10-2
BCA ~ 34,548 (rejecting contractor's claim for alleged provision of higher level of
service than contract required because "any actions which it undertook in this regard
were those of a volunteer and are not compensable").

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                                 CONCLUSION

      The appeal is denied.

      Dated: 20 September 2016

                                              Administrative Judge
                                              Armed Services Board
                                              of Contract Appeals

I concur                                      I concur

      ~
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MA~ N. STEMPLE~'
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. 58673, Appeal of Ft. McCoy
Shipping & Services, rendered in conformance with the Board's Charter.

      Dated:

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

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