Court Opinion

ID: 2830124
Source: CourtListenerOpinion
Date Created: 2015-08-24 21:00:06.755414+00
Date Added: 2024-06-11T11:31:37.568401
License: Public Domain

ARMED SERVICES BOARD OF CONTRACT APPEALS

Appeal of --                                   )
                                               )
DynPort Vaccine Company LLC                    )      ASBCA No. 59298
                                               )
Under Contract No. DAMDl 7-98-C-8024           )

APPEARANCES FOR THE APPELLANT:                        Carl J. Peckinpaugh, Esq.
                                                      Brian F. Wilbourn, Esq.
                                                       Counsel
                                                       Computer Sciences Corporation
                                                       Falls Church, VA

APPEARANCES FOR THE GOVERNMENT:                       Raymond M. Saunders, Esq.
                                                       Army Chief Trial Attorney
                                                      Kyle E. Chadwick, Esq.
                                                       Trial Attorney

                 OPINION BY ADMINISTRATIVE JUDGE JAMES
                ON APPELLANT'S MOTION TO DISMISS COUNT 3
                    OF THE GOVERNMENT'S COMPLAINT

       The Board's 15 January 2015 decision denied the government's motion to
dismiss the captioned appeal for lack of jurisdiction and ordered the government to file
the complaint on its claim. See DynPort Vaccine Company LLC, ASBCA No. 59298,
15-1BCAii35,860 at 175,334 (DVC). Familiarity with that decision is assumed.
Hence we summarize only the facts pertinent to the instant motion.

       The captioned contract incorporated by reference the FAR 52.246-8,
INSPECTION OF RESEARCH AND DEVELOPMENT-COST-REIMBURSEMENT (APR 1984)
clause which provided, as pertinent to the instant motion:

               (h) ... [T]he Government may at any time require the
               Contractor to remedy by correction or replacement,
               without cost to the Government, any failure by the
               Contractor to comply with the requirements of this
               contract, if the failure is due to ( 1) fraud, lack of good
               faith, or willful misconduct on the part of the Contractor's
               managerial personnel or (2) the conduct of one or more of
               the Contractor's employees selected or retained by the
               Contractor after any of the Contractor's management
              personnel has reasonable grounds to believe that the
              employee is habitually careless or unqualified.

(R4, tab 1 at Bates 57)

        After months of debating which party bore the costs resulting from DVC's
default termination of subcontractor Lonza Hopkinton, Inc. (LHI), to manufacture
BOT antigens, unilateral Modification No. P00431 (Mod. 431) directed DVC to
perform its proposed change order work to add a subcontractor to complete the work
terminated in LHI's subcontract at an additional cost of $4,629,326.19, but at no cost
to the government "due to [DVC's] willful managerial misconduct and/or habitual
employee carelessness." Mod. 431 cited FAR 52.246-8(h), but did not allege breach
of an implied duty of good faith and fair dealing. We decided Mod. 431 was a
government claim. See DynPort Vaccine, 15-1BCAif35,860 at 175,331, 175,333-34.

       The government's 31March2015 complaint alleged: "Count I-Habitual
Carelessness (FAR 52.246-8(h)(2))"; "Count 2-Lack of Good Faith/Willful
Misconduct (FAR 52.246-8(h)(l))"; "Count 3-Breach of Implied Covenant of Good
Faith and Fair Dealing" and "51 .... Count 3 arises from the same operative facts as
Counts 1and2" (compl. at 8, 10, 11). Appellant's answer to paragraph 51 of the
complaint stated in pertinent part:

                     51. . .. To the extent any response is deemed
              necessary, DVC lacks sufficient information to either
              admit or deny the allegations contained in Paragraph 51 of
              the Complaint and, accordingly, denies the same and
              demands strict proof thereof.

(Answer at 10)

                                      DECISION

       Appellant argues that the FAR 52.246-8, INSPECTION OF RESEARCH AND
DEVELOPMENT-COST-REIMBURSEMENT clause requires that a government demand
for no-cost work must be proven exclusively in accordance with the criteria in
paragraph (h)(l) or (2) of that clause, citing Century Exploration New Orleans, LLC v.
United States, 745 F.3d 1168, 1179 (Fed. Cir. 2014) (the implied duty of good faith
and fair dealing "cannot expand a party's contractual duties beyond those in the
express contract or create duties inconsistent with the contract's provisions"), which in
tum cited Metcalf Construction Co. v. United States, 742 F.3d 984, 991 (Fed. Cir.
2014) (an act cannot violate the implied covenant of good faith and fair dealing "if
such finding would be at odds with the terms of the original bargain, whether by

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altering the contract's discernible allocation of risks and benefits or by conflicting with
a contract provision.") in support of its motion (app. mot. at 2-3).

        The government argues that Count 3 alleges that appellant "failed to take
reasonable steps to avoid or to minimize the dire consequences to the government of
its subcontractor's default, despite repeated warnings that LHI would be unable to
perform," the government did not assume the risk that DVC would not use its best
efforts to work with its subcontractor to develop the vaccine, and the R&D Inspection
clause gives it a non-monetary contract remedy in specified circumstances but does not
bar the government from seeking monetary damages for breach of the duty of good
faith and fair dealing equal to DVC's proposed change cost (gov't opp'n at 2-5).

       Appellant rejoins that "this appeal does not involve any government claim for
money damages," but rather its demand for no-cost work under the R&D Inspection
clause. Therefore, it "must be proven in accordance with the terms of that clause" and
it "cannot, as a matter oflaw, prove its case by establishing a breach of the implied
duty of good faith and fair dealing." (App. reply hr. at 2-3)

        Appellant does not cite any language in the FAR 52.246-8 clause or any legal
precedent restricting the government's proof to sub-paragraphs (1) and (2) of that
clause, nor is any known to the Board. Neither Century Exploration nor Metcalf
Construction addressed our issue of dismissal from a party's pleading a count alleging
breach of the implied duty of good faith and fair dealing. In Century, though the
lessee's complaint did not allege a breach of the implied duty of good faith and fair
dealing, the Federal Circuit did not reject the trial court's introduction of that duty into
its decision and affirmed its holding that the government did not breach such duty
because the lease expressly authorized the government action of issuing new, more
onerous regulations under the Outer Continental Shelf Lands Act.

       In Metcalf, the contractor's sole claim alleged breach of the implied duty of
good faith and fair dealing. The Federal Circuit Court vacated the trial court's
decision which misinterpreted the implied duty of good faith and fair dealing to
require a specific government design (targeting) to reappropriate the benefits that the
contractor expected to obtain from the contract transaction. These decisions reflect the
substantive rule urged by appellant and stated in the first paragraph of this decision.
Appellant points to nothing in Count 3 of the complaint that expands appellant's duties
beyond, or conflicting or inconsistent with, its duties specified in the FAR 52.247-8
clause, and no altering of the risks allocated by that clause.

       Pursuant to the Contract Disputes Act of 1978 (CDA), the Federal Circuit held
in Scott Timber Co. v. United States, 333 F.3d 1358, 1365 (Fed. Cir. 2003) that the
same claim decided by the CO must be presented to the court; claims do "not require

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    rigid adherence to the exact language or structure of the original administrative CDA
    claim [when they] arise from the same operative facts, claim essentially the same
    relief, and merely assert differing legal theories for that recovery." See also American
    General Trading & Contracting, WLL, ASBCA No. 56758, 12-1BCAii34,905 at
    171,639 ("[A] claimant is free to change the legal theory ... from what was described in
    the claim .. .if the action continues to arise from the same operative facts that were
    relied upon in the [claim], and essentially seeks the same relief.").

           As summarized above, movant denied that Count 3 arises from the same
    operative facts as Counts 1 and 2, but identifies no evidence of any new or different
    operative facts that must be considered to adjudicate Count 3. The Board will not need
    to review new or unrelated evidence to adjudicate Count 3, which claims essentially
    the same relief as do Counts 1 and 2: contractor liability for the costs of performing its
    remedial change order work at no cost to the government.

           The government argues that the FAR 52.246-8 clause bars it from seeking
    monetary damages for breach of the duty of good faith and fair dealing equal to
    DVC's sum certain proposed change cost (gov't opp'n at 4-5). Indisputably, Mod. 431
    did not claim any monetary damages. See DynPort Vaccine, 15-1 BCA ii 35,860 at
    175,332, ii 11. Therefore, the Board has no CDA jurisdiction to adjudicate a
    government monetary claim raised for the first time in its complaint.* See Optimum
    Services, Inc., ASBCA No. 57575, 13 BCA ii 35,412 at 173,726.

           Accordingly, we deny appellant's motion to dismiss Count 3.

           Dated: 12 August 2015

                                                      of Contract Appeals

    (Signatures continued)

    * We have already held that the government's claim herein is a claim for "other
          relief." DynPort Vaccine, 15-1BCAii35,860 at 175,333.

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I concur                                       I concur

 ff;:t/Lff:;if---u _ _ __
MARK N.    STEMPLE~                            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. 59298, Appeal of DynPort
Vaccine Company LLC, rendered in conformance with the Board's Charter.

      Dated:

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

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