Court Opinion

ID: 2734638
Source: CourtListenerOpinion
Date Created: 2014-09-19 01:36:33.948563+00
Date Added: 2024-06-11T10:55:33.235445
License: Public Domain

ARMED SERVICES BOARD OF CONTRACT APPEALS

Appeal of--                                   )
                                              )
Jayco International, LLC                      )       ASBCA No. 58461
                                              )
Under Contract No. N40442-11-P-8440           )

APPEARANCE FOR THE APPELLANT:                         Gerald H. Werfel, Esq.
                                                       Pompan, Murray & Werfel, P.L.C.
                                                       Alexandria, VA

APPEARANCES FOR THE GOVERNMENT:                       Ronald J. Borro, Esq.
                                                       Navy Chief Trial Attorney
                                                      Davis Young, Esq.
                                                       Senior Associate Counsel
                                                      Stephen A. Copetas, Esq.
                                                      Jeffrey N. Davenport, Esq.
                                                       Assistant Counsel
                                                       Military Sealift Command Norfolk

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

       This appeal arises out of a contract for forklift batteries to be used on forklifts
deployed on a Navy ship. The Navy terminated the contract because the batteries
delivered were not the batteries identified in the contract. Jayco contends that the Navy
modified the contract to allow "or equal" batteries and that it delivered batteries that were
equal to those identified in the contract. We have jurisdiction pursuant to the Contract
Disputes Act of 1978 (CDA), 41 U.S.C. §§ 7101-7109. We deny the motion.

         STATEMENT OF FACTS (SOF) FOR PURPOSES OF THE MOTION

       1. On 23 May 2011, the Military Sealift Fleet Support Command (MSFSC)
posted amended Solicitation No. N40442-11-T-7464 stating:

              Military Sealift Fleet Support Command (MSFSC), Norfolk,
              VA intends to award a firm fixed price purchase order for
              USNS ALAN SHEPARD for the following Brand Name or
              Equal parts:
              ITEM PIN
              (OR EQUAL) DESCRIPTION QTY PRICE PER UNIT
              EXTENDED PRICE
              1 18-E80S-21 BATTERY FORKLIFT QTY: 10
              2 18-E80S-27 BATTERY, GEL, MAINT FREE FOR 10K
              FORKLIFT, QTY: 4 EA

(R4, tab 5 at 1-2) The name ofthe manufacturer (brand) was not included in the
solicitation, however, appellant agrees that the part numbers "correspond to batteries
manufactured by EnerSys, Inc." (R4, tab 8 at 2; app. opp'n at 2, ~ 4).

     2. The solicitation incorporated by reference FAR 52.211-6, BRAND NAME OR
EQUAL (AUG 1999), that includes the following language:

                 (a) If an item in this solicitation is identified as "brand
              name or equal," the purchase description reflects the
              characteristics and level of quality that will satisfy the
              Government's needs. The salient physical, functional, or
              performance characteristics that "equal" products must meet
              are specified in the solicitation.

                (d) Unless the offeror clearly indicates in its offer that the
              product being offered is an "equal" product, the offeror shall
              provide the brand name product referenced in the solicitation.

(R4, tab 5 at 3)

       3. The solicitation, as modified, listed the following salient characteristics:

              Batteries must fit in both Hyster E40XM and E60XM
              forklifts without modifications to either forklift.

              Batteries must be VRLA (Valve Regulated Lead Acid) type
              (maintenance free).

              Batteries must be "Shock Hardened"

                                              2
                Batteries must be UL rated as "EE".

(R4, tab 5 at 4) 1

        4. On 25 May 2011, Jayco International, LLC (Jayco) submitted its quote in
response to the amended solicitation. The quote identified the products offered as ten
"18-E80S-21EE SmartHog sealed tubular battery" at a unit price of$14,714.57 for a total
price of$147,145.70 and four "18-E80S-27EE SmartHog sealed tubular battery" at a unit
price of$18,647.18 for a total price of$74,588.72. (R4, tab 6 at 2) Both batteries
complied with "SparkProoftray (EE)," "Shock Hardened," and "VRLA" (id.). The total
price of the quote was $221,734.42. The quote included "[a]ll of the pages of the
solicitation and the Amendment/Modifications attached hereto and submitted with this
proposal are hereby incorporated by reference and all of the clauses and statements
contained therein are fully agreed to without exception" (id. at 3).

        5. On 8 June 2011, MSFSC issued Purchase Order No. N40442-ll-P-8440
(8440) to Jayco for ten EnerSys forklift batteries part No. 18-E80S-21 for a total cost of
$147,145.70 and four batteries (gel) part No. 18-E80S-72 for a total price of$74,588.72
for a cumulative total price of $221,734.42 (R4, tab 2 at 1, 4 ). The delivery date for the
batteries was 25 July 2011 (id. at 5). Although the block on the SF 1449 requiring Jayco
to sign the order was not checked (id. at 1), an email accompanying the award requested
that Jayco sign blocks 30a, b, and c and return (R4, tab 14 at 2). Jayco's president,
Mr. Walko, signed the order on 9 June 2011 (R4, tab 13).

       6. On 8 July 2011, Jayco issued a purchase order to EnerSys, Reading,
Pennsylvania, for ten 18-E80S-21EE SmartHog batteries and four 18-E80S-27EE
SmartHog batteries for a total amount of$211,720.00 (gov't reply, attach. 1). On 13 July
2011, Mr. Walko emailed Mr. Shoemake, MSFSC, stating that after talking with EnerSys
he anticipated that Jayco could not deliver until23 August 2011 (R4, tab 12 at 1). 2 On
7 September 2011, Mr. Walko emailed Mr. Zagrocki, MSFSC, stating that as soon as it
was confirmed that the batteries are EE rated they will be shipped (id. at 3-4). On
26 September 2011, Mr. Walko emailed Ms. Wright, MSFSC, stating that the batteries
were ready to ship but before shipment Jayco needed to send MSFSC an assignment of
claim form and MSFSC needed to get it back to J ayco "right away" and that "time is of
the essence" (id. at 5). On 7 October 2011, Mr. Meyers, Bibby Financial Services,
emailed Mr. Shanks, MSFSC, a copy of an unsigned Instrument of Assignment (lOA)
and Notice of Assignment (NOA) (R4, tab 24 ). Mr. Meyers wrote:

               As Bibby is looking to work with Stephen Walko from Jayco
               International, please find the assignment and instrument of

1
    No electrical characteristics, i.e., cold cranking amps, etc. were listed.
2
    The pages in Rule 4, tab 12 were not sequentially numbered so the Board numbered the
         pages 1 to 3 1.
                                                  3
                claims as would be provided to you assuming you are willing
                to approve the assignment of claims with to [sic] Bibby. We
                will make sure the formal steps are taken, but wanted to get
                this in front of you first to see if we should take those steps.

(!d. at 2) 3

         7. On 6 October 2011, Mr. Walko emailed Mr. Shoemake, MSFSC, stating:

                This has not shipped yet because we have to do an assignment
                with the bank and there was a snafu with that.

                Andy and I are working to get this done ASAP.

                The product is ready to ship once we get the bank assignment
                in place with the government.

(R4, tab   17 at 6-7)
       8. The record includes a copy of the lOA signed by Mr. Walko on 3 November
2011 and by Mr. Miller, Pulaski Bank, on 3 November 2011 and an NOA signed by
Ms. Lieson, Bibby Financial Services, on 8 December 2011 and by the MSFSC
contracting officer on 9 December 2011 (R4, tab 22).

       9. On 7 February 2012, Jayco issued a purchase order to Interstate PowerCare
SoCal, Garden Grove, California, for ten Hawker 18-751EL-21EE4 and four Hawker
18-75IEL-27EE batteries (gov't mot., ex. C).

       10. On 9 February 2012, Mr. Walko emailed Mr. Jennings, supervisory contract
specialist, MSFSC, and informed him that the batteries would be shipped on 13 March
2012 (R4, tab 12 at 11). Mr. Jennings responded to Mr. Walko on the same day stating:

                We have spoken with the battery manufacturer, EnerSys,
                about the availability/status of batteries. EnerSys says they
                have no batteries in stock and none in the pipeline. Are you
                sure you are providing the correct batteries?

(R4, tab 12 at 11) Mr. Walko replied, "[a]bsolutely" (id.).

3
    There is no response from MSFSC in the record.
4
    It is unclear why the order identifies the batteries as "IEL" since the name plate on the
          batteries delivered clearly identifies the batteries as "EL" (R4, tab 16 at 11 ).

                                                4
        11. On 17 February 2012, Mr. Jennings emailed Mr. Walko stating:

                 Your earlier email message stated that the fork truck
              batteries will ship on March 13, 2012. Please confirm that
              you are supplying EnerSys manufactured batteries in
              accordance with the EnerSys part number in purchase order
              N40442-11-P-8440 awarded on 08 June 2011. Ifyou cannot
              comply with the requirements of the purchase order, this
              procurement will be terminated for cause in accordance with
              FAR 12.403(c). Please provide your response as soon as
              possible.

(R4, tab 12 at 16) Mr. Walko responded to Mr. Jennings by email on the same day
stating that Jayco was providing batteries that were "or equal" to the part numbers in the
contract (id. at 15). Mr. Walko went on to write:

              Ricky, I know you were not personally involved in this, but in
              light of the many months (instead of a few days) it took for
              the government to complete our assignment paperwork (two
              of our orders from the manufacturer were taken by the
              government while we were waiting for our assignment
              paperwork so that we had to reorder the batteries two more
              times), and in light of the corrections having not been made to
              the contract for the proper PIN's, we believe it is in the
              government's and Jayco's best interest to issue a modification
              clarifying the above description and PIN's as stated.

              We want to be assured of getting paid for these batteries.
              Please issue a modification clarifying the batteries we are
              providing and the new delivery date.

(!d.)

        12. Mr. Jennings responded to Mr. Walko on 22 February 2012 stating in part:

                  Thanks for the additional information. You still have not
              answered my question: Are you supplying EnerSys
              manufactured batteries? Even though the synopsis/solicitation
              states the intent to award for "brand name or equal" parts, I
              must ensure the parts you are preparing to ship will meet the
              Government's requirement. None of the MSC engineering
              personnel involved are aware of the existence of an "equal"
              part. We have checked with the manufacturer and they do not
              know of any equal parts. The manufacturer also insists you

                                             5
              have not placed an order with them and they have no batteries
              in stock. ...

(R4, tab 12 at 14) Mr. Jennings went on to state that "[i]n order to ensure the batteries
are acceptable" he would send an engineering representative to inspect the batteries at the
vendor's facility at no cost to Jay co. He asked for vendor contact information and said he
would modify the contract to add the on-site inspection. (!d.) He stated, "[t]he
Government will not be obligated to pay for batteries that are shipped here and
determined to be unacceptable upon inspection" (id. ). He ended by stating, "[y]ou have
been granted more than enough time to complete this requirement. My only other option
is to terminate for cause." (!d.)

       13. On 23 February 2012, Mr. Walko responded:

              Thought that I had answered your question. Yes, we are
              providing Enersys manufactured batteries. They are
              manufactured at Enersys/Hawker's forklift battery plant in
              Tennesee [sic], Cage Code (3C3B9). Hawker is a division or
              subsidiary ofEnersys ....

              I understand that you must ensure that the parts meet the
              government's requirements and am pleased that you want to
              do a QAR inspection. I will get POC information to you later
              today or tomorrow but wanted to get this response off to you
              right away ....

             Enersys and Enersys/Hawker batteries are physically the
             same dimensions, same technology and they both use the
             same cells to make the batteries. Both are SHOCK
             HARDENED, SPARKPROOF TRAY, and VRLA and they
             both are made for the E40XM and E60XM ....

             Our batteries can be inspected at the plant's Cage Code
             address (3C3B9) and they will be shipped, packaged to your
             specifications, with a Certificate of Conformance, direct from
             the plant to San Diego.

(R4, tab 12 at 13-14)

      14. In early March 2012 the government prepared to conduct the inspection on
23 March 2012 at the Hawker facility (R4, tab 12 at 18).

                                            6
         15. On 12 March 2012, Hawker Powersource, Inc., Ooltewah, Tennessee, 5 shipped
five Envirolink 018-075EL-21 batteries to the MCS BATS warehouse, San Diego, California
(R4, tab 15). This shipment arrived at MCS BATS, San Diego on 20 March 2012 (R4, tab 16
at 3). Inspection ofthe batteries confirmed that they were Hawker brand 18-75-EL-21EE6
(id. at 4).

        16. On 22 March 2012, Mr. Hughes, material handling equipment program
manager, Military Sealift Command, and a representative from Hyster, the fork lift
manufacturer, were on their way to the Hawker plant, Chattanooga, Tennessee, to inspect
batteries when they were informed by phone and email that the J ayco batteries had been
mistakenly shipped and were not available for inspection (R4, tab 16 at 4). They were
also told that the plant manager would not see them (id. ). The next day Mr. Hughes
arrived at. the Hawker plant and was able to meet with the plant manager, Mr. Colwell.
Mr. Hughes reports that Mr. Colwell and others from Hawker told him that the batteries
sold to Jayco were manufactured at the EnerSys plant in Richmond, Kentucky, and were
standard Hawker brand 18-75EL-21EE and 18-75EL-27EE batteries that were not
shipboard batteries. They were not gel batteries, were flat plate design, not tubular, did
not have as high an ampere hour rating, and did not have proper trays, EMI shielding,
cover hold-downs, battery tray hold-downs, nor marine quality wooden reinforcement
under the cover required for shipboard batteries (id.).

         17. On 26 March 2012, Mr. Walko emailed Mr. Jennings stating:

                FYI: The inspection of the batteries did not take place on
                Friday.

               The batteries were ready earlier in the week, but Hawker,
               contrary to my instructions, accidently shipped out the
               batteries but were in the process of redirecting them back for
               inspection.

5
    Interstate PowerCare was identified as the billing address (R4, tab 15).
6
    Mr. Hughes memorandum incorrectly states that in addition to the 18-75-EL-21EE
         batteries that 18-75-EL-27EE batteries were received. The shipping documents
         (R4, tab 15) and pictures of the batteries (R4, tab 16 at 11) prove that only the
         21EE batteries were received.
                                               7
                Please keep me informed of what is going on with this
                inspection and I will do this [sic] same. I have to get these
                inspected as soon as possible so we can get paid as we have
                already paid for these batteries.

(R4, tab 12 at 20)

        18. Between 5 April2012 and 12 April2012 there were a series ofemails
between Mr. Walko and Mr. Jennings relating to inspecting the batteries that were at that
time at the Navy Warehouse in San Diego (R4, tab 12 at 25-29). Mr. Walko disagreed
with Mr. Hughes' comments that the batteries were not equal (R4, tab 12 at 26, 29).

       19. On 11 April2012, Mr. Jennings, contracting officer (C0)7 , signed a letter
cancelling Purchase Order No. N40442-11-P-8440 (R4, tab 7). CO Jennings took the
position that it was a unilateral contract that lapsed by its own terms when Jayco
delivered nonconforming batteries (id. ).

       20. On 23 August 2012, Jayco submitted a certified claim for $237,622.06 to
CO Jennings (R4, tab 8). On 18 September 2012, CO Jennings denied the claim taking
the position that the unilateral purchase order had "lapsed due to Jayco's failure to
successfully perform the contract because it tendered nonconforming items well after the
purchase order's required delivery date" (R4, tab 1 at 1). On 14 December 2012, Jayco
appealed the CO's final decision to this Board (R4, tab 9). The appeal was docketed as
ASBCA No. 58461 on 17 December 2012.

      21. On 8 February 2013, EnerSys sent a letter to the MSFSC including the
statement:

                I can state categorically that the Hawker Environlink batteries
                ordered by JAYCO through Interstate Batteries, although
                suitable for use in many commercial and shore-based
                applications, do not comply with any of the referenced
                Military Standards for Navy shipboard batteries with the
                exception of the UL EE requirement.

                These Hawker batteries are not in H.l. Shock trays - there are
                no provisions on these trays for the battery to be bolted into
                the forklift frame. Nor is there any provision for the battery
                covers to be bolted closed. The tray cover lacks any

7
    This is the first document that identified Mr. Jennings as the CO rather than a
         supervisory contract specialist. In a 15 June 2012 email he was still identified as a
         supervisory contract specialist (R4, tab 12 at 31). It is unclear from this record
         precisely when he became a CO.
                                                8
               reinforcement and is not lined suitably to hold cells in place
               when the cover is closed. There is absolutely no EMI
               shielding present on the battery cables. The trays appear to
               have received a standard commercial paint so it is
               questionable they would meet the Salt Fog requirement.

               From an electrical capacity point-of-view, the Hawker
               batteries are rated at 7 5 AH per positive plate. This means
               they cannot provide the required capacity. The EnerSys
               18-E80S-21EE is rated at 800 AH compared to 750 AH for
               the Hawker 18-75-21 and the EnerSys 18-E80S-27EE is rated
               at 1040 AH compared to 975 AH for the Hawker 18-75-27.

(R4, tab 20 at 3-4)

       22. By letter dated 5 March 2013, Hawker wrote:

                      The Hawker (18-75IEL-21EE & 18-75IEL-27EE)
               batteries supplied to JA YCO are commercial off the shelf
               (COTS) batteries. They are UL EE rated, but have not been
               designed or tested HI Shock, EMI, or Salinity. The Hawker
               (18-75IEL-21EE & 18-75IEL-27EE) batteries are not
               shipboard use approved nor equivalent to the EnerSys
               (18-E80S-21EE & 18-E80S-27EE) batteries ....

(R4, tab 21)

                                         DECISION

Procedural History

        On 6 March 2013, the government filed its original motion for summary judgment.
Jayco filed its opposition and motion to continue the government's motion on 11 April
2013. The motion to continue essentially took the position that Jayco had not had
sufficient time to conduct discovery to defend against the motion for summary judgment.
On 23 April2013, the government withdrew its motion for summary judgment to allow
Jayco an opportunity to conduct discovery. On 7 November 2013, the government
refiled its motion for summary judgment. On 20 December 2013, Jayco filed its
opposition. On 16 January 2014, the government replied to the opposition. From this
history we see that J ayco had six months to conduct discovery between the time the
government withdrew its original motion for summary judgment on 23 April 2013 and
refiled on 7 November 2013. We therefore conclude that Jayco has had sufficient time to
conduct additional discovery to defend against the government's motion.

                                              9
Contentions of the Parties

        Jayco contends that the contract was modified to allow it to tender "or equal"
batteries, that the contract delivery date was extended, and that the Hawker batteries it
delivered met the salient characteristics of the EnerSys batteries specified in the
solicitation and its quote, and the resulting contract. Jayco complains that the
government didn't bother to inspect the Hawker batteries it delivered.

       The government contends that the contract was not modified in writing to allow
"or equal" batteries and that since Jayco's quote and the resulting contract identified the
EnerSys batteries, only EnerSys batteries could be delivered to the government. The
government also contends that the proffered Hawker batteries do not meet the salient
characteristics of the EnerSys batteries and are therefore not "equal." In its motion the
government abandons the position taken previously by the CO (SOF ~~ 19, 20) that the
purchase order lapsed by its own terms, correctly concluding that a bilateral contract
came into existence when the government required Jayco to sign the purchase order. The
government "admits" that it waived the original delivery schedule (gov't reply at 12).

Discussion

       Summary judgment is appropriate only where there is no genuine issue of material
fact and the moving party is entitled to judgment as a matter of law. Any significant
doubt over factual issues, and all reasonable inferences, must be resolved in favor of the
party opposing summary judgment. Dixie Construction Co., ASBCA No. 56880, 10-1
BCA ~ 34,422 at 169,918; Mingus Constructors, Inc. v. United States, 812 F.2d 1387,
1390 (Fed. Cir. 1987).

        The solicitation specified 18-E80S-21 and 18-E80S-27 EnerSys batteries but allowed
for "or equal" offers (SOF ~~ 1, 2). Jayco offered the 18-E80S-21 and 18-E80S-27 EnerSys
batteries (SOF ~ 4). Accordingly, contract 84408 required that Jayco deliver EnerSys
18-E80S-21 and 18-E80S-27 batteries (SOF ~~ 1, 5).

       Jayco contends that emails between the parties during the period of 17 February
2012 and 23 February 2012 and conversations with the CO effectively modified the
contract to allow Jayco to deliver "or equal" batteries and that the Hawker batteries it
delivered were equal to the EnerSys batteries (app. opp'n at 3, ~ 11). We only get to the
issue of equality of the Hawker9 batteries if we first conclude that the contract was
modified to allow "or equal" batteries. Whether the batteries are equal is a disputed

8
    Although 8440 was issued as a unilateral purchase order (PO), we conclude that the
        government's insistence that Jayco sign the purchase order and Mr. Walko's
        signature converted the unilateral PO to a bilateral contract (SOF ~ 5).
9
    Hawker is a subsidiary ofEnerSys (SOF ~ 13).
                                             10
question of fact. However, whether the contract was modified is a mixed question of fact
and law. We must therefore scrutinize the emails and conversations Jayco relies upon,
and other facts in the record, to decide if the contract was modified to allow Jayco to
tender "or equal" batteries. First, however, we consider an assignment of claims issue
raised by Jayco.

Assignment of Claims

         On 8 July 2011, Jayco ordered ten 18-E80S-21EE and four 18-E80S-27EE
 SmartHog batteries from EnerSys (SOF ,-r 6). Between July 2011 and December 2011 the
parties discussed delivery and financing (SOF ,-r,-r 7, 8). On 7 February 2012, Jayco
ordered Hawker batteries from PowerCare SoCal (SOF ,-r 9). In a 17 February 2012
email, Jayco asserts that the government took "many months (instead of a few days)" to
complete Jayco's assignment of claim documents and as a result the EnerSys batteries it
had ordered and were waiting to be delivered were "taken by the government" (SOF
,-r 11). In its opposition, supported by Mr. Walko's declaration, Jayco contends that the
Navy delayed approving its assignment of claims 10 and as a result the Navy purchased
EnerSys batteries that had been set aside for Jayco's contract:

               The request for assignment of Contract payments was
               initiated by Jayco in September 20 11. For reasons unknown
               to Jayco, the Navy delayed the assignment of payments for
               several months and did not approve the assignment until on or
               about January 2012.

               During the time that the Navy delayed approving the
               assignment of Contract payments, the Navy requested, and
               Jayco agreed, that EnerSys could provide to the Navy the
               batteries that had been reserved for J ayco' s use in fulfillment
               of the Contract. The Navy's procurement of such batteries
               were separate from the procurement related to the Contract.

               Due to the Navy's delay in approving the assignment of
               Contract payments, as well as the Navy's request to take the
               batteries reserved by EnerSys for use under the Contract, it
               became necessary for J ayco to fulfill the Contract with
               batteries that were equal to or better than the brand-name
               EnerSys batteries.

(App. opp'n at 3, ,-r 10, ex. 1, Walko decl. ,-r,-r 15-17) We view this as a contention that the
Navy interfered with Jayco's performance.

10
     The assignment of claims process affords contractors a mechanism for obtaining
        financing.
                                             11
        The record documents that on 7 October 20 11 unsigned copies of an Instrument of
Assignment (lOA) and Notice of Assignment (NOA) were provided to the government
(SOF ~ 6). On 26 October 2011, Jayco informed the government that the batteries had
not been shipped because Jay co did not have an assignment with the bank because of a
"snafu" that Jayco was working on correcting (SOF ~ 7). There is nothing in the record
explaining the "snafu." The lOA was signed by Jayco and Pulaski Bank on 3 November
2011 (SOF ~ 8). The NOA was signed by Bibby Financial Services on 8 December 2011
and the government on 9 December 2011 (id. ). This record reflects that the government
took one day to sign the NOA. In its reply section C the government points to these
documents in the record that tend to support the government's argument that its response
times for the financing documents were reasonable. However, in reply section D the
government asserts that ( 1) there is no evidence that EnerSys reserved batteries for Jayco,
(2) the government did not request another contractor to purchase the batteries allegedly
reserved, and (3) ifEnerSys had sold batteries reserved for Jayco, replacement batteries
could have been ordered (gov't reply at 12). The government's argument suffers from
the same weakness it contends affects Jayco's 11 ; these arguments are unsupported
conclusory assertions by counsel. Jayco supports its contentions with Mr. Walko's
declaration and deposition testimony. The government fails to include anything from
EnerSys or government personnel to support its reply. If it had, it is likely that credibility
would be placed at issue for diametrically opposed testimony. Since all inferences must
be drawn in favor of Jayco, we must credit Mr. Walko's testimony and the inference that
the Navy interfered with Jayco's ability to perform. The record on this point is
insufficient for the Board to grant summary judgment in favor of the Navy.

Contract Modification

        On 8 July 2011 Jayco issued a purchase order to EnerSys, Reading, Pennsylvania,
for ten 18-E80S-21EE SmartHog batteries and four 18-E80S-27EE SmartHog batteries
(SOF ~ 6). On 7 February 2012, Jayco ordered Hawker batteries from Interstate
PowerCare SoCal in California (SOF ~ 9). 12 Two days later, the Navy, after checking
with EnerSys and learning they had no batteries in stock and none in production, asked
Jayco if they were providing the "correct batteries" (SOF ~ 10). Mr. Walko responded,
without elaboration, "absolutely" (id.). On 17 February 2012 the Navy again inquired if
Jayco was supplying the EnerSys batteries specified in the contract (SOF ~ 11).
Mr. Walko responded the same day and for the first time informed the Navy that Jayco
was providing "or equal" batteries {id. ). In that 17 February 2012 email, Mr. Walko
asked Mr. Jennings to "issue a modification clarifying the above description and PIN's as

11
     The government argues, "[m ]ere conclusory assertions do not raise a genuine issue of
        fact" (gov't reply at 4) (citing Pure Gold, Inc. v. Syntex (USA.), Inc., 739 F.2d
        624, 626-27 (Fed. Cir. 1984).
12
     The existing record of what transpired between 8 July 2011 and 7 February 2012 does
        not adequately explain the reason for the second order.
                                               12
stated" (id.). On 22 February 2012, Mr. Jennings responded but that response was
equivocal. Mr. Jennings did not demand that EnerSys batteries be delivered as he had
before. Instead, after being told that Jayco intended to supply "or equal" batteries,
Mr. Jennings stated he "must ensure the parts you are preparing to ship will meet the
Government's requirement" and he said he would send an engineer representative to
inspect the batteries at the vendor at no cost to Jayco. (SOF ~ 12) While Mr. Jennings
indicated a willingness to consider "or equal" batteries, he did not agree to "issue" a
written modification to the contract as requested.

        On 23 February 2012, Mr. Walko provided a response stating "we are providing
Enersys manufactured batteries" and that "Enersys and Enersys/Hawker" batteries are
"physically the same" (SOF ~ 13). Mr. Walko stated he would provide a POC at the
vendor's facility to facilitate a government inspection (id.). In early March 2012 the
government prepared to have Mr. Hughes, MHE program manager, and a representative
from Hyster (fork lift manufacturer) conduct an inspection of the batteries Jayco intended
to deliver on 23 March 2012 at the Hawker facility in Tennessee (SOF ,-[ 14). On
12 March 2012, five Hawker Envirolink 018-075EL-21 batteries were shipped by
Hawker Powersource, Inc., Ooltewah, Tennessee, to MCS BATS Warehouse,
San Diego, California (SOF ,-[ 15). The inspection of the Hawker batteries was scheduled
for 23 March 2012 at the Hawker plant in Chattanooga, Tennessee. As Mr. Hughes and
the Hyster representative were in route to Chattanooga, Hawker informed them by phone
and email that the batteries had been mistakenly shipped and were not available for
inspection (SOF ,-[ 16). This was ten days after the batteries had been shipped to the
Navy. There is no explanation in the record as to why Mr. Walko and/or Hawker did not
inform Mr. Hughes, well before he commenced travel to Chattanooga, that the batteries
were no longer there. Mr. Hughes was initially told that the Hawker plant manager
would not see him, but was able to meet with the plant manager and others even though
he could not inspect the batteries. Mr. Hughes reported in his 31 August 2012
memorandum that he learned from the Hawker representatives that the Hawker batteries
were not equal to the EnerSys shipboard batteries (SOF ,-[ 16).

       On 26 March 2012, Mr. Walko informed Mr. Jennings that Mr. Hughes'
inspection could not take place because the batteries, contrary to his instructions, had
been shipped (SOF ~ 17). Mr. Walko stated he was in the process of having them
returned for inspection (id. ). This, however, was six days after the Hawker batteries
arrived at the Navy Warehouse in San Diego (SOF ,-[ 15). None of this give and take on
the inspection is adequately explained in the record, but sending Mr. Hughes to inspect
the Hawker batteries could be consistent with the modification alleged by Jayco.

       A bilateral modification to a contract must satisfy all of the elements of contract
formation: mutual intent to contract including an offer; an acceptance; consideration; and
actual authority on the part of the government representative. Northrop Grumman
Systems Corp. Space Systems Division, ASBCA No. 54774, 10-2 BCA ,-[ 34,517 at
170,235, 170,237. In order to meet this burden Jayco relies upon the emails discussed

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above and a declaration by Mr. Walko asserting, "[b]ased upon multiple conversations
between myself and Ricky Jennings, Contracting Officer for the Contract, the parties
agreed that the Contract was modified to permit delivery of the Hawker Batteries subject
to inspection to confirm their status as 'or equal' to the EnerSys batteries" (app. opp'n,
ex. 1, Walko decl. at 3, ~ 19). Mr. Walko testified similarly in his deposition (app. opp'n
ex. 3 at 51). Mr. Walko provides few details ofthe conversations he states he had with
CO Jennings. The Navy responds to Mr. Walko's testimony, just as it did before, with
mere contentions by government attorneys. The government argues there is no evidence
indicating that the CO had agreed to substitute Hawker batteries for EnerSys batteries
(gov't reply at 9); however, Mr. Walko's testimony is evidence. The government
presents no declaration or affidavit or cite to deposition testimony from CO Jennings
disagreeing with Mr. Walko's testimony. Had there been, again an issue of credibility
would exist. Since all inferences must be drawn in favor of Jay co, we must credit
Mr. Walko's testimony, uncontested by sworn testimony from CO Jennings, that he and
CO Jennings agreed to the change in conversations. 13 The record on this point is
insufficient for the Board to grant summary judgment in favor of the Navy.

                                       CONCLUSION

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

         Dated: 12 February 20 14

                                                   Administrativ Judge
                                                   Armed Servic s Board
                                                   of Contract Appeals

I concur                                           I concur

~~~· ~/}¢
Administrative Judge                               Administrative Judge
Acting Chairman                                    Acting Vice Chairman
Armed Services Board                               Armed Services Board
of Contract Appeals                                of Contract Appeals

13
     The government asserts that only a written change would suffice (gov't reply at 9), but
        it ignores well established legal support for the possibility of oral or constructive
        changes. Elter S.A., ASBCA No. 52349 et al., 01-2 BCA ~ 31,547 at 155,809-10;
        Gray Personnel, Inc., ASBCA Nos. 54652, 55833, 13 BCA ~ 35,211 at 172,763.
                                              14
            ,
       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. 58461, Appeal of Jayco
International, LLC, rendered in conformance with the Board's Charter.

      Dated:

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

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