Court Opinion

ID: 3212663
Source: CourtListenerOpinion
Date Created: 2016-06-13 21:00:05.641611+00
Date Added: 2024-06-11T14:29:47.481212
License: Public Domain

ARMED SERVICES BOARD OF CONTRACT APPEALS

Appeal of --                                 )
                                             )
Military Aircraft Parts              )              ASBCA No. 60139
                                     )
Under Contract Nos. SPM4A7-12-M-3228 )
                    SPM4A7-12-M-3284 )

APPEARANCE FOR THE APPELLANT:                       Mr. Robert E. Marin
                                                     President

APPEARANCES FOR THE GOVERNMENT:                     Daniel K. Poling, Esq.
                                                     DLA Chief Trial Attorney
                                                    Edward R. Murray, Esq.
                                                    Jason D. Morgan, Esq.
                                                     Trial Attorneys
                                                     DLA Aviation
                                                     Richmond, VA

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

       Appellant Military Aircraft Parts (MAP) appeals from the contracting officer's
deemed denial of its claim for breach of contract and damages in connection with three
purchase orders issued by DLA Aviation. 1 The government, DLA Aviation (DLA), filed
the pending motion to dismiss, contending that MAP never timely appealed the default
terminations on any of the three orders and its current appeal is nothing more than an
attempted end run around the Contract Disputes Act's 90-day jurisdictional deadline for
appeal of a contracting officer's final decision to the boards of contract appeals.
41 U.S.C. § 7103(a). We grant the motion and dismiss the appeal as it pertains to
Purchase Order Nos. SPM4A7-12-M-3228 and SPM4A7-12-M-3284.

1
    MAP originally elected to proceed under Board Rule 12.2 (expedited appeals). This
       appeal was subsequently removed from the Board's Rule 12 docket in order to
       resolve the jurisdictional issue raised by the government before proceeding.
       This decision involves only two of the purchase orders. The Board has
       requested supplemental briefing with respect to the third.
                 STATEMENT OF FACTS FOR PURPOSES OF THE MOTION

        On 23 January 2012, DLA awarded Contract No. SPM4A7-12-M-3284
(Contract 3284) to MAP for aircraft structural parts. Contract 3284 required a first article
and ten production parts for a total price of $15,250. (Mot., ex. A at 1, 9-10) On the
same date, DLA awarded Contract No. SPM4A7-12-M-3228 (Contract 3228) to MAP for
mirror-image aircraft structural parts to be used on the opposite side of the plane (comp I.
~ 5; mot., ex.Eat 1). Contract 3228 also called for one first article and ten production
parts for a total price of $15,250 (mot., ex. Eat 9-10).

      Both of these contracts contained the Federal Acquisition Regulation (FAR)
52.209-4, FIRST ARTICLE APPROVAL-GOVERNMENT TESTING (SEP 1989)-
ALTERNATE 1(JAN1997) (mot., ex. A at 15, ex.Eat 14). 2 In pertinent part, this clause
provides as follows:

                        (b) Within 120 calendar days after the Government
                receives the first article, the Contracting Officer shall
                notify the Contractor, in writing, of the conditional
                approval, approval, or disapproval of the first article. The
                notice of conditional approval or approval shall not relieve
                the Con~ractor from complying with all requirements of the
                specifications and all other terms and conditions of this
                contract. A notice of conditional approval shall state any
                further action required of the Contractor. A notice of
                disapproval shall cite reasons for the disapproval.

                         c) If the first article is disapproved, the Contractor,
                upon Government request, shall submit an additional first
                article for testing. After each request, the Contractor shall
                make any necessary changes, modifications, or repairs to the
                first article or select another first article for testing. All costs
                related to these tests are to be borne by the Contractor,
                including any and all costs for additional tests following a
                disapproval. The Contractor shall furnish any additional first
                article to the Government under the terms and conditions and
                within the time specified by the Government. ...

                        ( d) If the Contractor fails to deliver any first article
                on time, or the Contracting Officer disapproves any first
                article, the Contractor shall be deemed to have failed to

2
    FAR 52.209-4 is not set forth in full text in the contracts.

                                                2
              make delivery within the meaning of the Default clause of
              this contract.

                      (h) Before first article approval, the acquisition of
              materials or components for, or the commencement of
              production of, the balance of the contract quantity is at the
              sole risk of the Contractor. Before first article approval, the
              costs thereof shall not be allocable to this contract for ( 1)
              progress payments, or (2) termination settlements if the
              contract is terminated for the convenience of the Government.

The contracts also contained the FAR 52.249-8, DEFAULT (FIXED-PRICE SUPPLY AND
SERVICE) (APR 1984) clause (mot., ex. A at 17, ex.Eat 17).

       MAP delivered parts for first article testing (FAT) to Hill AFB, Utah, between
23 October and 29 October 2012 (compl. ~ 9). On 9 November 2012 DLA requested a
clearer copy of one of the required raw material certifications. Because MAP thought it
would be unable to secure one from the supplier, it requested contract cancellation on
28 November 2012. However, on 21December2012 MAP succeeded in obtaining a
clearer copy and forwarded it to DLA. (Compl. ~ 10)

         By letter dated 24 January 2013, DLA contracting officer (CO) Alicia Wolford
informed MAP that its first article (FA) submission on Contract 3284 was disapproved for
the following reasons contained in an attached Discrepancy List dated 11 December 2012.
First, it "was formed opposite then [sic] required.... The contractor's submitted article flat
pattern is correct but is rolled the wrong direction." Second, "[m]aterial certification
provided with document package is illegible. This office requested a legible copy;
however the contractor replied best copy submitted." Third:

              Requirement: Finish per NFS 70, this part should be
              considered an internal part. It is sandwiched between the
              inlet duct skins and a former. So per item 3.7.3 of NFS 70,
              it should be passivated per FP-79 and primed with
              NAI-1269 per FP-80.
              Note: Per EO NAI-1269 is replaced by MIL-PRF-85582.
              Actual: Incorrect finish applied. The item contains top
              coat, this item should not contain top coat.

(Compl., ex. A at 4-5) CO Wolford further stated in the 24 January 2013 letter that "a
bilateral modification cancelling this contract per your email dated December 22, 2012
is forthcoming to you" (id. at 4).

                                            3
       By Show Cause Notice dated 21 February 2013, DLA CO Janice Hicks informed
MAP that its FA submission on Contract 3228 was disapproved for the identical three
reasons that its FA submission under Contract 3284 was disapproved (comp I., ex. A at 1).
She further stated that the government was considering terminating the contract for
default but that MAP would first have the opportunity to make its case that the failure to
provide an FA meeting contract requirements arose from causes beyond its control and
without its fault or negligence. MAP was given 10 days to do so following its receipt of
the notice. (Id. at 1-2)

       On 5 March 2013 MAP responded to COs Hicks and Wolford via email with the
following information:

             Finish Reguirement:
             1. We concur NFS-70 Section 3. 7.3 requires passivation
                and primer per MIL-PRF-85582. This was performed
                on all surfaces of this item.
             2. However, NFS-70, Section 6.6.2 (see attached)
                appears to require aluminum colored topcoat per
                MIL-PRF-85585 over the primer on the interior surface
                only. This was applied in accordance with this spec.
                Certifications from the FA package are attached.
                Obviously omission of the topcoat can be performed on
                production parts without issue.

             Forming:
             1. This item was fabricated at the same time as the
                opposite, PIN 3-11753-18, NSN 1560-01-597-5636
                from Contract SPM4A7-12-M-3284.
             2. The two parts were interchanged inadvertently and
                partmarked improperly. MAP will take steps to
                preclude this by using the forming fixtures as final
                partmark inspection templates in its traveler.

             Material Certification:
             1. On 11/9/12 Tim Farley/DLA requested a clearer copy
                of the material cert.
             2. On 11/28112 our material vendor stated it was
                impossible to obtain the cert. See email from
                Lolita Fonza/TW Metals.
             3. On 12/5/12 I requested contract cancellation based on
                this information and because of our issues with late
                deliveries of product.
                                                                                             J

                                           4
              4. On 12/21112 I unexpectedly obtained the certification
                 and forwarded it to DLA and our contracting officer.
                 I believe this should be sufficient to satisfy the DLA
                 request.
              5. On 12/22/12 we negotiated with DLA for a list of
                 contracts to be canceled that would make our backlog
                 manageable. Based on this negotiation we removed our
                 request to cancel this contract from the cancelation [sic]
                 list submitted to DLA.
              6. On 2/26/13 we received the attached show cause notice.

In conclusion, MAP stated its belief that the items were fabricated "sufficiently acceptably"
and requested conditional first article approval in accordance with the contract's first
article clause. (Comp!., ex. B at 1)

        The record before us does not include a Rule 4 file. Nevertheless, it appears from
the narrative ofMAP's later-submitted claim that DLA responded to this 5 March 2013
submission from MAP on 12 March 2013 telling MAP that it needed to "provide empirical
evidence of an error on the part of the FAT lab before a rebuttal will be considered"
(compl., ex. C at 2). CO Hicks subsequently issued notices of her final decision to
terminate the contracts for default on 1 April 2013 (mot., exs. C, G). These notices were
followed by contract modifications dated 2 April 2013 effecting the default terminations
for the two contracts (id., exs. B, F). MAP received the notices of default termination on
4 April 2013 (id., exs. D, H). There is no dispute that MAP did not file a timely appeal of
the termination decisions.

        On 27 April 2015, MAP submitted to CO Hicks a claim for breach of contract
damages consisting of anticipatory profit in the amount of$43,333.98. MAP claimed
that the actions of the government in improperly disapproving rather than conditionally
approving MAP's first article parts, failing to reasonably consider the relevant facts
submitted in response to the notices of default termination, and failing to consider that
MAP was supplying acceptable parts under later contracts were either express breaches
of the contracts or breaches of the implied duty of good faith and fair dealing. (Comp I.,
ex.Cat 1-2) CO Hicks responded on 22 May 2015 that the contracts had been
terminated for default and that "DLA Aviation is unwilling to revisit its previous
decisions and considers the matter closed" (comp I., ex. D). CO Hicks did not issue a
final decision on MAP's claim.

        On 25 August 2015 MAP filed with the Board its appeal from the contracting
officer's deemed denial of its claim. The government's motion to dismiss for lack of
jurisdiction followed thereafter on 28 August 2015, and by order dated 3 September 2015
the appeal was removed from the Board's 12.2 docket pending decision on the jurisdictional
issue. MAP filed its response to the government's motion on 6 October 2015.

                                            5
                                     DISCUSSION

        DLA contends that MAP's failure to timely appeal from the default terminations
deprives the Board of jurisdiction to consider MAP's appeal from the CO's deemed
denial of its 27 April 2015 claim. It points out that the Contract Disputes Act (CDA)
requires that an appeal to the Board from a contracting officer's final decision (COFD) be
filed within 90 days of the contractor's receipt of the COFD, 41 U.S.C. § 7104(a), and
that this appeal period is "statutory, strictly construed, and cannot be waived." Alnawars
Co., ASBCA No. 58678, 13 BCA, 35,463 at 173,909 (citing Cosmic Construction Co. v.
United States, 697 F.2d 1389, 1390-91 (Fed. Cir. 1982)). Furthermore, the government
cites to 41 U.S.C. § 7103(g), which provides that a "contracting officer's final
decision .. .is final and conclusive and is not subject to review by any forum, tribunal, or
Government agency, unless an appeal or action is timely commenced" (mot. at 3-4).

       It is DLA's position that the thrust of MAP's complaint, although clothed in breach
of contract language, is a challenge to the CO's 2013 default terminations. DLA cites to
allegations in MAP's complaint that the CO "abused her discretion," the CO "failed to
consider the urgency of the contracts at the time of termination," and "the Contracting
Officer's decision to Terminate for Default was not made independently" as obvious
challenges to the underlying default terminations. (Mot. at 4) DLA urges the Board to
consider the policy implications of allowing MAP to pursue its breach of contract claim,
claiming that to do so "would risk disturbing every contracting officer's final decision over
the past six years. Contractors would simply recast their untimely appeals as affirmative
claims and begin the disputes process anew." (Id. at 5)

        In response, MAP insists that its appeal is from a deemed denial of its claim for
breach, filed within the allowed 90-day period, and that its 27 April 2015 claim, with
respect to contracts awarded in 2012, is clearly within the CDA's six-year statute of
limitations. Citing Roxco, Ltd. v. United States, 60 Fed. Cl. 39, 44 (2004), MAP argues its
claims presented to the CO "are not merely defenses to a termination for default. They also
stand alone as claims against the Government. Under the CDA, all claims presented
separately to the CO are distinct and subject to a distinct limitations period, despite their
common origin."' (App. resp. at 10)

      In the alternative, MAP suggests that this would be an appropriate case in which
the Board could apply the reasoning of Sikorsky Aircraft Corp. v. United States, 773 F .3d
1313 (Fed. Cir. 2014), to find that the CDA's 90-day appeal period is not jurisdictional.

       The CDA not only provides a 90-day period for appeal of a COFD to this Board,
41 U.S.C. § 7104(a), but also states that the "contracting officer's decision on a claim is
final and conclusive and is not subject to review by any forum, tribunal, or Federal

                                            6
Government agency unless an appeal or action is timely commenced as authorized by this
chapter." 41 U.S.C. § 7103(g).

       We have a long line of Board precedent holding that the 90-day appeal period under
the CDA is jurisdictional, absolute, and may not be waived. Waterstone Environmental
Hydrology and Engineering, Inc., ASBCA No. 57557, 12-1 BCA ~ 35,028. The United
States Court of Appeals for the Federal Circuit confirmed our interpretation of the 90-day
appeal period as jurisdictional in Cosmic Construction Co. v. United States, 697 F.2d 1389,
1390-91 (Fed. Cir. 1982), in which the court stated that the appeal period is part of a statute
that waives sovereign immunity and "defines the jurisdiction" of the Board. We are bound
by our appellate authority and we decline MAP's invitation to hold otherwise.

        MAP's affirmative claim sets forth actions on the part of DLA-improperly
disapproving rather than conditionally approving MAP's FA parts, failing to reasonably
consider relevant facts contained in MAP's response to the notices of default termination-
that may have constituted breaches of both express contract provisions and the implied duty
of good faith and fair dealing. However, MAP's claim that DLA breached the contracts
prior to issuing its default termination decisions is not a claim that can be pursued without
attacking the default terminations. While the claim may be more than a mere defense to the
terminations, it is based on the same set of facts, circumstances, and actions preceding the
default terminations and is inextricably bound up with the issue of the propriety of those
terminations. We have allowed only one exception to the rule that a challenge to a default
termination must be the subject of a timely appeal, and that is in the event that the
government, subsequent to the default termination, assesses excess reprocurement costs.

        The Fulford doctrine was first articulated in Fulford Manufacturing Co., ASBCA
Nos. 2143, 2144, 6 CCF ~ 61,815 (20 May 1955) (CCH) (digest only), in which we held
that a timely appeal of an assessment of excess reprocurement costs allows the Board to
examine the propriety of an underlying default termination even though no timely appeal
was taken from the termination decision itself. The holding in the Fulford case was
concerned with the interplay between the excusable delay and excess reprocurement cost
provisions of the contract's Default clause and their relationship to the finality provision
of the Disputes article. The Board found an ambiguity in these provisions and construed
this against the government as the drafter of the clauses. Dailing Roofing, Inc., ASBCA
No. 34739, 89-1BCAii21,311 at 107,474; Mactek Industries Corp., ASBCA No. 33277,
87-1BCAii19,345 at 97,866.

        As originally conceived, the doctrine limited the scope of challenge to the propriety
of the termination to the issue of excusable delay. Dailing Roofing, 89-1 BCA ~ 21,311 at
107,474. Prior to the CDA's enactment, however, the permissible scope of challenge had
been broadened to encompass the consideration of any challenge to the original unappealed
default termination whenever a timely appeal was taken from a decision assessing excess
costs. Id. The doctrine has continued to be applied under the CDA, beginning with

                                            7
Western Industrial Corp., ASBCA No. 24969 et al., 81-1BCA,15,093, and continuing
for the last 35 years. We have consistently rejected attempts to expand the doctrine to
allow challenges to unappealed default terminations in the context of government claims
for damages other than excess reprocurement costs, or for unliquidated progress payments,
because such claims may be asserted independent of whether or not the contract has been
terminated for default. Dailing Roofing, 89-1BCA,21,311at107,475. By contrast,
termination of the contract for default, in whole or in part, is a prerequisite to a claim for
excess reprocurement costs. Id

        Dailing Roofing involved a contractor's appeal from a COFD demanding return of
unliquidated progress payments and asserting a multi-million dollar claim for damages
due to a fire allegedly caused by the contractor's negligence. The contractor had failed to
appeal an earlier COFD terminating the contract for default. The government moved to
strike paragraphs of the complaint and a portion of the prayer for relief alleging that the
earlier termination was improper and requesting that it be converted into a termination for
convenience, on the basis that they were outside the proper scope of the appeal and
beyond the Board's jurisdiction. The contractor argued that the Board should consider
the propriety of the default termination under the Fulford doctrine. However, since no
part of the government's claim for damages in Dailing Roofing was for excess
reprocurement or excess completion costs, the Board granted the government's motion to
strike the portions of the complaint challenging the propriety of the default termination.
89-1BCA,21,311at107,476.

       In Mactek Industries, the default termination was not timely appealed. Rather, the
contractor timely appealed from the government's decision demanding the return of
unliquidated progress payments. The contractor urged that the Fulford doctrine be applied
to allow it to challenge the propriety of the default termination, under the theory that the
government claimed entitlement to unliquidated progress payments as a direct result of the
alleged default. The Board rejected this contention, stating in relevant part:

              [W]ere we to apply the Fulford analogy to the present
              situation and thus "open up" the default termination for
              review, as appellant proposes, we would have to ignore the
              provision in§ 605(b) of the CDA that a contracting
              officer's decision "shall be final and conclusive" unless an
              appeal or suit is timely commenced "as authorized by this
              chapter". The only authorization regarding the Board is
              found in § 606 which establishes the 90-day appeal period.
              This provision is part of a statute waiving sovereign
              immunity and thus must be strictly construed. Cosmic
              Construction Co. v. United States, supra. The doctrine of
              strict construction of the consent to be sued requires "that
              if there is real ambiguity in a statutory consent, the

                                            8
              ambiguity must be resolved against the broad
              construction."

Mactek, 87-1BCA~19,345 at 97,867 (citing United States v. John C. Grimberg Co.,
702 F.2d 1362, 1377 (Fed. Cir. 1983) (concurring opinion ofNichols, J. (citing United
States v. Mitchell, 445 U.S. 535, 538 (1980))).

       In this appeal, we are faced not with a government claim for damages or for
unliquidated progress payments, but with a contractor claim for breach damages
submitted to the CO within the six-year CDA statute of limitations and timely appealed
upon the CO's deemed denial of the claim. On the other hand, MAP did not timely
appeal the default terminations. Thus, in making our decision, we are faced with some
tension between the CDA's general provisions regarding review of decisions on
contractor claims, 41 U.S.C. § 7104, and its provisions regarding the finality of
contracting officer decisions, 41 U.S.C. § 7103(g). As in Mactek, though, we see no way
to give appropriate force and effect to the CDA's express statement that a COFD is "final
and conclusive and not subject to review" by any tribunal "unless an appeal or action is
timely commenced as authorized by this chapter," except by declining to review
contractor claims to the extent that they expressly or implicitly challenge final decisions
that were not timely appealed.

       There are cases in which both the Board and the U.S. Court of Federal Claims
have found jurisdiction to review contractor claims that are independent of the
unappealed default termination. See, e.g., Roxco, Ltd. v. United States, 60 Fed. Cl. 39, 44
(2004) (claims for differing site conditions, constructive changes, and breach of contract
were independent claims separate and distinct from a challenge to the unappealed default
termination); C.H Hyperbarics, Inc., ASBCA No. 49375 et al., 04-1 BCA ~ 32,568
(Board upheld default termination; claims for constructive changes and extra work
considered separately); Gramercy Machine Corp., ASBCA No. 18188, 74-2 BCA
~ 10,706 (Board had jurisdiction of possible constructive changes claims and claim for
value of inventory raised in defense to government claim for unliquidated progress
payments following unappealed default termination).

       However, MAP's claim in this appeal is an implicit challenge to COFDs that were
not timely appealed. In the absence of timely appeals of DLA's termination decisions,
we lack jurisdiction to consider MAP's claim.

                                           9
                                   CONCLUSION

       The government's motion to dismiss is granted and the appeal is dismissed for
lack of jurisdiction with respect to Contracts 3228 and 3284.

      Dated: 3 June 2016

                                                 Administrative Judge
                                                 Armed Services Board
                                                 of Contract Appeals

 I concur                                        I concur

        N:sTEMPLER
 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. 60139, Appeal of Military
Aircraft Parts, rendered in conformance with the Board's Charter.

      Dated:

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

                                          10