Court Opinion

ID: 9900198
Source: CourtListenerOpinion
Date Created: 2023-11-18 22:01:58.282723+00
Date Added: 2024-06-11T09:21:01.666092
License: Public Domain

ARMED SERVICES BOARD OF CONTRACT APPEALS

 Appeals of -                                   )
                                                )
 ECC International, LLC                         )   ASBCA Nos. 60167, 60283
                                                )
 Under Contract No. W912DQ-11-C-4009            )

 APPEARANCES FOR THE APPELLANT:                     R. Dale Holmes, Esq.
                                                    Amy M. Kirby, Esq.
                                                    Michael A. Richard, Esq.
                                                     Cohen Seglias Pallas Greenhall &
                                                      Furman PC
                                                     Philadelphia, PA

 APPEARANCES FOR THE GOVERNMENT:                    Michael P. Goodman, Esq.
                                                     Engineer Chief Trial Attorney
                                                    Martin Chu, Esq.
                                                     Engineer Trial Attorney
                                                     U.S. Army Engineer District, Baltimore

                                                    Samuel J. Harrison, Esq.
                                                    Michael E. Taccino, Esq.
                                                    Matthew Tilghman, Esq.
                                                     Engineer Trial Attorneys
                                                     U.S. Army Engineer District, Middle East
                                                     Winchester, VA

                                                    Kathryn G. Morris, Esq.
                                                     Engineer Trial Attorney
                                                     U.S. Army Engineer District, Nashville

            OPINION BY ADMINISTRATIVE JUDGE EYESTER
        ON THE GOVERNMENT’S MOTION FOR RECONSIDERATION

       The U.S. Army Corps of Engineers (USACE or government) moves for
reconsideration of the Board’s February 24, 2022 post-hearing decision in ASBCA
Nos. 60167 and 60283 concerning the government’s affirmative defense of waiver and
ECC International, LLC’s (ECCI or appellant) Defense Base Act (DBA) premium
claim. For the following reasons, we deny the request in part and remand it in part to
the parties to decide quantum regarding the DBA premiums owed.
                                       DECISION

      Familiarity with the decision of ECC Intern’l, LLC, ASBCA Nos. 58993,
60167, 60283, 22-1 BCA ¶ 38,073, is presumed. 1 However, we provide an
abbreviated version of the facts relevant to the government’s motion.

        USACE awarded ECCI a contract to construct a Military Police School and a
Signal School at Camp Shaheen, Afghanistan. ECC Intern’l, LLC, 22-1 BCA ¶ 38,073
at 184,868 (finding 1). Ultimately, ECCI filed a certified delay claim on the contract
at issue here, along with several other claims on various contracts with performance in
Afghanistan. Id. at 184,890. The parties decided to hold a settlement negotiation
(referred to as an Executive Session) on those claims and entered into an agreement,
dated January 15, 2015, outlining the terms of the negotiations. Id. This Executive
Session agreement stated in pertinent part:

               The parties agree that only those appeals, claims and
               [requests for equitable adjustments (REAs)] listed in
               Attachment A are to be the subject of the Executive
               Session. Both parties understand that ECCI has ongoing
               projects in Afghanistan which may be subject to later
               claims. These claims are not included in the current
               Executive Session. Any further claims, REAs, and appeals
               to the Board or to the Court of Federal Claims arising from
               any of ECCI’s contracts with USACE, for projects
               performed in Afghanistan, under which performance has
               been completed as of the date of this agreement, must be
               submitted or filed with specific notice given to the Army
               Corps of Engineers, Middle East District Office of Counsel
               on or before May 15, 2015, provided that the (substantive,
               as opposed to procedural) transactions or occurrences
               underlying such claims, REAs, or appeals have occurred
               before that date. Those REAs, claims or appeals will be
               added to the Executive Session by mutual agreement of the
               parties, if practicable. If USACE does not agree to the
               addition of any REA’s, claims or appeals identified prior to
               May 15, 2015, but not currently set forth in Exhibit A,
               ECCI reserves the right to prosecute such claims outside
               the confines of the Executive Session as it sees fit. If any
               REAs, claims, or appeals (on completed Afghanistan

1
    The government only moves for reconsideration of the decision as it relates to
         ASBCA Nos. 60167 and 60283. Judge O’Sullivan, who authored the decision,
         has since retired.

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             Projects) are not filed or submitted and brought to the
             attention of USACE prior to May 15, 2015, they shall be
             forever waived.

Id. (Quoting R4, tab S-74 at 1, n.3) The Executive Session began on June 9, 2015 and
the parties ultimately entered into a settlement agreement effective September 21,
2016. Id. at 184,882 (finding 70).
.
        ECCI filed additional claims. Its claims with the Board in the appeals at issue
here sought compensation for the costs of mitigating collapsible soils at the project
site; damages for an unreasonably imposed and enforced period of performance as
identified by a biddability, constructability, operability, and environmental (BCOE)
review; and reimbursement for DBA insurance premiums. ECC Intern’l, LLC, 22-1
BCA ¶ 38,073 at 184,867. With respect to what is referred to as the BCOE claim, the
government asserted the following affirmative defenses: (1) ECCI waived its BCOE
claim when it failed to submit the claim by May 15, in accordance with the Executive
Session agreement; and (2) the BCOE claim was part of the September 2016
settlement agreement and therefore settled and released. Id. at 184,890. As relevant
here, the Board ultimately concluded it did not have jurisdiction over the government’s
affirmative defense of waiver and found ECC entitled to damages on part of the BCOE
claim. Id. at 184,890-97. The Board also found ECC entitled to reimbursement for
the DBA insurance premiums. Id. at 184,899.

Standard of Review

       In reviewing a motion for reconsideration, the Board will look to whether the
movant has presented newly discovered evidence, mistakes in findings of fact, errors
of law, or failure of the Board to consider an appropriate matter. See Kellogg Brown
& Root Servs., Inc., ASBCA Nos. 57530, 58161, 16-1 BCA ¶ 36,554 at 178,042;
Relyant, LLC, ASBCA No. 59809, 18-1 BCA ¶ 37,146 at 180,841. A party moving
for reconsideration “must show a compelling reason” why the Board should alter its
decision. Precision Standard, Inc., ASBCA No. 59116, 15-1 BCA ¶ 36,155
at 176,445.

         In addition, a motion for reconsideration is not the place to present arguments
previously made and rejected, or to advance arguments that should have been
presented in an earlier proceeding. Assist Consultants Inc., ASBCA Nos. 61525,
62090, 21-1 BCA ¶ 37,946 at 184,297; Precision Standard, Inc., supra. Specifically, a
motion for reconsideration is not the time “for bolstering contentions that the Board
has already rejected.” Raytheon Co. and Raytheon Missile Sys., ASBCA Nos. 59435
et al., 21-1 BCA ¶ 37,860 at 183,844.

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BCOE Claim and the Waiver Defense, ASBCA No. 60167

       During the hearing, the Board stated: “[I] think we may have some
jurisdictional problems with the waiver defense because it’s based on an express
provision of an agreement which is a standalone agreement, it’s not related to the
contract, the procurement contract that’s at issue here.” The Board further stated “the
waiver defense essentially asks the [B]oard to enforce a provision of the standalone
agreement between the parties that led up to the settlement proceeding.” (Tr. 2/8) The
Board then permitted the parties to elicit some testimony on the issue in case the
waiver defense was a viable defense for the government (tr. 2/9).

        In its decision, the Board explained that in an effort to refute the Board’s
concerns that the Executive Session agreement was not within the purview of the
Contract Disputes Act (CDA), 41 U.S.C. §§ 7101-09, the government’s post-hearing
briefs cited cases discussing concluded settlement agreements or binding alternative
dispute resolution proceedings but not private standalone agreements to discuss a
settlement. ECC Intern’l, LLC, 22-1 BCA ¶ 38,073 at 184,890. The Board therefore
concluded it did not have jurisdiction over the affirmative defense of waiver based on
a private agreement to negotiate a settlement agreement. Id.

       In its motion for reconsideration, USACE contends the Board’s conclusion was an
error of law and will have a chilling effect on the willingness of parties to engage in
settlement negotiations (gov’t mot. at 1). Specifically, the government argues that “CDA
jurisdiction need not be established for the Board to consider and uphold a common law
affirmative defense such as the express waiver defense” presented here. The government
contends that while defenses that request adjustment of contract terms must meet the
jurisdictional prerequisites of the CDA, the common law defense of waiver does not
because it does not require an adjustment to the contract terms. (Gov’t mot. at 3)

        The government cites to AFSA Int’l Constr. Ind. and Trade, Inc., ASBCA
No. 57880, 14-1 BCA ¶ 35,736 as support (gov’t mot. at 3). In that decision, the
Board ruled a contractor could raise the defense that the government waived its right to
the completion dates and liquidated damages without first filing a CDA claim. AFSA
Int’l Constr. Ind. and Trade, Inc., 14-1 BCA ¶ 35,736 at 174,911. The Board held that
while the contractor’s defense did not seek an adjustment or modification of the
contract terms, it did maintain the government waived rights already granted by the
contract and therefore there was no requirement to submit a CDA claim before
asserting such a defense. Id. That case is irrelevant here as the Board did not state,
either at the hearing or in the decision, that a CDA claim needed to first be filed before
consideration of the asserted defense. And regardless, here there is no allegation the
appellant waived rights specifically granted under the government contract as written.
See Securiforce Int’l America, LLC v. United States, 879 F.3d 1354, 1362-63. In this

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regard, in AFSA Int’l, there was no pre-negotiation standalone document on which the
contractor was relying solely to support its defense.

        The government acknowledges the Board has jurisdiction to consider concluded
settlement agreements and binding alternative dispute resolution proceedings but also
argues that the Board should extend this jurisdiction over the “the private settlement
agreement” in this appeal (gov’t mot. at 5-6). The Executive Session agreement
outlining the procedures for the nonbinding mediation was signed by counsel for the
government and ECCI; the agency contracting officer did not sign the document (R4,
tab S-74 at 5). The government cites to no recent law, decisions or otherwise, to
support its conclusion and demonstrate an error of law in our decision. Rather, after
being told at the hearing of the Board’s concerns, the government tries to take another
bite at the apple by attempting to bolster contentions we have already rejected, or
setting forth arguments that should have been presented in its post-hearing briefs after
the Board judge informed the parties of the jurisdictional concerns. 2 Accordingly, the
government’s motion here fails.

2
    For example, in its post-hearing brief, USACE argued that ECCI waived all claims
         not submitted by May 15, 2015, in the Executive Session agreement which
         “amounted to a partial compromise or settlement agreement” (gov’t br. at 99).
         Likewise, the government’s motion for reconsideration several times states the
         Executive Session agreement is a settlement agreement (although an atypical
         one) (see, e.g., gov’t mot. at 6). In its motion, however, the government also
         argues that the USACE trial attorney here “was acting within the scope of
         delegated authority from the Chief Trial Attorney to conduct litigation, and
         specifically had authority to ‘enter into an agreement on matters for which there
         [was] no substantial controversy and which [would] not have the effect of
         disposing of an appeal’” (gov’t reply at 7 quoting Army Federal Regulation
         Acquisition Supplement (AFARS), § 5133.212-96(b)(1)). It seems the agency
         is saying the AFARS grants the trial attorney the authority to enter into a
         settlement agreement, with no mention of the role of the contracting officer
         here such as his/her authority or responsibility. USACE never raised the
         AFARS in its post-hearing briefs despite the Board specifically stating its
         concerns over the standalone Executive Session agreement between private
         parties and the appellant’s post-hearing brief arguing the agreement was not a
         settlement agreement as it was not signed by the contracting officer or reduced
         to a contract modification (app. reply br. at 85). Rather, in its post-hearing
         brief, the agency merely stated that the agency counsel could bind the
         government in this Executive Session settlement agreement because he “had the
         power to commit to every obligation he undertook in that agreement on behalf
         of the Government” which was the procedural handling of disputes (resp. reply
         br. at 6-7).

                                             5
        In addition, during the hearing the Board also stated there could be some
interpretation issues with the agreement. Specifically, the Board stated it was unsure if
the June 15 BCOE claim could be waived as of May 15 if the claim was based on
documents that were produced as part of the settlement process (tr. 2/8). In the
decision, the Board noted that the BCOE claim was based on documents ECCI
received from the government through discovery shortly before the Executive Sessions
began and ECCI was not aware of the BCOE claim before receipt of these documents.
ECC Intern’l, LLC, 22-1 BCA ¶ 38,073 at 184,890. Therefore, even if the Board had
jurisdiction, the government did not show that ECCI intended to waive the BCOE
claim--a claim that it did not yet know existed by May 15. Further, the Board stated
that the language in the Executive Session agreement did not expressly include such
unknown claims and the words “appeals, claims and REAs” used in the footnote imply
the matter was known and already part of the negotiation or dispute process. Id.
at 184,890-91.

        The government argues the agreement unambiguously applied to ECCI’s claims
unknown at the time (gov’t reply at 2). In this regard, the government contends the
agreement states that for completed Afghanistan projects, any further claims, REAs
and appeals to the Board or court must be submitted or filed, with notice to USACE,
by a date certain in May, and those claims, REAs or appeals may be added to the list
of claims to be negotiated at the Executive Session. The agreement, however, also
states that “the (substantive, as opposed to procedural) transactions or occurrences
underlying such claims, REAs, or appeals” must have occurred before that May date.
The Executive Session agreement then states that if any REAs, claims or appeals are
not filed or submitted to USACE by that date, they are forever waived. Contrary to the
government’s assertions, the agreement is not a model of clarity, and the government
has failed to show that the Board’s interpretation is incorrect.

The DBA Claim, ASBCA No. 60283

        The contracts at issue here contained a provision requiring ECCI obtain DBA
insurance and maintain it until performance completion. ECC Intern’l, LLC, 22-1
BCA ¶ 38,073 at 184,883 (finding 77). A contract line item number contained
ECCI’s estimated DBA premium, including for ECCI’s subcontractors, but also stated
that the government would pay the actual amount of the premiums as shown on the
insurance company’s invoice. Id. If the insurance company recalculated the
premiums, the contract would be adjusted via modification to reflect the change. Id.

       ECCI’s estimated DBA premiums for the MP School and Signal School were
$159,952.20, for which ECCI was paid. ECC Intern’l, LLC, 22-1 BCA ¶ 38,073
at 184,883 (finding 78). During performance, ECCI incurred costs for DBA insurance
premiums totaling $210,296, including premiums for its subcontractors. Id. at 184,884
(finding 82). ECCI did not reimburse separately its subcontractors the premiums; rather,

                                           6
the subcontractors were reimbursed via invoices submitted against their fixed-priced
subcontracts for all work performed. Id. at 184,883 (finding 78). The insurance
company recalculated the premiums and sent a refund of $64,283 directly to USACE, not
ECCI, and then USACE issued a modification to the contract reducing the contract price
and hence payments to ECCI in the amount of $64,283. Id. at 184,884 (finding 80).
ECCI argued the government should not have modified the contract once it received the
refund. Id.

        The Board held that USACE recovered $64,283 twice--once from the insurance
company and once from the modification reducing the contract price. ECC Intern’l,
LLC, 22-1 BCA ¶ 38,073 at 184,885 (finding 85). The Board further held that there
were no legal issues associated with this issue, just basic arithmetic. Id. at 184,897. In
this regard, as the amount ECCI paid was $210,296, which USACE did not dispute,
and USACE had paid ECCI the $159,952.20, but then reduced the contract line item
by $64,283, USACE owed ECCI $114,627 plus CDA interest for the DBA premiums.
Id. at 184,899.

        In its motion for reconsideration, the government argues the Board decided
quantum despite specifically informing the parties it would only decide entitlement
(gov’t mot. at 12). Specifically, the government contends the Board’s holding that
USACE recovered twice on the insurance DBA recalculations is an issue of quantum
because USACE did not present all of its available financial records or call any
employee to testify on such records (id.). The government argues that such financial
records will prove “there were no deductions from contract payments to Appellant in
the amounts alleged by Appellant and awarded in the Board’s Decision based on a
decontextualized interpretation of pay estimates” (id. at 12-13). In a footnote, the
government contends the “Appellant has realized that the logical deduction by which it
concluded that the amounts of DBA refunds were withheld from its contract payments
is inconsistent with contract payment records” and therefore a hearing would not be
necessary and the parties could merely exchange evidence and agree on quantum (id.
at 13, n.1). The appellant failed to respond to the government’s argument and
concluded its brief by saying only that the Board should deny the government’s
“jurisdictional Motion to Reconsider” (app. reply at 10).

       In sum, USACE does not dispute the legal holding that there was a double
recovery on the insurance premium by USACE, or other legal holdings on this issue.
Rather, USACE argues that documents must be reviewed to determine actual
payments made to the appellant under the fixed-priced contract to deduce the specific
amount owed the appellant in light of the Board’s holding. As the appellant did not
disagree with the government’s argument, we return the appeal to the parties to
negotiate and resolve quantum on this issue.

                                            7
                                   CONCLUSION

       Accordingly, the government’s motion for reconsideration is denied in part and
granted in part to the extent that we return the appeal to the parties to negotiate and
resolve quantum regarding the DBA claim consistent with this decision.

      Dated: May 9, 2023

                                                  LAURA EYESTER
                                                  Administrative Judge
                                                  Armed Services Board
                                                  of Contract Appeals

 I concur                                        I concur

 RICHARD SHACKLEFORD                             OWEN C. WILSON
 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 Nos. 60167, 60283, Appeals of
ECC International, LLC, rendered in conformance with the Board’s Charter.

      Dated: May 9, 2023

                                               PAULLA K. GATES-LEWIS
                                               Recorder, Armed Services
                                               Board of Contract Appeals

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