Court Opinion

ID: 2744181
Source: CourtListenerOpinion
Date Created: 2014-10-21 18:00:18.204833+00
Date Added: 2024-06-11T09:53:44.194428
License: Public Domain

ARMED SERVICES BOARD OF CONTRACT APPEALS

Appeal of--                                   )
                                              )
Gerald R. Rouillard, III, d/b/a               )      ASBCA No. 58459
 International Gear Technologies              )
                                              )
Under Contract No. SPM7MC-10-M-2339           )

APPEARANCE FOR THE APPELLANT:                        Steven J. Boretos, Esq.
                                                      Everett, WA

APPEARANCES FOR THE GOVERNMENT:                      Daniel K. Poling, Esq.
                                                      DLA Chief Trial Attorney
                                                     Matthew 0. Geary, Esq.
                                                     Co Ileen T. Loughran, Esq.
                                                      Trial Attorneys
                                                      DLA Land and Maritime
                                                      Columbus, OH

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

       This is a timely appeal of a contracting officer's (CO' s) final decision
terminating appellant Gerald R. Rouillard, III, d/b/a International Gear Technologies'
(IGT's) supply contract for default. The Contr.act Disputes Act (CDA), 41 U.S.C.
§§ 7101-7109, is applicable. The government has filed a motion for summary
judgment. IGT opposes the government's motion; it has not filed a cross-motion. We
grant the motion.

         STATEMENT OF FACTS (SOF) FOR PURPOSES OF THE MOTION

       1. On 8 December 2009, the Defense Supply Center, Columbus, Ohio (Maritime
Supply Chain) (DSSC) issued request for quotations (RFQ) No. SPM7MC-l 0-0302 for
the purchase of 445 spur gears, National Stock Number (NSN) 3020-00-888-0130 (R4,
tab 87 at 4, 6). The RFQ included a procurement history for this NSN, dating back to
10 July 2007. As awarded, unit costs for the earlier contracts ranged from $106.00 to

1
    The government filed separate motions for summary judgment in ASBCA
        Nos. 58458 and 58459; however, appellant's opposition brief and the
        government's reply brief dealt jointly with the two appeals. Because the facts
        of each appeal differ, the Board is issuing separate decisions.
$210.95. (Id. at 2) The RFQ also contained a first article test (FAT) requirement which
consisted of one additional unit (id. at 6).

       2. The government's estimated unit price was $119.81. It received quotations
with unit prices ranging from $110.25 to $490.00. IGT quoted a unit price of $110.25.
The next two lowest offerors quoted unit prices of$1l1.00 and $112.70. (R4, tab 88) 2

       3. On 1 February 2010, DSSC awarded Contract No. SPM7MC-10-M-2339 to
appellant for the supply of 317 spur gears at a unit price of $107.75 and $110.25 for
128 spur gears. Within 120 days, IGT was also required to submit a First Article (FA)
at a unit price of$1,250. The total fixed-price contractual amount was $50,152.75.
(R4, tab 1at1, 3, 5-6) As awarded, the FA unit was to be delivered 120 days after
date of the order or by 1 June 2010, and the remaining spur gears were to be delivered
by 6 June 2011 (id. at 5-6).

      4. The contract contained FAR 52.209-4, FIRST ARTICLE APPROVAL-
GOVERNMENT TESTING (SEP 1989). Also included in the contract were FAR 52.233-1,
DISPUTES (JUL 2002); and FAR 52.249-8, DEFAULT (FIXED-PRICE SUPPLY AND SERVICE
(APR 1984). (R4, tab 1at9, 11)

        5. IGT did not deliver the FA by 1 June 2010 (R4, tabs 5-6). As of 20 October
2011, IGT still had not delivered the FA. On that date appellant notified the CO that it
had "found an issue with the root diameter of the gear teeth on the first article part, we
need to either request a waiver, or furnish another first article from a second lot we had
started months ago." (R4, tab 44 at 4)

       6. On 3 January 2012, the CO issued bilateral Modification No. P00003 to the
contract. It established a new FA delivery date of 17 February 2012 and extended the
delivery date for the 445 spur gears to 26 ,July 2012. (R4, tab 53) The modification also
provided that failure of the FAT would result in termination of the contract for default
(id.).

      7. IGT did not deliver the FA by 17 February 2012. On 1March2012, appellant
advised the CO that the FA unit had been completed (R4, tab 56 at 2). On 1 April 2012,
IGT stated in an email to the CO: "When I get to my office tomorrow I will send you the
FAT tracking info" (R4, tab 57). On 3 April 2012, appellant forwarded the promised
information to the CO (R4, tab 58 at 1-2). On 10 April 2012, the CO stated that he had
"checked the tracking and apparently they have not shipped yet" (R4, tab 59 at 2). On
12 April 2012, IGT stated: "I will be back in the office tomorrow to resolve FAT
shipment, yes, we do have a large lot of parts waiting to ship once FAT is approved" (R4,

2
    In the "ABSTRACT OF QUOTES," appellant's bid was coded as "CAGE"
         "5HFP7" (R4, tab 88).

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tab 60). As of 18 April 2012, the FA still had not been completed (R4, tab 61at3); and
as of 3 May 2012, it had not been shipped (R4, tab 64 at 2-3).

       8. On 14 June 2012, the FA unit was conditionally approved (R4, tab 67). On
20 June 2012, the CO forwarded the notice of conditional approval to IGT, noting six
discrepancies. He also requested by attached letter that appellant inform him of a revised
delivery date for "the production supplies" by 25 June 2012. (R4, tab 69 at 1, 3)

       9. IGT did not comply with this request; and, on 26 June 2012, the CO again
requested the delivery schedule by close of business on that day (R4, tab 71). On that
same date, appellant responded that it would forward "a complete schedule" by 29 June
2012. He also stated: "I can tell you that we have separated 50 from a 160 piece lot and
are expediting the 50 pieces for shipment asap." (R4, tab 72) On 28 June 2012, IGT
advised the CO that it would ship 50 units "around July 20th" (R4, tab 76 at 1). On 9 July
2012, the CO, once again, requested a complete delivery schedule (R4, tab 77 at 1).

       10. On 11July2012, Mr. Gerry Rouillard, III, IGT's president, forwarded a
lengthy letter to the CO in which he alleged that as a result of various increased costs, its
actual unit cost was $276.79, as opposed to the contractual prices of $107.75 and $110.25
(SOF ~ 3). He also contended that, as a part of IGT's bid, he had relied on his father for
"a large number of volunteer hours." Unfortunately, as a result of a heart condition, the
elder Mr. Rouillard had been unable to work on the contract. Finally, IGT alleged that
there had been a mutual mistake when it formulated its bid. Alleging that it had paid
$1,680 for inspection of a single unit, appellant described the $1,500 payment to the
government contained in a modification to another contract as an inspection fee, and
concluded that it had grossly underestimated the actual costs of producing the spur gears.
(R4, tab 78)

       11. On 16 July 2012, the CO forwarded the following response to Mr. Rouillard:

              In response to your 7/11/12 request for a price
              increase on contract SPM7MC10M2399 for NSN
              number 3020-00-888-0130, your request is hereby denied.

              This is a firm fixed price contract. Your proposal in
              response to RFQ SPM7MlOQ0302 offered a set unit price.
              The subject contract was awarded accordingly. You are
              obligated to perform to the terms of the contract.

              Within 5 calendar days from the date of this notice, you are
              requested to advise the undersigned in writing whether you
              will continue to perform the subject contract in accordance

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              with the existing terms and conditions. Failure to respond
              by [sic] will lead to termination for default proceedings.

              The Government is not invoking its rights under FAR
              52.249-8 - - Default (Fixed-Price Supply and Service), at
              this time. Please be advised, however, that notice of
              intention not to perform, or failure to perform, under the
              provisions of the contract may result in the subject contract
              being terminated for default, subject to the notice
              provisions of the default clause.

              Any assistance rendered to the contractor on this contract,
              or acceptance by the Government of delinquent goods or
              services hereunder, will be solely for the purpose of
              mitigating damages, and is not to be construed as an
              intention on the part of the Government to condone any
              delinquencies or as a waiver of any rights the Government
              may have under the above contract.

(R4, tab 79) On 20 July 2012, IGT replied to the CO's letter. It stated that it would
"continue to perform the subject contract in accordance with the existing terms and
conditions." But appellant again sought a price increase based upon "clear and
convincing evidence that a mutual mistake was made." (R4, tab 80 at 1-2)

       12. IGT did not deliver the production lot of spur gears by the modified delivery
date of26 July 2012 (SOF ~ 6; R4, tab 81). Accordingly, on 7 August 2012, the CO
forwarded a show cause letter to appellant, in which he stated:

             You are hereby notified that the Government considers
             your Email dated ·17 July, 2012 requesting an increase in
             unit price as unacceptable.

             Since you have failed to perform within the time required
             by the terms of your contract, the Government is
             considering terminating the contract under the provisions
             for default. Pending a final decision in this matter, it will
             be necessary to determine whether your failure to perform
             arose from causes beyond your control and without fault or
             negligence on your part. Accordingly, you are given the
             opportunity to present, in writing; any facts bearing on the
             question to the undersigned, within 10 days (August 17,
             2012) after receipt of this notice. Your failure to present
             any explanations within this time may be considered as an

                                           4
               admission that none exist. Your attention is invited to the
               respective rights of the Contractor and the Government and
               the liabilities that may be invoked if a decision is made to
               terminate for default.

               If it is your intention to perform under this contract, you
               should within 10 days (August 17, 2012) of your receipt of
               this letter, propose a new and reasonable delivery date by
               which the required supplies will 9e delivered together with
               monetary consideration for the additional performance
               time needed. Your proposed new delivery schedule will be
               taken into consideration by the Contracting Officer in
               deciding whether to terminate the contract.

               The Government does not waive any rights it has by virtue
               of this letter and specifically reserves any and all rights it
               has relative to untimely delivery. Should your firm fail to
               propose a new delivery date, that failure will be considered
               as repudiation by your firm of its obligation to perform
               under this contract and the contract may be terminated for
               default.

               Any assistance given to you on this contract or any
               acceptance by the Government of delinquent goods or
               services will be solely for the purpose of mitigating
               damages, and it is not the intention of the Government to
               condone any delinquency or to waive any rights the
               Government has under the contract.

(R4, tab 81)

       13. IGT responded to the CO's show cause letter on 11August2012. It
proposed a two-stage delivery schedule with units being delivered on 12 October 2012
and 19 March 2013. It also, once again referred to the illness of the elder
Mr. Rouillard and contended that there had been a mutual mistake. (R4, tab 82) On
12 September 2012, the CO forwarded a letter to IGT in which he terminated the
contract for default (R4, tab 84 ). This timely appeal followed (R4, tab 86).

                                        DECISION

     A grant of summary judgment is appropriate when a review of the record
demonstrates that there is no genuine dispute as to any material fact and that the
moving party is entitled to judgment as a matter oflaw. FED. R. CIV. P. 56(a), (c)(l);

                                             5
Mingus Constructors, Inc. v. United States, 812 F.2d 1387, 1390 (Fed. Cir. 1987). The
moving party has the burden of showing the absence of a genuine dispute of material
fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). If the moving party makes
the requisite showing, then the burden shifts to the nonmoving party to show that there
is a genuine factual issue for trial. Id. Moreover, the party opposing summary
judgment-here the appellant-"must show an evidentiary conflict on the record;
mere denials or conclusory statements are not sufficient." Mingus, 812 F .2d
at 1390-91.

        We are also guided by the settled law governing terminations for default. Such
a termination is "a drastic sanction which should be imposed ... only for good grounds
and on solid evidence." J.D. Hedin Construction Co. v. United States, 408 F.2d 424,
431 (Ct. Cl. 1969) (citation omitted). Accordingly, the government bears the burden
of proving that the termination was reasonable and justified. If the government
establishes a prima facie case in this regard, the burden of production--or going
forward-shifts to the contractor. Lisbon Contractors, Inc. v. United States, 828 F.2d
759, 765 (Fed. Cir. 1987).

        Initially, we simply note that appellant did not file a "Statement of Genuine
Issues of Material Fact" which would have aided us in succinctly identifying any
genuine factual disputes. Instead, it opposed respondent's motion in a diffuse manner
with few or no citations to the evidentiary record. What is undisputed is that appellant
failed to deliver any production lots on or before the revised delivery date of 26 July
2012 (SOF ~ 12). Therefore, the government has established aprimafacie case, and
the burden of going forward shifts to appellant to demonstrate that its failure to deliver
was excusable.

        Appellant relies heavily on the argument that the purported illness of its
president's father, Mr. Gerald Rouillard, Jr., severely impacted its ability to perform.
Although appellant provides little or no evidence to support its underlying contentions,
we will accept for purposes of this motion that Mr. Rouillard suffered a serious illness
at the time of contractual performance. As a legal matter, this Board has promulgated
a host of cases which hold that, absent an understanding by both parties that a key
person would be responsible for performance, his or her illness or death would not
excuse a default. See, e.g., MW Microwave Corp., ASBCA No. 45084, 93-3 BCA
~ 26,027 at 129,377-78; Jonatech, Inc., ASBCA No. 46088, 94-3 BCA ~ 27,248 at
135,774; Brill Brothers, Inc., ASBCA No. 42573, 94-1BCA~26,352 at 131,056;
M&T Construction Co., ASBCA No. 42750, 93-1BCA~25,223 at 125,636. No such
understanding has been shown here. Thus, appellant's arguments in this regard are
unavailing.

      Appellant also contends that it should be granted relief from the default
termination because of an alleged mistake in bid. During contractual performance,

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                                                 I

IGT contended, without any support in the evidentiary record, that its inspection cost
for a single unit was $1,680. It also argued that the $1,500 fee stated in Modification
No. POOOOl of a related contract-but not in this contract-was the government's
inspection cost and reasoned from this premise that its bid grossly underestimated the
cost of producing the spur gears and resulted in a mutual mistake in bid. Appellant's
argument is illogical and does not advance its case. We find no evidence of mistake in
bid, unilateral or bilateral. 3

       Finally, appellant makes the belated contention that it made a unilateral mistake
in bid when it relied upon the procurement history for the spur gears which was
contained in the solicitation. This argument is difficult to comprehend. The
procurement history cited by appellant merely sets forth unit costs for earlier contracts
dating back to 10 July 2007 and ranging between $106.00 and $210.95 (SOF ii 1).
Appellant's bid of $107.75 per unit for one quantity and $110.25 per unit for the
remainder fit well within this range. It also closely tracked the government's estimate
of$119.81. (SOF ii 2)

       In order to establish a defense against a default termination based upon a
unilateral mistake in bid, appellant must demonstrate by clear and convincing evidence
that:

               (1) [A] mistake in fact occurred prior to contract award;
               (2) the mistake was a clear-cut, clerical or mathematical
               error or a misreading of the specifications and not a
               judgmental error; (3) prior to award the Government knew,
               or should have known, that a mistake had been made and,
               therefore, should have requested bid verification; (4) the
               Government did not request bid verification or its request
               for bid verification was inadequate; and (5) proof of the
               intended bid is established.

McClure Electrical Constructors, Inc. v. Dalton, 132 F.3d 709, 711 (Fed. Cir. 1997)
(citing Solar Foam Insulation, ASBCA No. 46921, 94-2 BCA ii 26,901). Even though
appellant's contention that it somehow relied on the procurement history in
formulating a mistaken bid is not supported by record evidence, we shall assume, for
purposes of the motion, that "a mistake in fact occurred prior to contract award."
Nevertheless, appellant has not satisfied, by clear and convincing evidence, the other
four prongs of the test. For example, IGT has not demonstrated or alleged either that it
made a clear-cut, clerical or mathematical error or misread the specifications. In fact,
its bid was in line both with the procurement history and the government's estimate.

3
    Appellant did not include this argument in its opposition brief and may have
        abandoned it (app. br., passim).

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In addition, the CO could not have been placed on notice by appellant's bid that there
had been a mistake: there was simply no disparity between it, the procurement history,
and the government's estimate. Under these circumstances, IGT's contentions must
fail.

                                    CONCLUSION

        We find no genuine disputes as to material facts and that the government is
entitled to judgment as a matter oflaw. The government's motion for summary
judgment is granted. The appeal is denied.

       Dated: 8 October 2014

                                                 MICHAEL T. PAUL
                                                 Administrative Judge
                                                 Armed Services Board
                                                 of Contract Appeals

I concur                                         I concur

                                                 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. 58459, Appeal of Gerald
R. Rouillard, III, d/b/a International Gear Technologies, rendered in conformance with
the Board's Charter.

       Dated:

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

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