Court Opinion

ID: 5122955
Source: CourtListenerOpinion
Date Created: 2021-11-03 16:00:14.884586+00
Date Added: 2024-06-11T08:22:30.861412
License: Public Domain

ARMED SERVICES BOARD OF CONTRACT APPEALS
 Appeal of -                                    )
                                                )
 Powertronic Systems Florida, Inc.              )   ASBCA No. 62174
                                                )
 Under Contract No. N00253-18-C-0003            )

 APPEARANCES FOR THE APPELLANT:                     David L. Hayden, Esq.
                                                    Jackson W. Moore, Jr., Esq.
                                                     Smith, Anderson, Blount, Dorsett, Mitchell &
                                                       Jernigan
                                                     Raleigh, NC

 APPEARANCES FOR THE GOVERNMENT: Craig D. Jensen, Esq.
                                  Navy Chief Trial Attorney
                                 Trenton Bowen, Esq.
                                  Trial Attorney

      OPINION BY ADMINISTRATIVE JUDGE CLARKE ON APPELLANT’S
                   MOTION FOR RECONSIDERATION

       Powertronic Systems Florida, Inc. (Powertronic) moves this Board to reconsider
its May 10, 2021 decision sustaining the Navy’s Termination for Default of Contract
No. N00253-18-C-0003. We have jurisdiction pursuant to the Contract Disputes Act of
1978 (CDA), 41 U.S.C. §§ 7101-7109. None of the justifications supporting successful
reconsideration apply and the Motion is denied.

                                   LEGAL STANDARD

      Both parties correctly recite the law concerning the government’s obligation in
considering a motion for reconsideration (app. mot. at 2-3; gov’t. opp’n at 1). In
Supreme Foodservice GmbH, ASBCA No. 57884 et al., 17-1 BCA ¶ 36,740 we wrote:

               [W]e look to whether the movant has presented newly
               discovered evidence, mistakes in findings of fact, or errors of
               law. Kellogg Brown & Root Services, Inc., ASBCA
               Nos. 57530, 58161, 16-1 BCA ¶ 36,554 at 178,039. A
               reconsideration motion is not an opportunity to reargue issues
               previously raised and decided, or to advance arguments that
               should have been presented in an earlier proceeding.
               Precision Standard, Inc., ASBCA No. 59116, 15-1 BCA
             36,155 at 176,445; Avant Assessment, LLC, ASBCA
             No. 58867, 15-1 BCA ¶ 36,137 at 176,384. A party moving
             for reconsideration “must show a compelling reason” why the
             Board should alter its decision. Precision Standard,
             15- 1 BCA ¶ 36,155 at 176,445.

Id. at 179,092. There is no disagreement as to the standard the Board will apply.

                         POWERTRONIC’S INTRODUCTION

Powertronic summarized its arguments at the beginning of its motion:

             The Board did not properly consider certain evidence
             regarding Powertronic’s request for a no-cost termination
             under the FAR, the Board made an error of law in its
             application of Lisbon Contractors, and the Board made errors
             of law and mistakes of fact in finding that the Contracting
             Officer did not abuse her discretion in terminating the
             Contract for default, and each error supports the Board
             reversing the Opinion, sustaining Powertronic’s appeal, and
             converting the Navy’s termination of the Contract for default
             into a termination for convenience.

(App. mot. at 2)

                                       DECISION

Federal Acquisition Regulation (FAR) 94.109-4

       Firstly, Powertronic argues that the Board did not address whether the contracting
officer “violated 48 C.F.R. § 49.109.4 [we will use FAR 49.109-4] by failing to execute a
no-cost settlement rather than terminating the Contract for default” (app. mot. at 3).
Powertronic misconstrues FAR 49.109-4 when it states, “[t]his is a mandatory provision

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requiring the contracting officer to execute a no-cost settlement if the two factors in the
clause are met” ∗ (id. at 3-4). FAR 49.109-4 reads:

               49.109-4 No-cost settlement.

               The TCO shall execute a no-cost settlement agreement (see
               49.603-6 or 49.603-7, as applicable) if-

                   (a) The contractor has not incurred costs for the
               terminated portion of the contract or

                     (b) The contractor is willing to waive the costs incurred
               and

                  (c) No amounts are due the Government under the
               contract

However FAR 49.109-4 is subject to FAR 49.109-1 that reads:

               49.109-1 General.

               When a termination settlement has been negotiated and all
               required reviews have been obtained, the contractor and the
               TCO shall execute a settlement agreement on
               Standard Form 30 (Amendment of Solicitation/Modification
               of Contract) (see 49.603). The settlement shall cover

                   (a) Any setoffs that the Government has against the
               contractor that may be applied against the terminated contract
               and

                  (b) All settlement proposals of subcontractors, except
               proposals that are specifically excepted from the agreement
               and reserved for separate settlement.

The Navy’s termination for default was not a “negotiated settlement” that is therefore
outside of the scope of FAR 49.109-1 and 4. Clearly a contracting officer is not required
to negotiate a termination for default and FAR 49.109-1 and 4 cannot be reasonably
interpreted to require a contracting officer to execute a no cost settlement agreement
instead of a termination for default as Powertronic argues. Powertronic’s interpretation is

∗
    A Westlaw search failed to bring up any ASBCA cases considering this argument.
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unreasonable. Additionally, we agree with the Navy’s arguments on this point (gov’t
opp’n at 2).

Lisbon Contractors

        Powertronic starts this argument by attempting to distinguish the Board’s reliance
on DoDs, Inc., ASBCA No. 57667, 13 BCA (CCH) ¶ 35203, and CKC Sys., Inc.,
ASBCA No. 61025, 19-1 BCA (CCH) ¶ 37385, for the tenet that “[f]ailure to make
timely delivery establishes a prima facie case for termination for default.” Powertronic
argues that “([i]mportantly, in both Dods, Inc. and CKC Sys., Inc., the government
terminated the relevant contracts after the delivery deadlines expired” and “[f]ailure to
make appropriate progress—which the Navy cited as the key basis for the Contract
termination—does not equate to failure to make timely delivery.” (App. mot. at 5)
(emphasis added) Powertronic ignores what we said in our opinion, that failure to make
progress in First Article testing resulting in termination for default does in fact equate to
failure to make timely delivery. Powertronic Systems Florida, Inc, ASBCA No. 62174,
21-1 BCA ¶ 37,859 at 183,839.

        Powertronic relies on Lisbon Contractors, Inc. v. United States, 828 F.2d 759, 765
(Fed. Cir. 1987), for the proposition, “[t]he mere fact that a contractor is behind schedule
is insufficient to satisfy the government’s burden in proving a termination for default is
justified” (app. mot. at 6). This proposition is not enough to invalidate the Navy’s
decision here. In our decision, we addressed Powertronic’s list of excuses (GFE, Viton,
Snap Action Switch, DO-C9 Rating, unavailability of shock testing, HUBZone Status).
Powertronic was not “merely” behind schedule, it was chronically behind schedule and
the Navy correctly concluded that it would not likely get back on schedule and that
enough was enough. Powertronic effectively argues that the Navy must put up with
Powertronic’s chronic failures—it is obvious from our decision that we disagree. This
was dealt with in our decision and is not new fact or law.

Abuse of Discretion

        Powertronic argues, “Powertronic was faced with delays both before and after the
Contract modification due to the Navy’s actions and inactions, supplier shortages, and
subcontractor difficulties that the Contracting Officer failed to adequately consider when
terminating the Contract for default” (app. mot. at 9). We dealt with these “delays” and
all of them were Powertronic’s responsibility. This case can be summed up by saying if
you contract with the government ultimately you have to perform, not list excuses for
which you are legally responsible.

       Powertronic characterizes our footnote 1 as a mistake in fact (app. mot. at 10). We
disagree. First, the issue of a contractor’s right to unilaterally redesign design
specifications is a question of law. Second, contractors do not have the unilateral right to

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redesign design drawings. Anyone with any familiarity with design specifications knows
that.

                                   CONCLUSION

      Powertronic’s Motion for Reconsideration is denied.

      Dated: October 19, 2021

                                                CRAIG S. CLARKE
                                                Administrative Judge
                                                Armed Services Board
                                                of Contract Appeals

 I concur                                         I concur

 RICHARD SHACKLEFORD                              J. REID PROUTY
 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. 62174, Appeal of
Powertronic Systems Florida, Inc., rendered in conformance with the Board’s Charter.

      Dated: October 19, 2021

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

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