Court Opinion

ID: 4512301
Source: CourtListenerOpinion
Date Created: 2020-03-03 20:00:14.604511+00
Date Added: 2024-06-11T09:37:58.674991
License: Public Domain

ARMED SERVICES BOARD OF CONTRACT APPEALS

Appeal of --                                  )
                                              )
Molly Jessie Company                          )      ASBCA No. 62134
                                              )
Under Contract No. FA440719PA002              )

APPEARANCE FOR THE APPELLANT:                        Mr. Greg Ryan
                                                      Principal

APPEARANCES FOR THE GOVERNMENT:                      Jeffrey P. Hildebrant, Esq.
                                                      Air Force Deputy Chief Trial Attorney
                                                     Lawrence M. Anderson, Esq.
                                                     Lt Col Scott A. Van Schoyck, USAF
                                                      Trial Attorneys

            OPINION BY ADMINISTRATIVE JUDGE SHACKLEFORD

        This is an appeal from a final decision terminating the subject contract for
cause. The appellant has elected Board Rule 12.3, Accelerated Procedure, and the
parties have agreed to a record submission under Board Rule 11. Each party filed an
initial brief. Appellant filed a reply brief and the government answered that reply. In
addition to the briefs, the record includes the government's Rule 4 file (R4, tabs 1-74),
two documents submitted by appellant with its initial brief (exs. A-1, -2) and an
affidavit from Mr. Ryan. Also included are several photographs from the
government's Rule 4 file upon which appellant has added commentary. Only the
propriety of the termination for cause is before us.

                                 FINDINGS OF FACT

       1. On February 27, 2019, the Air Force, on behalf of Cardinal Creek Golf
Course (government) awarded Contract No. F A4407 l 9PA002 ( contract) to Molly
Jessie Company (appellant or MJC) to perform three line items of work. Item No. 001
was to perform tree removal, root pruning and canopy pruning in accordance with the
contract's Statement of Work (SOW) in the amount of$17,100. (R4, tab 3 at 4-5)

        2. Item No. 0002 was to perform Option No. 2, remove all trees behind the
third tee including driving range side of fence - hole # 3 in accordance with the SOW
for the amount of $1,700. Item No. 0003 was to perform Option No. 3, Remove 3
Cotton Wood Trees behind the 15th green and other work near holes 5, 6, 7, 11, 14 and
15 for the amount of $2,500. (R4, tab 3 at 4-5)
      3. The- period of performance set forth in the contract was February 20, 2019 to
March 20, 2019 for Item Nos. 1, 2 and 3 (R4, tab 3 at 10).

      4. The contract included Paragraph 13, Termination for Cause. which provided:

             a. The NAFI may, subject to paragraphs c. and d. below,
             by written notice of cause to the Contractor, terminate this
             contract in whole or in part if the Contractor fails to-

             ( 1) Deliver the supplies or perform the service within the
             time specified within this contract or any extension;
             (2) Make progress, so as to endanger performance of this
             contract (however, see paragraph b. below); or
             (3) Perform any of the other provisions of this contract
             (however see paragraph b. below).

              b. The NAFI's right to terminate this contract under
              paragraph a. 2. and a. 3. above, may be exercised if the
              Contractor does not cure such failure within 10 days (or
              more if authorized in writing by the Contracting Officer)
              after receipt of notice from the Contracting Officer
              specifying the failure.

              c. If the NAFI terminates this contract in whole or in part,
              it may acquire, under the terms and in the manner the
              Contracting Officer considers appropriate, supplies or
              services similar to those terminated, and the Contractor
              will remain liable to the NAFI for any excess costs for
              those supplies or services. However the Contractor must
              continue the work not terminated.

              d.... The Contractor shall not be liable for any excess
              costs if the failure to perform the contract arises from
              causes beyond the control and without the fault or
              negligence of the Contractor. Examples of such causes
              include:
              (1) Acts of God or of the public enemy
              (2) Act of the NAFI in either its sovereign or contractual
              capacity
              (3) Fires
              (4) Floods
              (5) Epidemics
              (6) Quarantine restrictions

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             (7) Strikes
             (8) Freight embargoes
             (9) Unusually severe weather

             g. If, after termination, it is determined that the cause by
             the Contractor was excusable, the rights and obligations of
             the parties shall be the same as if the termination had been
             issued for convenience of the NAFI.

             h. The rights and remedies of the NAFI in this clause are in
             addition to any other rights and remedies provided by law
             or under this contract.

(R4, tab 3 at 15-16)

       5. The contract also included paragraph 3, Claims, which provided in part:

              b. "Claims," as used in this clause, means the inability of a
              Contractor and the Contracting Officer to reach a mutual
              agreement related to contractual issues in controversy
              resulting in the filing of a written demand or assertion
              seeking payment of money, adjustment or interpretation of
              contract, or other relief, and issuance of a Contracting
              Officer's final decision ....

              e. The Contractor shall proceed diligently with
              performance of this contract, pending final resolution of
              any request for relief, claim, appe~l, or action arising under
              the contract, and comply with any decision of the
              Contracting Officer.

(R4, tab 3 at 13-14)

       6. The SOW included the following:

              Work should be performed when the soil is firm enough to
              support any equipment used in the execution of this work.

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              Any turf damage (i.e. tire ruts) are the responsibility of the
              contractor to repair back to same or improved condition.

(R4, tab 3 at 5)

       7. Appellant's employees arrived on site on or around March 6, 2019 (R4, tab 6
at 3). From that point forward, some work was performed and the government made
one or more partial payments to appellant, but the work was not completed by the
March 20, 2019 contract due date. Thus the parties had discussions (e.g., R4, tab 12,
tab 23 at 1), and on April 25, 2019, bilateral contract modification POOOO 1 was issued
extending the period of performance to June 30, 2019, providing as follows:

              The purpose of this modification is for the following:

              A. Cancel any previous requested modifications ... by the
                 Government
              B. Change the completion date from 20 March 2019 to an
                 estimated completion date of 30 June 2019. Any
                 additional delays for weather will be coordinated,
                 approved, and agreed to between Molly Jessie and the
                 Government.
              C. Partial Payments will be authorized.
              D. Contract price be increased by $1,700.00 for
                 remobilization and the contract price is increased from
                 $21,300.00 to $23,000.00 for this modification.
              E. All other terms and conditions remain unchanged. In
                 consideration of the modification agreed to herein as
                 complete equitable adjustment for time and cost
                 associated. The contractor hereby releases the
                 Government from any and all liability under this
                 modification for further equitable adjustments.

(R4, tab 39 at 3) Bilateral contract modification POOOOl also established a contract
completion date for each line item of June 30, 2019, none of which included the
modifier "estimated."

       8. Thereafter, on or about May 13, 2019, appellant's crews resumed tree
removal, root pruning and canopy pruning at the golf course (R4, tab 42 at 2). For
May 14, 2019, appellant reported that they had completed seven stump grindings, but
that due to ground conditions they could make only limited work towards completion.
MJC said that the soil was wet and support for its equipment was not favorable.
Moreover, continuing heavy rain was expected over the next several days. For
May 15, 2019, site conditions were wet and poor but some work was accomplished.

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No work was performed on May 16 or 17 as appellant was changing out its equipment.
(Id.) On May 18, 2019, appellant reported weather was coming in, that the wind was
too strong and it was not safe to work on tree work above ground. The grounds were
also in poor shape. (Id.) Some work was performed on May 20, 2019, but the "area
was extremely wet." Poor weather conditions prevented any work on May 21, 2019.
Some work was performed on May 22, 2019, but it was impacted by wet areas that
prevented work in those areas and Mr. Ryan reported that they would be thereafter
delayed due to the wet conditions, stating:

              We will reschedule work for what balance of what sections
              to perform work at that may be able to complete work
              activity depending on each areas ability to access correctly
              and safely with new date to be forwarded after
              improvement. (Syntax in original)

(R4, tab 42 at 1-2)

        9. As no work had been performed since May 22, 2019, on June 3, 2019, the
government inquired of Mr. Ryan as to when they would return to work (R4, tab 43)
and he advised that the weather and ground conditions were not conducive and he was
waiting for favorable weather and dry out conditions. Moreover, appellant advised
that stand-by time would be too costly for continued performance. (R4, tab 44) More
particularly, he stated:

              When conditions are unfavorable it is not cost effective for
              the government in mobilization and demobilization
              charges that become continual and repeated to proceed to
              site and not be able to perform work. Please take note for
              your file as our return conditions are viewed and scheduled
              accordingly to productivity and ability to perform SOW at
              your project with additional unnecessary concerns.

(R4, tab 44 at 1)

       10. On June 4, 2019, the contracting officer emailed appellant, stating:

              The government understands that there has been an
              unusual amount of rain and appreciate your reports. The
              mission partners really need this work finished as to not
              impact their business during peak season. Your contract
              still has a few weeks remaining and any assistance you can
              provide to expedite the completion would be greatly

                                           5
              appreciated. Please let SSgt Tucker and myself know ifwe
              can be of any assistance.

(R4, tab 48 at 2) Appellant replied that same date stating that it could perform the
required work at the golf course but that it would cost the government additional money
in order to resume performance in the existing weather conditions. Such performance
would utilize extensive hand work in addition to using mats to support any required
equipment. Appellant also stated that it would require an additional mobilization
payment to cover amounts over and above its bid amount. (R4, tab 48 at 1-2)

       11. On June 5, 2019, the golf course manager expressed his concern to other
government officials with the progress of the contract work, stating that no portion of
the work was 100% complete and the entire job was only 30% to 35% complete. Thus
he was resistant to paying appellant's latest invoice for $4,200 which would have
made the total paid under the contract to be $13,355 out of the total contract amount,
about $23,000, or more than 50% paid on a job that was only 30% to 35% complete.
(R4, tab 47 at 1-2) Consequently, appellant's invoice was rejected (R4, tab 51 at 1-2).

        12. On June 5, 2019, appellant rejected the government's invitation of that
same date to jointly walk the site so as to assess the work remaining to be performed,
stating:

              We are familiar with the project and know what still needs
              to be completed and we have no reservation or additional
              question with the work to be performed and we completely
              understand the project. ... We just feel that a walk
              through at this time is premature and is not productive for
              either party unless you want to extend further costs.

(R4, tab 49 at 1)

       13. On June 7, 2019, appellant submitted a proposal for the additional costs for
accomplishing the uncompleted contract work in the total amount of $8,423.05,
including overhead and profit (R4, tab 50 at 2-3).

       14. Appellant was not on the site on June 10, 2019, having been absent since
May 22, 2019 (R4, tab 52). When asked by the Course Manager whether appellant
planned to work on June 10, 2019, he was told that rain over the weekend had caused
conditions to not dry out. In fact, the Course Manager noted for the record that the
conditions were ideal for work and had been for about three weeks. (Id.)

       15. On June 12, 2019, representatives of the government and Molly Jessie had
a telephone conversation in which the government contended only 38% of the work

                                           6
was complete and appellant contended that 58% of the work was complete and the
grounds were too wet to support safe working conditions (R4, tab 55). When asked if
appellant would be able to finish by June 30, 2019, Mr. Ryan stated he did not know if
the weather will hold and he had not yet rented the required equipment (Id.)

        16. On the evening of June 12, 2019, Mr. Ryan sent a lengthy email to
government officials clarifying MJC's position on work stoppage and posing a series
of questions to the contracting officer. He further stated that unless MJC was paid to
remain on standby to perform work as allowed by the weather then appellant was
entitled to additional mobilization and demobilization each time appellant mobilized
and demobilized to perform work. Appellant concluded by stating that the
government might want to consider terminating the contract for convenience to avoid
continued extensions and an unhappy customer. (R4, tab 54 at 1-3)

       17. On June 18, 2019, the contracting officer issued a cure notice to appellant,
advising that the government considered MJC's failure to make progress a condition
that was endangering performance of the contract and that if the conditions were not
cured within 10 days after receipt of the notice the government may terminate the
contract for cause under General Provision Paragraph 13(a) (2), Termination for
Cause, of the contract (R4, tab 57 at 2). The notice further stated:

             2. Your request for termination for convenience in your
             email dated 12 June 2019 indicated a decision on your part
             to leave the work incomplete. You are hereby given the
             opportunity to complete all work by 30 June 2019, in
             accordance with the terms and conditions of the contract,
             as modified.

             3. You are directed to take the following actions as a result
             of this notice:

                    a. Within 10 days, indicate if the intent of Molly
             Jessie Co. is to not complete all work in accordance with
             the terms and the conditions of the contract.

                     Or

                   b. Demonstrate significant progress on all remaining
             work in accordance with the terms and the conditions of

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              the contract to ensure a 30 June 2019 completion date.

(Id.)

       18. Later in the day on June 18, 2019, appellant submitted a response to the
cure notice, stating that it was not requesting a termination for convenience, rather it
was proposing that such convenience termination might be the best solution if the
government did not agree to appellant's alternative proposals for accomplishing the
work, all of which required the payment of additional money (R4, tab 59 at 2). That
email further recapped appellant's view of what had transpired during the contract
period, including that the contracting officer had not responded to several questions
posed in an earlier email from appellant (R4, tab 59 at 2-9).

        19. On June 19, 2019, the contracting officer notified appellant that the cure
notice was intended to be his response to those questions, but he nevertheless provided
brief answers to those questions (R4, tab 60 at 2-8). Appellant commented on the
responses in the evening of June 19, 2019 (R4, tab 60 at 1, 3-8).

       20. The contracting officer advised MJC on June 20, 2019 that "[t]he Government
will not continue a point by point discussion as to why the work is not complete. Please
provide a response to the cure notice issued 18 June." (R4, tab 62 at 1)

        21. Appellant responded that same day in a second response to the cure notice,
stating:

              FYI, we had no intention of not completing this project.
              We have done work there in the past with no issues. Your
              way of handling this contract recently by ignoring the past
              agreements, makes it impossible to proceed.

(Id.)

        22. On June 21, 2019, the contracting officer notified MJC as follows:

              The response required by the cure notice is: 1) provide
              notice that Molly Jessie Co will not perform the work in
              accordance with the terms and conditions of the contract or
              2) demonstrate significant [progress] on all remaining
              work in accordance with the terms and the conditions of
              the contract to ensure a 10 [sic 30] June 2019 completion
              date.

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              Other suggestions as to how the Government should fulfill
              the requirement are not a valid response.

(Id.)

       23. Appellant responded by stating that it was willing to perform so long as the
contract was modified as it had suggested by extending the contract completion date
and by approving additional payments for alternative means of accomplishing the
work. If the contracting officer denied the requested modifications then appellant
suggested the contracting officer should issue a final decision that it could appeal to
the Armed Services Board of Contract Appeals. (R4, tab 63 at 1)

        24. On June 25 and 26, 2019 appellant provided additional responses, much of
it repetitious of previous responses, but also requesting that any modification to the
contract include mobilization costs and an offer to reduce the amount sought in its
third invoice from $4,200 to $3,000 (R4, tab 64 at 1). On June 28, 2019, appellant
repeated its suggestion that the government terminate for convenience (R4, tab 65 at 1)

       25. Later on June 28, 2019, the contracting officer issued a final decision
terminating the contract for cause under General Provision Paragraph 13, stating that
appellant "failed to demonstrate significant progress on the remaining work in
accordance with the terms and conditions of the contract to ensure a completion date
of 30 June 2019" (R4, tab 67).

      26. The final decision was timely appealed to this Board on July 15, 2019 and
was docketed as ASBCA No. 62134.

                                     DECISION

        "[A] default termination is a drastic sanction which should be imposed (or
sustained) only for good grounds and on solid evidence." Lisbon Contractors, Inc. v.
United States, 828 F.2d 759, 765 (Fed. Cir. 1987) (quoting JD. Hedin Constr. Co. v.
United States, 408 F .2d 424, 431 (Ct. Cl. 1969)). Though this is an appeal brought by
Molly Jessie Company, because a termination for default is essentially a government
claim, the government bears the burden of proving, "by a preponderance of the
evidence, that a termination for default was justified." DayDanyon Corp., ASBCA
No. 57681, 15-1 BCA, 36,073 at 176,151; Keystone Capital Services, ASBCA
No. 56565, 09-1 BCA, 34,130 at 168,753 (citing Lisbon Contractors, 828 F.2dat 765.
If the government establishes a prima facie case justifying the termination, the burden
shifts to the contractor to prove the default was excusable." Truck/a Services, Inc.,
ASBCA No. 57564, 17-1 BCA, 36,638 at 178,445 (citingADTConstr. Grp., Inc.,
ASBCA No. 55358, 13 BCA, 35,307 at 173,312.

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        The government terminated the contract on June 28, 2019 for failing to make
progress so as to complete the work by June 30, 2019. Whether we use the
government's estimate of the amount of work completed, 38% as of June 12, 2019, or
appellant's estimate on that same date, 58% (SOF i1 15), it is clear that a significant
amount of work remained and appellant was unwilling to complete performance unless
it was given more money. (SOF i1i110, 18) Our review of the contract revealed no
clause which required the government to increase the price on this firm fixed price
contract. Therefore we find the government has established a prima facie case
justifying the termination for cause.

        The burden then shifts to MJC to prove the default was excusable. Mostly
appellant's Rule 11 brief talks about how difficult it was to work on the site and that to
perform the work it had agreed to perform and at a price it had agreed to for such work
was not possible. The record is clear that the site had days when the ground was wet.
But it was not always wet. (SOF i114) Appellant performed no work subsequent to
May 22, 2019, and frankly we are not convinced on this evidence that it could not
work on many of those days prior to termination, it was just too costly to perform and
that is not the fault of the government.

      We find nothing in appellant's evidence or its arguments that proves the default
was excusable, and thus we find the termination for cause to be appropriate.

                                    CONCLUSION

       The appeal is denied.

       Dated: February 5, 2020
                                                   ~ · ·

                                                   RICHARD SHACKLEFORD
                                                   Administrative Judge
                                                   Vice Chairman
                                                   Armed Services Board
                                                   of Contract Appeals

(Signatures continued)

                                           iO
I concur

  Gk:----
OWEN C. WILSON
Administrative Judge
Vice Chairman
Armed Services Board
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. 62134, Appeal of Molly
Jessie Company, rendered in conformance with the Board's Charter.

       Dated:

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

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