Court Opinion

ID: 4258272
Source: CourtListenerOpinion
Date Created: 2018-03-26 20:00:04.283207+00
Date Added: 2024-06-11T12:11:59.546715
License: Public Domain

ARMED SERVICES BOARD OF CONTRACT APPEALS

Appeals of --                                  )
                                               )
Shams Walizada Construction Company            )      ASBCA Nos. 61411, 61469
                                               )
Under Contract No. H92237-l l-C-0608           )

APPEARANCE FOR THE APPELLANT:                         Mr. Shams UR Rehman
                                                       President

APPEARANCES FOR THE GOVERNMENT:                       Jeffrey P. Hildebrant, Esq.
                                                       Air Force Deputy Chief Trial Attorney
                                                      Heather M. Mandelkehr, Esq.
                                                      Lt Col Byron G. Shibata, USAF
                                                       Trial Attorneys

                  OPINION BY ADMINISTRATIVE JUDGE CLARKE

       This appeal involves a contract for construction of a "pole barn" at a site
in Afghanistan. Appellant, Shams Walizada Construction Company (SWCC),
claims $25,000 for "additional interest." SWCC elected to proceed under Board
Rule 12.2, 1 Small Claims (Expedited) Procedure and Rule 11, Submission Without a
Hearing. We have jurisdiction pursuant to the Contract Disputes Act of 1978 (CDA),
41 U.S.C. ,, 7101-7109. We deny the appeal.

                                  FINDINGS OF FACT

Contract No. H92237-11-C-0608

         1. On 1 April 2011 the Air Force (AF) awarded SWCC a firm-fixed-price
(FFP) contract, H92237-11-C-0608 (0608), for the construction of a pole barn at
Ghazni Meet Site, Afghanistan, in the amount of $42,154.45 (R4, tab 1 at 1-3).
Performance was to be completed 30 calendar days after the notice to proceed (NTP)
(id. at 3). Contract 0608 included the following clauses: Clause G 1., Invoices, that
explained how the contractor was to submit invoices (id. at 4); Clause H-7., Hours of
Work, that included, "While the Government will make its best effort to make forces
available, if a Government inspection or escort force is not available, the Contractor

1
    A decision under Rule 12.2 shall have no value as precedent, and in the absence of
         fraud, shall be final and conclusive and may not be appealed or set aside.
will still be liable to complete the work within the specified time period" 2 (id. at 8);
Clause H-8., Release of Claims, that required, "Upon completion of the work and prior
to final payment, the contractor shall be required to furnish to the Contracting Officer
a Release of Claims (Attachment 1) per FAR 52.232-5, Payments Under Fixed-Price
Construction Contracts" (id. at 8); and Clause H-15., Escorts Badging, that states,
"The contractor is responsible for providing badging for all workers and coordinating
all required escorts for the duration of the project. Contractor is responsible for all
escort costs." (Id. at 9) Contract 0608 incorporates by reference FAR 52.232-5,
PAYMENTS UNDER FIXED-PRICE CONSTRUCTION (SEP 2000), that requires the
execution of a release and submission of a voucher "after completion and acceptance
of all work" (id. at 16).

       2. Contract 0608 includes a Scope of Work (SOW) that required the contractor
to coordinate with the contracting officer representative (COR) for delivery of all
supplies and equipment to the construction site (R4, tab 2 at 2). The SOW required the
AF to "provide coordination for contractor's vehicles, personnel and equipment to
enter ANA/ETT Base" (id. at 4 ).

Contract Performance

       3. Although the record is limited, it appears SWCC was told to start
performance on 24 September 2011 (R4, tab 9 at 1-2). SWCC delivered material to
the job site and poured a concrete pad "in accordance with the contract." The contract
was not successfully completed. (Id. at 1)

The $26, 126 Claim

       4. By email dated 7 September 2016, SWCC submitted a claim stating that it
had never been paid for "all our expense we did under this contract" 3 (R4, tab 8 at 1).
Attached to the email was a copy of the contract and a series of emails between the
date of the contract and 2 January 2012 (id. at 48-70). The emails present a confusing
exchange where SWCC stated it could not get into the work site because the AF would
not respond to its requests for access and the AF responding that SWCC's workers
were not present for work (id.). There is no voucher or request for payment in the
2011 documents. The record includes nothing between 2 January 2012 and the
7 September 2016 claim submission.

2
  We wonder how the contractor could be liable to complete the work within the
      specified time if the government failed to provide escorts thereby preventing
      the contractor access to the work site which is apparently what happened in this
      contract. We need not resolve that issue today, however.
3
  A sum certain was not evident in the 7 September 2016 claim (R4, tab 8).

                                           2
       5. According to the 31 October 2016 contracting officer's final decision,
SWCC submitted a claim for $26,126 on 15 August 2016 (R4, tab 9 at 1). 4 In his
31 October 2016 final decision contracting officer (CO) SFC Desmond Culler granted
SWCC's claim and approved payment of the $26,126 upon submission of a signed
modification and an invoice for that amount (id. at 3). 5 In the final decision the AF did
not contest SWCC's assertion that it delivered materials to the site and poured a
concrete pad "in accordance with the contract" (R4, tab 9 at 1). Therefore, I find that
SWCC successfully completed that much of the contract. The final decision cited
"inconsistencies with the performance schedule ultimately prevented the completion of
work under the contract" (id.). The final decision included the following
determination:

                After a review of SWCC's claim and the supporting email
                documentation supplied, I have determined that although
                SWCC made repeated efforts to finish the work under the
                terms and conditions outlined within the contract, it was
                ultimately unable to gain access to the base to get to the
                worksite.

(R4, tab 9 at 2)

      6. On 16 November 2016 SWCC and CO Culler signed bilateral Modification
No. P00002 that allowed the $26,126 for "Claim Settlement" (R4, tab 10 at 3).
Modification No. P00002 included the following release:

                The Contractor hereby releases the US Government from
                any and all liability under this contract for further equitable
                adjustments attributable to such facts or circumstances
                giving rise to the "proposal(s) for adjustment". No further
                claims, demand, or cause of action, legal, equitable,
                contractual, or administrative, to include the unabsorbed
                overhead, that may have arisen from, resulted from, or
                related to the work as set forth in the terms of the contract
                may be made against the US Government.

(R4, tab 10 at 1) There were no exclusions or reservations associated with the release
(id.). Also on 16 November 2016 SWCC submitted an invoice for $26,126 (R4,
tab 12). The AF attempted to pay the invoice twice in March and April 2017 but

4
    The 15 August 2016 claim does not appear to be in the record.
5
    The AF discusses the claim history which we skip because it is not relevant to our
         decision (gov't br. at 2-3).

                                              3
SWCC's banks rejected the payment (R4, tab 13). The $26,126 was paid 27 July 2017
(R4, tab 11 ).

The $25,000 Claim

      7. By email dated 22 September 2017, SWCC submitted a second claim for
$25,000 stating in part:

              2. Our Employees and Staffs who worked under this
              contract keep charging us interests and penalty for late
              payment under this contract[,] which were delayed from
              US Government in not paying SWCC on time.

              3. Our Company SWCC was owing the US Government
              under this contract $26,126.00, which shquld have been
              paid by January 2012. But it has been paid to Our
              Company after 5 and half years, which was paid 28 July
              2017.

              4. Therefor SWCC has the right according to contract
              terms and conditions to charge the US Government an
              additional amount of $25,000.00 interest, which equals to
              $378.00 a month for the delay in our payments.

              5. SWCC is submitting their claim for the interest in the
              amount of $25,000.00 against the Government for its fault
              in not paying our company in time.

(R4, tab 18 at 2) A copy ofthe 31 October 2016 final decision was attached to the
claim (id. at 4 ).

       8. On 21 December 2017, CO MAJ Daniel Weidman issued a final decision
denying SWCC's $25,000 claim (R4, tab 20). The CO listed three reasons why the
claim was denied: Release of Claims in Modification No. P00002; FAR 52.232-27
Prompt Payment for Construction Contracts clause does not provide for interest
penalties if there is disagreement over the claimed amount; and final payment (id. at 4).

       9. On 22 December 2017, SWCC appealed to the Board the CO's 21 December
2017 final decision and requested the Small Claims (Expedited) Procedure. SWCC
attached the final decision and table listing "Late Payment Penalty." SWCC listed 17
employees it contends were paid $1,470 each. For each employee there is a payment
voucher attached to the appeal letter filled out between 6 and 10 August 2017.

                                           4
There is no indication when the payments were made other than the August 2017
dates. There is no discussion of how SWCC was liable for making these payments.

                                       DECISION

        Both parties filed briefs; only the AF filed a reply brief. The AF relies on four
main arguments: Modification No. P00002's release, accord and satisfaction, final
payment, 6 and SWCC's failure to prove entitlement. SWCC reiterates its previous
arguments but does not address the release in Modification No. P00002 or explain why
it was liable to pay its workers' claims.

No Proof ofPayment Request until 2016

        Although SWCC provided material to the site and poured a concrete pad in
2011, the contract was not completed (finding 3). The first problem SWCC faces on
this record is there is no evidence that it ever submitted a request for payment such as
an invoice or voucher to the AF until its claim on 7 September 2016 (finding 4).
SWCC fails to explain how the AF is liable for late payment when SWCC did not
request partial payment until 2016. SWCC failed to meet its burden of proof that it
submitted a request for payment in 2012.

No Proof ofSWCC 's Liability for the $25,000

        According to SWCC it has "the right according to contract terms and conditions
to charge the US Government an additional amount of $25,000.00 interest" for late
payment of the $26,126 (finding 7). SWCC presented no evidence or argument
attempting to prove where this "right" came from or that it was obligated to pay the
$25,000.00 "interests and penalty for late payment under this contract" to its employees
(id.). In its reply brief the AF characterizes SWCC's claim as a "pass-through claim for
its employees" with which we agree (gov't reply br. at 2). The AF correctly cites to
E.R. Mitchell Constr. Co. v. Danzig, 175 F.3d 1369 (Fed. Cir. 1999), for the proposition
that SWCC must prove that it is liable to its employees for the late payment fees before
a pass-thorough claim may be made. Id. at 1374. SWCC failed to meet its burden of
proof that it is liable to its employees for the "interest and penalty" amounts paid.

6
    The Air Force cites FAR 52.232-5 but it requires completion and acceptance of all
         work, a voucher and release other than for claims excepted from the release.
         FAR 52.232-5(h). FAR 52.232-5 and the final payment defense does not apply
         to a settlement situation.

                                           5
Modification No. P00002 & Release

        Modification No. P00002 included a release that stated in part, "No further
claims. demand. or cause of action. legal, equitable, contractual, or administrative, to
include the unabsorbed overhead, that may have arisen from, resulted from. or related
to the work as set forth in the terms of the contract may be made against the US
Government" (finding 6). SWCC fails to explain why this release is not enforceable.
We agree with the government's reliance on Mary Lou Fashions, Inc., ASBCA
No. 29318, 86-3 BCA 1 19,161, for the proposition that, "[i]t is a fundamental rule that
a contractor who executes a general release is thereafter barred from claiming
additional compensation under the contract on the basis of events that occurred prior to
the execution of the release unless there are special circumstances present which
vitiate the release." Id. at 96,845. The contract included instructions on how to submit
invoices (finding 1). Although the Payment Invoices are all dated in August 2017,
which is after the release was executed on 6 November 2016, the "events" causing the
claimed payments to the workers was the delay in payment to S WCC commencing in
January 2012 which is well before the execution of the release. SWCC failed to meet
its burden of proof as to why the Board should not enforce the release S WCC agreed
to in Modification No. P00002.

SWCC's Bank Delays

       After the AF approved the payment of $26,126 in the 31 October 2016 final
decision, SWCC signed Modification No. P00002 on 16 November 2016 and
submitted an invoice on the same day (finding 6). The AF attempted to pay the
invoice twice in March and April 2017 but SWCC's banks refused to accept the
payments. The $26,126 was paid on 27 July 2017. (Id.) This delay in payment was
not the AF's fault.

                                   CONCLUSION

      In addition to the failures of proof by S WCC mentioned above, we find that
SWCC's $25,000 claim is barred by the release in bilateral Modification No. P00002.
The appeal is denied.

      Dated: 15 March 2018

                                                 CRAIG S. C ARKE
                                                 Administrati e Judge
                                                 Armed Services Board
                                                 of Contract Appeals

                                          6
       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. 61411, 61469, Appeals of
Shams Walizada Construction Company, rendered in conformance with the Board's
Charter.

      Dated:

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

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