Court Opinion

ID: 9367505
Source: CourtListenerOpinion
Date Created: 2023-01-31 23:00:11.812873+00
Date Added: 2024-06-11T17:16:00.841748
License: Public Domain

ARMED SERVICES BOARD OF CONTRACT APPEALS
 Appeal of -                                    )
                                                )
 OSC Solutions, Inc.                            ) ASBCA No. 63294
                                                )
 Under Contract No. N00189-20-A-0002            )

 APPEARANCE FOR THE APPELLANT:                     Frank V. Reilly, Esq.
                                                    Oakland Park, FL

 APPEARANCES FOR THE GOVERNMENT: Craig D. Jensen, Esq.
                                  Navy Chief Trial Attorney
                                 Philip T. Rappmund, Esq.
                                  Trial Attorney

OPINION BY ADMINISTRATIVE JUDGE ARNETT ON THE GOVERNMENT’S
         MOTION TO DISMISS FOR LACK OF JURISDICTION

        OSC Solutions, Inc. (appellant or OSC) filed an appeal from the denial of its
claim involving a Blanket Purchase Agreement (BPA). Respondent Naval Supply
Systems Command, Fleet Logistics Center Norfolk (the government or the Navy) has
moved to dismiss this appeal pursuant to ASBCA Rule 7(b). The government asserts
that the Board lacks jurisdiction to address this appeal because 1) it arises out of a
dispute over the terms of a BPA, which is not a contract and, therefore, not subject to
the Contract Disputes Act (CDA); and 2) appellant has failed to allege facts sufficient
to demonstrate that an implied-in-fact contract exists between the parties to confer
jurisdiction under the CDA.

       STATEMENT OF FACTS (SOF) FOR PURPOSES OF THE MOTION

       1. On or about May 2, 2019, the government issued Solicitation
No. N0018919R0041 for a BPA to provide maintenance, repair, and operations
supplies and materials for sale in “shop stores” at four Naval Facility Public Works
Department locations in the Northeastern United States (R4, tab 7).

       2. The Solicitation identified a list of services and products that “can be
ordered under this BPA” and stated that the “BPA does not obligate any funds” (R4,
tab 7 at 541).

        3. In response to the Solicitation, OSC submitted a price proposal that included
a table to reflect the monthly and total service price for each of the four locations.
OSC’s proposal stated a cost of $0 as the monthly and total service price for each
location and included the following note under the table: “Store service is included
within the price of the products therefore there are no additional charge for services.”
(R4, tab 8 at 599)

       4. On or about August 2, 2019, the government indicated to OSC that it would
conduct exchanges and request final proposal revisions from offerors. It identified
weaknesses in OSC’s proposal, including noting that OSC’s price proposal “must
contain separately priced services.” (R4, tab 9 at 605-06)

       5. In response, OSC provided a seven-page letter dated August 2, 2019. To
address the government’s comment about OSC’s price proposal, OSC stated the
following:

                  OSC is offering the required services to the Navy for no
                  additional charge as they are incidental to the purchasing
                  of the products from our GSA schedule contract. There is
                  therefore no additional charge for OSC to offer the Navy
                  the required services under the contract. Required services
                  are included for no additional charge. 1

(R4, tab 10 at 613)

       6. On January 2, 2020, the government and OSC entered into BPA
No. N0018920A0002. The BPA included a base ordering period through January 1,
2021, and four subsequent option years. (R4, tab 2)

       7. Paragraph (1) of the BPA states, “The following contract services/products
can be ordered under this BPA. All orders placed against this BPA are subject to the
terms and conditions of the contract, except as noted below . . .” (R4, tab 2 at 5).

      8. Paragraph (3) of the BPA states, “The Government estimates, but does not
guarantee, that the volume of purchases through this agreement will be
$70,070,404.09” (R4, tab 2 at 5).

      9. Paragraph (4) of the BPA states, “This BPA does not obligate any funds.
Funds will be obligated by placement of calls under Federal Acquisition Regulation
Subpart 8.4 entitled ‘Federal Supply Schedules’, or the use of a Government wide
purchase card issued under the Federal Acquisition Regulation 13.303 entitled
‘Blanket Purchase Agreements’, and agency regulations” (R4, tab 2 at 5).

1
    OSC reiterated this statement in an email to the government on August 8, 2019 (R4, tab 11 at 615-
         16).
                                                    2
       10. Paragraph (11) of the BPA states, “Best Value: The Fleet Logistics Center
Norfolk, Contracting Office, and OSC Solutions, enter into this blanket purchase
agreement with the intent of ensuring the best value is achieved for the Navy when
acquiring required materials and services as detailed in the PWS” (R4, tab 2 at 6).

      11. On December 31, 2020, the government exercised Option Period 1, which
extended the BPA to January 1, 2022 (R4, tab 5 at 112-13).

      12. In July 2021, OSC submitted an invoice requesting payment of
$1,013,729.28 for “unabsorbed store services direct costs.” OSC indicated that it had
discounted its store service costs based on the estimated volume of sales indicated in
the BPA, which had not been realized (R4, tab 12 at 619).

       13. In October 2021, OSC requested a “resolution” of the unpaid invoice
indicating that it desired to cancel its obligation under the BPA effective October 29,
2021, if the government would not pay the invoice (R4, tab 13 at 627).

       14. On November 19, 2021, the government indicated its intent not to exercise
the next option period (R4, tab 12 at 622-23). As a result, the BPA expired on
December 31, 2021.

       15. On November 29, 2021, the contracting officer stated the government’s
position that there was “no basis for the payment of OSC’s labor service invoices” and
indicated that the government did not intend to pay the invoices or modify the BPA “to
permit such charges” (R4, tab 13 at 621).

        16. On February 17, 2022, OSC filed a certified claim seeking $1,152,858 for
store labor services incurred in the performance of the BPA (R4, tab 6). Rather than
price the service costs separately, OSC included its store service costs within the cost
of its products. OSC asserted that its service costs were not compensated because the
government ordered “a small percentage” of the product amount estimated in the BPA,
and OSC only received payment for services associated with its products that were
ordered. Had the BPA estimate been realized, OSC concluded that it would have been
paid in full. (R4, tab 6 at 115-18)

        17. On April 18, 2022, the government denied OSC’s certified claim (R4,
tab 1). The contracting officer concluded that the BPA did not guarantee a particular
volume of sales, that the BPA did not impose a contractual obligation upon the
government, and that OSC made a business decision not to propose separate pricing
for store labor prices since that was specifically identified in the Solicitation and
discussed in the exchanges prior to award. The contracting officer noted that OSC
elected to include its store service costs within the price of the products stating that
“there are no additional charge for services.” (R4, tab 1 at 1)

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       18. On June 2, 2022, appellant filed an appeal with the Board seeking
$1,153,858 2 for labor service costs it allegedly incurred to staff the four Naval Public
Works Department locations under the BPA due to the government’s alleged breach of
an implied-in-fact contract. Appellant further asserted that the Board has jurisdiction
to consider its’ claims that arose under orders placed pursuant to the BPA.
Accordingly, we find that these assertions are not frivolous.

                                             DECISION

        In its motion, the government contends that the Board lacks jurisdiction to
decide OSC’s claim and should dismiss the pending appeal because OSC’s claim does
not arise from a contract that is subject to the CDA (gov’t mot. at 2). The government
asserts that the BPA is not a contract and denies that the circumstances alleged by
OSC give rise to an implied-in-fact contract (gov’t mot. at 8-9). Appellant contends
that it has met the jurisdictional threshold through its “non-frivolous assertion of a
contract” (app. resp. at 4). Specifically, appellant asserts an implied-in-fact contract
exists because the government required appellant to incur staffing service costs upon
award of the BPA, including staffing costs to process competitor’s orders, and “that it
was implied that OSC would be paid the fair and reasonable value of work
performed.” Further, Appellant argues that the question of whether a valid contract
exists goes to the merits of the appeal and does not affect the Board’s jurisdiction over
the appeal. (App. resp. at 2, 4)

        Under the CDA, the Board possesses jurisdiction to hear appeals “from a
decision of a contracting officer . . . relative to a contract made by that department or
agency.” 41 U.S.C. § 7105(e)(1)(A) The Federal Acquisition Regulation (FAR)
2.101 defines a “contract” as: “[A] mutually binding legal relationship obligating the
seller to furnish the supplies or services (including construction) and the buyer to pay
for them. It includes all types of commitments that obligate the Government to an
expenditure of appropriated funds and that, except as otherwise authorized, are in
writing.” The Board's jurisdiction under the CDA is predicated upon an “express or
implied contract” between a contractor and the government. ASFA Constr. Indus. and
Trade, Inc., ASBCA No. 57269, 15-1 BCA ¶ 36,034 at 176,004 (citing 41 U.S.C. §
7102(a)). As the proponent of the Board's jurisdiction, OSC bears the burden of
establishing jurisdiction by a preponderance of the evidence. Najmaa Alshimal,
ASBCA No. 62701, 21-1 BCA ¶ 37,872 at 183,899; see also K-Con Bldg. Sys., Inc. v.
United States, 778 F.3d 1000, 1004 (Fed. Cir. 2015). “The facts supporting
jurisdiction are subject to our fact-finding upon a review of the record.” CCIE & Co.,
ASBCA Nos. 58355, 59008, 14-1 BCA ¶ 35,700 at 174,816 citing Raytheon Missile
Sys., ASBCA No. 58011, 13-1 BCA ¶ 35,241 at 173,016.

2
    The amount sought in OSC’s complaint for $1,153,858 differs by $1,000 from the amount stated in
         OSC’s claim in the amount of $1,152,858.
                                                  4
         The CDA gives the Board jurisdiction over any express or implied contract for
 the procurement of property or services. 41 USC § 7102(a) The Board has jurisdiction
 to consider a claim seeking payment under an alleged implied-in-fact contract.
 Concorde, Inc., ASBCA No. 53749, 03-1 BCA ¶ 32,113 at 158,783 citing Liquid
 Carbonic, ASBCA No. 39645, 91-2 BCA ¶ 24,040 at 120,334. The determination of
 whether a valid contract exists goes to the merits of the appeal and will not be resolved
 at this jurisdictional threshold.

        In the instant appeal, we found that appellant has made a non-frivolous
 assertion of a contract sufficient to establish the Board’s jurisdiction (SOF ¶ 18).
 Thus, the Board has jurisdiction over appellant’s claim under an alleged implied-in-
 fact contract theory.

                                       CONCLUSION

           The motion to dismiss is denied.

           Dated: January 17, 2023

                                                  LAURA J. ARNETT
                                                  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

                                              5
       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. 63294, Appeal of OSC
Solutions, Inc., rendered in conformance with the Board’s Charter.

       Dated: January 18, 2023

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

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