Court Opinion

ID: 4401609
Source: CourtListenerOpinion
Date Created: 2019-05-29 20:01:47.870683+00
Date Added: 2024-06-11T14:52:02.929976
License: Public Domain

In the United States Court of Federal Claims
  No. 16-950C, 17-2017C, 18-80C, 18-522C, 18-677C, 18-691C, 18-921C, 18-1779C,
                               19-245C, 19-658C
                                  (consolidated)
                                 (Filed: May 29, 2019)
*************************************
                                    *
CB&I AREVA MOX SERVICES, LLC,       *
                                    *
                    Plaintiff,      *
                                    * Contracts Disputes Act; 41 U.S.C. §
v.                                  * 7109; Contractor Claim; Appeal of a
                                    * Government Claim; Recovery of Interest.
THE UNITED STATES,                  *
                                    *
                    Defendant.      *
                                    *
*************************************

Dennis J. Callahan with whom were Mark J. Linderman, Lisa N. Himes, and Stephen L.
Bacon, Rogers Joseph O’Donnell, P.C., San Francisco, California, for Plaintiff.

Anthony Schiavetti, Trial Attorney, with whom were Joseph H. Hunt, Assistant Attorney
General, Robert E. Kirschman, Jr., Director, Allison Kidd-Miller, Assistant Director,
Joseph Ashman and P. Davis Oliver, Senior Trial Counsel, and Sosun Bae, Trial Attorney,
Commercial Litigation Branch, Civil Division, U.S. Department of Justice, Washington,
D.C., and Mary-Ellen Noone, Site Counsel, Savannah River Field Office, National Nuclear
Security Administration, Aiken, South Carolina, for Defendant.

                               OPINION AND ORDER

WHEELER, Judge.

       On June 11, 2018, this Court ordered the National Nuclear Security Administration
(“NNSA”) to return to Plaintiff CB&I AREVA MOX Services, LLC (“MOX Services”)
approximately $21.6 million in incentive fees that the NNSA improperly clawed back.
Currently before the Court is MOX Services’ motion for interest and recovery of penalties
and fees on that clawed back amount. Since the dispute over the $21.6 million in already-
paid incentive fees originated as an affirmative government claim, MOX Services cannot
recover interest. For the reasons explained below, the Court DENIES MOX Services’
motion. MOX Services’ request for fees is moot considering the Government’s
representation to the Court that the “NNSA will repay this amount to MOX Services.” Def.
Resp. at 2.

                                             Background1

        Beginning in fiscal year 2008, MOX Services became eligible to earn quarterly
incentive fees if its progress on construction fell within certain cost and schedule
parameters. Dkt. No. 112 at 4. The incentive fee structure includes a vesting schedule that
provides for up to half of previously paid incentive fees to vest as final with MOX Services
at the end of the fifth quarter following the quarter in which the incentive fee is earned. Id.
at 5. The remaining half of the incentive fees remain provisional. Id. MOX Services must
repay provisional fees to the United States if MOX Services’ performance falls outside of
cost and schedule parameters specified in the contract. Id. The NNSA made 12 incentive
fee payments during fiscal years 2008-2010 then stopped paying MOX Services in fiscal
year 2011. Id.

       On September 29, 2016, MOX Services submitted a certified claim to the NNSA
for approximately $53 million in unpaid incentive fee amounts from fiscal years 2011 to
2015 plus approximately $3.5 million in interest. Id. at 6; Am. Compl. Ex. A at 2. On
December 7, 2016, the contracting officer issued two final decisions in a letter sent to MOX
Services, wherein the officer (1) denied MOX Services’ certified claim for the $53 million
in unpaid incentive fees, and (2) directed MOX Services to return $21.6 million in already-
paid provisional incentive fees currently in MOX Services’ possession. Dkt. No. 112 at 6.
Approximately one month later, the NNSA collected the $21.6 million via offsets.

       MOX Services filed a claim in this Court alleging that the NNSA improperly clawed
back the $21.6 million. Id. at 2. The Court agreed and directed the NNSA to return the
$21.6 million to MOX Services until the project is completed. MOX Services now seeks:
(1) $12,187.86 in administrative charges that the NNSA assessed MOX Services when the
agency clawed back the incentive fees, and (2) $790,840.24 in interest that would have
accrued on the $21.6 million over the 18 months during which the NNSA possessed the
clawed back amount.

1
 The facts surrounding this dispute are fully set out in the Court’s Opinion and Order dated June 11, 2018,
originally issued as Dkt. No. 76 and reissued as Dkt. No. 112, CB&I AREVA MOX Servs., LLC v. United
States, 138 Fed. Cl. 292 (2018). The Court only briefly recites those facts essential to this issue.

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                                                  Discussion

      A. Standard of Review

       Section 7109 of the Contract Disputes Act (“CDA”) provides that “[i]nterest on an
amount found due a contractor on a claim shall be paid to the contractor for the period
beginning with the date the contracting officer receives the contractor’s claim, pursuant to
section 7103(a) of this title, until the date of payment of the claim.” 41 U.S.C. § 7109(a)(1).
Section 7103(a) further clarifies that the “claims” referenced in section 7109 are those “by
a contractor made against the Federal Government.” Consistent with the CDA, section
33.208 of the Federal Acquisition Regulation provides that “[t]he Government shall pay
interest on a contractor’s claim on the amount found due and unpaid.” FAR 33.208.
Accordingly, the CDA permits interest recovery on a “contractor’s claim” but not on the
successful appeal of a Government claim. See, e.g., Magnus Pac. Corp. v. United States,
133 Fed. Cl. 640, 665 (2017) (collecting cases finding the same). Accordingly, if the
Government first disputed MOX Services’ entitlement to the $21.6 million, then MOX
Services may not recover interest.2

      B. The Claim to the $21.6 Million Originated as a Government Claim.

       MOX Services’ September 29, 2019 “Certification of Claim” expressly seeks
payment of $53 million plus approximately $3.5 million in interest. See Am. Compl. Ex.
A at 5. This claim certification makes no mention of the $21.6 million nor does it request
any interpretation of contract terms regarding MOX Services’ entitlement to retain already-
paid fees. MOX Services attempts to retroactively inject a claim to the $21.6 million in
previously-paid incentive fees into its September 29, 2016 claim.

        First, MOX Services’ citations to language scattered throughout its claim is
unavailing. MOX Services points to a declaration that it had met the “cost and schedule
performance targets, and currently is entitled to the entire $81,990,019 in incentive fee on the
Contract.” Id. at 232. MOX Services submits that it sought an interpretation of contract
terms, and within that approximately $82 million included a claim to $53 million in unpaid
incentive fees as well as to the $21.6 million in provisional incentive fees already paid.
However, MOX Services also cites a footnote in its claim which provided that “The parties
also included a collateral savings/cost share provision which would provide an additional
upward or downward adjustment. The collateral savings/cost share adjustment is made at
the end of performance, is not relevant at this time and, thus, is not addressed in this claim.”
Id. at 108 n.13. Plaintiff, therefore, explicitly limited its claim to amounts due but unpaid.
This interpretation is consistent with its demand for the $53 million in unpaid fees plus
interest.

2
    The parties do not dispute this interpretation of section 7109(a)(1).

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       Second, MOX Services maintains that implicit in its claim for the $53 million plus
interest for unpaid incentive fees was a claim for entitlement to retain the $21.6 million in
paid provisional incentive fees. See Pl. Mot. at 10. It would be illogical to read MOX
Services’ September 29, 2016 certified claim as implicating the $21.6 million. At that
time, MOX Services remained in possession of that money and the NNSA had not yet
demanded repayment of those provisional fees. Put differently, there was nothing for MOX
Services to contest at that point.

       Lastly, this Court and MOX Services have both consistently characterized the
dispute over the $21.6 million as an affirmative government claim. See Am. Compl. ¶ 7
(“MOX Services appeals four contracting officer’s final determinations (COFDs) . . . .
MOX Services appeals a second COFD, set forth in the same NNSA letter, that required
MOX Services to repay to NNSA incentive fees that had been paid to MOX Services on a
provisional basis.”); Dkt. No. 112 at 14 (“Count II is an affirmative government claim in
which the NNSA clawed back $21.6 million in provisional incentive fee payments
previously made to MOX Services. MOX Services did not present a certified claim to the
contracting officer for this amount.”)

       The contracting officer’s December 7, 2016 letter demanding that MOX Services
repay the $21.6 million in previously-paid provisional incentive fees put entitlement to
those fees at issue. MOX Services then appealed that affirmative government claim. The
CDA does not provide for the payment of interest on the successful appeal of a government
claim, and MOX Services is not entitled to interest as a result.

                                        Conclusion

        For the reasons stated above, the Court DENIES Plaintiff MOX Services’ motion
for interest on clawed back incentive fees. Its request for recovery of penalties and fees
on those clawed back incentive fees is moot.

       IT IS SO ORDERED.

                                                         s/ Thomas C. Wheeler
                                                         THOMAS C. WHEELER
                                                         Judge

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