Court Opinion

ID: 2805604
Source: CourtListenerOpinion
Date Created: 2015-06-04 15:00:06.934973+00
Date Added: 2024-06-11T11:29:56.311541
License: Public Domain

ARMED SERVICES BOARD OF CONTRACT APPEALS

Appeal of --                                )
                                            )
Snowdon, Inc.                               )      ASBCA No. 59705
                                            )
Under Contract No. HDTRAl-10-C-0065         )

APPEARANCE FOR THE APPELLANT:                      Mr. William J. Welsh
                                                    Owner

APPEARANCES FOR THE GOVERNMENT:                    E. Michael Chiaparas, Esq.
                                                    DCMA Chief Trial Attorney
                                                   Gregory T. Allen, Esq.
                                                    Trial Attorney
                                                    Defense Contract Management Agency
                                                    Chantilly, VA

                OPINION BY ADMINISTRATIVE JUDGE MCILMAIL

                                 INTRODUCTION

       Appellant, Snowdon, Inc. (Snowdon), appeals from a contracting officer's final
decision demanding payment to the government of $47,500, the amount that Snowdon
received from a third party to which it sold government property used to perform a
contract that Snowdon had with the Defense Threat Reduction Agency (government).
We deny the appeal, and award to the government $47,500, plus interest. Appellant
has elected to proceed pursuant to Board Rule 12.3.

                               FINDINGS OF FACT

       In July 2010, Snowdon entered into a research and development contract with
the government (R4, tab 1). The contract incorporated by reference Federal
Acquisition Regulation (FAR) clause 52.245-1, GOVERNMENT PROPERTY (JUN 2007)
and FAR clause 52.232-17, INTEREST (OCT 2008) (R4, tab 1 at G-17). The contract's
performance period ended in August 2011 (R4, tab 4 ). In the course of and for the
purpose of contract performance, Snowdon purchased two pieces of equipment for
which the government reimbursed Snowdon, vesting title in the equipment to the
government (see compl. at 2; R4, tab 7 at 76, 81, tab 16 at 1-2).

       In 2012, Snowdon and the government engaged in a series of communications
regarding the disposition of the government-owned equipment (R4, tab 7 at G-77-81).
On 17 May 2012, the government informed Snowdon by email that "[i]f none of the
equipment is deemed good for use here or transferred to another project then it will be
left to Snowdon," ending the email with the postscript "More to follow .... " (id. at
G-78-79). Later the same day, in response to Snowdon asking when the government
might make its decision, the government's representative stated "I think 2 weeks at the
most" (id. at G-78). On 20 June 2012, Snowdon followed up, requesting that the
government provide equipment disposition instructions because, Snowdon advised, it
was vacating its facility at the end of the month (id. at G-73).

       On 30 July 2012, Snowdon sold the equipment to TAXIS Pharmaceuticals
(TAXIS) for $47,500 (compl. at 4; R4, tab 7 at G-85). There is no evidence that upon
sale of the equipment, Snowdon offered to remit the proceeds to the government. In
June 2014, the government inquired of Snowdon regarding the equipment (id. at
G-81). Snowdon informed the government that "no instructions [regarding the
equipment] were ever provided to Snowden" (id. at G-77), and that "[a]bsent guidance
from the [contracting officer], the company was forced to take responsibility for the
equipment and sold it" (id. at G-73). On 27 August 2014, the contracting officer
issued a final decision demanding payment to the government of $4 7 ,500, finding that
Snowdon had sold the equipment, for that amount, without government approval (R4,
tab 11).

                                      DECISION

       Snowdon owes the government $47,500, plus interest. FAR clause 52.245-1,
GOVERNMENT PROPERTY (JUN 2007) provides, at paragraph 0)(9), that "[a]s directed
by the Contracting Officer, the Contractor shall credit the net proceeds from the
disposal of Contractor inventory to the contract, or to the Treasury of the United States
as miscellaneous receipts." The same clause defines, at paragraph (a), "Contractor
inventory" as including "[a]ny property acquired by and in the possession of a
Contractor... under a contract for which title is vested in the Government and which
exceeds the amounts needed to complete full performance under the entire contract."

       There is no dispute, and we so find, that the equipment that Snowdon sold to
TAXIS was "Contractor inventory," and that the net proceeds that Snowdon realized
from the disposal of that equipment is $47,500. Consequently, pursuant to FAR clause
52.245-10)(9), Snowdon owes the government $47,500. Snowdon contends that the
government abandoned the equipment, but we disagree. FAR clause 52.245-l(k)(2)
provides that "[t]he Government, upon notice to the Contractor, may abandon any
nonsensitive Government property in place," but Snowdon received no such notice.
At most, the communications between Snowdon and the government establish that the
government was considering its options for disposing of the equipment, including
abandonment, but did not communicate any disposal decision to Snowdon. Indeed,
without any instructions or guidance from the government, Snowdon took matters into
its own hands and sold the equipment to a third party.

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      In view of our decision, we find it unnecessary to address the parties' other
arguments.

                                    CONCLUSION

      For the reasons stated, the appeal is denied, and the government is awarded
$47,500, plus interest pursuant to FAR clause 52.232-17, INTEREST (OCT 2008), from
27 August 2014, the date of the contracting officer's final decision demanding
payment, until the date of payment.

       Dated: 20 May 2015

                                               ~~
                                               ·~ffiL
                                                 Administrative Judge
                                                 Armed Services Board
                                                 of Contract Appeals

I concur

RICHARD SHACKLEFORD
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. 59705, Appeal of
Snowdon, Inc., rendered in conformance with the Board's Charter.

       Dated:

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

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