Court Opinion

ID: 2820609
Source: CourtListenerOpinion
Date Created: 2015-07-27 21:00:36.504072+00
Date Added: 2024-06-11T12:26:24.398732
License: Public Domain

ARMED SERVICES BOARD OF CONTRACT APPEALS

Appeals of --                                 )
                                              )
Highland Al Hujaz Co., Ltd.                   )      ASBCA Nos. 59746, 59818
                                              )
Under Contract No. W917PM-09-C-0049           )

APPEARANCES FOR THE APPELLANT:                       Herman M. Braude, Esq.
                                                     Edward D. Manchester, Esq.
                                                      Braude Law Group, P.C.
                                                      Washington, DC

APPEARANCES FOR THE GOVERNMENT:                      Thomas H. Gourlay, Jr., Esq.
                                                      Engineer Chief Trial Attorney
                                                     Daniel B. McConnell, Esq.
                                                      Assistant Counsel
                                                      U.S. Army Engineer District, Middle East
                                                      Winchester, VA

             OPINION BY ADMINISTRATIVE JUDGE THRASHER
         ON APPELLANT'S MOTION FOR AN ORDER DIRECTING THE
                 GOVERNMENT TO FILE THE COMPLAINT

       This matter comes before the Board on appellant's motion for an order requiring
the government to file the complaint in this appeal. The government opposes the motion.
For the reasons that follow we grant the motion.

       STATEMENT OF FACTS (SOF) FOR PURPOSES OF THE MOTION

       1. The government awarded Contract No. W9 l 7PM-09-C-0049 (contract)
to Highland Al Hujaz Co., Ltd. (HLH), on 3 June 2009, for design and construction of
the Afghanistan National Army Corps Support Battalion, Camp Hero, Kandahar,
Afghanistan (R4, tab 11 ). • The government terminated the contract for default on
23 April 2012 (R4, tab 2). On 18 August 2012, the government issued an invitation
for bids to reprocure the uncompleted portion of the contract and to correct defects in the
work completed (R4, tab 903). Five bids were received and the government awarded
the reprocurement contract on 24 September 2012 (ASBCA No. 58243, R4, tab 841).

• The Rule 4 file in ASBCA Nos. 59746 and 59818 is consolidated with the Rule 4
      file in ASBCA No. 58243, the appeal on the associated default termination
      action giving rise to the demand for excess reprocurement costs.
The work under the reprocurement contract was completed and accepted by the
government on 31January2014 (R4, tab 904).

        2. On 21 May 2014 the government issued HLH a demand letter to collect the
excess reprocurement costs in completing the work which was deficient and/or left
unfinished as of the date of termination for default of the contract. The demand letter
asserted the government's right to assess excess reprocurement costs, that the
reprocurement contract was competitively awarded, identified the reprocurement
contractor and described how the asserted amount of excess reprocurement costs were
calculated. (R4, tab 889) HLH responded on 23 May 2014 rejecting the government's
right to excess reprocurement costs (R4, tab 901 ). In addition to the issue of the
propriety of the underlying default termination being litigated in ASBCA No. 58243,
HLH's response asserted a number of reasons why the government's demand for
excess reprocurement costs was erroneous or questionable. Further, the letter asked
the government to confirm the demand letter was not a contracting officer's final
decision (COFD) (R4, tab 901).

        3. Two years earlier, on 18 June 2012, the government issued HLH a demand
letter for reimbursement of $903,553.79 in overpayments to HLH during performance
of the contract (R4, tab 98). HLH responded disagreeing with the government's
assessment and requested further information (R4, tab 900). There is no record of a
request for a COFD, issuance of a COFD or an appeal to the Board on this issue.

        4. The government issued HLH a second demand letter on 30 May 2014 that
mirrored the 21May2014 demand letter but also addressed each issue raised by HLH
in its response. However, the second demand letter did not address whether it was a
COFD. (R4, tab 893) Again on 4 June 2014, HLH rejected the government's
demands and repeated its arguments for the rejection of the assessment of excess costs
(R4, tab 902). On 20 June 2014 HLH requested issuance of a COFD on the
government's claim for excess reprocurement costs (R4, tab 921 at 2). Having not
received a COFD by 21 October 2014, HLH asked the government to confirm when it
would issue a COFD (R4, tab 922). No response or COFD was forthcoming so HLH
filed a notice of appeal with the Board on 15 December 2014 which was docketed as
ASBCA No. 59746. On 22 January 2015, the government issued a COFD repeating
its demand for excess reprocurement costs. The COFD referenced the overpayment
issue asserted on 18 June 2012 in a recitation of facts but did not appear to include the
amount of overpayment within the excess reprocurement calculations or otherwise
address entitlement to any amount for the overpayment issue in its decision. HLH
appealed the COFD to the Board on 5 February 2015 which was docketed as ASBCA
No. 59818. HLH' s notice of appeal only referenced excess reprocurement costs; there
was no reference to the overpayment demand.

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        5. On 20 February 2015, HLH filed a motion to extend time for filing the
complaint until 30 days after the government files the Rule 4 file. The motion was not
opposed by the government and was granted by the Board on 11 March 2015. The
Board received its copy of the Rule 4 file on 15 April 2015. On 23 April 2015, HLH
filed a motion for order directing the government to file the complaint in this appeal.
The government responded on 19 May 2015 opposing the motion asserting that both
the excess reprocurement cost and overpayment issues were before the Board in the
appeals, and HLH replied to the government's response on 2 June 2015.

                                      DECISION

        Under the unique procedural requirements of the Contract Disputes Act (CDA),
all claims, whether contractor or government claims, must be the subject of a COFD.
41 U.S.C. § 7103. The contractor, however, is the only party who may initiate
proceedings at the Board, 41 U.S.C. § 7104, and Board Rule 6(a) requires appellant to
file the complaint in an appeal. If the contractor appeals from a final decision on a
government claim, the contractor typically files a complaint with enough information
about the government claim to form a sufficient predicate for the government's answer
and allow for adequate framing of the issues. Therefore, the fact the appeal involves a
government claim alone, is not enough to compel the government to file the complaint.

        Nonetheless, we have recognized that there may be situations when the
proceedings would be facilitated by the government filing the complaint or initial
pleading. E.g., Kellogg Brown & Root Services, Inc., ASBCA No. 59557, 15-1 BCA
ii 35,865; Beechcraft Defense Co., ASBCA No. 59173, 14-1BCAii35,592; RO. Vl.B.
Sri, ASBCA No. 56198, 09-1BCAii34,068. Ifwe determine that the proceeding
would not be facilitated, we do not order the government to file the initial pleading.
See, e.g., General Dynamics Corp., ASBCA No. 49339, 96-1BCAii28,244
(contractor in possession of information upon which government claim is based).

       While ordinarily we might look with disfavor on the instant motion when
appellant has acknowledged its responsibility to file the complaint and requested an
extension to do so (SOF ii 5), the fact that it is unclear whether the appeals concern
excess reprocurement costs alone, or these costs plus an overpayment claim by the
government, present a unique situation. As near as we can determine on the present
record, the only issue before us is the government's affirmative claim for excess
reprocurement costs. However, a substantial portion of the government's 19 May
2015 response addresses a government demand for collection of overpayments during
performance of the contract. The government did assert a demand for overpayments
during performance (SOF ii 3) but there is no record of a COFD or an appeal to the
Board on this issue. Nonetheless, the government's response to the motion states
"Appellant does not address the Government's demand for overpayment in its
Motion. However, both the Government's demands for overpayment and assessed

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reprocurement costs rely upon the same facts and therefore, both demands are
addressed herein." (Gov't resp. at 1) This statement is then followed by a page and a
half of discussion of the facts related to the overpayment (id. at 2-3). Then later in
summary, the government argues:

                     The information to accurately and fairly determine
              the extent of both overpayments and excess reprocurement
              costs caused by Appellant's non-conforming and
              unfinished work resides with both the Government and
              the Appellant, as both ultimately had equal access to the
              information, albeit at different points in time. Therefore,
              the proceedings would be not be facilitated by the
              Government filing the initial pleading, and would be
              better facilitated by Appellant setting forth the facts and
              rationale as to its duty to perform as well as Appellant's
              completion of the work under the original contract and
              how it differs from the scope of work in the
              reprocurement contract.

(Id. at 4)

        These arguments seem to evidence a government belief that the overpayment
demand is included within the COFD, and is before the Board for decision, or that the
demand is somehow part of the excess reprocurement claim. The COFD does mention
the overpayment demand but the CO's calculations used to arrive at the excess
reprocurement costs do not appear to include the overpayment amounts demanded and
the CO does not address the overpayment issue in her decision (SOF ii 4 ). Likewise,
the overpayment demand has not been appealed to the Board; the only issue before us
in this appeal is the claim for excess reprocurement costs (id.). Consequently, it is
unclear how the overpayment issue relates to the government's theory of their case on
the excess reprocurement costs.

        Given these circumstances, we conclude that the proceedings would be
facilitated by the government setting forth in an initial pleading, the facts and rationale
for its claim for excess reprocurement costs, and if claimed, overpayments.

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                                   CONCLUSION

      The Board grants appellant's motion to direct the government to file the
complaint 30 days from the date of this opinion. Appellant's answer shall be due
30 days following receipt of the government's complaint.

      Dated: 13 July 2015

                                               of Contract Appeals

I concur
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Administrative Judge
                                               RICHARD SHACKLEFORD
                                               Administrative Judge
Acting Chairman                                Vice Chairman
Armed Services Board                           Armed Services Board
of Contract Appeals                            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 Nos. 59746, 59818, Appeals of
Highland Al Hujaz Co., Ltd., rendered in conformance with the Board's Charter.

      Dated:

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

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