Man & Machine, Inc. ( 2019 )

ARMED SERVICES BOARD OF CONTRACT APPEALS
Appeal of -- )
)
Man & Machine, Inc. ) ASBCA No. 61608
)
Under Contract No. 000000-00-0-0000 )
APPEARANCE FOR THE APPELLANT: Mr. Clifton Broumand
President
APPEARANCES FOR THE GOVERNMENT: Laurel C. Gillespie, Esq.
Chief Trial Attorney
Ian F. Rothfuss, Esq.
James A. Douglas, Esq.
Trial Attorneys
Defense Health Agency
Falls Church, VA
OPINION BY ADMINISTRATIVE JUDGE SHACKLEFORD ON THE
GOVERNMENT'S MOTION TO DISMISS FOR LACK OF JURISDICTION AND
FAILURE TO STATE A CLAIM
The government moves to dismiss this appeal for lack of jurisdiction, arguing
that no contract existed between the parties, or, in the alternative, that appellant failed
to state a claim upon which relief can be granted. Appellant opposes the motion. The
Board grants the motion and dismisses the appeal for lack of jurisdiction.
STATEMENT OF FACTS (SOF) FOR PURPOSES OF THE MOTION
1. In 2015 , a nurse consultant for the Infection Prevention and Control Service
at Walter Reed National IVIilitary Medicai Center (hereinafter WRNMMC) requested
the WRNMMC information technology (IT) department conduct market research to
determine if it could find a company with a common access card (CAC) enabled
keyboard that could be easily sanitized and disinfected (gov' t mot., ex. G-1 at 1).
2. In response to the request, the WRNMMC chief information officer (CIO)
assigned Mr. Marshall Bailey, an information technology contractor, to identify
potential vendors of such CAC-enabled keyboards (gov' t mot., exs. G-1 at 1, G-3 at 1).
3. Mr. Bailey identified Man & Machine, Inc. , (hereinafter appellant or MMI)
as a potential vendor for such products, since MMI designed and manufactured
keyboards, mice, and other computer accessories (gov' t mot., ex. G-3 at 1-2).
4. Mr. Bailey requested information about MMI ' s waterproof keyboards, mice,
and accessories to test and evaluate (gov ' t mot. , ex. 3 at 1). In response to the request
from the government, MMI sent test products to WRNMMC on or about December 14,
2015 (app. resp ., exs. A-1 to -3).
5. Over the course of the next year, MMI and WRNMMC communicated
regarding the products provided. The parties discussed potential modifications and
Mr. Bailey' s inability to obtain funding for purchase of any products. (R4 , tabs 1(b),
l (c); app. resp. , exs. A-3 , -4, -8)
6. In an email dated January 16, 20 17, MMI requested WRNMMC return the
products, stating " [we] would like to get our products back so we can show them to
other people. If not, then no problem. " (R4, tab 1(b) at DHA-R4-9)
7. On or about November 7, 2017, WRNMMC received two invoices from
MMI dated October 23 , 2017 (gov't mot. , ex. G-3 at 3). The first invoice number
328291 , totaled $118,773.00 for miscellaneous product development costs (R4, tab l(a)
at DHA-R4-2). The second invoice number 328290, totaled $1 ,744.18 for the various
keyboards and mice sent to WRNMMC (R4, tab l(a) at DHA-R4-3-4).
8. In addition to the invoices, WRNMMC received an undated letter, indicating
it was included with the invoices. The letter stated that MMI "agreed to provide and
understood that [WRNMMC] are not committing to the purchase of any product."
Even so, MMI alleged in the letter that WRNMMC constructively accepted the
products and was required to pay for them. (R4, tab 1)
9. In November 2017, WRNMMC attempted to return the equipment provided
by MMI (gov't mot., ex. G-2 at 2). MMI refused to accept the products, alleging that
WRNMMC did not follow the "process" MMI required for return shipment. Additionally,
MMI assumed that the products were not properly decontaminated before return, although
it is unclear if this was ever investigated or discussed amongst the parties. (App. resp. at 3)
10. By correspondence dated December 20, 2017, MMI forwarded the letter,
invoices, and attachments to the head of the Defense Health Agency (DHA) contracting
activity. The correspondence specifically states " [t]his is not under formal contract as
we didn ' t know one was required." (R4, tab 2)
11. The contracting officer sent a letter to MMI on December 21 , 201 7,
indicating DHA would not respond to the package submitted by MMI because it was
not a properly certified claim (R4, tab 3). MMI responded by correspondence dated
December 22, 2017, certifying its claim (R4, tab 4).
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12. The contracting officer issued a final decision denying appellant's claim by
letter dated February 7, 2018 (R4, tab 5). MMI timely filed its notice of appeal with the
Board on April 23 , 2018.
DECISION
The government contends that the Board lacks jurisdiction over this appeal
because no contract, express or implied, existed. Alternatively, the government argues
that even if the Board were to find jurisdiction over the appeal, MMI failed to state a
claim upon which relief can be granted because the facts contained in appellant' s
complaint fail to allege the existence of a contract. MMI opposes the motion, arguing
that it has made a non-frivolous assertion of an implied contract between the parties.
MMI also argues that there has been a conversion of its property and efforts, allowing
for recovery.
"Appellant, as the proponent of the Board' s jurisdiction, bears the burden of
establishing jurisdiction by a preponderance of the evidence." CCIE & Co. , ASBCA
Nos. 58355 , 59008, 14-1 BCA ,r 35,700 at 174,816 (internal citations omitted). "The
facts supporting jurisdiction are subject to our fact-finding upon a review of the
record." Id.
While the existence of a contract is essential to establish jurisdiction, an appellant
"need only allege the existence of a contract to establish the Board' s jurisdiction under
the CDA." American General Trading & Contracting, WLL , ASBCA No. 56758, 12-1
BCA ,r 34,905 at 171 ,640 (quoting Engage Learning, Inc. v. Salazar, 660 F.3d 1346,
1353 (Fed. Cir. 2011)). The appellant "need not prove that either an express or
implied-in-fact contract exists. Whether such a contract was formed and breached goes
to the merits of the appeal." Tele-Consultants, Inc., ASBCA No. 58129, 13-1 BCA ,r
35,234 at 172,994 (internal citations omitted). "However, appellant must be able to
make a non-frivolous allegation that a contract existed between it and the government."
Interaction Research Inst., Inc., ASBCA No. 61505 , 18-1 BCA ,r 37,196 at 180,080
(citing Leviathan Corporation, ASBCA No. 58659, 16-1 BCA ,r 36,372 at 177,294). To
make a non-frivolous assertion of the existence of a contract, "an appellant must present
at least some plausible evidence of a contract to satisfy both the 'preponderance of the
evidence' standard and the 'non-frivolous ' allegation standard." Safeco Ins. Co. ofAm. ,
ASBCA No. 60952, 17-1 BCA ,r 36,819 at 179,450.
The parties agree no express contract exists (SOF ,r 8). Thus, we must determine
if the factual allegations amount to a "non-frivolous" allegation of an implied-in-fact
contract. "An implied-in-fact contract has all the requirements of an express contract
except that the evidence of the meeting of the minds differs." Safeco, 17-1 BCA ,r
36,819 at 179,450 (citing Hanlin v. United States, 316 F.3d 1325, 1328 (Fed. Cir.
2003)). As such, in order to establish the possibility of an implied-in-fact contract, an
appellant should analyze its allegations of the existence of a contract with an eye
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towards the following: ( 1) mutuality of intent; (2) consideration; (3) lack of ambiguity
in offer and acceptance; and (4) the existence of a government representative whose
conduct is relied upon who had actual authority to bind the government in a contract.
Safeco, 17-1 BCA ,r 36,819 at 179,450 (quoting Todd Pacific Shipyards Corp. , ASBCA
No. 55126, 08-2 BCA ,r 33 ,891 at 167,755).
In Safeco, the Board looked to other decisions involving similar jurisdictional
motions in order to analyze when an allegation amounted to "non-frivolous" stating:
In Tech Projects, LLC, ASBCA No. 58789, 15-1 BCA ,r
35,940, we denied a motion to dismiss for lack of jurisdiction
because the contracting officer' s final decision agreed that
there was an implied-in-fact contract. Id. at 175,661. In
Black Tiger Co. , ASBCA No. 59819, 16-1 BCA ,r 36,423 ,
we denied a government motion to dismiss for lack of
jurisdiction because the "notice of appeal included (1) a
contract number; (2) an SF 1449 that identified appellant on
the first page of the contract as the contractor; and (3) a
document appellant asserted was an invoice for the equipment
provided under the contract." Id. at 177,570. In Leviathan
Corp. , 16-1 BCA ,r 36,372, we denied a motion to dismiss for
lack of jurisdiction because of a contract modification that
offered settlement "on behalf of the U.S. Government" and
included a release of claims. Id. at 177,294. We concluded
that in each of these cases appellant had made a
"non-frivolous" allegation that a contract existed between it
and the government. However, in each case there were facts
that indicated a contract existed. We do not see any
similarities between these cases and the facts alleged by
Safeco. Some of the problems we have are that the COE was
not a party to the escrow agreement [ ... ] and reliance by
subcontractors iikewise does not indicate an intent to enter
into a contract. The facts itemized above do not relate in any
way to any of the elements of an implied-in-fact contract, i.e.,
mutuality of intent to contract, lack of ambiguity in offer and
acceptance, consideration, and that the government
representative whose conduct is relied upon had actual
authority to bind the government in contract. Safeco has not
made a "non-frivolous" allegation that an implied-in-fact
contract existed between it and the COE.
Id. at 179, 450-51.
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Although MMI alleges there is an implied contract between the parties, like the
appellant in Safeco, it does nothing more to support this assertion. Instead, appellant
focuses on the fact that it provided pricing, terms and conditions to WRNMMC, and
that WRNMMC did not return the products (SOF 115, 6; see also app. resp. at 6). The
facts presented by appellant do not relate to the elements of an implied-in-fact contract.
Appellant admits there was no mutual intent for the parties to enter into a contract. In
fact, appellant admits that it knew the government was under no obligation to purchase
any of the products it voluntarily sent for evaluation. (SOF 118, 10) Additionally, at
no point during the exchanges between appellant and WRNMMC was a person with
authority to bind the government involved. In fact, the majority, if not all substantive
conversations about the product took place with Mr. Bailey, a contractor himself (SOF
1 2). As such, we conclude that appellant has not made a "non-frivolous" assertion of
an implied-in-fact contract between itself and the government.
Further, while the Board understands appellant' s position that WRNMMC is
responsible for damages under a theory of conversion, " [t]he Board lacks jurisdiction to
entertain a claim based upon tortious conduct which is independent of a contract
between the government and a prime contractor." Qatar Int '! Trading Co. , ASBCA
No. 55533 , 08-1 BCA 133,829 at 167,428 (citing L&M Thomas Concrete Co ., ASBCA
Nos. 49198, 49615, 98-1BCA129,560 at 146,538). Here, because appellant failed to
make a non-frivolous assertion about the existence of a contract, the Board does not
have jurisdiction over any claims for tortious conduct, as such claims could not arise
from a related contractual obligation.
CONCLUSION
The Board lacks jurisdiction over Man & Machine, Inc.' s appeal. The
government' s motion is granted and the appeal is dismissed for lack of jurisdiction.
Dated: July 26, 2019
RICHARD SHACKLEFORD
Administrative Judge
Acting Chairman
Armed Services Board
of Contract Appeals
(Signatures continued)
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I concur I concur
OWEN C. WILSON
/1 .·
CRAif:t.
~ CLARKE
Administrative Judge Administrative Judge
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 No. 61608, Appeal of Man &
Machine, Inc., rendered in conformance with the Board' s Charter. ·
Dated:
PAULLA K. GATES-LEWIS
Recorder, Armed Services
Board of Contract Appeals
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