Greenland Contractors I/S ( 2019 )

ARMED SERVICES BOARD OF CONTRACT APPEALS
Appeals of -- )
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Greenland Contractors I/S ) ASBCA Nos. 61113, 61248
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Under Contract No. FA2523-15-C-0002 )
APPEARA.tl\JCES FOR THE APPELLANT: James J. McCullough, Esq.
Michael J. Anstett Esq.
Anayansi Rodriguez, Esq.
Fried, Frank Harris, Shriver &
Jacobson LLP
Washington, DC
APPEARANCES FOR THE GOVERNMENT: Jeffrey P. Hildebrant, Esq.
Air Force Deputy Chief Trial Attorney
Kyle E. Gilbertson, Esq.
Trial Attorney
OPINION BY ADMINISTRATIVE JUDGE D'ALESSANDRIS
ON THE GOVERN:r-v1ENT'S SECOND MOTION TO DISMISS
Pending before the Board is the four-page motion to dismiss filed by respondent,
the Department of the Air Force (Air Force or government). As the procedural posture
of these appeals is complex, it is explained in detail below.
Greenland Contractors I/S (Greenland) filed its first appeal, ASBCA No. 61113,
in April 2017, from what Greenland contended was a government claim for contract
interpretation regarding maintenance of electrical generation equipment, referred to as
engines #1 through #5, at Thule Air Force Base in Greenland. The Air Force filed its
first motion to dismiss before a complaint was filed. While that motion to dismiss was
pending, Greenland filed its second appeal, ASBCA No. 61248, from what it contends is
a government claim in the nature of a unilateral deductive modification in the amount of
$3.2 million, pursuant to the inspection clause, for work purportedly required by the
contract, but not perf01med by Greenland.
On December 8, 2017, the Board denied the Air Force's first motion to dismiss.
Greenland Contractors IS, ASBCA Nos. 61113, 61248, 18-1 BCA ,r 36,942. Based
upon the limited record before us at that time, we held that the Air Force had asserted a
non-monetary government claim for other relief. Subsequent to that opinion, the
Board denied Greenland's motions to require the government to file the complaint in
the then consolidated appeals (ASBCA Nos. 61113 and 61248). Greenland filed its
complaint on February 12, 2018. Relevant to the pending motion, Greenland included
in its prayer for relief a request that the Board "[d]etermine that the Air Force's
unilateral contract modification was factually and legally in error, entitling Greenland
Contractors to return of the Air Force's claimed $3.2 million in withheld amounts"
(compl. at 24).
The government then filed the instant motion to dismiss asserting two
jurisdictional challenges: first, because Greenland had not presented its purported
monetary claims to the contracting officer; and second, because ASBCA No. 61113
was not timely filed. Greenland opposed the government's motion. Although not
addressed by the Air Force in its motion to dismiss, Greenland's complaint also
indicated that it had "pe1formed the directed repairs [to engine #1] by September 30,
2017 at a cost of$422,086" (compl. at 21, ,r 100).
The Board raised the issue of Greenland's performance of purportedly
additional work with the parties in a telephonic status conference on May 30, 2018.
Greenland subsequently indicated that it would present a claim for its additional costs
of performance which it did. An Air Force contracting officer denied Greenland's
claim on October 2, 2018 (R4, tab 17). Greenland appealed this denial to the Board
and the appeal was docketed as ASBCA No. 61834, 1 and consolidated with ASBCA
Nos. 61113 and 61248. Greenland filed its consolidated complaint on November 13,
2018 (consol. comp1. ). By order dated October 17, 2018, the Board invited the
government to file a supplemental brief addressing any new information relevant to its
pending motion. On December 13, 2018, the government provided notice that it
would not file a supplemental brief.
Not addressed by the government, but relevant to our dete1mination of
jurisdiction, Greenland asserts in its consolidated complaint three instances where it
was directed to pe1form work on engines #1 and #3 that Greenland contends was
beyond the scope of its contract or was additional work caused by the Air Force's
failure to perform work that Greenland contends the Air Force was required to perf01m
under the contract (R4, tab 16 at 3). Specifically, Greenland asserts that its
subcontractor repaired the master and articulating rod on engine # l at a cost of
$237,941.02 (consol. compl. at 20, ,r,r 90-91). This work was invoiced on
February 28, 2017, and Greenland paid the invoice on Aptil 12, 2017 (R4, tab 16
at 22-25). Greenland asserts that its subcontractor repaired the left camshaft on engine
#3 at a cost of $257,803.64 (consol. compl. at 28, ,r,r 135-36). This work was invoiced
on May 31, 2017, and paid on August 30, 2017 (R4, tab 16 at 48-54). In addition,
Greenland contends that its subcontractor performed additional repairs to engine # 1 at
1
The government's motion to dismiss only pertains to ASBCA Nos. 61113 and 61248
which are consolidated with ASBCA No. 61834.
2
a cost of $422,085.99 (consol. compI. at 29, ,r,r 142-43 ). These costs were invoiced on
September 12, 2017, and paid on November 3, 2017 (R4, tab 16 at 34-41).
The government's pending motion to dismiss asserts that ASBCA Nos. 61113
and 61248 must be dismissed because Greenland seeks ·'return of the Air Force's
claimed $3.2 million in withheld amounts'' (gov't mot. at 1 (quoting compl. at 24)).
According to the Air Force, the quoted language means that Greenland is asserting a
money claim that was not certified and was not presented to the contracting officer,
and thus that we are without jmisdiction to entertain the claim. The Air Force relies
on the Court of Appeals for the Federal Circuit's holding in Securtforce International
America, LLC v. United States, 879 F.3d 1354, 1360 (Fed. Cir. 2018), for the
proposition that Greenland's claim is, in essence, a monetary claim, and thus,
Greenland was required to present the claim to the contracting officer for a final
decision (gov't mot. at 1-2). In opposition, Greenland asserts that its future
entitlement to repayment of funds withheld by the Air Force does not convert its
nonmonetary claims into prematm·e claims for money damages, and points out that
certification is not required for a gove1nment claim (app. opp'n at 9-13). In its reply
brief, the Air Force doubles-down on its argument asserting that Greenland was
required to present a claim requesting a sum certain to the contracting officer asserting
that Securiforce makes no distinction between government and contractor claims, and
that the "only practical result" of granting Greenland's requested relief would be
money damages against the government (gov't reply at 1-6). The Air Force
additionally cites to the Civilian Board of Contract Appeals' decision in Duke
University v. Dept. ofHealth and Human Services, CBCA No. 5992, 18-1 BCA
,r 37,023. 2 The Air Force "disputes" that its contract modification, deleting $3.2
million from the contract for work it contends was required by the contract but not
performed, was a government claim (gov't reply at 5).
In our opinion denying the government's first motion to dismiss, we held that
ASBCA No. 61113 was a government claim. Greenland, 18-1 BCA ,r 36,942
at 179,972-73. It is beyond dispute that a contractor is not required to certify a
government claim. See, e.g., Placeway Construction Corp. v. United States, 920 F.2d
903,906 (Fed. Cir. 1990)~ 41 U.S.C. § 7103(a). In fact, Securiforce itself recognizes
that a termination for default, one type of government claim, is not subject to the
presentment requirement. Securiforce, 879 F.3d at 1363. In our opinion we noted that
ASBCA No. 61248 had been filed, but did not make any findings of fact or law
regarding the appeal. Greenland, 18-1 BCA ,r 36,942 at 179,974 & n.4. We now hold
that ASBCA No. 61248 is also an appeal of a government claim, and we reject the
government's argument that the Board lacks jurisdiction because Greenland failed to
submit a claim.
2
While Duke University is not binding on us, we find its reasoning to be persuasive as
discussed further herein.
3
A claim is a "written demand or written asse1tion by one of the contracting
parties seeking, as a matter of right, the payment of money in a sum certain, the
adjustment or interpretation of contract terms, or other relief arising under or relating
to this contract" (R4, tab 1 at 145 (incorporating by reference Federal Acquisition
Regulation (FAR) 52.233-1, DISPUTES (MAY 2014))); see also FAR 2.101. Here, the
Air Force's July 11, 2017 unilateral contract modification and finding of
nonconformance, pursuant to the inspection clause FAR 52.246-4(e)(2) and reduction
in contract price of $3.2 million (R4, tab 15), satisfies the definition of a claim. It is
obviously a written demand, and as a unilateral modification, it seeks, as a matter of
right the adjustment of contract terms by reducing the contract amount by a sum
certain amount of $3.2 million. In Garrett v. General Elec. Co., 987 F.2d 747 (Fed.
Cir. 1993 ), the Federal Circuit held that pursuant to that contract's inspection clause,
the government had three options when it found that the contractor had not fulfilled the
contract's requirements; it could have: 1) reduced the contract price by an equitable
portion of the contract price; 2) demanded that the contractor repay an equitable
portion of the contract price; or 3) directed the contractor to correct or replace the
defective product. General Electric, 987 F.2d at 749. Having already ordered
Greenland to perform work that Greenland contends was not required by the contract,
the government issued a unilateral contract modification to reduce the contract amount
by, what it believes to be an equitable portion, of the contract price. This is also a
government claim. See DynPort Vaccine Co. LLC, ASBCA No. 59298, 15-1 BCA
135,860 (holding that unilateral contract modification directing performance of
corrective work at no cost to the government to be a government claim); LTV
Aerospace & Defense Co., Vought Missiles & Advanced Programs Div., ASBCA
No. 35674, 89-2 BCA 121,858 at 109,950-51 (government reduction of contract price
a government claim). Moreover, an interpretation of the contract in favor of
Greenland in ASBCA No. 61248 would simply return money to the contract and
would not constitute a money claim by Greenland. However, any amount sought by
Greenland beyond reversal of the deductive modification, such as for additional work
or Contract Disputes Act (CDA) interest would constitute a contractor claim. See, e.g.,
Martin Marietta Corp., ASBCA No. 25828, 84-1BCA117, 119 at 85,256-58
(contractor claim required to recover CDA interest on amounts withheld).
The Federal Circuit's recent holding in Securiforce does not change the
definition of a government claim. Instead, Securiforce, and the Civilian Board's
holding in Duke, clarify when a purported non-monetary CDA claim actually seeks
monetary relief. As the government notes, the holding in Securiforce states that "[i]f
'the only significant consequence' of the declaratory relief sought 'would be that [the
plaintiff] would obtain monetary damages from the federal government,' the claim is
in essence a monetary one." Securiforce, 879 F.3d at 1360 (quoting Brazos Elec.
Pmver Coop., Inc. v. United States, 144 F.3d 784, 787 (Fed. Cir. 1998)).
4
Based upon the record before us when we issued our earlier opinion, it appeared
that Greenland was appealing from a valid government claim for other relief. Unlike
in Securiforce, resolution of the contract interpretation issue could have determined
whether Greenland was required to perform maintenance on the generators pursuant to
the contract. As in General Electric, this other relief, relieving Greenland of an
obligation to perform, would have been a "significant consequence" of the declaratory
relief sought that was not monetary in nature.
In Securifhrce, the government issued a partial termination for convenience and
then tenninated the contractor for default. The contractor filed its initial complaint in
the Court of Federal Claims to challenge the tennination for default and then filed a
claim with the contracting officer challenging the termination for convenience.
Securiforce, 879 F.3d at 1359-60. Thus, at the time Securijorce filed its claim, it had
already been terminated for default and it could not obtain any relief other than money
damages because it was no longer performing on the contract. Similarly, the Civilian
Board held in Duke, that the contractor had "already incurred costs associated with its
contract interpretation dispute, and it could have quantified those costs and stated them
in a sum certain in a claim to the contracting officer.'' Duke, 18-1 BCA ,r 37,023
at 180,290. The Civilian Board explained that a "ruling in Duke's favor would not
result in Duke avoiding costs, but instead would be used only to entitle Duke to
monetary relief in a separate proceeding. In such circumstances, it is clear that Duke
has an uncertified and unquantified monetary claim." Id
We detennine jurisdiction at the time the appellant filed its notice of appeal.
See, e.g., Keene Corp. v. United States, 508 U.S. 200,207 (1993) (quotingMollan v.
Torrance, 9 Wheat. 537, 539 (1824)) ("the jurisdiction of the Court depends upon the
state of things at the time of the action brought"). Thus, the fact that Greenland might
have subsequently incuITed costs performing the tasks that it contends were not
required pursuant to the contract would not necessarily deprive us of jurisdiction.
However, we now know from Greenland's consolidated complaint that it had
performed work that it contends was beyond the scope of the contract before it filed its
notice of appeal.3 Specifically, Greenland attached to its claim documents showing
that its subcontractor invoiced Greenland for such repairs in Februa1y 2017 (R4, tab 16
at 22), which was before Greenland's April 10, 2017 notice of appeal in ASBCA
No. 61113. This fact contradicts Greenland's argument that "it would have been
impossible for Greenland Contractors to have submitted a certified claim for a sum
certain prior to or at the time it filed its appeal in No. 61113" (app. resp. at 12). Thus,
Greenland's situation is similar to that in Duke in that a holding in Greenland's favor
would not allow Greenland to avoid performing, but would only be used to entitle
Greenland to monetary relief in a separate proceeding - one that Greenland has
3
Although the government does not raise this argument, we must guard the Board's
jurisdiction and consider these facts sua sponte. ·
i
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already filed and that is now consolidated with these appeals. Thus, we find that
Greenland's appeal in ASBCA No. 61113 is in reality a claim for money damages that
was not submitted to a contracting officer for a final decision. Accordingly, we
dismiss ASBCA No. 61113. We find that ASBCA No. 61248 is a government claim
that was not required to be submitted to a contracting officer and is properly before the
Board. As we find that we lack jurisdiction to entertain ASBCA No. 61113, we need
not reach the Air Force's second argument that the appeal is untimely.
Dated: January 29, 2019
DA YID D' ALESSANDRIS
Administrative Judge
Armed Services Board
of Contract Appeals
I concur I concur
RICHARD SHACKLEFORD ~y
Administrative Judge Administrative Judge
Acting Chairman Vice Chairman
Armed Services Board Armed Services Board
of Contract Appeals of Contract Appeals
I ce1tify that the foregoing is a true copy of the Opinion and Decision of the
Armed Services Board of Contract Appeals in ASBCA Nos. 61113, 61248, Appeals of
Greenland Contractors I/S, rendered in conformance with the Board's Charter.
Dated:
JEFFREY D. GARDIN
Recorder, Aimed Services
Board of Contract Appeals
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