M.L. Energia, Inc. ( 2019 )

ARMED SERVICES BOARD OF CONTRACT APPEALS
Appeal of -- )
)
M. L. Energia, Inc. ) ASBCA No. 58975
)
Under Contract No. NAS 10-98025 )
APPEARANCE FOR THE APPELLANT: Bruce I. Afran, Esq.
Princeton, NJ
APPEARANCES FOR THE GOVERNMENT: Scott Barber, Esq.
NASA Chief Trial Attorney
Bradley W. Smith, Esq.
H. Joseph Batey, Esq.
Trial Attorneys
Kennedy Space Center, FL
OPINION BY ADMINISTRATIVE JUDGE SHACKLEFORD
ASBCA No. 58975 is the quantum phase of ML. Energia, Inc., ASBCA
No. 55947, 12-2 BCA i135,110 (MLE /), recon. granted in part, 13 BCA ~ 35,284
(MLE JI).* We have jurisdiction pursuant to the Contract Disputes Act of 1978 (CDA)
41 U.S.C. §§ 7101-7109. A two-day hearing on quantum was held in Trenton,
New Jersey, after which each party submitted an initial and reply brief. While
evidence was allowed at that hearing on entitlement/causation that exceeded the
quantum issues, the assigned judge did so in order to give appellant, by then with
counsel, a full opportunity to prove its case, with the understanding that objectionable
material would be handled as offered. (See discussion on the record at tr. 1/9-18) We
are thus not relying upon evidence in the record that goes to causation because those
issues were fully litigated and decided in the earlier proceedings. We now dismiss as
moot the government's Motion for Preliminary Ruling on Matters/Issues Excluded
from Further Litigation by Reason of Issue Preclusion.
In addition to the transcript of the 2016 hearing (with limits as outlined above)
and briefs filed thereafter, we also rely upon the record made in the entitlement
proceedings as well as the two decisions issued following those proceedings.
* Familiarity with our prior decisions in this matter is presumed.
FINDINGS OF FACT
NASA awarded a Small Business Innovation Research contract to Energia with
respect to photo-chemical remediation of sites contaminated with hazardous solvents
at the Kennedy Space Center, Florida. The contract was for a firm-fixed-price of
$597,960 but contemplated that Energia would contribute $100,000 to the project such
that the estimated cost of the project was around $697,960. MLE I at 172,395-96,
findings 3, 9, 14. Only the fixed-price amount is at issue here.
The research contract was not fully completed for reasons stated in our prior
decisions, and we found the government entitled to take an equitable reduction in
contract price under the FAR 52.246-7, INSPECTION OF RESEARCH AND DEVELOPMENT
-FIXED-PRICE (AUG 1996), clause of the contract. See MLE I at 172,396, finding 13;
MLE II at 173,170. The only issue remaining is whether the government is entitled to
all or some smaller portion of the amount withheld.
The contract clause (FAR 52.246-7) upon which the contracting officer (CO)
based her final decision (R4, tabs 1-2); and upon which we rely for making an
equitable reduction in the contract price, provides in relevant part as follows:
(e) The Government has the right to reject
nonconforming work. If the Contractor fails or is unable to
correct or to replace nonconforming work within the
delivery schedule (or such later time as the Contracting
Officer may authorize), the Contracting Officer may accept
the work and make an equitable price reduction. Failure to
agree on a price reduction shall be a dispute.
MLE I at 172,396, finding 13. Appellant makes much of the government failure to
provide a test site, basing it on evidence adduced in the quantum hearing. We found in
our first decision that:
The [test] sites at [Kennedy Space Center] eventually
became unavailable because appellant failed to adhere to
the timeline which would have made a test at the center
possible.
MLE I at 172,399, finding 36.
Thus, the lack of a site was the fault of Energia, not NASA. Pursuant to the
Inspection clause, where the contractor does not timely perform, the CO may accept
the work and make an equitable price reduction. Appellant would have the
government pay for performing tasks 4 and 5, which it did not perform (MLE I
2
at 172,406, findings 84-86), and task 6, which was not acceptably performed (MLE I
at 172,407, finding 89), regardless of fault.
In MLE /, we pointed out that Energia's contention it was entitled to be paid the
remaining unpaid contract funds to be "without merit as appellant misconstrues the
nature of the contract into which it entered." MLE I at 172,408. Further, we stated the
contract was a firm-fixed-price contract, not a cost-reimbursement contract and that
the Inspection clause allowed the government to make an equitable price reduction
where, as here, there is a finding of nonconforming work. Id.
Appellant adduced no credible evidence of the proper equitable price reduction
for the nonconforming or incomplete work other than to argue that at most the
government should retain no more than $20,000 as the cost to complete the field study
(app. hr. at 23-24). This number is based upon the testimony of Dr. Moshe Lavid who
testified that, in his judgment, it would cost between $15,000 and $20,000 to complete
the field scale study (tr. 2/137-38). We find more credible the testimony of
Karen L. Rivaud, a contract cost and price analyst for NASA, and her calculation of the
estimated equitable price reduction in this matter (R4, tab 131 (memorandum for record