Gerald R. Rouillard, III, d/b/a International Gear Technologies ( 2014 )

ARMED SERVICES BOARD OF CONTRACT APPEALS
Appeal of-- )
)
Gerald R. Rouillard, III, d/b/a ) ASBCA No. 58458
International Gear Technologies )
)
Under Contract No. SPM7MC-11-M-1722 )
APPEARANCE FOR THE APPELLANT: Steven J. Boretos, Esq.
Everett, WA
APPEARANCES FOR THE GOVERNMENT: Daniel K. Poling, Esq.
DLA Chief Trial Attorney
Matthew 0. Geary, Esq.
Colleen T. Loughran, Esq.
Trial Attorneys
DLA Land and Maritime
Columbus, OH
OPINION BY ADMINISTRATIVE JUDGE PAUL ON THE GOVERNMENT'S
MOTION FOR SUMMARY JUDGMENT
This is a timely appeal of a contracting officer's (CO' s) final decision
terminating appellant Gerald R. Rouillard, III, d/b/a International Gear Technologies'
(IGT's) supply contract for default. The Contract Disputes Act (CDA), 41 U.S.C.
§§ 7101-7109, is applicable. The government has filed a motion for summary
judgment. IGT opposes the government's motion; it has not filed a cross-motion. We
grant the motion.
STATEMENT OF FACTS (SOF) FOR PURPOSES OF THE MOTION
1. On 19 July 2010, the Defense Supply Center, Columbus, Ohio (Maritime
Supply Chain) (DSSC) issued request for quotations (RFQ) No. SPM7MC- l O-Q-17 41
for the purchase of 311 spur gears, National Stock Number (NSN) 3020-00-888-0130
(R4, tab 99 at 5-6). The RFQ included a procurement history for this NSN, dating back
to 10 July 2007. As awarded, unit costs for the earlier contracts ranged from $106.00 to
1
The government filed separate motions for summary judgment in ASBCA
Nos. 58458 and 58459; however; appellant's opposition brief and the
government's reply brief dealt jointly with the two appeals. Because the facts
of each appeal differ, the Board is issuing separate decisions.
$210.95. (Id. at 2) The RFQ also contained a first article test (FAT) requirement which
consisted of one additional unit (id. at 7).
2. The government's estimated unit price was $127.86. It received quotations
with unit prices ranging from $98.47 to $348.00. IGT quoted a unit price of$112.25.
(R4, tab 100)2
3. On 30 December 2010, DSSC awarded Contract No. SPM7MC-11-M-1722
to appellant for the supply of 311 spur gears at a unit price of$112.25. Within 45 days
IGT was also required to submit a First Article (FA) at a unit price of$1,500. The total
fixed-price contractual amount was $36,409.75. (R4, tab 1 at 1, 4-6) As awarded, the
FA was to be delivered on 13 February 2011, and the remaining spur gears were to be
delivered 255 days after date of the order or by 11 September 2011 (id. at 1, 6).
4. The contract contained FAR 52.209-4, FIRST ARTICLE APPROVAL-
GOVERNMENT TESTING (SEP 1989). Also included in the contract by reference were FAR
52.233-1, DISPUTES (JUL 2002); and FAR 52.249-8, DEFAULT (FIXED-PRICE SUPPLY AND
SERVICE (APR 1984). (R4, tab 1 at 9-10)
5. IGT did not deliver the FAT unit by 13 February 2011 (R4, tab 6 at 2). On
22 June 2011, IGT informed the government that "we had a failure on our gear tester"
(id. at 1). As of20 October 2011, IGT still had not delivered the FA. On that date, it
informed the government that "[ q]uality found an issue with the root diameter of the
gear teeth on the first article part, we need to either request a waiver, or finish another
first article from a second lot we had started months ago." (R4, tab 26 at 4)
6. On 3 January 2012, the CO issued bilateral Modification No. POOOOl to the
contract. It established a new FA delivery date of 17 February 2012 and extended the
delivery date for 311 spur gears from 11 September 2011 to 26 July 2012. (R4, tab 37 at
1-2) The modification also provided ~hat failure of the FAT would result in termination
of the contract for default (id. at 2). Finally, the parties agreed that IGT would pay
$1,500 for the modification (id.).
7. IGT did not deliver the FA by 17 February 2012 (R4, tab 44 at 2). On 1 March
2012 appellant advised the CO that the FAT unit had been completed (id.). On 1 April
2012, IGT stated in an email to the CO: "When I get to my office tomorrow I will send
you the FAT tracking info" (R4, tab 45). On 3 April 2012, appellant forwarded the
promised information to the CO (R4, tab 46 at 1-2). On 11April2012, the CO wrote to
appellant, in part, as follows: "I just checked tracking for this item. UPS shows this as
not being shipped? I need to know what is going on." (R4, tab 48 at 1) On 12 April
2
In the "ABSTRACT OF QUOTES," appellant's bid was coded as "CAGE"
"5HFP7" (R4, tab 100).
2
2012, IGT responded to the CO, stating: "I will be back in the office tomorrow to resolve
FAT shipment, yes, we do have a large lot of parts waiting to ship once FAT is
approved" (R4, tab 50). As of 19 April 2012, the FAT unit had still not been completed
(R4, tab 53 at 1); and as of 3 May 2012, it had not been shipped (R4, tab 56 at 3).
8. On 1June2012, the CO issued Modi'fication No. P00002 to amend a drawing
number (R4, tab 68). On 8 June 2012, the FAT unit was shipped for testing by the
government (R4, tab 77); and, on 14 June 2012, it was conditionally approved (R4, tab 78
at 1). On 20 June 2012, the CO forwarded a FAT conditional approval letter to IGT,
listing six discrepancies. He also requested that appellant forward a revised date for the
production lot by 25 June 2012. (R4, tab 81 at 1, 3)
9. IGT did not comply with this request; and, on 26 June 2012, the CO again
requested the delivery schedule by close of business on that day (R4, tab 83 at 1). On
that same date, appellant responded that it would forward "a complete schedule" by
29 June 2012. He also stated: "I can tell you that we have separated 50 from a 160 piece
lot and are expediting the 50 pieces for shipment asap." (R4, tab 84) On 28 June 2012,
IGT advised the CO that it would ship 50 units "around July 20th" (R4, tab 88 at 1). On
9 July 2012, the CO, once again, requested a complete delivery schedule (R4, tab 89
at 1).
10. On 11 July 2012, Mr. Gerry Rouillard, III, IGT's president, forwarded a
lengthy letter to the CO in which it alleged that, as result of various increased costs, its
actual unit cost was $276.79, as opposed to the contractual price of $112.25 (SOF ~ 2). It
also contended that, as part of its bid, it had relied on Mr. Rouillard's father for "a large
number of volunteer hours." Unfortunately, as result of a heart condition, the elder
Mr. Rouillard had been unable to work on the contract. Finally, IGT alleged that there
had been a mutual mistake when it formulated its bid. Alleging that it had paid $1,680
for inspection of a single unit, appellant described the $1,500 payment to the government
contained in Modification No. POOOOl as an inspection fee, and concluded that it had
grossly underestimated the actual fee of producing the spur gears. (SOF ~ 6; R4, tab 90
at 1-3)
11. On 16 July 2012, the CO forwarded the following response to Mr. Rouillard:
In response to your 7/11/12 request for a price
increase on contract SPM7MC1lMl722 for NSN
number 3020-00-888-0130, your request is hereby denied.
This is a firm fixed price contract. Your proposal in
response to RFQ SPM7MlOQ0302 offered a set unit price.
The subject contract was awarded accordingly. You are
obligated to perform to the terms of the contract.
3
Within 5 calendar days from the date of this notice, you are
requested to advise the undersigned in writing whether you
will continue to perform the subject contract in accordance
with the existing terms and conditions. Failure to respond
by [sic] will lead to termination for default proceedings.
The Government is not invoking its rights under FAR
52.249-8 - - Default (Fixed-Price Supply and Service), at
this time. Please be advised, 'however, that notice of
intention not to perform, or failure to perform, under the
provisions of the contract may result in the subject contract
being terminated for default, subject to the notice
provisions of the default clause.
Any assistance rendered to the contractor on this contract,
or acceptance by the Government of delinquent goods or
services hereunder, will be solely for the purpose of
mitigating damages, and is not to be construed as an
intention on the part ofthe Government to condone any
delinquencies or as a waiver of any rights the Government
may have under the above contract.
(R4, tab 91) On 20 July 2012, IGT replied to the CO's letter. It stated that it would
"continue to perform the subject contract in accordance with the existing terms and
conditions." But appellant again sought a price increase based upon "clear and
convincing evidence that a mutual mistake was made." (R4, tab 92 at 1-2)
12. IGT did not deliver the production lot of spur gears by the modified delivery
date of 26 July 2012 (SOF if 6; R4, tab 96). Accordingly, on 7 August 2012, the CO
forwarded by email a show cause letter to appellant in which he stated:
You are hereby notified that the Government considers
your Email dated 17 July, 2012 requesting an increase in
unit price as unacceptable.
Since you have failed to perform within the time required
by the terms of your contract, the Government is
considering terminating the contract under the provisions
for default. Pending a final decision in this matter, it will
be necessary to determine whether your failure to perform
arose from causes beyond your control and without fault or
negligence on your part. Accordingly, you are given the
4
opportunity to present, in writing, any facts bearing on the
question to the undersigned, within 10 days (August 17,
2012) after receipt of this notice. Your failure to present
any explanations within this time may be considered as an
admission that none exist. Your attention is invited to the
respective rights of the Contractor and the Government and
the liabilities that may be invoked if a decision is made to
terminate for default.
If it is your int~ntion to perform under this contract, you
should within 10 days (Aµ gust 17, 2012) of your receipt of
this letter, propose a new and reasonable delivery date by
which the required supplies will be delivered together with
monetary consideration for the additional performance
time needed. Your proposed new delivery schedule will be
taken into consideration by the Contracting Officer in
deciding whether to terminate the contract.
The Government does not waive any rights it has by virtue
of this letter and specifically reserves any and all rights it
has relative to untimely delivery. Should your firm fail to
propose a new delivery date, that failure will be considered
as repudiation by your firm of its obligation to perform
under this contract and the contract may be terminated for
default.
Any assistance given to you on this contract or any
acceptance by the Government of delinquent goods or
services will be solely foi,; the purpose of mitigating
damages, and it is not the intention of the Government to
condone any delinquency or to waive any rights the
Government has under the contract.
(R4, tab 93)
13. IGT responded to the CO's show cause letter on 11August2012. It
proposed a two-stage delivery schedule with units being delivered on 30 November
2012 and 18 January 2013. Jt also, once again, referred to the illness of the elder
Mr. Rouillard and contended that there had been a mutual mistake (R4, tab 94). On
12 September 2012, the CO forwarded a letter to IGT in which he terminated the
contract for default (R4, tab 96). This timely appeal followed (R4, tab 98).
5
DECISION
A grant of summary judgment is appropriate when a review of the record
demonstrates that there is no genuine dispute as to any material fact and that the
moving party is entitled to judgment as a matter oflaw. FED. R. CIV. P. 56(a), (c)(l);
Mingus Constructors, Inc. v. United States, 812 F.2d 1387, 1390 (Fed. Cir. 1987). The
moving party has the burden of showing the absence of a genuine dispute of material
fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). If the moving party makes
the requisite showing, then the burden shifts to the nonmoving party to show that there
is a genuine factual issue for trial. Id. Moreover, the party opposing summary
judgment-here the appellant-"must show an evidentiary conflict on the record; mere
denials or conclusory statements are not sufficient." Mingus, 812 F .2d at 13 90-91.
We are also guided by the settled law governing terminations for default. Such
a termination is "a drastic sanction which should be imposed ... only for good grounds
and on solid evidence." J.D. Hedin Construction Co. v. United States, 408 F.2d 424,
431 (Ct. Cl. 1969) (citation omitted). Accordingly, the government bears the burden
of proving that the termination was reasonable and justified. If the government
establishes a prima facie case in this regard, the burden of production-or going
forward-shifts to the contractor. Lisbon Contractors, Inc. v. United States, 828 F.2d
759, 765 (Fed. Cir. 1987); New Era Contract Sales, Inc., ASBCA No. 56661 et al.,
11-1BCA~34,738 at 171,022.
Initially, we simply note that appellant did not file a "Statement of Genuine
Issues of Material Fact" which would have aided us in succinctly identifying any
genuine factual disputes. Instead, it opposed respondent's motion in a diffuse manner
with few or no citations to the evidentiary record. What is undisputed is that appellant
failed to deliver any production lots on or before the revised delivery date of 26 July
2012 (SOF ~ 12). Therefore, the government has established aprimafacie case, and
the burden of going forward shifts to appellant to demonstrate that its failure to deliver
was excusable.
Appellant relies heavily on the argument that the purported illness of its
president's father, Mr. Gerald Rouillard, Jr., severely impacted its ability to perform.
Although appellant provides little or no evidence to support its underlying contentions,
we will accept for purposes of this motion that Mr. Rouillard suffered a serious illness
at the time of contractual performance. As a legal matter, this Board has promulgated
a host of cases which hold that, absent an understanding by both parties that a key
person would be responsible for performance, his or her illness or death would not
excuse a default. See, e.g., MW. Microwave Corp., ASBCA No. 45084, 93-3 BCA
~ 26,027 at 129,377-78; Jonatech, Inc., ASBCA No. 46088, 94-3 BCA ~ 27,248 at
135,774; Brill Brothers, Inc., ASBCA No. 42573, 94-1BCA~26,352 at 131,056;
M&T Construction Co., ASBCA No. 42750, 93-1BCA~25,223 at 125,636. No such
6
understanding has been shown here. Thus, appellant's arguments in this regard are
unavailing.
Appellant also contends that it should be granted relief from the default
termination because of an alleged mistake in bid. During contractual performance,
IGT contended, without any support in ~he ~videntiary record, that its inspection cost
for a single unit was $1,680. It also argued that the $1,500 fee stated in a Modification
No. POOOOl was the government's inspection cost, and reasoned from this premise that
its bid of $112.25 grossly underestimated the cost of producing the spur gears (SOF
~ 10). Appellant concludes that there was a mutual mistake in bid. Appellant's
argument is illogical and does not advance its case. We find no evidence of a mistake
in bid, unilateral or bilateral. 3
Finally, appellant makes the contention for the first time in its opposition brief
that it made a unilateral mistake in bid when it relied upon the procurement history for
the spur gears which was contained in the solicitation. This argument is difficult to
comprehend. The procurement history cited by appellant merely sets forth unit costs
for earlier contracts dating back to 10 July 2007 and ranging between $106.00 and
$210.95 (SOF ~ 1). Appellant's bid of $112.25 per unit fit well within this range. It
also closely tracked the government's estimate of $127.86 (SOF ~ 2).
In order to establish a defense against a default termination based upon a
unilateral mistake in bid, appellant must demonstrate by clear and convincing evidence
that: .·
1
'
(1) [A] mistake in fact occurred prior to contract award;
(2) the mistake was a clear-cut, clerical or mathematical
error or a misreading of the specifications and not a
judgmental error; (3) prior to award the Government knew,
or should have known, that a mistake had been made and,
therefore, should have requested bid verification; (4) the
Government did not request bid verification or its request
for bid verification was inadequate; and (5) proof of the
intended bid is established.
McClure Electrical Constructors, Inc. v. Dalton, 132 F .3d 709, 711 (Fed. Cir. 1997)
(citing Solar Foam Insulation, ASBCA No. 46921, 94-2 BCA ~ 26,901. Even though
appellant's contention that it somehow relied on the procurement history in
formulating a mistaken bid is not supported by record evidence, we shall assume, for
purposes of the motion that, "a mistake in fact occurred prior to contract award."
3
Appellant did not include this argument in its opposition brief and may have
abandoned it (app. br.,passim).
7
Nevertheless, appellant has not satisfied, by clear and convincing evidence, the other
four prongs of the test. For example, IGT has not demonstrated or alleged either that it
made a clear-cut, clerical or mathematical error or misread the specifications. In fact,
its bid was in line both with the procurement history and the government's estimate.
In addition, the CO could not have been placed on notice by appellant's bid that there
had been a mistake: there was simply no disparity between it, the procurement history,
and the government's estimate. Under these circumstances, IGT's contentions must
fail.
CONCLUSION
We find no genuine disputes as to material facts and that the government is
entitled to judgment as a matter oflaw. The government's motion for summary
judgment is granted. The appeal is denied.
Dated: 7 October 2014
MICHAEL T. PAUL
Administrative Judge
Armed Services Board
of Contract Appeals
I concur
~%ti74
Administrative Judge
RICHARD SHACKLEFORD
Administrative Judge
Acting Chairman Vice Chairman
Armed Services Board Armed Services Board
of Contract Appeals of Contract Appeals
8
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. 58458, Appeal of Gerald
R. Rouillard, III, d/b/a International Gear Technologies, rendered in conformance with
the Board's Charter.
Dated:
JEFFREY D. GARDIN
Recorder, Armed Services
Board of Contract Appeals
9