New Iraq Ahd Company ( 2014 )

ARMED SERVICES BOARD OF CONTRACT APPEALS
Appeal of -- )
)
New Iraq Ahd Company ) ASBCA No. 58768
)
Under Contract No. W91 GY0-09-M-0051 )
APPEARANCE FOR THE APPELLANT: Mr. Abbas Abed Mohsin
Owner
APPEARANCES FOR THE GOVERNMENT: Raymond M. Saunders, Esq.
Army Chief Trial Attorney
CPT Vera A. Strebel, JA
Trial Attorney
OPINION BY ADMINISTRATIVE JUDGE JAMES
This appeal arises from the contracting officer's (CO's) 20 June 2013 final
decision refusing to pay the contractor's invoice claiming $75,600 under the captioned
contract. The Board has jurisdiction of the appeal under the Contract Disputes Act of
1978 (CDA), 41 U.S.C. §§ 7101-7109. The parties have elected to submit the appeal on
the written record under Board Rule 11. The Board is to decide entitlement only (Bd.
order, 13 December 2013).
FINDINGS OF FACT
1. On 9 November 2008 the Joint Contracting Command-Iraq/Afghanistan
awarded commercial item Contract No. W91GY0-09-M-0051 (the contract) to New Iraq
Ahd Company (NIAC) for the purchase and delivery of furniture and other items to the
billeting office at Kirkuk Regional Air Base, Iraq, for the total contract price of
$369,200.00 (R4, tab 1 at 1-2).
2. The contract Schedule B set forth descriptions, quantities, unit prices and total
prices for 19 line items of furniture and other items to be delivered (R4, tab I at 2).
3. Schedule B, contract line item number 0010 (CLIN 0010) stated 700 "LAMP,"
$12.00 unit price and $84,000.00 total price (R4, tab I at 2), corresponding to NIAC's 25
October 2008 quote (R4, tab 8 at 2; app. supp. R4, tab 19). The contract depicted CLIN
0010 LAMP in a 2" by 2 112" photograph of a lamp, shade and electric cord, with no
specified dimensions, qualities or other characteristics (R4, tab 1 at 6).
4. The contract incorporated by reference the FAR 52.212-4, CONTRACT TERMS
AND CONDITIONS-COMMERCIAL ITEMS (FEB 2007) clause. In that clause,~ (a),
"Inspection/Acceptance," authorized the government to reject only "nonconforming"
supplies;~ (1), "Termination for the Government's convenience," gave the government
the right to terminate the contract, or any part of it, for its sole convenience, entitling the
contractor to receive the costs allowed by that clause; and~ (o), "Warranty," warranted
that the items delivered were merchantable and fit for use for the particular purpose
described in the contract. (R4, tab 1 at 8)
5. CO CPT Stuart Moats' 11November2008 email to NIAC stated: "Line item
0010 has a mistake ... 700 lamps at $12.00 each should be $8,400, not $84,000. This will
also bring the total contract amount down to $293,600. Do you see the mistake?" (R4,
tab 4 at 1)
6. NIAC's 12 November 2008 email to CO Moats stated:
[Y]es i see that but i am so confused about that but the total
was correct count our profit according to that finalamount our
accountant was mistake he dint add zero to tha each price of
the iyem no 10 but he ad the price to the total please we need
your assistance to fix this mistake.... [Syntax in original]
(R4, tab 4 at 1)
7. On 15 November 2008 CO Moats issued to NIAC unilateral contract
Modification No. P00002 1 (Mod. P00002) "to correct the unit price of CLIN 0010 from
$12.00 to $120.00. The total CLIN and total contract amount[s] remain unchanged. The
total contract price remains at $369,200.00." (R4, tab 5)
8. In January 2009 SSgt Diana Rhame replaced CPT Moats as CO for the NIAC
contract (R4, tab 14, Moats decl. of 19 March 2014 ).
9. On 25 February 2009 CO representative (COR) Jeffrey Sanders (R4, tab 15,
~ 2) accepted NIAC's 7 February 2009 invoice No. 982 for delivery ofCLIN 0010, 700
lamps at $12.00 per unit and a $8,400 total price even though the price per unilateral
Mod. POOOOl was $120.00 per unit for a total of $84,000 (R4, tab 7 at 1).
1
Mod. POOOOl, proposed to change the contractor's name (R4, tab 3), was not
previously issued, apparently because the contract correctly stated the contractor's
name.
2
10. In March 2009 COR Sanders advised CO Rhame that the lamps delivered
under the contract were not acceptable because they "were very low quality and were
simple desk lamps" for a $120 unit price (R4, tab 15, ,-i 2).
11. CO Rhame's 14 March 2009 email to NIAC stated:
I am the hold up [sic] on your payment request. As I was
reviewing your invoice, I noticed that the cost of the lamps
were [sic] $120.00. After review of your original quote, I
noticed that you priced the lamps at $12.00. I understand that
a modification was done to increase the price, however I think
it was done in error. I would like to issue a modification to
reduce the price of the lamps to its original price of $12.00 ....
If you have any information in regards to the price change,
please contact me.
(App. supp. R4, tab 8 at 1) We find that CO Rhame's foregoing references to "price"
and "cost" meant contract "unit price."
12. NIAC's 15 March 2009 email reply to CO Rhame stated:
[T]he contracting officer agree about our price and he signed the
contract we have the right to receive payments completely as the
contract say the contracting officer noted that and he make the
first amendment but we explain to him that this is the accountant
mistake then he return the price to the original total amount of the
contract with out any changes$ 369,200.00 ... the contracting
officer Mr. Moats did the amendment himself, we did not forced
him . now after we complete the work you want to change the
price of the contract , this is not correct . [Syntax and punctuation
in original]
(App. supp. R4, tab 8 at 2)
13. NIAC's undated email to CO Rhame stated: "our benefit was in this item
more that others therefore .. .if i cancel or return the prices to$ 12.00 that will be a big
loss." CO Rhame's 18 March 2009 email to NIAC stated: "Is this your final stance?
Are you not willing to negotiate a price with the government? If not, please be prepared
to pick up the lamps. I will start the process to partially terminate your contract." (App.
supp. R4, tab 9)
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14. Effective 30 April 2009 the parties executed bilateral contract Modification
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No. POOOO 1 (Mod. POOOO 1) which "reduce[d] the unit price for [CLIN] 0010 to reflect
the unit price listed on the original quote dated 25 October 2008." CLIN OOlO's unit
price was decreased from $120.00 to $12.00, and its total price was decreased by
$75,600.00 from $84,000.00 to $8,400.00 (R4, tab 8 at 1-2). On 1May2009 NIAC
signed Mod. POOOOl without reservation (id.), and submitted invoice No. 982, redated
1May2009, for 700 CLIN 0010 lamps at $12.00 per unit and an $8,400 total price
(R4, tab 7 at 3), which price was paid to NIAC (R4, tab 10 at 1).
15. NIAC's 10 February 2013 email to CO Joan Wysoske at the Army
Contracting Command - Rock Island, regarding Contract No. W91 GY0-09-M-0051
stated: "on attached file another contract I still demand payment of it" (R4, tab 12).
16. On 14 February 2013 NIAC submitted invoice No. 983, apparently to
CO Wysoske, requesting $75,600 for "Lamp, Turkey, (the rest payment for the contract
W91GY0-09-M-0051)," i.e., the difference between $84,000 and $8,400 (R4, tab 13).
17. CO Wysoske's 20 June 2013 final decision declined to pay NIAC's invoice
No. 983 for $75,600 and notified NIAC of its appeal rights (R4, tab 10). NIAC appealed
from CO Wysoske's decision on 10 July 2013 (R4, tab 11), which appeal was docketed
as ASBCA No. 58768. In its complaint, NIAC alleges that CO Rhame forced it to install
billeting furniture items even though installation was not part of the contract (compl. if 3).
The installation allegation was not included in the instant claim.
18. During litigation, CO Rhame described her 2009 communications with NIAC:
3. ...I contacted the contractor on several occasions via email
and thru an interpreter, Dr. Ali, about renegotiating a fair
market price for the lamps, because the quality of the lamps
delivered to the MSgt Sanders was not worth $120.00. The
contractor was insistent that we pay him $12 0. 00 per lamp ....
After several attempts to reason with Mr. Moshin [sic, NIAC
owner Abbas Abed Mohsin], I determined that a partial
termination for convenience was in the best interest of the
government. Mr. Moshin was not happy about my decision
although I tried to explain to him that each item is evaluated
not just the overall contract amount; therefore he should quote
fair market prices for each [CLIN].
4. Throughout this process Mr. Moshin did not state he felt
threatened nor forced into signing a modification for partial
2
See footnote 1.
4
termination to myself or our interpreter. I never threatened
Mr. Moshin nor did I insinuate a threat to him.
(R4, tab 15, Rhame decl. iii! 3, 4)
19. The record contains no evidence of the amount of the next lowest quote on the
contract, or any nonconformity of the CLIN 0010 lamps NIAC delivered, or any breach
of the warranties of merchantability or fitness for their intended use of such lamps.
DECISION
Appellant argues that in March-April 2009 CO Rhame coerced NIAC to sign
contract Mod. POOOO 1 by threatening to terminate CLIN 0010 and to require NIAC to
pick up the 700 lamps the government had accepted, and thus it is entitled to the $75,600
it has claimed. The government contends that Mod. POOOO 1, which NIAC signed without
reservation, constitutes an accord and satisfaction, barring NIAC's claim for $75,600
more than the $8,400 total price to which it agreed in that Mod. for the 700 CLIN 0010
lamps; NIAC has not proven that it signed Mod. POOOO 1 under coercion or duress; and
the Board lacks jurisdiction to consider NIAC' s 15 July 2013 allegation that CO Rhame
forced NIAC to install the furniture items without cost (compl. if 3; app. br. at 2).
I.
Turning to the government's jurisdictional contention first, under the CDA, in
instances such as are present here, the Board's jurisdiction is dependent upon the
submission of a proper contractor's claim. Thus, the claim, and not the complaint,
determines the scope of our jurisdiction in this appeal. See American General Trading &
Contracting, WLL, ASBCA No. 56758, 12-1 BCA if 34,905 at 171,639. NIAC's
14 February 2013 claim demanded only the additional payment of $75,600 for delivery of
700 CLIN 0010 lamps (finding 16). NIAC's complaint in ASBCA No. 58768 alleged
that CO Rhame forced NIAC to install the billeting furniture items without compensation
(compl. if 3). A CDA claim cannot properly be raised for the first time in a party's
pleadings before the Board. Unconventional Concepts, Inc., ASBCA No. 56065 et al.,
10-1BCAif34,340 at 169,591. The Board has no jurisdiction ofNIAC's furniture
installation allegation.
II.
Bilateral Mod. POOOO 1 is dispositive of the unit price of the CLIN 0010 lamps,
unless that modification is unenforceable because it was executed by NIAC under duress,
an issue to which we tum next. To establish duress, a party "must establish that (1) it
involuntarily accepted [the other party's] terms, (2) circumstances permitted no other
alternative, and (3) such circumstances were the result of [the other party's] coercive
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acts." Rumsfeldv. Freedom NY, Inc., 329 F.3d 1320, 1329 (Fed. Cir. 2003), reh'g
denied, 346 F.3d 1359 (Fed. Cir. 2003), cert. denied, 541 U.S. 987 (2004). Coercion
requires a showing that the "party's manifestation of assent was induced by improper
threat which left the recipient with no reasonable alternative save to agree." System
Technology Associates, Inc. v. United States, 699 F.2d 1383, 1387 (Fed. Cir. 1983). By
another formulation, coercion requires proof that the government action was ( 1) illegal,
(2) a breach of an express provision of the contract without a good faith belief that the
action was permissible under the contract, or (3) a breach of the implied covenant of good
faith and fair dealing. Rumsfeld, 329 F.3d at 1330. "The assertion of a legitimate
contract right cannot be considered as violative of a duty of good faith and fair dealing,"
and thus cannot be coercive. Rumsfeld, 329 F.3d at 1331 (quoting Nassif Assocs. v.
United States, 644 F .2d 4, 12 (Ct. Cl. 1981 )).
We apply the foregoing rules to the instant appeal. In its 25 March 2014 brief,
NIAC asserts:
I was not happy with Ms Diana Rhame decision and I did not
agree on the partial termination or issuing modification , I
refused many times . but finally I was forced to sign
modification because I was confused and afraid I had no idea
that there is offices like board or offices to recheck and close
contract where can I claim and ask for my rights . If I knew
about that I would insist and still on my position and I would
not sign the mod . [Syntax in original]
(App. br. at 3)
NIAC's duress argument is untenable for two reasons. First, NIAC's more than
three years of silence in submitting its $75,600 claim, due to its ignorance of its contract
dispute and appeal rights (app. br. at 2), undercuts the probative weight of its duress
argument.
Second, in Range Technology Corp., ASBCA No. 51943 et al., 04-1 BCA
~ 32,456, the contractor alleged, and the CO's declaration denied, that the CO threatened
to terminate the commercial item contract for default if it did not sign certain
modifications. We held that such government threats do "not ipso facto violate 'notions
of fair dealing'" and were not wrongful conduct. 04-1 BCA ~ 32,456 at 160,548. If a
threat of default termination is not coercive, a threat of convenience termination a fortiori
is not coercive. 3 The contract gives the CO the right to terminate a portion of the
contract. FAR 52.212-4(1), (m). We hold that NIAC has not proven duress.
3
There is not a scintilla of evidence that the CO was attempting to reject the lamps
pursuant to 52.214-4(a) or (o).
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CONCLUSION
We deny the appeal.
Dated: 17 October 2014
I concur I concur
``#= ~
RICHARD SHACKLEFORD
Administrative Judge 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 No. 58768, Appeal of New Iraq
Ahd Company, rendered in conformance with the Board's Charter.
Dated:
JEFFREY D. GARDIN
Recorder, Armed Services
Board of Contract Appeals
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