Nauset Construction Corporation

ARMED SERVICES BOARD OF CONTRACT APPEALS
Appeals of - )
)
Nauset Construction Corporation ) ASBCA Nos. 61673, 61675
)
Under Contract No. W912SV-13-C-0007 )
APPEARANCES FOR THE APPELLANT: John J. McNamara, Esq.
Elise M. Kuehn, Esq.
Lane McNamara LLP
Southborough, MA
APPEARANCES FOR THE GOVERNMENT: Scott N. Flesch, Esq.
Army Chief Trial Attorney
CPT Philip L. Aubart, JA
Harry M. Parent, III, Esq.
MAJ Felix S. Mason, JA
Trial Attorneys
OPINION BY ADMINISTRATIVE JUDGE YOUNG ON THE GOVERNMENT’S
PARTIAL MOTION TO DISMISS FOR LACK OF JURISDICTION
Pending before the Board is a motion filed by the Department of the Army
(government or respondent) to dismiss two of the three appeals 1 filed by Nauset
Construction Corporation (Nauset or appellant). The government argues that the
Board lacks jurisdiction on ASBCA Nos. 61673 (Claim 1) and 61675 (Claim 2) 2
because the claims involved fraud. The government also argues that ASBCA
No. 61675, to the extent it appeals a termination for default, is untimely. We grant the
motion in part as it relates to ASBCA No. 61675, and deny the remainder.
STATEMENT OF FACTS (SOF) FOR PURPOSES OF THE MOTION
1. On November 1, 2013, the National Guard Bureau (Guard) awarded a
contract to Nauset for $20,521,858.00 to build the Unit Training Equipment Site
Project in Camp Edwards, MA (the project) (R4, tab 1 at 2).
1 A companion case, Appeal No. 61674, involves a subcontractor claim and is not
included in the motion to dismiss.
2 For simplicity’s sake we will refer to the claim appellant filed on May 12, 2017, as
“Claim 1” and the claim it later filed on February 12, 2018, as “Claim 2” (see
app. opp’n at 1-2).
2. On May 12, 2017, Nauset submitted a certified claim (Claim 1) to the
contracting officer (CO) for $2,563,622 plus an extension of time, from the inception
of the contract through October 26, 2016 (R4, tabs 182-85).
3. On July 6, 2017, Nauset’s attorney researched the “best avenue of relief,
Armed Services Board of Contract Appeals or Federal Court of Claim for filing
suit” (R4, tab 200 at 27-28).
4. On July 10, 2017, the CO informed appellant that due to ongoing
investigations into Nauset by multiple government agencies that may affect her
decision, she would not be able to render a decision within the 60 days required by the
Contract Disputes Act, and that she would issue a decision by November 7, 2017 (R4,
tab 186 at 2).
5. On September 27, 2017, Nauset’s attorney researched “docketing dates”
(R4, tab 200 at 30). On October 18, 2017, Nauset’s attorney conducted
“[r]esearch of entitlement to additional time to respond to notice of default,” and
on October 19, 2017, he conducted “[r]esearch [on] FAR regulations; Research
case law regarding termination for default under FAR” (id. at 15).
6. On November 7, 2017, the CO informed Nauset that she was still reviewing
the claim of May 12, 2017, that ongoing investigations by multiple government
agencies may affect her decision, and that she would issue a decision on Claim 1 by
January 8, 2018 (app. supp. R4, tab 204).
7. On November 17, 2017, the CO terminated the contract for default (R4,
tab 39). The 24-page termination notice detailed the causes for termination and
included the following language:
[T]he Government is completely Terminating [sic] Nauset
for Default on contract W912SV-13-C-0007.
. . . This notice constitutes such decision, and Nauset has
the right to appeal under the Disputes clause of the contract
. . . . This notice constitutes a decision that the contractor
is in default as specified and that the contractor has the
right to appeal under the Disputes clause.
. . . [T]his termination does not relieve Nauset of any and
all liability relating to the outcome of the current
2
investigations by the Department of Labor, Army Criminal
Investigative Department, and the Defense Criminal
Investigative Service.
(R4, tab 39 at 23-24)
8. The termination letter did not include the appeal language required by
Federal Acquisition Regulation (FAR) 33.211(a)(4)(v).
9. On November 17, 2017, the same day the termination letter was issued,
Nauset’s attorney reviewed “[the] Government’s 23 page notice of termination of
Nauset; [held] Teleconferences with Mark Williams regarding termination notice;
Teleconferences with Anthony N. Papantonis regarding termination notice;
Teleconference with Robin P. Wilcox of Traveler’s regarding termination notice”
and “review[ed] the Federal Acquisition Regulations regarding avenues of appeal”
(R4, tab 200 at 17-18). On November 29, 2017, Nauset’s counsel conducted “[r]eview
of cases under Contract Dispute Act regarding default terminations” (id. at 18).
10. On November 28, 2017, during a telephone conference with counsel for
Nauset, the government’s attorney stated that “it is possible that this matter could be
converted to a termination for convenience”3 (app. opp’n at 2 (citing McNamara aff. ¶ 5)).
11. On January 8, 2018, the CO informed appellant that she was still
reviewing Claim 1 in coordination with legal and other advisors, and that due to the
ongoing investigations by multiple government agencies that may affect her decision,
she was unable to render a decision at that time. The CO stated that she would issue a
decision on the claim by April 1, 2018. (R4, tab 197 at 3)
12. On January 17, 2018, 61 days after the termination notice, Nauset’s project
manager submitted a letter to the CO, titled “Response to Termination of
November 17, 2017 and Certified Termination Claim and Request for Final Decision
under the Contract Disputes Act” (R4, tab 198). In the letter, Nauset responded to the
issues identified by the CO in the termination letter, disputed the termination and
3 We note the government’s objection to the inclusion of this statement in the
record. The government argues that the statement, to the extent that it was
made, was a communication covered by Federal Rule of Evidence 408,
Compromise Offers and Negotiations, which prohibits the use of a
statement made during compromise negotiations to prove the validity of a
claim (gov’t reply at 3). The Federal Rules of Evidence are not binding
on the Board, but may guide the Board’s rulings. See Board Rule 10(c).
We will weigh the evidentiary value of this statement as appropriate.
3
stated that it intended to submit a second claim for costs not included in Claim 1.
Appellant stated: “Nauset takes exception to the government’s decision to terminate
for default . . . . Nauset will continue to vehemently invest every available resource to
support our Claim, our position and reputation” (R4, tab 198 at 14). Although the
subject of the letter included the words “Certified Termination Claim and Request for
Final Decision Under the Contract Disputes Act,” Nauset did not include certification
language nor request anywhere else in the letter a decision by the CO. Nauset’s letter
did not explicitly state that it wished to appeal the termination decision to the Board or
to any other tribunal.
13. The CO acknowledged receipt of the January 17, 2018 letter by email of
January 17, 2018, stating “email received” (app. supp. R4, tab 207).
14. On February 12, 2018, 87 days after the termination notice, appellant
submitted to the CO a certified claim (Claim 2), titled “Claim for Extended Time
and Unpaid Completed Contract Work – Part 2 and Wrongful Termination” (R4,
tab 200). In Section I of the letter, Nauset asserted that the causes of termination
were beyond its control and demanded payment of $1,076,189.00 for costs incurred
from November 2016 until the date of termination in November 2017 4 (id. at 1-2).
Section II of the letter, “Wrongful Termination,” reflects that “Nauset intends to
defend its position and prove that the government’s decision to terminate was
based on [circumstances] beyond our control” (id. at 3). Section II concludes with
this statement: “Nauset specifically asserts that the termination was wrongful as a
matter of fact and as a matter of law. Nauset specifically submits this wrongful
termination claim in accordance with the Contract Disputes Act.” (Id. at 4)
Section III of the letter, titled “Request for Final Decision of the Contracting
Officer Pursuant to the Contracts Dispute Act” requests that “the Contract [sic]
Officer render a decision on the claim submitted by Nauset Construction Corp. within
sixty (60) days of the date of this claim” (id.).
15. Nauset’s letter of February 12, 2018, did not state it wished to appeal to
the ASBCA or to any other tribunal.
16. The CO acknowledged receipt of Claim 2 via email on February 13, 2018,
in a single word: “Received” (app. supp. R4, tab 208).
17. On March 26, 2018, the CO informed appellant that she was still
reviewing Nauset’s claims, and that due to the ongoing investigations, her
projected decision date for both claims was July 1, 2018 (R4, tab 202).
18. On April 25, 2018, the government (including the CO) met with Nauset
4 Nauset did not specify how many days of delay it wished to claim.
4
and Nauset’s surety (app. supp. R4, tab 210). The minutes of the meeting reflect that
the purpose of the meeting was to “assist the Surety in moving forward” (id. ¶ 8). The
minutes reflect that Nauset’s counsel inquired whether the government would be
willing to rescind the termination (id. ¶ 16). The government responded that “it was
confident that the termination of the principal was impartial, factually supported,
properly executed and includes a number of grounds for termination that collectively
and in some cases individually by themselves, would provide an appropriate basis for
the termination findings” (id. ¶ 19).
19. On May 24, 2018, counsel for the Guard wrote to the attorneys for Nauset
and the Surety responding to previous correspondence to coordinate a meeting
between the attorneys (app. supp. R4, tab 211 at 1). The letter states: “At this time,
the Government will not rescind the default termination” (id.). The letter further states
that “the Government . . . clearly and unequivocally . . . re-state[s] our position . . . .
The Government does not desire Nauset to be involved in the completion effort. The
Government is required to contract with responsible contractors . . . . Nauset’s actions
have given rise to serious concerns about its contractor responsibility.” (Id. at 1-2)
Further, the letter states that “the Government cannot assent to the use of Nauset in
the completion effort due to contractor responsibility concerns” (id.) (emphasis in
original) (footnote omitted).
20. On June 27, 2018, Nauset appealed to the Board the deemed denial of
Claims 1, 2, and the default termination.
21. On June 30, 2018, the CO informed appellant that due to ongoing
investigations into Nauset by multiple government agencies including the Army
Criminal Investigations Division and US Department of Labor, her projected
decision date was now October 1, 2018 (app. supp. R4, tab 212).
22. On October 1, 2018, the CO informed Nauset that she was still reviewing
Claims 1 and 2, that there were multiple government agencies investigating Nauset
including the Army Criminal Investigative Division, and that she would issue a
decision by November 1, 2018 (app. supp. R4, tab 214).
23. On November 1, 2018, the CO issued a letter to appellant containing
the following language:
The purpose of this letter is to provide a response to
your 12 May 2017 and 12 February 2018 claims
received by the National Guard for Contract
No. W912SV­ 13-C-0007. I have reviewed all of the
facts pertinent to this claim with the assistance of legal
as required by FAR§ 33.211.
5
As I have previously informed you, the claims and this
matter have been referred to investigative agencies. See
FAR 33.209 (“If the contractor is unable to support any
part of the claim and there is evidence that the inability
is attributable to misrepresentation of fact or to fraud on
the part of the contractor, the contracting officer shall
refer the matter to the agency official responsible for
investigating fraud”).
Based on preliminary findings of the Army Criminal
Investigation Division, the Defense Contract Audit
Agency, as well as my review of the claimed cost, this
office suspects that claimed costs are fraudulent or false.
The National Guard is currently considering referral of
this matter under the False Claims Act [FCA].
FAR 33.210 states that a Contracting Officer’s authority
does not extend to the settlement, compromise,
payment, or adjustment of any claim involving fraud.
Therefore, I have no authority to take action on your
claims.
(App. supp. R4, tab 215)
24. Appellant asserts that throughout 2018, Nauset continued to meet with the
government, Nauset’s surety, and counsel in regard to the project and Nauset’s
termination (app. opp’n at 3 (citing Papantonis aff. ¶ 29)).
25. On November 7, 2018, the CO’s representative issued a Notice to Comply
(the notice) to Nauset and to the Surety. The notice stated that Nauset had failed to
comply with contract drawings and that water was leaking into the building, that the
problems had been identified in a walk-through conducted on October 12, 2018, and
that they needed to be resolved immediately (app. supp. R4, tab 216).
26. In response to the notice, Nauset and two subcontractors met with the
government on December 4, 2018 (app. opp’n at 4 (citing Williams aff. ¶ 20,
Papantonis aff. ¶ 34)).
27. Appellant asserts that December 13, 2018 was Nauset’s last day on the
project site (app. opp’n at 4 (citing McNamara aff. ¶ 21, Papantonis aff. ¶ 35)).
28. On February 6, 2019, the Army Criminal Investigation Command, Major
6
Procurement Fraud Unit, issued a memorandum stating that it “has an open, active
investigation on [appellant] concerning the Massachusetts Army National Guard’s
construction project at the unit Training Equipment Site (UTES) project, Camp
Edwards, MA” (gov’t reply, ex. 2).
DECISION
The motion before us challenges our jurisdiction in two distinct areas. First, the
government argues that the Board lacks jurisdiction on ASBCA Nos. 61673 and 61675
because the claims involved fraud. Secondly, the government argues that ASBCA
No. 61675, to the extent it appeals a termination for default, is untimely. We examine
each part of the motion in turn.
I. Does the Board lack jurisdiction over the claims in ASBCA Nos. 61673 and
61675 because the claims involved fraud?
The government argues that the CO had no authority to decide the claims
because they involved fraud and accordingly the Board lacks jurisdiction over the
deemed denial of the claims. Appellant opposes the motion, arguing that the CO’s
refusal to issue a decision based on a mere suspicion of fraud is not enough to deprive
the Board of jurisdiction. 5
We first examine the language of the applicable statute and regulation. The
Contract Disputes Act (CDA), 41 U.S.C. §§ 7101-7109, states that an agency head has
no authority to “settle, compromise, pay, or otherwise adjust any claim involving
fraud.” 41 U.S.C. § 7103(c)(1) (emphasis added). The FAR provides a similar
limitation on the CO’s authority, establishing that the CO has no authority to decide or
resolve “any claim involving fraud.” FAR 33.210 (emphasis added). Additionally, the
FAR provides that in case of “suspected fraudulent claims . . . the CO shall refer that
matter to the agency official responsible for investigating fraud.” FAR 33.209
(emphasis added).
When interpreting a statute we look first to the language of the statute itself. If
that language is unambiguous our inquiry stops, unless there is a clearly expressed
legislative intention contrary to the language of the statute itself. See LSI Computer
Sys., Inc. v. United States Int’l Trade Comm’n, 832 F.2d 588, 590 (Fed.Cir.1987).
This is sometimes called the “plain meaning” rule. As there appears to be no
ambiguity in the CDA and FAR language quoted above, we examine the plain
5 Appellant also argues that the CO’s refusal to issue a decision upon suspicion of
fraud amounts to an indefinite stay, as the investigation into the suspected fraud
may take an undetermined amount of time. We do not reach this issue, as we
decide the motion on other grounds.
7
meaning of the terms at issue. According to the NEW OXFORD AMERICAN
DICTIONARY (3d ed. 2010), to “involve” means “to include (something) as a necessary
part or result.” In contrast, to “suspect” means “to have an idea or impression of the
existence, presence, or truth of (something) without certain proof.” Id. It becomes
clear that “involve fraud” and “suspect fraud” are not interchangeable. The record
shows that the CO referred the suspected fraud to the investigative agencies, as
required by the FAR, but she took her suspicion a step further: because she suspected
fraud in Nauset’s claims, she concluded that the claims involved fraud and that she had
no authority to resolve them. In other words, substituting the terms for the definitions
above, the CO had “an idea or impression of the existence, presence, or truth of fraud
without certain proof” and concluded that the claims “included fraud as a necessary
part or result.” As explained further below, we do not agree that a CO’s articulation of
a suspicion of fraud is sufficient to deprive the Board of jurisdiction.
In a recent decision, ESA South, Inc., ASBCA Nos. 62242, 62243, 20-1 BCA
¶ 37,647, the CO issued a letter declining to issue a final decision due to a suspicion of
fraud after the appellant appealed to the Board the deemed denial of its claim. The
Board held:
We do not agree that the contracting officer’s 2020 letter
divests us of jurisdiction to entertain these 2019 appeals. If
it did, the government presumably could defeat any appeal
before this Board simply by presenting to the Board a letter
from the contracting officer written after the filing of the
appeal articulating the contracting officer’s suspicion that
the claim underlying the appeal was fraudulent. We do not
agree that section 7103(c)(1) [of the CDA] goes that far.
Indeed, discussing that section we have said that “[we]
have jurisdiction under the CDA to decide the contract
rights of the parties even when fraud has been alleged,”
“we possess jurisdiction over an appeal if we do not have
to make factual determinations of fraud,” and “[t]hat fraud
allegedly may have been practiced in the drafting or
submission of . . . [a] claim does not deprive this Board of
jurisdiction under the CDA.”
ESA South, 20-1 BCA ¶ 37,647 at 182,772 (citing Sand Point Servs., LLC, ASBCA
Nos. 61819, 61820, 19-1 BCA ¶ 37,412 at 181,859).
The government relies on PROTEC GmbH, ASBCA No. 61161 et al., 18-1
BCA ¶ 37,010, for the proposition that when a CO’s final decision is based upon a
suspicion of fraud there is no CDA jurisdiction (gov’t mot. at 6). The government’s
reliance is misplaced. In PROTEC the Board found jurisdiction because the final
8
decision was grounded “exclusively in disputed contract issues . . . . [and was] not
based upon – let alone solely based upon – a suspicion of fraud . . . .” PROTEC, 18-1
BCA ¶ 37,010 at 180,244. The government also offers Medina Constr., Ltd. v. United
States, 43 Fed. Cl. 537(1999) and Savannah River Nuclear Sols., LLC v. Dep’t of
Energy, CBCA No. 5287, 17-1 BCA ¶ 36,749 for the same proposition. The Board
rejected this argument in a recent decision, Mountain Movers/Ainsworth-Benning,
LLC, ASBCA No. 62164, 20-1 BCA ¶ 37,664 at 182,868. Accordingly, we conclude
the government’s reliance on these cases inapposite.
The government also argues that the fact that there are ongoing investigations
lends support to the CO’s determination that the claims involved fraud (gov’t mot.
at 6, gov’t reply at 6). We disagree. The fact that there is an ongoing investigation
does not divest the Board of jurisdiction in a matter otherwise properly before the
Board. ESA South, 20-1 BCA ¶ 37,647 at 182,772 (citations omitted).
In its ultimate analysis, in order to resolve the jurisdictional motion at hand, the
government asks the Board to agree with the CO’s determination that she had no
authority to resolve the claims because they involved fraud. It is well settled that we
possess jurisdiction over an appeal if we do not have to make factual determinations of
fraud. ESA South, 20-1 BCA at 182,772. The Board has previously held that it “can
maintain jurisdiction over a [separate defense] involving . . . fraud as long as it does
not have to make factual determinations of the underlying fraud.” Laguna Constr. Co.
v. Carter, 828 F.3d 1364, 1368 (Fed. Cir. 2016); see Supply & Service Team GmbH,
ASBCA No. 59630, 17-1 BCA ¶ 36,678 at 178,602 (following Laguna). In this vein,
the Board has maintained jurisdiction, for example, when a finding of fraud is made by
another authority competent to make such a finding. See Laguna, 828 F.3d at 1368-69
(citing AAA Eng’g & Drafting, Inc., ASBCA No. 48729, 01–1 BCA ¶ 31,256at 154,367 (Board had jurisdiction where the government alleged fraud in contract
administration, and the United States Court of Appeals for the Tenth Circuit had
already determined that the contractor had committed fraud)); see also Laguna Constr.
Co., ASBCA No. 58324, 14-1 BCA ¶ 35,748 at 174,947-48 (the Board declined to
make factual findings of fraud, but admitted into the record the guilty pleas of
Laguna’s officers entered in the United States District Court for the District of New
Mexico, which the Board found helped “explain and support” how Laguna breached
the contract). In the appeal before us, the record does not support that a finding of
fraud in these claims has been made by an authority competent to make such a finding.
We decline to make such a finding ourselves.
However, whether the claims involved fraud is not operative to resolve the
jurisdictional matter before us. The essential fact before us is that two claims were
presented to the CO and she declined to issue a decision on those claims. Under the
CDA, the Board has jurisdiction over a CO’s final decision (41 U.S.C. § 7104(a)) and
over the deemed denial thereof (41 U.S.C. § 7103(f)(5)). Our jurisdiction attached
9
when Nauset filed an appeal from the deemed denial of its claims, after the CO
continued to delay, again and again, issuing a decision on the pending claims
(SOF ¶¶ 4, 6, 11, 17). The CO’s letter determining she had no authority to decide the
claims, issued after appellant appealed the deemed denial to the Board, does not
change this result. “Once the Board is vested with jurisdiction over a matter, the
contracting officer cannot divest it of jurisdiction by his or her unilateral action.”
Mountain Movers/Ainsworth-Benning, LLC, 20-1 BCA ¶ 37,664 at 182,869 (citing
Triad Microsystems, Inc., ASBCA No. 48763, 96-1 BCA ¶ 28,078 at 140,196).
For the reasons discussed above, we conclude that we have jurisdiction to hear
Nauset’s appeal of the CO’s deemed denial of Claims 1 and 2, docketed as ASBCA
Nos. 61673 and 61675.
II. Does the Board lack jurisdiction over the termination for default in ASBCA
No. 61675 because it was untimely appealed to the Board?
The government argues that ASBCA No. 61675, to the extent it appeals a
termination for default, 6 was not filed with the Board within 90 days of the termination
and accordingly the Board lacks jurisdiction. The termination for default was issued
and received by appellant on January 17, 2018. Thus, the government concludes that
the 90-day appeal period expired on February 15, 2018. It is undisputed that appellant
appealed the termination to the Board on June 27, 2018 (SOF ¶ 20). Appellant argues
that the appeal is not time-barred because (1) the government’s conduct vitiated the
finality of the termination for default; (2) appellant effectively appealed the
termination for default to the Board by notice to the CO and thus tolled the 90-day
clock; and (3) the termination notice failed to provide appeal language and thus
prejudiced appellant. We examine each argument in turn.
1. Did the government’s conduct vitiate the finality of the termination for
default?
Under the CDA, 41 U.S.C. § 7104 (a), the CO’s decision must be appealed to
the Board within 90 days. The 90-day period is jurisdictional and may not be waived.
See Cosmic Constr. Co. v. United States, 697 F.2d 1389, 1390-91 (Fed. Cir. 1982);
Maria Lochbrunner, ASBCA Nos. 57235, 57236, 11-2 BCA ¶34,783 at 171,186. We
have recognized that the finality of a termination may be vitiated by acts of the
government: “The test for vitiation of the finality of the CO’s decision ‘is whether the
contractor presented evidence showing it reasonably or objectively could have
concluded the CO’s decision was being reconsidered.’” Aerospace Facilities Group,
Inc., ASBCA 61026, 18-1 BCA ¶ 37,105 at 180,605 (quoting Sach Sinha and Assocs.,
6
As explained further below, Nauset submitted its disagreement with the termination
as a claim, rather than as an appeal from the termination for default.
10
Inc., ASBCA No. 46916, 95-1 BCA ¶ 27, 499 at 137,042). In Aerospace Facilities,
“written and oral communications with the government [subsequent to the termination]
created a cloud of uncertainty as to the status of the . . . termination.” 18-1 BCA ¶ 27,
499 at 180,605. However, a request to the CO to reconsider a final decision is not in
itself sufficient to vitiate the termination decision. Id. (citing Propulsion Controls
Engineering, ASBCA No. 53307, 01-2 BCA ¶ 31,494 at 155,508 (“it is unreasonable
to conclude that a [CO] is reconsidering a final decision simply as a result of a request
to do so.”)). It is well settled that the government’s actions must have occurred within
the 90-day jurisdictional window in order to vitiate the finality of the termination. See
Godwin Corp., ASBCA No. 61410, 18-1 BCA ¶ 37,073 at 180,450 (finding that the
CO’s alleged agreement to review additional evidence submitted six months after the
termination notice could not have had any effect on appellant’s understanding of the
termination’s finality during the appeal period because the 90-day appeal window to
the Board had already expired at the time that the CO allegedly made this
representation (see also Shafi Nasimi Constr. and Logistics Co., ASBCA No. 59916,
16-1 BCA ¶ 36,215 at 176,698)).
In the appeal at hand, Nauset argues that it reasonably believed the CO agreed
to review her termination decision (app. opp’n at 9-15). Appellant argues that since
the CO acknowledged receipt of Nauset’s letters of January 17, 2018, and February 12,
2018, Nauset reasonably believed that the CO “accepted Nauset’s [Claim 2] and would
review her decision in regard to Nauset’s termination” and that “this reasonable
expectation . . . is supported by the [CO’s] letter of March 26, 2018, [stating] that she
was still reviewing Nauset’s [Claim 2]” (app. opp’n at 13) (emphasis in original).
These arguments are not persuasive. First, it is not reasonable for appellant to believe
the CO was reconsidering the termination decision based on the cryptic
acknowledgements of receipt (SOF ¶¶ 13, 16) of Nauset’s submissions. Second, “it is
unreasonable to conclude that a [CO] is reconsidering a final decision simply as a
result of [appellant’s] request to do so” Propulsion Controls Engineering, 01-2 BCA
¶ 31,494 at 155,508. Lastly, the CO’s correspondence of March 26, 2018, was issued
outside the 90-day window to appeal to this Board, so it could not have had any effect
on appellant’s understanding of the finality of the termination during the appeal
period. Godwin Corp., 18-1 BCA ¶ 37,073 at 180,450.
Nauset also argues that several communications between its attorney and
government counsel vitiated the finality of the termination. Nauset asserts that on
November 28, 2017, government counsel conveyed to appellant’s counsel that it was
possible that the termination for default could be converted to a termination for
convenience (app. opp’n at 13; see SOF ¶ 10). Nauset argues that this conversation
led it to believe that the CO was reconsidering the termination. We view this
conversation as a statement made between lawyers in the midst of legal discussions,
and conclude that it does not support a reasonable belief by appellant that the CO was
reconsidering her decision. Nauset also argues that its counsel spoke with the
11
government’s attorney “multiple times about the termination” (app. opp’n at 13) but
we note that the supporting affidavit by Nauset’s attorney is careful to state that a
meeting between the parties was discussed extensively in the late fall 2017 and early
spring of 2018 (McNamara aff. ¶ 6). Appellant also asserts that Nauset continued to
meet with the government through 2018 in regard to the project and the termination
(app. opp’n at 14; SOF ¶ 24). We note, however, that the record does not show that
the CO was part of any of these conversations. For these reasons, we hold that these
communications between the government and Nauset were not sufficient to reasonably
lead Nauset to believe that the CO was reconsidering the termination.
Nauset also points to the meeting with the government on April 25, 2018
(SOF ¶ 18), the letter of May 24, 2018 (SOF ¶ 19) and the notice to comply issued on
November 7, 2018 (SOF ¶ 25) as indicia that the CO was reconsidering the termination
decision. These events took place after February 15, 2018, when the 90-day appeal
window closed, and could not have had any effect on appellant’s understanding of the
finality of the termination during the appeal period. See Godwin Corp., 18-1 BCA
¶ 37,073 at 180,450.
Appellant provided no evidence of government conduct during the 90-day
appeal period that could have led the contractor to reasonably believe that the CO’s
decision was being reconsidered. Accordingly, we find that the government’s conduct
did not vitiate the finality of the CO’s decision. See, e.g., Shafi Nasimi Constr. and
Logistics Co., 16-1 BCA ¶ 36,215 at 176,698.
2. Did appellant’s Claim 2 submitted to the CO effectively appeal the
termination for default to the Board and toll the 90-day clock?
Filing an appeal with the CO may satisfy the Board’s notice requirement.
Aerospace Facilities, 18-1 BCA ¶ 37,105 at 180,604 (citing Hellenic Express, ASBCA
No. 47129, 94-3 BCA ¶ 27,189 at 135,503 (“filing an appeal with the [CO] is
tantamount to filing with the Board” (citation omitted)). The Board has historically
taken a liberal reading of contractor’s communications to the CO in finding effective
appeals. Aerospace Facilities, 18-1 BCA at 180,604 (citing Thompson Aerospace,
Inc., ASBCA Nos. 51548, 51904, 99-1 BCA ¶ 30,232 at 149,570). See also Afghan
Active Group (AAG), ASBCA 60387, 16-1 BCA ¶ 36,349 at 177,211. Adequate
notice to the CO must be (1) in writing, (2) express dissatisfaction with the CO’s
decision, and (3) manifest an intent to appeal the decision to a higher authority
(Aerospace Facilities, 18-1 BCA at 180,604 (citing McNamara-Lunz Vans &
Warehouses, Inc., ASBCA No. 38057, 89-2 BCA ¶ 21,636 at 108,856)).
As to the third requirement, i.e. manifest an intent to appeal the decision to a
higher authority, “‘[w]hile the Board historically has interpreted contractors’
communications liberally in determining whether an intent to appeal exists, the record
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reasonably must demonstrate an intent to appeal to the Board in order for our
jurisdiction to attach.’” Bahram Malikzada Constr. Co., ASBCA Nos. 59613, 59614,
15-1 BCA ¶ 36,134 at 176,370 (quoting Oconto Elec., Inc., ASBCA No. 36789, 88-3
BCA ¶ 21,188 at 106,939, aff’d, 884 F.2d 1399 (Fed. Cir. 1989) (unpublished table
decision)). Thus, in Aerospace Facilities, we found that a letter stating that “‘we will
appeal your decision through the various avenues open to us’ adequately expressed the
contractor’s intent to appeal as a contractor can only ‘appeal’ to the Board.” 18-1 BCA
¶ 37,105 at 180,604. However, a contractor’s letter indicating [it] would appeal to either
the Board or the Claims Court [is] not a notice of appeal because the CDA requires a
notice of appeal to express an election of the forum in which it will seek relief.
Stewart-Thomas Indus., Inc., ASBCA No. 38773, 90-1 BCA ¶ 22,481 at 112,836.
In the appeal at hand, Nauset argues that its submission to the CO on
February 12, 2018, satisfied the Board’s notice requirement, as it was in writing,
expressed dissatisfaction with the CO’s decision, and manifested an intent to appeal
the decision to higher authority (app. opp’n at 20-21). We agree that Nauset fulfills
the first two requirements, but the third prong fails. Nauset’s letter of February 12,
2018, (SOF ¶ 14) asserts that the termination was wrongful and submits a claim to the
CO for additional costs. In this letter, appellant does not express an intent to appeal
the termination to higher authority, and the word “appeal” does not appear anywhere
in Nauset’s letter. We examined appellant’s letter of January 17, 2018, to ascertain
whether, if read together with the letter of February 12, 2018, it may convey
appellant’s intent to appeal the termination. In the letter of January 12, 2018, appellant
expresses its disagreement with the termination and states it intends to submit a new
claim (SOF ¶ 12). The letter states that Nauset will “continue to vehemently invest
every available resource to support our claim, our position and reputation” (id.), but it
fails to express Nauset wishes to appeal the termination for default. Although we have
historically construed liberally the language of a notice of appeal, Nauset’s letters fail
to express an intent to raise appellant’s plight to an authority higher than the CO, and
we hold that they do not suffice as a notice to appeal to the Board. See Ft. McCoy
Shipping & Svcs., ASBCA No. 58673, 13 BCA ¶ 35,429 at 173,794.
3. Was appellant prejudiced by the CO’s failure to provide appeal language
in the termination letter?
Nauset argues that although the termination letter gave notice that it had the
right to appeal under the Disputes clause, the CO failed to provide the appeal rights as
required by the FAR and Nauset was prejudiced by this omission. Appellant asserts
that because the termination letter did not provide the appeal language, it did not set in
motion the 90-day period to appeal to the Board. The government argues that the
omission of appeal rights in the termination letter did not prejudice appellant because
appellant was represented by counsel throughout the performance of the contract, and
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counsel conducted research on its appeal rights so appellant was aware of its rights to
appeal the termination decision. We agree.
The termination letter included the following language: “This notice constitutes
[a termination] decision, and Nauset has the right to appeal under the Disputes clause
of the contract . . . . This notice constitutes a decision that the contractor is in default
as specified and that the contractor has the right to appeal under the Disputes clause
(SOF ¶ 7).
The contract incorporated by reference FAR 33.211(a)(4)(v) (SOF ¶ 1)
which requires that a termination include language substantially as follows:
This is the final decision of the Contracting Officer. You
may appeal this decision to the agency board of contract
appeals. If you decide to appeal, you must, within 90 days
from the date you receive this decision, mail or otherwise
furnish written notice to the agency board of contract
appeals and provide a copy to the Contracting Officer from
whose decision this appeal is taken. The notice shall
indicate that an appeal is intended, reference this decision,
and identify the contract by number.
We have consistently held that ‘“when confronted with contracting officer
decisions that only advise the contractor that it may appeal under the Disputes clause,
omitting additional details of its rights, the Board has required the contractor to prove
it was actually prejudiced by the omission, or that the contractor detrimentally relied
upon it, to avoid the 90-day limitation period.’” Shafi Nasimi Constr. and Logistics
Co., 16-1 BCA ¶ 36,215 at 176,697 (quoting Mansoor Int’ll Dev.t Servs., ASBCA
No. 58423, 14-1 BCA ¶ 35,742 at 174,926). See also Access Personnel Servs., Inc.,
ASBCA No. 59900, 16-1 BCA ¶ 36,407 at 177,517. We have also consistently held
that a termination for default is a government claim, and starts the 90-day clock as a
final decision of the CO. Western Trading Co., ASBCA No. 61004, 18-1 BCA
¶ 37,030 at 180,304 (citing Bushra Co., ASBCA No. 59918, 16-1 BCA ¶ 36,355at 177,238).
Nauset states that it was prejudiced because it “did not understand that the
Notice of Termination was a final decision of the contracting officer that was
appealable to the ASBCA within ninety (90) days” (Papantonis aff. ¶ 9; see app. opp’n
at 18; app. sur-reply at 3).
The facts before us suggest that Nauset did not understand the distinction
between filing a claim with the CO and appealing a termination for default, which is a
contracting officer’s final decision (COFD) that must be appealed to the Board within
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90 days of the termination. The January 17, 2018, letter states that Nauset intends,
sometime in the future, to dispute the termination decision (SOF ¶ 12). Indeed, in its
letter of February 12, 2018, to the CO, Nauset states that it intends to defend its
position, that Nauset submits its wrongful termination claim in accordance with the
Contract Disputes Act, and that in accordance with the CDA, Nauset requests that the
CO render a final decision on its certified claim disagreeing with the termination
within 60 days (SOF ¶ 14). This letter denotes Nauset’s intent to file a claim against
the default termination with the CO instead of an appeal with the Board, showing that
Nauset did not understand that a termination for default is in itself a government claim,
and starts the 90-day clock as a final decision of the CO. Western Trading Company,
18-1 BCA ¶ 37,030 at 180,304. The record does not explain the genesis of this
confusion. However, we note that appellant’s counsel conducted research on
termination rights several times.
The record demonstrates that Nauset’s attorney conducted extensive research
on termination rights on the same day the termination letter was issued, including
review of the “Government’s 23 page notice of termination” which directed Nauset to
the Disputes clause, and “[r]eview of Federal Acquisition Regulations regarding
avenues of appeal” (SOF ¶ 9). On November 29, 2017, appellant’s counsel researched
“cases under Contract Dispute Act regarding default terminations” (id.). On July 6,
2017, Nauset’s attorney researched the “best avenue of relief, Armed Services Board
of Contract Appeals or Federal Court of Claims for filing suit” (SOF ¶ 3). On
September 27, 2017, Nauset’s attorney researched “docketing dates” (SOF ¶ 5). On
October 18, 2017, Nauset’s counsel conducted “[r]esearch of entitlement to additional
time to respond to notice of default” and on October 19, 2017, he conducted
“[r]esearch [on] FAR regulations; research case law regarding termination for default
under FAR” (id.) Additionally, appellant’s counsel was involved throughout the
performance of the contract and termination process, and discussed the termination at
length with the government (SOF ¶¶ 10, 18, 24). The contract incorporates by
reference the Disputes clause (SOF ¶ 1) and the termination letter directs Nauset’s
attention to that clause, stating “Nauset has the right to appeal under the Disputes
clause of the contract” (SOF ¶ 7). Given the amount of research conducted by
counsel, and counsel’s involvement throughout the performance and termination of the
contract, we find it hard to believe that appellant was unaware of its appeal rights
under the Disputes clause even if the termination letter did not include the language
required by the FAR. Considered together, these facts do not support appellant’s
assertion that it was prejudiced by the termination letter’s omission of appeals rights
language. Accordingly, we conclude that the 90-day appeal period was not tolled (see
Access Personnel, 16-1 BCA ¶ 36,407 at 177,517).
The 90-day period within which the CO’s decision must be appealed to the
Board is jurisdictional and may not be waived, and appellant failed to appeal the
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COFD within the 90-day window. Accordingly, we do not have jurisdiction over
ASBCA No. 61675.
CONCLUSION
For the reasons above, the Board asserts jurisdiction over the claims in the
appeals docketed as ASBCA Nos. 61673 and 61675. To the extent ASBCA
No. 61675 also appeals a termination for default, that portion of the appeal is
time-barred and is hereby dismissed for lack of jurisdiction.
Dated: May 5, 2021
LIS B. YOUNG
Administrative Judge
Armed Services Board
of Contract Appeals
I concur I concur
RICHARD SHACKLEFORD OWEN C. WILSON
Administrative Judge Administrative Judge
Acting Chairman Vice Chairman
Armed Services Board Armed Services Board
of Contract Appeals of Contract Appeals
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I certify that the foregoing is a true copy of the Opinion and Decision of the
Armed Services Board of Contract Appeals in ASBCA Nos. 61673, 61675, Appeals of
Nauset Construction Corporation, rendered in conformance with the Board’s Charter.
Dated: May 5, 2021
PAULLA GATES LEWIS
Recorder, Armed Services
Board of Contract Appeals
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