DayDanyon Corporation

ARMED SERVICES BOARD OF CONTRACT APPEALS
Appeal of -- )
)
DayDanyon Corporation ) ASBCA No. 57681
)
Under Contract No. SPM8ED-09-D-OOO 1 )
APPEARANCE FOR THE APPELLANT: Mr. Joseph S. Jankowski
President
APPEARANCES FOR THE GOVERNMENT: Daniel K. Poling, Esq.
DLA Chief Trial Attorney
Joseph R. Weidenburner, Esq.
Assistant Counsel
Kristin K. Bray, Esq.
Assistant Trial Attorney
DLA Troop Support
Philadelphia, PA
OPINION BY ADMINISTRATIVE JUDGE JAMES
This dispute arises from DayDanyon Corporation's (DayDanyon's) timely
appeal from the DLA Troop Support contracting officer's (CO's) 20 April 2011
terminations for default of the captioned contract and its Delivery Order Nos. 0002 and
0003. The Board has jurisdiction of the appeal under the Contract Disputes Act of
1978 (CDA), 41 U.S.C. §§ 7101-7109. After a two-day hearing at the Board's offices,
the parties filed briefs. The Board is to decide only the validity of the default
termination.
FINDINGS OF FACT
1. On 23 April 2009, the Defense Supply Center Philadelphia (whose name
was changed to DLA Troop Support (DLATS 1)) awarded indefinite-quantity type
Contract No. SPM8ED-09-D-0001 (the contract) to DayDanyon for collapsible joint
modular intermodal containers (JMICs). The contract was to be administered by the
Defense Contract Management Agency (DCMA), Atlanta. (R4, tab 4 at 1)
2. The contract specified contract line item numbers (CLINs) for the JMICs:
CLIN 0001, National Stock Number (NSN) 8145-01-564-5802, "COLOR
GREEN"; CLIN 0002, NSN 8145-01-564-5795, "COLOR TAN"; CLIN 0003,
NSN 8145-01-551-5311, "NOT PAINTED"; and CLIN 9906, first article testing.
CLINs 0001-0003 each estimated 500 JMICs. (R4, tab 4 at 1-3, 12)
1
For simplicity, hereafter we refer to the government purchasing activity as DLATS.
3. The contract provided for issuance of delivery or task orders and
incorporated, inter alia, the FAR 52.209-4, FIRST ARTICLE APPROVAL-
GOVERNMENT TESTING (SEP 1989); FAR 52.249-2, TERMINATION FOR CONVENIENCE
OF THE GOVERNMENT (FIXED-PRICE) (MA y 2004); and FAR 52.249-8, DEFAULT
(FIXED-PRICE SUPPLY AND SERVICE) (APR 1984) clauses (R4, tab 4 at 16, 21).
4. After a 4 June 2009 DLATS stop work order due to a bid protest,
DayDanyon resumed contract performance on 2 July 2009 pursuant to bilateral
contract Modification No. POOOOl (R4, tab 11 at 1-2).
5. On 16 December 2009 DayDanyon submitted two first article JMICs for
government testing (R4, tab 34 at 1). The government's 13 January 2010 test report
found 27 major and 15 minor defects in the JMICs (R4, tab 38 at 1-8).
6. On 3 March 2010 DayDanyon again submitted two first article JMICs. The
government's 30 March 2010 test report found 2 major and 5 minor defects in those
JMICs. (R4, tab 43 at 1-9)
7. DLATS' 6 April 2010 letter to DayDanyon conditionally accepted the first
article JMICs, provided that DayDanyon submit a corrective action plan addressing
such deficiencies. On or about 7 April 2010 DayDanyon submitted such a plan, which
DLATS approved on or about 9 April 2010. (R4, tabs 46, 47, 49) DLATS authorized
DayDanyon to begin production of JMICs on 29 April 2010 (R4, tab 51).
8. On 3 May 2010 DLATS issued: (a) Delivery Order No. 0002 (DO 2) for
100 units of"NSN ... 8145015645795" (tan) and Delivery Order No. 0003 (DO 3) for
400 units of"NSN ... 8145015515311," (unpainted) both of which mistakenly cited
CLIN 0001, whose NSN 8145-01-564-5802 was for "COLOR GREEN" (finding 2),
and required delivery by 29 March 2010, and (b) unilateral Modification Nos. 000201
and 000301 to DOs 2 and 3, respectively, correcting their delivery date to 31 August
2010, but not correcting their CLIN 0001 cites (R4, tabs 53-56).
9. DayDanyon's 2 July 2010 email to DLA stated that DayDanyon expected
contract modifications to add ECP No. 109028, to update 2 data lists and 12 drawings,
and to correct "the incorrect Item/CLIN" stated in Modification Nos. 000201 and
000301 (R4, tab 63 at 3).
10. On 20 July 2010 unilateral Modification No. P00003 incorporated ECP
No. 109028 and updated the data lists and drawings as DayDanyon expected (R4,
tab 66).
11. On 5 August 2010 DO 2 unilateral Modification No. 000203 extended the
delivery date for 100 tan JMICs to 15 October 2010, and DO 3 unilateral Modification
2
No. 000302 extended the delivery dates for 300 unpainted JMICs to 30 September
2010 and 100 unpainted JMICs to 15 October 2010 (R4, tabs 73-74).
12. Effective 23 November 2010, bilateral DO 3 Modification No. 000303
extended the delivery date for 400 unpainted JMICs to 8 March 2011 and bilateral
DO 2 Modification No. 000204 extended the delivery date for 100 tan JMICs to
15 March 2011, cured the erroneous CLIN and NSN numbers and JMIC colors in
DOs 2 and 3 and included the following release:
IN CONSIDERATION OF THIS REVISED DELIVERY
SCHEDULE, CONTRACTOR HEREBY
UNCONDITIONALLY RELEASES AND WAIVES ALL
CLAIMS AGAINST THE GOVERNMENT BY REASON
OF DELAYS ATTRIBUTABLE TO EXCUSABLE
CAUSES WHICH HAVE OR MAY HAVE OCCURRED
IN THIS CONTRACT AND FOR ALL OTHER
CAUSES, CONDITIONS AND HAPPENINGS WHICH
HAVE OCCURRED UNDER THIS CONTRACT TO
DATE.
(R4, tab 85 at 2, tab 86 at 2)
13. On 20 January 2011 DCMA industrial specialist Angelo Oppedisano sent
CO Joseph McHenry a 20 January 2011 trip report on his 19 January 2011 visit at
DayDanyon's plant. Mr. Oppedisano saw no completed JMICs, but he saw
subassemblies, side panel frames, material for the base, miscellaneous hardware and
other components needed for assembly that "appeared to be enough material to build a
few hundred [JMICs] once they receive the sheet metal." (R4, tab 92 at 1-2)
14. On 9 February 2011 DCMA quality assurance representative (QAR)
George Johnson and Mr. Oppedisano visited the DayDanyon plant (tr. 2/113-15),
where Mr. Oppedisano photographed about 170 open frames; 80 H-configured frames;
100 rectangular plates; 3 larger rectangular plates; 8 packages of small parts; 2 hollow
rectangular tubes; and 1 incompletely assembled JMIC. Mr. Oppedisano sent
10 photographs and told CO Joseph McHenry that some parts were missing, no
production was being done and 5 people were there. (R4, tab 97 at 1-3, 5, 8, 11-12)
Mr. Johnson said that the incompletely assembled JMIC was a "dummy" used for
process control and quality measurements and "if we had to" DayDanyon could have
assembled and shipped it (tr. 2/135-36). We find this report presented an unfavorable
picture of appellant's production efforts.
15. After DLATS on 7 February 2011 asked DayDanyon to provide "digital
pictures of finished units today," on 16 February 2001 DayDanyon sent photographs
of several stacks of "materials and components" (R4, tab 95 at 1, tab 101 at 1-4).
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16. On 17 February 2011 Mr. Oppedisano reported his visit to DayDanyon's
facility to CO McHenry. He stated that all required parts to build 500 containers were
not on site, nor was all hardware required to build that quantity, no completed units
were available, there was no ongoing production, but Mr. Jankowski still thought he
would be able to meet the March delivery dates. (R4, tab 102 at 1, 5)
17. The CO's 22 February 2011 cure notice stated that DayDanyon's contract
performance was endangered by lack of progress, noted the impending DO 2 and
DO 3 delivery dates, gave DayDanyon ten days to cure such conditions and stated that
if those conditions were not so cured, the government might terminate the contract and
DOs 2 and 3 for default (R4, tab 106 at 2-3).
18. In reply to DLATS' 1 March 2011 email asking DayDanyon, "How many
units are completed as of today?" on 2 March 2011 DayDanyon told the CO: "I am
e-mailing you a production update today, and a response to the show cause letter by
Friday. We've got this thing nailed, we can begin shipments soon" (R4, tab 110), and
later in the afternoon, "Currently, a major portion of the performance has been
completed, and the remainder will be finished shortly" (R4, tab 111 ).
19. On 4 March 2011 DCMA approved DayDanyon's Shipping Instruction
Request (SIR) that projected contract shipments no earlier than 30 March 2011, 14 April
2011, and 22 April 2011 (app. supp. R4, tab 16 at 1, 3, 6, 9), and DayDanyon's reply to
CO McHenry's cure notice stated:
The first three shipments of JMICs, comprised of
100-200 units per shipment, have been loaded into the
DCMA SIR System. These will occur beginning later this
month ....
. . .Regarding the items noted in the Cure Notice,
most are inaccurate. Each JMIC has 17 noted different
assemblies or sub-assemblies, 53 parts, and dozens of
additional pieces of hardware. Therefore, when a status
report is based only on the number of completed JMICs it
turns performance status into an inaccurate "all or none"
extreme. Preparation and production of parts and
assemblies have been ongoing. There have been 10 plus
people working on this program since 01 January, and an
additional 10 are being added currently.
(R4, tab 112 at 2)
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20. DayDanyon's 7 March 2011 letter to CO McHenry offered $5,000 for "an
extension of 14 days" and requested a new delivery schedule of "100+ units" on each
of 31 March, 14 April, 22 April, 29 April and 6 May 2011 (R4, tab 113 ).
21. By 8 March 2011 DayDanyon did not deliver any of the 400 unpainted
JMICs due under DO 3 (tr. 1/26, 154, 2171 ).
22. On 11 March 2011 DayDanyon advised CO McHenry that it had ordered
seven "custom designed ... process stations for high production of JMICs" only two of
which were needed to allow production of completed JMICs; they were to be installed
the following week (R4, tab 114).
23. By 15 March 2011 DayDanyon delivered no JMICs to DLATS under DO 2
and DO 3; on the day before it began installing processing station 1 (R4, tab 116).
24. On 15 and 17 March 2011 DLATS issued requests for quotations for 75 tan
JMICs and 160 unpainted JMICs (app. supp. R4, tabs 31, 32).
25. DayDanyon's 16 March 2011 email advised CO McHenry that components
were arriving for processing station 2, and JMIC side and access panel sheets were
being assembled to weldment frames (R4, tabs 117, 123-24).
26. On 17 March 2011 DayDanyon reported to CO McHenry the completed
installation of processing station 1 (R4, tab 118 at 1), and on 18 March 2011 reported
that processing station 1 drives were operational and being calibrated (R4, tab 119).
27. On 22 March 2011 DayDanyon advised CO McHenry that the "set-ups to
begin running Stations One and Two began yesterday and are ongoing" (R4, tab 120).
28. DayDanyon's 28 March 2011 email to DCMA stated: "We have been
continuing performance [on the contract] orders 0002 & 0003 .... [W]e are looking to
begin shipping as early as the week of 10 APR." DCMA's 28 March 2011 email to
DayDanyon asked whether DLA had "indicated if they" would extend the contract
performance period and advised of a new QAR, Mr. Robert Strain, for DayDanyon.
(App. supp. R4, tab 10)
29. DayDanyon's 15 April 2011 email to CO McHenry stated: "Performance
continues on SPM8ED-09-D-0001 Orders 0002 & 0003" (R4, tab 124 at 1).
30. On 20 April 2011, CO McHenry issued unilateral contract Modification
No. P0004 which terminated the contract and DOs 2 and 3 for default for failure to
deliver and included a decision that stated the basis for the default termination, the
causes ofDayDanyon's failures, his views on DayDanyon's excuses and advised
DayDanyon of its appeal rights (R4, tab 125).
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31. FAR 49.402-3(t) in effect on 23 April 2009 provided as follows:
( f) The contracting officer shall consider the
following factors in determining whether to terminate a
contract for default:
( 1) The terms of the contract and applicable laws
and regulations.
(2) The specific failure of the contractor and the
excuses for the failure.
(3) The availability of the supplies or services from
other sources.
(4) The urgency of the need for the supplies ... and
the period of time required to obtain them from other
sources, as compared with the time delivery could be
obtained from the delinquent contractor.
(5) The degree of essentiality of the contractor in
the Government acquisition program and the effect of a
termination for default upon the contractor's capability as a
supplier under other contracts.
(6) The effect of a termination for default on the
ability of the contractor to liquidate guaranteed loans,
progress payments, or advance payments.
(7) Any other pertinent facts and circumstances.
In preparing his default termination decision, CO McHenry considered the
FAR 49.402-3(t) factors regarding the contract terms and applicable regulations,
whether DayDanyon was going to perform and produce, the high backorder situation,
and use of emergency purchase orders to acquire JMICs within 120 days (R4, tab 125
at 3-5; tr. 1/182-84, 188-90).
32. On 11 July 2011 DayDanyon timely appealed to the Board from that CO's
final decision, which was docketed as ASBCA No. 57681.
33. DayDanyon records state that: (a) on 1 April 2011 it ordered "2 Precision
Straight Edges" from Mike Petsch & Associates, Inc. for $929.50, without evidence
that it paid for such items, and (b) from 10 March to 23 April 2011 it paid
approximately $32,000 to eight employees. Neither record shows that such amounts
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were incurred for Contract No. SPM8ED-09-D-0001. (App. supp. R4, tab 35 at 42,
tab 36 at 10-17)
34. During discovery, DayDanyon stated in response to government
interrogatories that due to exceptional weather events on 15-16 December 2010,
25-26 December 2010 and 9-10 January 2011, "DayDanyon was closed and directly
lost five days of production." We take judicial notice that DayDanyon's plant is
located in Hart County, Georgia. The National Weather Service reports accompanying
DayDanyon's response showed neither the historic normal weather nor any unusually
severe weather for Hart County on such dates. DayDanyon's response also stated
that-
[D]elays in delivering of JMICS were partially caused by
the inability of two suppliers/subcontractors to guarantee
delivery dates of certain automated production set-ups by
mid-January 2011 for early February 2011 delivery. This
resulted in DayDanyon having to develop alternative
methods and processes utilizing components it had
available in-house or were readily available off the shelf,
over the course oflate January and through February 2011.
These actions/inactions occurred [during] the latter part of
December, 2010 until mid-January, 2011.
(App. supp. R4, tab 46 at 5-21, 23, 25)
DECISION
I.
The government has the burden to prove that its default termination was
justified. See Lisbon Contractors, Inc. v. United States, 828 F.2d 759, 764-65 (Fed.
Cir. 1987). A contractor's failure to make timely delivery of agreed-upon goods
establishes a prima facie case of default. Id.
As last extended, the delivery dates were 8 March 2011 for the 400 DO 3
unpainted JMICs, and 15 March 2011 for the DO 2 100 tan JMICs (finding 12). By
8 March 2011 DayDanyon delivered no unpainted JMICs (finding 21) and by
15 March 2011 DayDanyon delivered no JMICs (finding 23). Nor were any JMICs of
either type delivered on or before 20 April 2011 (finding 30). Therefore, the
government has sustained its burden of proof that pursuant to the contract's
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FAR 52.249-8 Default clause,, (a)(l)(i), DayDanyon was in default for failure to
deliver the JMICs by their agreed delivery dates.
II.
The contractor has the burden to show that its failure to deliver the goods was
excusable. See DCX Inc. v. Perry, 79 F.3d 132, 134 (Fed. Cir. 1996), cert. denied,
519 U.S. 992 (1996). DayDanyon argues that DLATS was required to extend the
delivery dates by five days due to "exceptional weather events" on 15-16 December
2010, 25-26 December 2010 and 9-10 January 2011 (app. br. at 51-52). The record
contains evidence of neither the historic normal weather nor any usually severe
weather for Hart County on such dates (finding 34). Thus, the record contains no
proof of "unusually severe weather" under paragraph (c )(9) of the contract's FAR
52.249-8, Default clause. See All-State Construction, Inc., ASBCA No. 50513 et al.,
04-2 BCA, 32,778 at 162,082-84 (number of days of excusable weather delay
determined by comparing experienced rain and snowfall to "historic normal" rain and
snowfalls). Even if, arguendo, Hart County experienced "unusually severe weather"
on those dates, that five-day delay would not excuse DayDanyon's failure to deliver
timely.
DayDanyon argues that the CO abused his discretion by failing to consider the
seven factors prescribed in FAR 49.402-3(f) before terminating the contract for
default, to consider information Mr. Oppedisano and Mr. Johnson did not provide
about DayDanyon's performance status and failed to prepare the written memorandum
stating his reasons for terminating for default required by FAR 49.402-5 (app. br.
at 57, 62).
FAR 49.402-3(f) prescribes as follows:
(f) The [CO] shall consider the following factors in
determining whether to terminate a contract for default:
( 1) The terms of the contract and applicable laws
and regulations.
(2) The specific failure of the contractor and the
excuses for the failure.
(3) The availability of the supplies or services from
other sources.
(4) The urgency of the need for the supplies ... and
the period of time required to obtain them from other
sources, as compared with the time delivery could be
obtained from the delinquent contractor.
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(5) The degree of essentiality of the contractor in
the Government acquisition program and the effect of a
termination for default upon the contractor's capability as a
supplier under other contracts.
(6) The effect of a termination for default on the
ability of the contractor to liquidate guaranteed loans,
progress payments, or advance payments.
(7) Any other pertinent facts and circumstances.
(Finding 31) InDCX, 79 F.3d at 135, the Court interpreted FAR 49.402-3(f) as follows:
[T]he factors in[§] 49.402-3(f) that [COs] are directed to
consider before terminating contracts are not prerequisites
to a valid termination. Although compliance or
noncompliance with[§] 49.402-3(f) may aid a Board of
Contract Appeals or a court in determining whether a [CO]
has abused his discretion in terminating a contract for
default, the regulation does not confer rights on a
defaulting contractor. A [CO's] failure to consider one or
more of the[§] 49.402-3(f) factors therefore does not
require that a default termination be converted into a
termination for the convenience of the government.
[Citations omitted]
See also American Renovation and Construction Co., ASBCA Nos. 53723, 54038,
09-2 BCA ~ 34,199 at 169,061 (CO articulated a reasonable basis for the default
termination in her show cause notice and final decision, which implicitly considered
most of the factors in FAR 49.402-3(f)); Recon Optical, Inc., ASBCA No. 56289, 09-1
BCA ~ 34, 110 at 168,671 (document accompanying default termination notice with no
pen and ink signature of CO satisfied FAR 49.402-5).
In his decision included in his default termination notice, CO McHenry
considered the FAR 49.402-3(f) factors regarding the contract terms and applicable
regulations, the causes ofDayDanyon's failures to deliver the JMICs by the last
specified delivery dates and its alleged excuses, whether DayDanyon was going to
perform and produce, the high JMIC backorder situation, and use of emergency
purchase orders to acquire JMICs within 120 days (findings 30-31). He received
Mr. Oppedisano's 20 January, 9 and 17 February 2011 reports of the status of parts
and work activity at DayDanyon's facility and photographs of what Mr. Oppedisano
saw and what DayDanyon photographed there (findings 13-16). He had reason to
know ofDLATS' mid-March 2011 solicitations for 75 tan and 160 unpainted JMICs
(finding 24), indicative of the urgency of its JMIC requirements. The record evidence
9
shows an unfavorable view ofDayDanyon's production efforts as of9 February 2011
(finding 14). See Novelty Products Co., ASBCA No. 21077, 78-1BCAii12,989
at 63,346 ("There is no requirement that the [CO] must adopt the ACO's
recommendations favorable to the contractor."). We hold that the decision signed by
CO McHenry and included in Modification No. P0004 (finding 30) satisfied the FAR
49.402-5 requirement for a written memorandum of the reasons for the default
termination, articulated a reasonable basis for his default termination and did not abuse
his discretion in terminating the contract for default in accordance with the
requirements in FAR 49.402-3(f) and 49.402-5.
III.
DayDanyon argues that the CO McHenry waived the 8 and 15 March 2011
JMIC delivery dates because the CO's lack of a response to DayDanyon (see finding
19) after 22 February 2011 and up to his 20 April 2011 default termination "meant an
implied waiver of the delivery schedule" (app. br. at 64-65).
DayDanyon has the burden to prove its affirmative defense of waiver of the
delivery schedule. See Phoenix Petroleum Co., ASBCA No. 42763, 96-2 BCA
ii 28,284 at 141,213. To prove such waiver, a contractor must show: (1) failure to
terminate within a reasonable time after default under circumstances indicating
forbearance; and (2) reliance by the contractor on the failure to terminate and
continued performance by him under the contract, with the government's knowledge
and implied or express consent. De Vito v. United States, 413 F.2d 1147, 1153-54
(Ct. Cl. 1969). Appellant must show, therefore, that it reasonably construed the CO's
inaction from 8 March 2011 (the first delivery date) until 20 April 2011 (the
termination date) as a waiver and it performed in detrimental reliance thereon. See
Tectron Corp., ASBCA No. 12901 et al., 73-1BCAii9786 at 45,718 (waiver requires
proof of reasonable, detrimental reliance on government encouragement or inducement
to continue performance).
In Pelliccia v. United States, 525 F.2d 1035, 1044 (Ct. Cl. 1975), the Court of
Claims clarified the forbearance criterion of proof:
Fairness to the contractor requires that the [CO] allow a
reasonable time within which the contractor may endeavor
to demonstrate that its failure to deliver was excusable.
Even when the delay is found not to be excusable, the
[CO] should have a reasonable time within which to
determine whether a default termination would be in the
best interest of the Government.. ..
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In applying the De Vito and Pelliccia waiver and forbearance guidelines, the
ASBCA has distinguished "affirmative" and "non-affirmative" government actions to
determine whether the government encouraged or induced continued performance. As
stated in Tectron, 73-1BCA~9786 at 45,719:
After failure of [timely] delivery without excusable
cause, the Government must make an election of remedies;
i.e., to terminate the contract for default or to waive the
delivery date and require continued performance. The time
within which this election is made must be reasonable and
often it is difficult to determine whether the Government is
forbearing a termination for default to assess the situation
or ... is forbearing to continue the contract. The
determination usually rests on whether the Government's
acts are non-affirmative in nature, indicating forbearance
of termination, or affirmative, indicating an election and
waiver of the delivery date. Non-affirmative acts by the
Government such as investigations do not operate as a
waiver of the delivery schedule. On the other hand,
affirmative acts directing or encouraging the contractor to
continue performance operate as an election by the
Government waiving the delivery date.
Several Board decisions exemplify non-affirmative government conduct in the
interval between a contractor's default and the default termination notice (i.e., the
forbearance period), that did not constitute a waiver: Precision Dynamics, Inc.,
ASBCA No. 42955, 97-1BCA~28,846 at 143,893-94 (QAR observation of
contractor testing, silence and inaction); Precision Standard, Inc., ASBCA
Nos. 41375, 44357, 96-2 BCA ~ 28,461 at 142,154, aff'd, 135 F.3d 775 (Fed. Cir.
1997) (table) (routine QAR plant visits and telephone calls to monitor contractor
actions during the forbearance period); Engineering Design & Development, ASBCA
No. 22067, 77-2 BCA ~ 12,774 at 62,080-81 (government inaction, though
government representatives may have known of continued performance); Raytheon
Service Co., A Subsidiary ofRaytheon Co., ASBCA No. 14746, 70-2 BCA ~ 8390
at 39,018 (government silence and inaction); H.N. Bailey & Associates, ASBCA
No. 21300, 77-2 BCA ~ 12,681 at 61,534 (government non-communication with
contractor); Bermite Division of Whittaker Corp., ASBCA Nos. 19211, 20474, 77-2
BCA ~ 12,675 at 61,515-17 (government conferred with contractor on the cause of its
noncompliant signals); Tectron, 73-1BCA~9786 at 45,717-18 (government observed
contractor performing contract after delivery date passed); Precision Products, Inc.,
ASBCA No. 14284, 70-2 BCA ~ 8447 at 39,299 (after the delivery date for 101
assemblies the government inspected and rejected 42 assemblies; and after the delivery
date for 158 additional assemblies the government inspected and rejected 80 units;
held: the government "merely elected to wait and see if appellant would in fact make
deliveries").
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Affirmative government conduct that waived a contractor's default includes
acceptance of 420 units, out of 1,000 units due for delivery by 29 November 1960,
from 30 November to 30 December 1960, apparently without issuance of a show cause
disclaimer of waiver. See De Vito, 413 F.2d at 1150, 1153. Similarly, when the CO's
partial default termination notice ordered the contractor to deliver 25 delinquent
radios, he waived their delinquency. Raytheon Service, 70-2 BCA ii 8390 at 39,016.
With respect to De Vito waiver criterion (2), to constitute "detrimental reliance,"
activities performed by the contractor after the delivery date must amount to
productive performance or tangible progress on the contract. For example, in a
contract for bottled water, neither conducting a site survey, nor being responsible for
liquidated damages to a subcontractor, nor attempting to purchase water from another
source constituted productive performance or tangible progress. See American
AquaSource, Inc., ASBCA Nos. 56677, 57275, 13 BCA ii 35,212 at 172,788.
Likewise, receipt of anodized aluminum parts without additional work performed does
not constitute detrimental reliance. Precision Standard, 96-2 BCA ii 28,461
at 142,155.
DayDanyon had received many but not all JMIC parts and components by
17 February 2011 (finding 16). Between the 8 March and 15 March 2011 dates for
delivering the DO 3 and DO 2 JMICs to the 20 April 2011 default termination,
DayDanyon began assembling JMIC side and access panel sheets (finding 25);
ordered, received components and installed two "process stations" to produce JMICs
(findings 22-23, 25-27); and forecasted shipping "as early as the week of 10[-16]
APR" (finding 28). However, by 20 April 2011, DayDanyon's JMIC deliveries
remained delinquent (finding 30). Based on the foregoing facts, DayDanyon's
performance from 8 March to 20 April 2011 was comparatively insubstantial and its
tangible progress was limited. Thus, DayDanyon has not established detrimental
reliance during such period. See Pelliccia, 525 F.2d at 1043.
Finally, a contractor must show that it incurred costs in continuing productive
performance or tangible progress on the contract. See Bermite Division, 77-2 BCA
ii 12,675 at 61,577 (default upheld because, inter alia, contractor failed to prove it
incurred performance costs in reliance on government encouragement to proceed);
Precision Standard, 96-2 BCA ii 28,461at142,151, 142,155 ($1,183.70 was "too
small a sum to constitute detrimental reliance" in a $43,000 contract).
DayDanyon introduced records stating that from about 8 March to 20 April
2011 it paid eight employees $31,976 and ordered straight edges priced at $929.50, but
no proof that it had paid such price. DayDanyon's evidence did not show that those
amounts were incurred to perform Contract No. SPM8ED-09-D-0001. (Finding 33)
Therefore, DayDanyon failed to prove it incurred approximately $32,000 from about
8 March to 20 April 2011 to perform Contract No. SPM8ED-09-D-0001, and such
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amount was too small to constitute detrimental reliance. See Bermite Division, 77-2
BCA ~ 12,675 at 61,577; Precision Standard, 96-2 BCA ~ 28,461at142,155.
For the foregoing reasons, we hold that DayDanyon did not carry its burden of
proving the affirmative defense of waiver. We deny the appeal.
Dated: 17 August 2015
Administrativ ge
Armed Service oard
of Contract Appeals
I concur I concur
``
``
MARKN:STEMPLER 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. 57681, Appeal of
DayDanyon Corporation, rendered in conformance with the Board's Charter.
Dated:
JEFFREY D. GARDIN
Recorder, Armed Services
Board of Contract Appeals
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