Sungwoo E&C., Ltd.

Appeals of --
ARMED SERVICES BOARD OF CONTRACT APPEALS
)
)
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Sungwoo E&C Co., Ltd. ) ASBCA Nos. 61144, 61219
)
Under Contract Nos. W91QVN-14-D-0034 )
W91QVN-12-D-0114 )
W91QVN-I2-D-Ol l9 )
W91QVN-l2-D-OI30 )
W91QVN-l2-D-OI32 )
W91QVN-I3-D-0064 )
APPEARANCE FOR THE APPELLANT: Song Yong Eui., Esq.
Central IP & Law
Seoul, Korea
APPEARANCES FOR THE GOVERNMENT: Raymond M. Saunders, Esq.
Army Chief Trial Attorney
Dana J. Chase, Esq.
MAJ Bruce H. Robinson, JA
MAJ Stephen P. Smith, JA
Trial Attorneys
OPINION BY ADMINISTRATIVE JUDGE MCNULTY
Before us are the government's motions to strike and a motion to partially
dismiss for lack of jurisdiction in the above referenced appeals. 1 The government f
moves to strike portions of appellant's complaints, contending we lack jurisdiction
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1 The government has filed four motions to strike. The first, filed in ASBCA
No. 61144 on June 12, 2017, related to appellant's initial complaint in that
appeal. The second, also filed in ASBCA No. 61144 on August 25, 2017,
relates to appellant's amended complaint in that appeal. It reiterated the
arguments made in the first motion and does not differ materially from the first
motion. We view it as superseding the original motion. The third motion was
filed in ASBCA No. 61219, on August 29, 2017. The final motion to strike was
filed as part of the government's briefing, requested by the Board to address a
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jurisdictional issue. This final motion also includes a motion to partially
dismiss for lack of jurisdiction. Although not currently consolidated, the
appeals are interrelated, sharing common or overlapping factual assertions and
arguments, and the motions are best decided in a single decision.
over some of the causes of action, one cause of action is duplicative and another is
moot.
FINDINGS OF FACT FOR PURPOSES OF THE MOTIONS
1. The appeals arise from several task orders awarded to appellant for work
performed in the Republic of Korea (ROK). The initial task orders were issued pursuant to
a general construction, multiple award, indefinite delivery/indefinite quantity (IDIQ) task
order contract appellant received, Contract No. W91QVN-14-D-0034 (MATOC). (ASBCA
No. 61219 (61219) R4, tab 17 at 1, 10) The Multiple Award Task Order Contract
(MATOC) was signed by a U.S. contracting officer (CO) (id. at 1). The MATOC
performance period was 12 month_s from August 14, 2014 through August 13, 2015,
renewable at the option of the government for two additional 12-month periods (id. at 10).
The awardees were promised they would be given fair opportunity to compete for additional
awards in accordance with Federal Acquisition Regulation (FAR) 16.505, ORDERS
UNDER MULTIPLE AWARD CONTRACTS FAIR OPPORTUNITY (id. at 27).
2. Appellant, a Korean company, was awarded eleven task orders under the
MATOC (61219 app. supp. R4, tab 39 at 1). Only three of the task orders, 0001, 0002,
0004 are at issue in the appeals (61219 R4, tab 27 at 17). These orders were signed by
a CO (61219 app. supp. R4, tabs 29-31 at 1).
3. Appellant also was awarded other IDIQ contracts: Contract Nos. W91QVN-12-D-0114,
W91QVN-12-D-0119, W91QVN-12-D-0130, W91QVN-12-D-0132, W91QVN-13-D-0064
and task orders issued thereunder for paving and other work2 (ASBCA No. 61219 R4, tabs 11,
13-16). The paving work contracts also included the promise of fair opportunity to compete for
additional awards and options to renew the contracts, but for four additional 12-month
performance periods (61219 R4, tabs 11, 13-16 at 5-8, 16). The paving contracts were signed
by a U.S. CO (id. at 2). The record does not include the task orders issued under the paving
contracts.
4. In addition to the contracts and task orders awarded to appellant, appellant
asserts it was the lowest offeror on three other solicitations, but was not awarded any
of them (61219 R4, tab 27 at 1-2).
2
Also multiple award task order contracts. To reduce potential confusion we will
refer to the task orders issued under these contracts as the "paving work"
contracts or task orders.
2
5. The MATOC included the following pertinent contract clauses:
5152.232-4030 PAYMENTS -ROK MND- FUNDED CONTRACTS:
(a) Responsibility for Payment: Pursuant to Memorandum
of Agreement (MOA) between United States Forces Korea
(USFK) and the Republic of Korea Ministry of National
Defense (ROK MND) concerning this contract, the ROK
Government shall make payment directly to the contractor
for performance rendered and accepted under any contract
part, or delivery or service order identified as "MOA
contract, funded by ROK MND." If the contract or any
part of the contract is identified as obligating U.S.
appropriated funds, the U.S. Government shall pay for that
portion, pursuant to and IAW procedures stated by FAR
52.232-1 PAYMENTS (APR 1984). Payments shall be
made at the prices specified in the schedule.
5152.232-4028 FUNDING OF ROK FUNDED CONTRACTS:
(a) Funding advisement: Except for contractual
instruments, if any, which specifically obligate U.S.
appropriated funds for payment by the U.S. Government,
this contract, any modifications (including exercise of
option(s)) to it, and any delivery orders under it, shall cite
"MOA Contract - funded by ROK MND," in lieu of citing
appropriations and accounting data.
(b) Limitation of US liability: The U.S. Government shall
incur no liability, and no appropriated funds of the United
States shall be obligated, for payment for services,
supplies, claims, or other costs_ arising out of or under
contracts, delivery or service orders, or exercises of options
or other modifications that are designated as "MOA
Contract- funded by ROK MND."
5152.233-4008, DISPUTES, MINISTRY OF NATIONAL DEFENSE
FUNDED CONTRACTS, ROK:
(This clause applies only to ROK-funded acquisitions or parts of acquisitions.)
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(a) All disputes arising under, or relating to, this contract
shall be resolved under this clause.
(b) "Claim," as used in this clause, means a written
demand or written assertion by one of the contracting
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parties seeking, as a matter of right, the payment of money
in a sum certain, the adjustment or interpretation of
contract terms, or other relief arising under or relating to
this contract. A claim arising under a contract, unlike a
claim relating to that contract, is a claim than can be
resolved under a contract clause that provides for the relief
sought by the claimant; however, a written demand or
written assertion by the Contractor seeking the payment of
money exceeding $100,000 is not a claim under the clause
until certified as required by subparagraph (d)(2) below. A
voucher, invoice, or other routine request for payment that
is not in dispute when submitted is not a claim under the
clause. The submission may be converted to a claim under
the clause, by complying with the submission and
certification requirements of this clause, if it is disputed
either as to liability or amount or is not acted upon in a
reasonable time.
(c) The contractor shall have the right to submit to the
Contracting Officer, disputes, demands, and/or claims,
relating to or arising under this contract, only on the issue
of whether the Government should and will certify
performance, for payment by the ROK Government. The
contractor shall not submit to the U.S. Government, nor
will the Contracting Officer accept, any disputes, demands,
or claims for compensation for work, which the U.S.
Government has certified as completed.
(d) Procedures
( 1) A claim by the contractor shall be made in writing
and submitted to the Contracting Officer for a written
decision. A claim by the Government against the
Contractor shall be subject to a decision by the Contracting
Officer.
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(2) For contractor's claims exceeding $100,000, the
contractor shall submit with the claim a certification that -
(i) The claim is made in good faith;
(ii) Supporting data are accurate and complete to
the best of the contractor's knowledge and belief; and
(iii) The amount requested accurately reflects the
contract adjustment for which the contractor believes the
Government is liable.
(3) Individuals
(i) If the contractor is an individual, the
certification shall be executed by that individual.
(ii) If the contractor is not an individual, the
certification shall be executed by -
(A) A senior company official in charge at the contractor's
plant or location involved; or
(B) An officer or general partner of the contractor having overall
responsibility for the conduct of the contractor's affairs.
(e) For contractor's claims of $100,000 or less, the Contracting
Officer will, if requested in writing by the contractor, render a
decision within 60 days of the request. For contractor-certified
claims over $100,000, the Contracting Officer will, within 60 days,
decide the claim or notify the contractor of the date by which the
decision will be made.
(f) The Contracting Officer's decision shall be final unless the
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contractor appeals the decision within 30 days of the Contracting
Officer's decision, to the Principal Assistant Responsible for
Contracting (PARC). In the event that the contractor does appeal
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the decision of the Contracting Officer, the appeal shall be heard
by and decided by the PARC and/or a panel of U.S. officials,
chaired by the PARC. The decision of this panel shall be final.
(g) The contractor shall proceed diligently with performance
of this contract, pending final resolution of any request for
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relief, claim, or action arising under the contract, and comply
with any decision of the Contracting Officer.
(h) Regarding "MOA Contract Funded by ROK MND"
portion or period of this contract, any reference to the Disputes
clause, FAR 52.233-1, shall be construed to mean this local
clause 5152.233-4008.
(61219 R4, tab 17 at 25, 37-40) The paving contracts also included these provisions
(61219 R4, tab 11 at 27-28, 34, 36; tab 13-16 at 21-23, 27-30).
6. The MATOC contemplated that task orders awarded to Sungwoo might be I
funded by the ROK MND or by the United States with appropriated funds (61219 R4,
tab 17 at 26).
7. The record includes three task orders issued under the MATOC (ASBCA
No. 61144 (61144) R4, tabs 3-5). All three indicate payment would be made by the
ROK MND without appropriated United States funds (61144 R4, tab 3 at 1-2, 12; tab 4
at 1, 11; tab 5 at 1, 9). Two of the task orders also expressly state that they are "LCS
projects" 3 funded in accordance with a memorandum of agreement between the
United States and the ROK (61144 R4, tab 3 at 12; tab 5 at 9). 4 The other MATOC
task order states that it is a ROK MND funded memorandum of agreement contract
(61144 R4, tab 4 at 11).
8. The MATOC was issued pursuant to the 1953 Mutual Defense Treaty
between the United States and ROK and a number of agreements relating thereto (see,
e.g., 61219 R4, tab 17 at 25; ASBCA Nos. 61144, 61219, gov't mot., ex. GI at 4). In
1967 the United States and ROK entered into a Status of Forces Agreement (SOFA),
which includes the following pertinent provisions in Article V:
Facilities and Areas - Cost and Maintenance
1. It is agreed that the United States will bear for the
duration of this Agreement without cost to the Republic
of Korea all expenditures incident to the maintenance
of the United States armed forces in the Republic of
Korea, except those to be borne by the Republic of
Korea as provided in paragraph 2.
3
LCS project will be discussed below.
4
LCS involve cost sharing between the United States and the Republic of Korea.
They are either Labor Cost Sharing or Logistics Cost Sharing (findings 10-11).
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2. It is agreed that the Republic of Korea will furnish for
the duration of this Agreement without cost to the
United States and make compensation where
appropriate to the owners and suppliers thereof all
facilities and areas and rights of way, including
facilities and areas jointly used, such as those at
airfields and ports as provided in articles II and III. The
Government of the Republic of Korea assures the use of
such facilities and areas to the Government of the
United States and will hold the Government of the
United States as well as its agencies and employees
harmless .from [sic] any third party claims which may
be advanced in connection with such use.
(ASBCA Nos. 61144, 61219, gov't mot., ex. G-1 at 7)
9. The United States and ROK have entered into a number of Special Measures
Agreements (SMA) to implement Article V of the SOFA. The 9th SMA covers the
period in which the MATOC and the paving contracts were awarded and performed.
(ASBCA Nos. 61144, 61219, gov't mot., ex. G-2 at 1, 3-6)
IO. Article 1 of the 9th SMA states:
The Republic of Korea shall bear, for the duration of this
Agreement, as a special measure relating to Article V of
the Status of Forces Agreement, a part of the expenditures
associated with the stationing of the United States Armed
Forces in the Republic of Korea. The contribution of the
Republic of Korea shall be categorized into Labor Cost
Sharing, Logistics Cost Sharing and Republic of Korea
Funded Construction (ROKFC). Implementation of this
Agreement shall be in accordance with a separate
implementation arrangement between the concerned
authorities of the Parties.
The Parties shall put in utmost efforts to enhance
accountability and transparency for implementation of this
Agreement. In this regard, the Exchange of Notes on
System Improvements shall be adopted and enter into force
at the same date as this agreement.
(Id. at 5)
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11. The United States and ROK entered into an Implementing Agreement
concerning Logistics Cost Sharing (LCS) for 2009 through 2013 in October 2009
(ASBCA Nos. 61144, 61219, gov't mot., ex. G-3 at 1, 9). The purpose of the
Implementing Agreement was stated to be; '"[t]o define the responsibilities of the
parties in the execution of the LCS program" (id. at 2). These responsibilities are set
forth in Article III-Mutual Responsibilities Of The Parties, which states in pertinent
part:
2. ROK MND delegates to USFK the authority to solicit
for its requirements within Categories and Scope of the
LCS program, negotiate, and prepare the contract
drafts(s). USFK will submit the contract draft(s) and
the contractor submitted Local Clause 5152.204-4032
Representation and Certifications to include the bid
advertisement to ROK MND for the approval of
obligating ROK funds. ROK MND also delegates to
USFK the sole authority to issue delivery orders, to
inspect and accept equipment, supplies, and services,
and to determine the contractor's entitlement to
payment under the contract. ROK MND retains
authority to review and suggest modifications to
contract draft(s), and final approval authority for ROK
funded contract(s) after US obligation of any US funds
or US government furnished property. USFK retains
authority to sign and join in award of those contracts
that obligate US funds or US government furnished
property.
3. The parties agree that all contractors shall submit
billing invoices directly to USFK for certification,
USFK shall forward the certified billing invoices to
ROK MND Logistics Management Bureau for
payment, and ROK MND shall pay the Korean
contractors directly.
4. The parties agree that all LCS work must be
accomplished in the ROK or its territorial waters and
that all equipment and supplies that are to be acquired
with ROKG funds shall be manufactured in the ROK,
and that all LCS service work shall be carried out by
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Korean contractor(s), Korea Railroad Corporation, or
the ROK military.
(Id. at 2-3)
12. Appellant's performance with respect to schedule on three of the MATOC
task orders was rated as unsatisfactory in the government's Contractor Performance
Assessment Reporting System (CPARS) (61219 R4, tabs 3-5). I
13. Appellant disputes the government's evaluation of its performance. (61219
R4, tab 27 at 4, 14, 19-20; ASBCA No. 61219, compl. 1112-14; ASBCA No. 61144,
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amend. compl. first 111-4). Appellant alleges the government engaged in fraudulent
acts, including requiring contractors to forge documents and that the government
retaliated against appellant, when it refused to participate in the alleged scheme, by (1)
giving it "unsatisfactory" CPARS ratings and (2) by imposing a defacto suspension or
debarment when the government refused to exercise options under the MATOC and
paving work contracts and award additional work to appellant (ASBCA No. 61114,
amend. compl. 11129-43; ASBCA No. 61219, compl. 1112, 16, 17).
14. Appellant's claim asserts the government wrongfully failed to award
contracts under Solicitation Nos. W91QVN-16-R-0091 and W91QVN-16-R-0119 5,
and to exercise options under the MATOC and Contract Nos. W91QVN-13-D-0064,
W91QVN-12-D-0114, W91QVN-12-D-0119, W91QVN-12-D-0130 (61219, R4, tab 27
at 2).
15. Appellant seeks relief in ASBCA No. 61144 in the form of an order
directing the government to change the CPARS ratings from "unsatisfactory" to
"satisfactory" and in ASBCA No. 61219, by payment of damages in the amount of
KRW2,050,656, 763 6 for the failure to award its contracts and exercise options
(ASBCA No. 61144, amend. compl. first 12; ASBCA No. 61219, compl. first 11).
Included in the total amount claimed in ASBCA No. 61219 is KRWl,000,000,000,
described as "punitive damages" (ASBCA No. 61219, compl. 1 18).
5 The solicitations indicate that they are for task orders to be issued to awardees under
many contracts (61219 R4, tabs 6, 9 at 1). Other than the MATOC, these
contracts are not in the record.
6
South Korea currency, the Won.
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16. The specific damages in KRW, other than the "punitive damages," asserted
in ASBCA No. 61219 are set forth in the table below:
Contract/Solicitation Complaint Lost Profits Bid Prep. Costs Total Damages
No. Paragraph Asserted
W91QVN-16-R-0008 Second 11 90,664,095 5,000,000 95,664,095
W91 QVN-16-R-0091 Second 12 111,032,048 5,000,000 116,032,048
W91QVN-16-R-0119 13 93,001,648 5,000,000 98,001,648
W91QVN-13-D-0064 ,, 4-5 62,517,650 62,517,650
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W91QVN-12-D-0114 ,, 6-8 216,056,967 216,056,967
W91QVN-12-D-0119
W91QVN-12-D-0130
W91QVN-12-D-0132
W91QVN-14-D-0034 7 ,, 6, 9-10 390,961,678 390,961,678
W91QVN-14-D-0034 8 ~Wll 33,850,412 33,850,412
Total 1,013,084,498 9
Solicitation Nos. W91QVN-16-R-0008, W91QVN-16-R-0091 and W91QVN-16-R-0119
are the three solicitations for which appellant asserts it was the lowest offeror, but
received no award (finding 4).
DECISION
Parties' Contentions
The government asserts appellant has raised six distinct causes of action in
ASBCA No. 61219: one count challenging the June 2, 2016 MATOC CPARS
evaluation, three counts challenging the failure to award task orders, one count
challenging a stop work order, two counts alleging the Army committed fraud, one count
7
The MATOC (finding 1).
8
The MATOC (finding 1).
9
The "punitive" damages ofKRWl,000,000 added to this figure is KRW37,572,265
less than the total amount, KRW2,050,656,763, asserted in the complaint. This
discrepancy is not explained in either tpe claim or the complaint.
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alleging the Army suspe11:ded or debarred appellant, and six counts challenging the
decision to not exercise options. The government moves to strike all but the last of these
causes of actions. Additionally, the government moves to strike appellant's punitive
damages claim. (ASBCA No. 61219, gov't mot. at 12) The government asserts we lack
jurisdiction under the Contract Disputes Act, (CDA) 41 U.S.C. §§ 7101-7109 to
consider appellant's claims relating to the MATOC, arguing it was not a contract entered
into by an executive agency of the United States because it was funded by the ROK.
The government argues we lack subject matter jurisdiction to consider ASBCA
No. 61144 for the same reason. (ASBCA Nos. 61144, 61219, gov't mot. at 1) The
government makes additional arguments as will be set forth below. Appellant argues we
have jurisdiction because the contracts were entered into by the Army, an executive
agency of the United States, which as discussed below, we find persuasive. Appellant
makes other arguments, set forth in greater detail below, which we find to be
non-persuasive.
Jurisdictional Finding
The appeals and the government's motions raise several issues. First, we address
whether any of appellant's contracts are procurements under the CDA, (41 U.S.C.
§§ 7101-7109), for which we have subject matter jurisdiction. The CDA applies to
contracts entered into by an executive agency as follows:
(a) Executive agency contracts.--Unless otherwise specifically
provided in this chapter, this chapter applies to any express or implied
contract (including those of the nonappropriated fund activities described
in sections 1346 and 1491 of title 28) made by an executive agency for-
(1) the procurement of property, other than real property in being;
(2) the procurement of services;
(3) the procurement of construction, alteration, repair, or maintenance of
real property; or
(4) the disposal of personal property.
41 U.S.C. § 7102.
The CDA establishes our jurisdiction in §7105 as follows:
(e) Jurisdiction.--
(1) In general.--
(A) Armed Services Board.--The Armed Services Board has
jurisdiction to decide any appeal from a decision of a contracting officer
of the Department of Defense, the Department of the Army, the
Department of the Navy, the Department of the Air Force, or the
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National Aeronautics and Space Administration relative to a contract
made by that department or agency.
Here there is no dispute that all of the contracts involved are for construction
services, which is a type of contract over which we have subject matter jurisdiction.
Next, we determine whether the contracts and task orders were entered into by an
executive agency. Appellant argues jurisdiction exists under the CDA because all of
the contracts were signed by a United States contracting officer on behalf of the United
States Army (ASBCA Nos. 61144, 61219, app. resp. at 2-5). The government argues
that, although executed by an Army contracting officer, because the MATOC task
orders are funded by the ROK they were not entered into by an executive agency of the
United States. In support of this argument the government relies on the SOFA
between the ROK and the United State~ and the SMA entered into thereunder.
Beginning with the SMA in 1991, the parties revised the SOFA, changing the original
provision set forth in Article V, which required the United States to bear all
expenditures incident to the maintenance of United States Armed Forces in the ROK,
to a cost sharing system, by which the ROK bears some of the costs associated with
maintaining United States Armed Forces in Korea. (Findings 8-10) The government
has focused on language in the 9th SMA, the one applicable to the period of contract
performance, which suggests the Army entered into the task orders as an agent for the
ROK. In this regard the government has emphasized the language in the SMA and an
Implementing Agreement delegating the ROK's authority to the Army and the ROK's
retention of final approval authority for the contracts it funds. (Findings 10-11) It is
true the ROK could be found to be the contracting authority, or party to the contract, if
the Army was acting as a mere agent for it. IO The record does not support finding the
Army was acting as an agent of the ROK. Instead, the record supports finding the
work was performed to directly benefit the United States Armed Forces' mission in
Korea and that ROK's involvement was to partially absorb the cost of this mission.
This is made clear in the record in several ways. In Article I of the SMA, the parties
agreed "The Republic of Korea shall bear for the duration of this Agreement, as a
special measure relating to Article V of the SOFA, a part of the expenditures
associated with the stationing of the United States Armed Forces in the Republic of
Korea." (ASBCA No. 61144, gov't mot., ex. G-2 at 5) The Implementation
Agreement and the Notes thereto, implementing the SMA indicate that it is the United
States government, which selects the projects to be funded by the ROK (id. at 16-18).
In the case of construction projects, the United States selects and prioritizes the
IO "When an agent acting with actual or apparent authority makes a contract on behalf
of a disclosed principal, ( 1) the principal and the third party are parties to the
contract; and (2) the agent is not a party to the contract unless the agent and the
third party agree otherwise." RESTATEMENT (THIRD) OF AGENCY§ 6.01 (2006).
A principal is disclosed when the third party has notice that an agent is acting
for a principal and has notice of the principal's identity." Id. at§ 1.04 (2).
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projects based on military needs, is responsible for their design and selects the
contractors (id. at 30-31, 34-35). In the case of contracts for equipment, supplies and
services funded by the ROK pursuant to the LCS program, the parties have agreed
expressly that these are acquired for the official use of United States Forces Korea
(ASBCA No. 61144, gov't mot., ex. G-3 at 2). The LCS program includes
construction services needed to maintain facilities on United States installations (id.
at 8). The MATOC and the LCS task orders issued under it also state that the work
performed is for the benefit of the United States (61219 R4, tab 17 at 11; app. supp.
R4, tab 29 at 5 (improvements to Building 2253 at Camp Stanley); tab 30 at 4-5
(repairs to Buildings 1251 and 1256 (dining facilities) at RLFC (Rodriguez Live Fire
Complex); tab 31 at 4 (repairs to Building 247 at Camp Red Cloud)).
As a result of the CDAs use of the term "procurement" in its definition of
executive agency contract, whether a contract is for something that directly benefits
the United States is an important factor in determining whether a contract falls within
the statute. See Wesleyan Co., Inc. v. Harvey, 454 F.3d 1375, 1378 (Fed. Cir. 2006)
(defining "procurement," as that term is used in the CDA, as the "acquisition by
purchase, lease or barter, of property or services for the direct benefit or use of the
Federal Government)." (Emphasis in original); see also Latifi Shagiwall Constr. Co.,
ASBCA No. 58872, 15-1 BCA ,r 35,937 at 175,633 (agreement by the United States to
purchase property or services using U.S. appropriated funds, but for the direct benefit
of a party other than the United States is not a procurement contract). The Latifi
opinion, together with the Federal Circuit's decision in Wesleyan, makes it clear that it
is not the source of funding that determines whether a contract falls within the CDA;
instead the determining factor is whether the United States directly benefits from the
procurement. See also, Slattery v. United States, 635 F.3d 1298, 1301 (Fed. Cir. 2011)
(en bane) (involving similar jurisdictional issue under the Tucker Act, 28 U.S.C.
§ 1491 contract funded with non-appropriated funds found to fit within the Tucker Act
because the contract directly benefited the United States).
Similarly, the paving contracts also are for the direct benefit of the United
States and thus constitute CDA contracts (61219 R4, tab 11 at 10 (repair and upgrade
of general building USAG-RC, Casey/Area I); tabs 13-16 each at 1 (repair and
construction of asphalt concrete pavements for Area I, II, IV, Kunsan Air Base (AB),
Osan AB and Co-located Operating Bases (COBs) (Suwon, Daegu, Gwangju, Gimhae
AB and Wonju Air Station)); tab 17 at 3 (contractor to provide all labor, tools,
equipment, supplies, and any other resources necessary to upgrade USFK facilities
(Including New Construction Work under $750,000.00) located in the Republic of
Korea). 11
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The record does not include any of the task orders issued to appellant under the
paving contracts, which presumably, would more specifically describe the work
that was performed.
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The presence of a Disputes clause in the contract providing a dispute resolution
process other than what is provided under the CDA does not divest the Board of its
jurisdiction. Binladin Organization, Almihdar Binladin Development Co., Ltd. &
Amoumi Development Co., Ltd. (JV), ENG BCA No. 5304, 89-3 BCA, 22,188
at 111,639. See also OSHCO-PAE-SOMC v. United States, 16 Cl. Ct. 614 (1989);
Burnside-Ott Aviation Training Center v. Dalton, 107 F.3d 854 at 858 (Fed. Cir.
1997); Minesen Co. v. McHugh, 671 F.3d 1332, 1340-41 (Fed. Cir. 2012).
Accordingly, we have general subject matter jurisdiction to consider the claims.
The government also argues we lack subject matter jurisdiction over appellant's
ROK funded contracts under our charter. Having ruled we have jurisdiction under the
CDA we need not address this issue.
CPARS Finding
The government further argues we lack subject matter jurisdiction to consider
the claims relating to appellant's performance evaluations and the government's
decision to not exercise options and award additional work due to appellant's fraud
assertions (ASBCA No. 61219, gov't mot.). The government is correct when it argues
that we do not have jurisdiction to consider allegations of fraud and make rulings
thereon. United Technologies Corp., ASBCA No. 46880 et al., 95-2 BCA, 27,698
at 138,079, n.1. But we do not agree with the government's characterization of
appellant's complaints and we do not agree that we are required to strike the portions
of the complaints that include allegations of fraud. Despite the frequent use of the
word "fraud" in the complaints, we view appellant's appeals as making one central
assertion, that the government acted arbitrarily and capriciously, or in bad faith, when
it evaluated appellant's performance as being "unsatisfactory" and when it refused to
exercise the options and award appellant additional work under the various contracts.
We view the allegations regarding the falsification of documents and the other
allegations of fraud potentially to be supportive of this central claim, should appellant
be able to substantiate them. The Supreme Court has stated that leniency should be
associated with notice pleading and that pleadings should be construed to facilitate a
proper decision on the merits. Conley v. Gibson, 355 U.S. 41, 47-48, (1957). We do
have jurisdiction to consider and rule on whether the government's performance
evaluations and decision to not exercise the options were arbitrary and capricious
actions or undertaken in bad faith. Metag Insaat Ticaret A.S., ASBCA No. 58616,
13 BCA, 35,454 at 173,862 (performance evaluation system requires fair, accurate
and objective evaluation); Attenuation Envtl. Co. v. NRC, CBCA Nos 4920, 5093, 16-1
BCA, 36,521 at 177,916-17 (involving claim that the government refused to exercise
an option in retaliation, but finding bad faith was not proved). Keeping with Conley,
we construe appellant's pleadings to allege bad faith and arbitrary and capricious
actions on the part of the government with respect to the performance evaluations and
I
I
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the refusal to exercise the options and deny the government's motions in this regard.
Accordingly, we decline to strike appellant's allegations as requested and partially
deny the government's motion.
Punitive Damages Finding
The government also moves to strike appellant's punitive damages claim,
arguing we lack jurisdiction to award punitive damages (ASBCA No. 61219 gov't
mot. at 1, 20). We do not have authority to award punitive damages. (Consolidated
Defense Corp., ASBCA No. 52315, 03-1BCA132,099 at 158,668). Sungwoo's
"Punitive Damage" claim narrative states specifically in pertinent part: "Sungwoo has
been incurring loss and damage due to the government's improper actions. Therefore,
Sungwoo is hereby making a claim for one billion (1,000,000,000) won as a punitive
damage." (61219 R4, tab 27 at 4) The claim provides no further detail setting forth
how this figure was derived. This allegation is repeated, essentially verbatim in
appellant's complaint. (ASBCA No. 61219, complaint 118) In its response to the
government's motion to strike, appellant argues the motion should be denied and that it
be permitted to conduct discovery to develop facts needed to prove its allegations the
government engaged in fraud and forgery (ASBCA No. 61219 app. resp. at 4).
Appellant made no other effort to address the government's argument against its
punitive damages claim. Even assuming appellant's allegations are true, they have no
effect on the Board's ability to award punitive damages. In order to avoid dismissal it
was incumbent upon appellant to provide evidence the damages it seeks had been
mis-labeled as "punitive." Appellant has failed to do so. Accordingly, we find the
government's argument against appellant's "punitive" damages claim in ASBCA
No. 61219, persuasive and also partially grant the government's motion in this respect.
Suspension and Debarment Finding
The government also moves to strike appellant's allegations relating to its
assertions that it has been suspended or debarred. We view appellant's allegations
regarding the government's failure to award its contracts as assertions that the
government breached an implied contract to consider its bids fairly and honestly.
Appellant argues its allegations do not raise a jurisdictional issue, but provides nothing
more than this unsupported assertion to bolster its argument. (ASBCA No. 61219,
app. resp. at 3) These allegations are in the nature of a bid protest, which we have
previously held we do not have jurisdiction to consider. Ammon Circuits Research,
ASBCA No. 50885, 97-2 BCA 129,318 at 145,786 (citing RC 27th Avenue Corp.,
ASBCA No. 49176, 97-1BCA128,658 at 143,151. See also Coastal Corp. v. United
States, 713 F.2d 728, 730 (Fed. Cir. 1983); Dreadnought Marine, Inc., ASBCA
No. 45055, 95-2 BCA 127,650 at 137,825. Accordingly, we grant the government's
motion with respect to the suspension and disbarment allegation, and strike these
15
assertions; specifically the second set of paragraphs numbered one through three of the
complaint in ASBCA No. 61219.
The government is also correct that we do not have jurisdiction to consider
appeals from suspension or debarment orders, whether actual or de facto. Henry
Stranahan, ASBCA No. 58392, 13 BCA 135,312 at 173,356 (citing Inter-Continental
Equip., Inc. ASBCA No. 38444, 90-1BCA122,501 at 112,956); Sermor, Inc.,
ASBCA Nos. 32824 et al., 94-1BCA126,301 at 130,822. Although appellant asserts
it has been suspended or debarred in its amended complaint in ASBCA No. 61144,
importantly, it does not seek relief in a form that would require that we make a
determination that appellant was suspended or debarred, or direct the government to
rescind any such order. Instead, as was the case with appellant's allegations relating to
fraud, we view the allegations relating to suspension and debarment to be part of
appellant's central assertion that the government acted arbitrarily and capriciously,
circumstances potentially supporting with respect to the CPARS and failure to exercise
option claims that we do have jurisdiction to consider. Accordingly, we also deny the
government's motion with respect to the allegations relating to suspension and
debarment.
The government also moves to strike the allegations challenging the
government's decision to issue a stop work order relating to one of the task orders.
The government argues the issue is moot, having been settled by the parties as part of
the negotiations following the filing and dismissal of two earlier appeals by appellant,
ASBCA Nos. 60855 and 60985. (ASBCA No. 61219, gov't mot. at 15-16) Appellant
agrees the dispute has been resolved (ASBCA No. 61219, app. resp. at 3).
Accordingly, we partially grant the government's motion and strike the allegations
relating to the stop work order because the settlement renders the issue moot. See
Shiloh Services, Inc., ASBCA No. 61134, 18-1BCA137,117 at 180,662.
Duplication Finding
Finally, the government moves to strike the allegations regarding the evaluation
of appellant's performance in ASBCA No. 61219, arguing they are duplicative of the
allegations made in ASBCA No. 61144. Appellant argues the allegations are not
duplicative (ASBCA No. 61219, app. resp. at 2). We agree appellant's allegations in
the two appeals are duplicative with regard to the government's evaluation of its
performance and grant the government's motion in this respect. See CCIE & Co.,
ASBCA Nos. 58355, 59008, 14-1BCA135,700 at 174,817.
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CONCLUSION
For the reasons stated above the government's motions are partially granted and
partially denied. Although the MATOC contract and the delivery orders issued
thereunder do not involve United States appropriated funds, we find we have
jurisdiction to consider appeals arising therefrom because the contracts were entered
into by an executive agency of the United States with authority to do so and the work
performed was for the direct benefit of the United States.
Dated: October 8, 2019
Administrative Judge
Armed Services Board
of Contract Appeals
IconcAA I concur
RICHARD SHACKLEFORD J. REID PROUTY
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 Nos. 61144, 61219, Appeals of
Sungwoo E&C Co., Ltd., rendered in conformance with the Board's Charter.
Dated:
PAULLA K. GATES-LEWIS
Recorder, Armed Services
Board of Contract Appeals
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