Truckla Services, Inc.

ARMED SERVICES BOARD OF CONTRACT APPEALS
Appeals of -- )
)
Truckla Services, Inc. ) ASBCA Nos. 57564, 57752
)
Under Contract No. W912EE-09-C-0030 )
APPEARANCE FOR THE APPELLANT: Kent B. Ryan, Esq.
The Miller Law Firm PLLC
New Orleans, LA
APPEARANCES FOR THE GOVERNMENT: Thomas H. Gourlay, Jr., Esq.
Engineer Chief Trial Attorney
Daniel L. Egger, Esq.
Engineer Trial Attorney
U.S. Army Engineer District, Vicksburg
OPINION BY ADMINISTRATIVE JUDGE NEWSOM
These appeals concern a default termination and related claim on a contract to
build stone dikes on and near the Mississippi River. The Army Corps of Engineers
(Corps or government) awarded the contract to appellant Truckla Services, Inc. (Truckla
or appellant) but terminated for default after Truckla did not finish within the contract
performance period. Truckla challenges the termination on various grounds including
that its delays were excusable, alleging that delays were due in part to the British
Petroleum oil spill in the Gulf of Mexico. Truckla also seeks payment for work it
contends it performed but for which it was not paid.
After a four-day hearing and submission of post-hearing briefs and replies, we
deny the appeals.
FINDINGS OF FACT
Contract Award and Contract Terms
1. On 31 August 2009, after a competitive procurement, the Corps awarded
Contract No. W912EE-09-C-0030 to Truckla to construct 15 stone structures called
"hardpoints" in a waterway off the Mississippi River near a location called Island 86,
then, after completing the hardpoints, to rebuild and extend 2 pre-existing stone dikes
on the Mississippi River at a location called the Lower Cracraft (R4, tab 3 at 189-91). 1
1 Page references in Rule 4, tab 3 are to consecutive numbers on the top, left-hand side
of each page.
2. A hardpoint is a short dike made of rocks formed in a row extending from the
bank into the water (ex. J-2 (photographs)). The purpose of the hardpoints was to
stabilize the bank by redirecting water in order to keep the channel from "widening and
increasing in flow" (tr. 3/86).
3. The government was to pay Truckla for each of three contract line item
numbers (CLINs). CLIN 0001 required mobilization and demobilization, for which
Truckla was to be paid $100,000. CLIN 0002AA required placement of the first 36,145
tons of stone at a unit price of $26.28. CLIN 0002AB required placement of stone in
amounts exceeding 36,145 tons at the same fixed unit price. If all CLINs had been
performed in full for the exact quantities set forth in the CLINs, the total contract
payment would have been $1,999,781.20 for an estimated quantity of 68,290 tons of
placed stone. (R4, tab 3 at 3, 193-94)
4. The contract provided that Truckla was to be paid "for stone satisfactorily
placed" (R4, tab 3 at 194). To determine if stone was "satisfactorily placed," the
contract established quality standards. Section 35 42 39.00 09, part 3, subsection 3.1,
Stone Placement, required that "[t]he dikes and stone hardpoints shall be constructed to
the elevations, cross sections, and minimum thicknesses and within the limits shown on
the contract drawings" (id. at 251 ). Contract drawings identified each hardpoint' s
required elevation, azimuth 2 and distance from neighboring hardpoints (ex. J-3,
drawings C-103, C-104). They also specified the amount of stone to be used and the
average length of a hardpoint (id., drawing D-50 I).
5. The contract also specified the angle of slide slopes and permissible
tolerances, stating:
Side slopes shall be determined by the angle of repose of the
stone, approximately IV on l .25H.. .. A tolerance of I foot
will be allowed above the specified elevation and no
tolerance below the specified elevation, and I foot under and
2 feet over the specified crown width, provided these
variations are gradual over a minimum distance of I 00 feet
measured along the centerline.
(R4, tab 3 at 251)
2 In this context, azimuth was the angle of the hardpoint in relation to north
(tr. 4/28 (Pinkard)).
2
6. Certain work was not separately priced; compensation for these items was
included in payment for stone placement, as noted in section 1.2.1 of the contract, which
provided that:
The lump sum price and payment made for each item listed
shall constitute full compensation for furnishing all plant,
labor, materials, and equipment, and performing any
associated Contractor quality control, submittal procedures,
environmental protection, meeting safety requirements, tests
and reports, providing as-built drawings, for using the
Government-furnished software (RMS) and providing all
labor and equipment necessary for electronic exchange of
information and management of the contract.. .and for
performing all work required for which separate payment is
not otherwise provided.
(R4, tab 3at193)
7. One example of required work that was not separately priced was construction
surveys of placed stone. Regarding surveys, the contract provided that "[ s]eparate
payment will not be made for these surveys and all costs associated therewith shall be
included in the applicable unit prices or lump sum prices contained in the Bidding
Schedule" (R4, tab 3 at 174).
8. The contract called for monthly progress payments based on estimates of work
meeting the standards of quality established under the contract, incorporating Federal
Acquisition Regulation (FAR) 52.232-5, PAYMENTS UNDER FIXED-PRICE
CONSTRUCTION CONTRACTS (SEP 2002) (R4, tab 3 at 72-74).
9. The contract required Truckla to complete the work within 60 calendar days
after its receipt of the notice to proceed (R4, tab 3 at 1). The performance period could
be extended for certain excusable reasons, all of which are relevant here. First, the
contract contemplated that high river conditions could interrupt work, and ifthe river
rose above certain stages, construction would not be permitted and the government would
grant time extensions. (Id. at 189-90) The contract explained that the "normal working
season for the work to be done under this contract is seldom more than five months, and
usually extends from about 15 July to 15 December" (id. at 151-52).
10. Second, the contract prohibited work from 19 December 2009 through
3 January 2010 which the government referred to as "holiday time" (tr. 11182) and from
1 April through 30 June of each year for the pallid sturgeon spawning season (R4, tab 3
at 150).
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11. Third, the contract incorporated the default clause at FAR 52.249-10,
DEFAULT (FIXED-PRICE CONSTRUCTION) (APR 1984 ). This clause allowed termination
for default for failure to prosecute the work or failure to complete the work within the
time allowed by the contract, provided that the contractor's right to proceed shall not be
terminated for delay that "arises from unforeseeable causes beyond the control and
without the fault or negligence of the Contractor." (R4, tab 3 at 120-22)
Truckla Begins to Build the Hardpoints in December 2009
12. The government issued a notice to proceed on 13 October 2009, and thus the
original contract completion date was 12 December 2009 (R4, tab 5). By Modification
No. AOOOO 1 dated 29 January 2010, the government extended the performance period by
48 days due to high river stages. Accordingly, the required completion date was extended
to 14 February 2010. Modification No. AOOOOl also acknowledged that Truckla worked
on the hardpoints from 1 to 17 December 2009 (R4, tab 3A at 2, 4-5).
13. Hardpoints are built by depositing stone into water at predetermined
locations, building them into rows (R4, tab 3 at 191 ). Truckla used two barges to place
the stone. One barge, known as a "spud barge," held a trackhoe. A spud barge has one
or more extendable legs called "spuds" which are plunged into the river bottom to
secure the barge in place. A second barge, called the "rock barge," held the stone.
Truckla positioned the two barges on either side of the location at which the hardpoint
was to be built. Using the trackhoe on the spud barge, Truckla grabbed stone, dragged,
and dropped it into the water along and between the barges, building the stone into rows.
(Tr. 1/57-58, 2/128-31; ex. J-9)
14. Truckla did a poor job of maintaining correct positioning of its barges, which
tended to drift together at one end. This caused Truckla to lay stone in zigzag fashion,
not straight. (Ex. J-9, photo 1; tr. 3/244-46) Truckla also had trouble laying stone at a
consistent rate of 10 tons per linear foot, as the contract drawings required, resulting in
inconsistencies (exs. J-2 (photographs), J-4 (drawing C-301), J-18, e.g. HP-6, 7, 8, 9, 10,
11, 28, 30; tr. 1156, 3/241 ).
15. Stone placed under water may not be visible, so the contract required Truckla
to plot as-built survey profiles and cross-sections and provide them to the government
on a daily basis to verify the position of the stone. Truckla was also required to provide
additional profiles and cross-sections "as necessary or as directed by the onsite
Government Representative." (R4, tab 3 at 174)
16. Concerned about the quality of the stone placement, government
representatives repeatedly requested Truckla to supply as-built survey data to verify that
the stone was placed correctly (R4, tab 18 at 60, 63, 70, 73, 77). To the extent Truckla
supplied surveys, those data did not show the location, azimuth, or cross-sections of the
hardpoints (exs. J-8, J-10; tr. 3/246-50).
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17. On 18 December 2009, Truckla ceased construction because of high river
conditions, which was followed by the contractual holiday time exclusion period starting
19 December 2009. Truckla did no further work during 2009. (R4, tab 3A at 5) Indeed
as things turned out, Truckla performed no further construction at all (finding 35).
18. As of 17 December 2009, its last day before the exclusion period, Truckla
had built all 15 hardpoints except that it had not "tied them in" (tr. 2/264-65). To "tie
in" means to extend the stone from the hardpoints onto the bank (tr. 3/139).
Deficiencies in the Hardpoints
19. The Corps met with Truckla on 19 January 2010 to discuss concerns about
the work (supp. R4, tab 6; R4, tab 6; tr. 2/194-97). Among other things, the government
complained that the hardpoints were located in the wrong positions and shaped to
incorrect dimensions, and that Truckla did not provide surveys showing their locations,
cross-sections, and other dimensions (R4, tabs 7, 8). Truckla agreed to hire a
subcontractor to perform as-built surveys and provide them to the government (supp.
R4, tab 6).
20. The surveys confirmed that hardpoints did not meet the contract
requirements. They were built in the wrong locations and laid along the wrong
azimuths, they zig-zagged and were angled incorrectly. Because Truckla laid stone
at inconsistent rates, it placed too much stone in some spots and not enough in
others, resulting in inconsistencies in elevation, voids, and gaps. (Exs. J-2
(photographs), J-18, e.g. HP-6, 7, 8, 9, 10, 11, 28, 30; tr. 3/241, 1/56) We find that the
stone was not "satisfactorily placed" pursuant to section 1.3.2 of the contract.
21. On 24-25 March 2010 the government notified Truckla that "none of the
hardpoints ... meet the contract requirements," and that they "var[ied] in elevation,
azimuth, and section beyond the required tolerances," and the azimuth lines were "not
straight" but "change direction in a zigzag fashion" (R4, tabs 6, 7). It summarized: "the
work performed to date is much more deficient than we previously realized and that
considerable rework will be required to bring the work into compliance with the
contract" (R4, tab 6).
22. Nevertheless, the government said it would accept the mislocation of the
hardpoints provided that Truckla corrected other deficiencies and tied them into the
bank (R4, tab 7). The government characterized its provisional acceptance as an effort
to mitigate Truckla's cost of corrective work (R4, tab 8). The government also
criticized the "general lack of knowledge and experience by [Truckla's] onsite personnel
in stone placement on a river utilizing floating plant." Noting that the Cracraft
environment was more challenging than Island 86 and the importance of correct
alignment even more critical for the dikes than for the hardpoints, the government
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directed Truckla to explain how it would improve operations to assure that it could
satisfactorily perform. (Id.)
23. Citing these deficiencies, the government refused to pay in full Truckla's
invoice for a progress payment. In December 2009 Truckla had submitted an invoice
seeking $582,102.00 for 22,150 tons oflaid stone (supp. R4, tab 15). In February 2010
the government notified Truckla that the government would pay for only 9,465 tons of
stone, the quantity it said was minimally acceptable with only minor corrections
required. The government paid $248,740.20 for the stone plus $60,000 for mobilization;
it refused to pay more until Truckla corrected the hardpoints. (R4, tab 2 at 12, tab 1O;
supp. R4, tab 2 at 9-10, tab 17) It also refused to pay Truckla for the cost of the surveys,
stating that compensation for surveys was included in the contract price and no
additional compensation was due (tr. 21198-99; R4, tab 10). The 9,465 tons of stone
accepted by the government comprised approximately 13 percent of the 68,290 tons in
the contract (finding 3).
24. In its 9 April 2010 response, Truckla did not dispute that the hardpoints were
deficient, but promised to correct the deficiencies and replace some of its personnel
(supp. R4, tab 7). Indeed, even at trial, Truckla's owner conceded that the hardpoints
did not conform to the contract requirements, acknowledging that they were mislocated
and misaligned (ex. J-18; tr. 2/261-64 ).
Lack of Progress During 2010
25. Meanwhile, work remained at a standstill. High river conditions prevailed
during most of January, February, and March 2010, except for 9 days in January and
7 days in March. Truckla performed no work on the hardpoints during these periods
apart from hiring a subcontractor to perform surveys in January 2010. (Supp. R4, tab 17
at 6; R4, tab 2 at 30, tab 3B at 3, 5) Truckla demobilized in February 2010, having
decided to await a period when "better working conditions are favorable for an extended
amount of time" (supp. R4, tab 17 at 6; R4, tab 3B at 3, 5).
26. From 1 April to 30 June 2010 the contract excluded work because of pallid
sturgeon spawning season (R4, tab 3 at 150).
27. During the standstill, Truckla searched for a subcontractor to complete the
remaining work (tr. 2/206-07). In March and April 2010 Truckla negotiated with
Patton-Tully Marine, LLC (PTM) and exchanged draft subcontracts (exs. T-60, -63, -64;
tr. 2/207, 218). At one point, attorneys for PTM and the Corps spoke directly
(ex. T-70). PTM's availability, however, was limited. During 2010 it was only
available in August. As it turned out, the river remained too high to work throughout
the 2010 period that PTM said it was available. (R4, tabs 3C, 11, 12)
6
28. Complicating matters, on 20 April 2010, a British Petroleum (BP) oil
platform explosion occurred causing a massive oil spill in the Gulf of Mexico
(tr. 2/219). The BP oil spill created demand for spud barges to support oil cleanup
(tr. 2/219-20, 3/50-54). Meanwhile, on 7 May 2010, the government extended the
contract by 70 days via Modification No. A00002; thus establishing a new completion
date of 25 July 2010 (R4, tab 3B). During summer 2010, Truckla encountered
difficulties finding spud barges to lease, even after contacting several equipment
suppliers (tr. 2/218-24; exs. J-13, -14). In the past, Truckla had been able to rent a spud
barge on short notice (tr. 2/169-70).
29. In June 2010 Truckla notified the government that it found another
subcontractor, Upper Missouri River Corporation, to perform the remaining work (supp.
R4, tabs 9, 10; ex. T-70). Ultimately, Upper Missouri declined to commit because it could
not be assured of rock deliveries from Truckla's rock supplier (exs. J-13, -14; R4, tab 15
at 6). Truckla owed more than $400,000 to its rock supplier, which threatened a
collection action and refused to supply either rocks or barges to Truckla, stating that
"barges and stone were no longer available for this contract" (R4, tab 15 at 6; supp.
R4, tab 18 at 2). Truckla requested another progress payment, but the government
again refused until Truckla corrected the hardpoints (supp. R4, tabs 18, 19; R4, tab 10;
ex. J-16 at 26).
30. Apart from its own correspondence complaining about the government's
partial progress payment, Truckla presented no evidence of its 2010 financial condition
nor explanation why it did not pay the rock supplier (supp. R4, tabs 18, 19; R4, tab 1O;
ex. J-16 at 26).
River Stages Allow Work, But Truckla Fails to Return
31. By 2 September 2010 river conditions were favorable and on 15 September
2010 the government informed Truckla that the contract performance period would
restart on 20 September 2010 (R4, tab 11). Truckla responded on 16 September 2010
that it could not resume work because it was having difficulty lining up equipment and
subcontractors and that the spud barges it previously leased were unavailable because of
the BP oil spill (ex. J-14).
32. On 17 September 2010, the government reiterated that the performance
period would restart on 20 September, stated that the contract completion date was
14 October 2010, and directed Truckla to submit a plan and schedule (R4, tab 12). In
calculating the revised contract completion date, the government credited Truckla for
199 days of time extensions due to high river conditions (R4, tabs 3A, 3B, 3C). These
time extensions, combined with the contractual work exclusion periods ( 19 December
2009 through 3 January 2010 and 1 April 2010 through 30 June of 2010) pushed the
contract completion date to 14 October 2010 (R4, tabs 3C, 12).
7
33. Truckla did not return to the job, and in its 22 September 2010 response, did
not provide a plan or schedule as the contracting officer requested. Rather, it asserted
that it was unable to locate equipment to resume work due to the "BP situation." It said
it had a "willing subcontractor" and requested to meet with the contracting officer and
small business representative. Later, Truckla provided to the government a copy of
Truckla's unsigned, marked-up April 2010 draft subcontract with PTM as evidence of
PTM's willingness to perform. (R4, tabs 13, 14)
34. Meanwhile, PTM spoke directly to the contracting officer and at the
contracting officer's request, provided a letter stating that PTM's availability for the
project "could range from the Winter 2011 to the Summer 2011 subject to our work
backlog and river stages." Significantly, PTM also stated it "does not have an
agreement with Truckla Services for this work." (Tr. 2/42; ex. J-15; ex. T-59)
35. The 14 October 2010 completion date passed without Truckla returning to
the job (R4, tabs 13, 14). As of that date, the status of the work had not changed since
December 2009: 15 hardpoints at Island 86 had been constructed but not tied in to the
bank; the hardpoints did not comply with the contract requirements as to location,
azimuth, cross-section, or elevation; and many hardpoints zig-zagged and had voids and
gaps, and no corrections had been made (finding 20). No work had been performed on
the Lower Cracraft dikes (R4, tab 2 at 16). We find that Truckla did not complete the
work within the performance period as extended.
Truckla Defaults and the Government Terminates
36. The passing of the contract completion date led the government to issue a
10-day cure notice on 4 November 2010. The contracting officer asserted that Truckla
failed to provide a plan for completion of the work, had not diligently prosecuted the
work, and was endangering performance of the contract. She directed Truckla to submit
a plan for cure, including a realistic schedule by close of business 12 November 2010.
(R4, tab 14)
37. In its response on 12 November 2010, Truckla proposed to subcontract with
PTM, who, Truckla now said, could complete the project in August 2011. Truckla
blamed contract delays on the BP oil spill and blamed the government for the
mislocation of the hardpoints. (R4, tab 15)
38. By separate letter dated 12 November 2010, PTM stated that it would be
available to work either late July or August 2011 or "as soon as river stages are
workable after these dates." PTM reiterated that it had not reached agreement with
Truckla on pricing, work scope, or other terms, explaining:
Before Patton-Tully Marine, LLC would comment
(sic] to this work an agreement with Truckla Services must
8
be agreed to by both parties. This agreement to include as a
minimum the work agreed to by Patton-Tully Marine, LLC,
pricing for the work and payment guarantee. Patton-Tully
Marine, LLC would accept no liability for work performed
by others. All Terms in the agreement must be to
Patton-Tully Marine, LLC approval.
(Ex. J-1)
39. The government issued a show cause notice on 18 November 2010
threatening to terminate for default (R4, tab 16). Truckla responded on 29 November
2010 reiterating its previous positions (R4, tab 17).
40. The contracting officer terminated Truckla's right to proceed on 14 December
2010 (R4, tab 2).
The Surety Completes the Contract with PIM as Subcontractor
41. Pursuant to Truckla's performance bond, the government made a demand on
Truckla's surety, Travelers Casualty and Surety Company. of America (Travelers), to
complete the contract. Travelers executed a Takeover Agreement with the government
on 22 June 2011 pursuant to which Travelers agreed to complete performance of the
contract (ex. J-5).
42. The Takeover Agreement provided, among other things:
[T]he Government and Surety agree that the quantity of
stone currently in place on Island 86 hardpoints that can be
considered acceptable for payment purposes once the
Government's required remediation work is complete is
16,791 tons. Of this quantity, payment for 9,465 tons was
previously made to the Contractor prior to
termination ... [T]he Government and Surety agree that an
additional 5,061 tons of stone are required for the
Government's required remediation work to the Island 86
hardpoints. Upon completion of the Government's required
remediation work ... the Government shall issue payment to
the Surety for the 7,326 tons placed by Contractor prior to
termination and the 5,061 tons required for the government's
required remediation for a total payment for 12,387 tons ....
With regard to the Lower Cracraft dikes, the agreement indicated that a balance of
50,438 tons (not to exceed 72,290 tons) needed to be placed in order to complete that
portion of the contract. (Ex. J-5 at 3; ex. T-2 at 2)
9
43. Travelers hired PTM to perform the completion work (ex. J-5 at 2). The
record demonstrates that Travelers requested that the Corps identify potential
contractors, and the Corps provided the names of all contractors that had done river
work with the Vicksburg District, a list of contractors holding certain multiple award
contracts, and a list of contractors that had bid on the present contract (tr. 1/242). We
find no evidence that the government recommended or directed travelers to use PTM to
complete the contract.
44. PTM completed the contract in August 2011. It did not lay additional stone
to remediate the hardpoints. (Tr. 1/92-95; ex. T-1 (Daily Logs, 4-7 Aug. 2011)) To
correct the alignment and elevations of the hardpoints, PTM rearranged mislaid stone
and placed it into voids or gaps (tr. 1/56-59). It was unable to locate all the mislaid
stone (tr. 1/59), nor could it quantify the rock PTM moved to remediate the hardpoints
(tr. 1/138).
45. Even after the remedial work, the hardpoints remained in the wrong locations
and along incorrect azimuths. As one government quality assurance representative
testified, "[t]o get [the hardpoints] within the requirements of the contract on the correct
structural azimuth line, most of them would have had to have been entirely removed.
And that's almost impossible." (Tr. 1/129-30) He continued, "We did everything we
could to try to make them at least acceptable, even though they were still in the wrong
place, totally" (tr. 1/138).
Basis for the Termination Decision and Truckla's Excuses for Nonperformance
46. In her written decision dated 14 December 2010, the contracting officer
justified the termination on the ground that Truckla failed to complete the contract on
time and did not propose a realistic, acceptable plan for cure. She found that Truckla
had completed only 13 percent of the work and the remaining 87 percent had either not
been performed (none on the Lower Cracraft dikes), or was improperly performed
(Island 86 hardpoints). (R4, tab 2 at 13-26) She reviewed the contract terms and
considered, but rejected, Truckla's assertion that the BP oil spill caused the delay, noting
that other Corps contractors successfully located spud barges (id. at 1-7, 17-23). She
rejected Truckla's assertions that the government caused delay or caused Truckla to
mislocate the hardpoints (id. at 13-26; tr. 1/198-200, 208-11).
4 7. Truckla timely appealed the termination decision on 11 March 2011. This
appeal was docketed as ASBCA No. 57564 (R4, tab 1).
48. At the hearing, the contracting officer elaborated that Truckla's proposal to
subcontract to PTM was too uncertain to be accepted and that Truckla did not provide
"verifiable assurances" that it could complete the contract (tr. 11198-200, 208-11 ). She
testified that she had not heard of any other contractors requesting extensions because of
equipment supply problems and that "multiple contractors" were available to perform
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the work (tr. 1/218-19). While the job was not urgent, she said it must be completed
"sooner rather than later" to prevent erosion and "more damage happening," especially
because finding a replacement contractor could take time (tr. 11220, 222-24, 226)l She
testified that she considered the essentiality of Truckla as a supplier under other
contracts and its ability to liquidate loans and payments (tr. 1/226-27). We find, based
on the record, that her actions were reasonable.
Were the Hardpoints Serving Their Purpose?
49. In challenging the default termination, Truckla argues that the hardpoints
served their intended purpose of preventing bank erosion, citing its expert,
Mr. Hannoura, who testified that no erosion appeared in photographs taken in January
2011 (tr. 3/175-201; ex. J-2; app. hr. at 18).
50. The government's expert, Freddie Pinkard, however, testified that erosion
develops over time, sometimes years (tr. 4/15). Mr. Pinkard credibly explained that
gaps and voids in the hardpoints-such as those left by Truckla's operation (findings 14,
20)-expose the bank to increased risk of erosion:
As I had mentioned before when that flow goes around that
structure or through those gaps it accelerates. So in the long
term you have the potential for that erosion to occur. When
that erosion occurs it's going to scour the bed of the channel,
it's going to create a hole. And when that hole is created the
stone that's adjacent to it is going to fall in that hole. So you
will reduce the volume of stone that you actually have in that
structure.
(Tr. 4/15) Mr. Pinkard's testimony persuades us that photos taken in January 2011
- approximately one year after Truckla stopped work - are insufficient to establish that
the hardpoints were preventing bank erosion or would continue to do so.
51. Truckla also cited testimony of a government employee who relied
upon flyover pictures taken in 2012 to conclude that the hardpoints were - at that
time - serving their purpose (tr. 3/88, 96-97; ex. J-17). Those photographs were taken
after PTM finished remedial work in August 2011 (findings 44-45), and thus do not
reflect the performance of the hardpoints as Truckla built them. Thus we find that these
photographs do not establish that the hardpoints as built by Truckla were serving their
intended purpose.
Did the Government Cause Truckla to Build the Hardpoints in the Wrong Locations?
52. The contract required the government to establish control points, i.e.
"base lines and bench marks," at each work site, to include "two iron pins with
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elevations for vertical as well as horizontal control at each location." The contract
locations were Island 86, Dike 2-R and Dike 3-R. Then, "[f]rom the base linesI and
bench marks established by the Government," Truckla was required to "complete the
layout of the work and ... be responsible for all measurements that may be required for
the execution of the work to the location and limit marks prescribed in the specifications
or on the contract drawings. (R4, tab 3 at 93, 176, 190) The contract incorporated
FAR 52.236-17, LAYOUT OF WORK (APR 1984), which provides that "[t]he Contractor
shall lay out its work from Government-established base lines and bench marks
indicated on the drawings, and shall be responsible for all measurements in connection
with the layout."
53. The Corps provided more than two control points at Island 86, as evidenced
by the testimony that two government employees located at least six control points at
Island 86 after Truckla left the site (tr. 1/41-47). Truckla's employee admitted that he
did not search for the government's control points at Island 86 (tr. 2/151-52).
Accordingly we find that the government provided more than two control points at
Island 86, but Truckla did not locate them because it did not search for them.
54. Truckla asserts that the government quality representative advised Truckla to
establish hardpoint locations using a global positioning system (GPS) (app. hr. at 8).
The testimony it cited does not support this assertion. The testimony established that
one Corps employee relayed a comment from another Corps employee that Truckla
"might not never find" the control points for the Cracraft dikes, but no mention was
made of using a GPS. (Tr. 2/139) We find that the government did not direct Truckla to
locate control points with a GPS device.
55. On 31May2011, Truckla submitted a certified claim seeking payment in the
amount of $407,487.35 for three items: (1) $349,944.48 for stone laid to build the
hardpoints for which Truckla was not previously paid; (2) $26,872 for performance bond
costs; and (3) $30,670.87 for surveys performed in January 2010. Truckla contends that it
placed 22, 781 tons of stone on the hardpoints, and was only paid for 9,465 tons of stone, thus
it claims it was not paid for 13,316 tons of stone. (Supp. R4, tab 4)
56. Truckla also sought damages in an amount to be determined for reputational
harm and loss of future business and sought to convert the default termination into a
termination for convenience (supp. R4, tabs 3, 4).
57. The contracting officer denied the claim for payment by written decision
dated 22 July 2011 (supp. R4, tab 2). She concluded that Truckla had placed only 9,465
tons of stone in a manner that could be made acceptable with corrections that Truckla
never performed (id. at 12).
58. Truckla timely appealed the contracting officer's denial of its monetary claim
on 25 August 2011 (supp. R4, tab 1). This appeal was docketed as ASBCA No. 57752.
12
DECISION
We address first the termination for default in ASBCA No. 57564, then Truckla's
claim for payment in ASBCA No. 57752.
I. ASBCA No. 57564: The Termination for Default
The legal standards for a default termination are well established. Under the
default clause, in this case FAR 52.249-10, DEFAULT (FIXED-PRICE CONSTRUCTION)
(APR 1984 ), the government may terminate a contract for default when the contractor,
without excuse, fails diligently to prosecute the work or fails to complete the work
within the time prescribed by the contract. The government bears the burden to
prove that its termination was justified. Lisbon Contractors, Inc. v. United States,
828 F.2d 759 (Fed. Cir. 1987); New Era Contract Sales, Inc., ASBCA No. 56661 et al.,
11-1 BCA ii 34, 73 8 at 171,022. If the government establishes a prima facie case
justifying the termination, the burden shifts to the contractor to prove the default was
excusable. ADTConstr. Grp., Inc., ASBCA No. 55358, 13 BCA ii 35,307at173,312
(citing Empire Energy Management Systems, Inc., ASBCA No. 46741, 03-1 BCA
ii 32,079 at 158,553).
In this appeal, the government carried its burden to establish a prima facie basis
for the default termination: Truckla failed to complete the work within the contract
period of performance (finding 35). Failure to complete the contract work is a prima
facie basis for a default termination. See, e.g., Lean Construction and Engineering Co.,
ASBCA No. 59016, 16-1 BCA ii 36,375 at 177,334 (holding that failure to complete
work within the performance period establishes prima facie case that termination for
default was proper). The burden thus shifts to Truckla to prove its default was excusable.
Truckla offers three independent reasons for excusing its nonperformance. First,
it contends that the contract was wrongfully terminated because the contracting officer's
decision was arbitrary, capricious, or an abuse of discretion (app. hr. at 18-31 ). Second,
it contends that the corps should have granted an excusable delay as a result of the BP
oil spill (id. at 31-38). Third, it contends that its performance was excused because the
government materially breached the contract, by failing to establish "iron pin"
benchmarks that were to be used to determine the proper location and azimuth of the
hardpoints (id. at 38-39).
For the reasons explained below, Truckla has not carried its burden of proof. We
deny the appeal and sustain the default termination.
A. The Government Did Not Abuse its Discretion
Truckla contends that the default termination was arbitrary, capricious, or an
abuse of discretion (app. hr. at 18-31 ). The standard of proof to show abuse of
13
discretion is very high. Empire Energy, 03-1BCA~32,079 at 158,553. To determine
whether a termination was an abuse of discretion, the Board considers ( 1) whether the
contracting officer acted with subjective bad faith; (2) whether the contracting officer
had a reasonable, contract-related basis supporting the decision; (3) the amount of
discretion vested in the contracting officer; and (4) whether a proven violation of
relevant statutes or regulations can render a decision arbitrary and capricious.
McDonnell Douglas Corp. v. United States, 182 F .3d 1319, 1326 (Fed. Cir. 1999);
Empire Energy, 03-1BCA~32,079 at 158,553.
Truckla raises no issues concerning the third and fourth factors. The contracting
officer possesses broad discretion to decide whether to terminate for default, ADT
Constr., 13 BCA ~ 35,307 at 173,312, and the contracting officer did not violate any
statute or regulation.
Truckla's arguments focus on the first and second factors, challenging the
government's rationale for the termination and alleging bad faith. It contends that the
contracting officer's stated rationale for the termination -that Truckla failed to complete
the contract within the performance period - was arbitrary. No contractor, it contends,
could have completed the work sooner than Truckla proposed to complete it, using PTM
as subcontractor, in August 2011 (app. br. at 20, 31 ). Truckla contends that it was
arbitrary for the contracting officer to require a guarantee that PTM would perform
when she knew that PTM was willing (id. at 25-26). The result of the termination,
according to Truckla, is that the government obtained the same work on the same
schedule but at allegedly higher cost than the original contract price (with the overage
passed on to Truckla) (id. at 16).
Truckla fails to carry its burden. The contemporaneous evidence contradicts
nearly every Truckla assertion regarding its proposal to complete the work using PTM
as subcontractor. Truckla asserts that it had "had an agreement ready with PTM"
(finding 33; app. br. at 24). PTM stated at the time that it "does not have an agreement
with Truckla" (findings 34, 38). What Truckla calls a subcontract agreement was an
unsigned, marked-up draft (findings 27, 33). Truckla downplays the lack of signature,
suggesting that the agreement was in place but for a signature (app. br. at 24, 26). At the
time, however, PTM stated twice that no agreement existed and specifically identified
material terms on which there was no agreement, such as price, work scope, liability,
and payment terms (finding 38). Furthermore, PTM hedged on committing itself to a
schedule. PTM initially suggested it might be available during a range between winter
2011 to summer 2011 (finding 34), then later suggested "late July or August 2011" or
"as soon as river stages are workable after these dates" (finding 38).
Confronted with the lack of agreement on price or other material terms, PTM's
repeated insistence that it had no agreement with Truckla, and its shifting, caveated
schedule, the contracting officer was within her discretion to conclude that Truckla's
plan to complete the work with PTM was not reasonably certain. It was not reasonably
14
certain to be completed on the schedule or at the price proposed by Truckla. The
contracting officer did not require a "guarantee" as Truckla characterizes it (app. br. at
25-26), but rather reasonable certainty. Truckla failed to provide it. ;
Furthermore, Truckla asserts that its failure to complete the work within the
contractual period of performance was a mere "technical" default and a pretext to get rid of
Truckla. It asserts that the work was not urgent because the hardpoints were serving their
intended purpose. (App. br. at 20-21, 27) Truckla analogizes to Darwin Construction Co. v.
United States, 811F.2d593 (Fed. Cir. 1987) and its progeny (app. hr. at 20-21).
The evidence refutes this theory. In Darwin, the Federal Circuit held that a
default termination that was done "solely to rid the Navy of having to further deal with"
the contractor was an abuse of discretion, in circumstances where the reason given for
the termination was found to be a pretext, which the court called a "technical default."
811 F.2d at 595. In the McDonnell Douglas A-12 aircraft litigation, the Federal Circuit
clarified Darwin, explaining that the technical default theory bars only a termination for
default in which there is "no considered nexus between the default termination and the
contractor's performance under the contract." Because in the A-12 termination, the
government identified a nexus between the contractor's performance and the
termination, the Court reversed a lower court decision overturning the termination.
McDonnell Douglas, 182 F.3d at 1326.
Here, the contracting officer articulated a clear nexus between Truckla's
performance and the default termination: Truckla did not complete the contract within
the performance period (finding 35). Unlike in Darwin, where the contractor completed
65 percent of the work satisfactorily and the grounds for default were found to be
pretextual, here Truckla satisfactorily placed only 13 percent of the stone and performed
poorly (findings 20, 23). Unlike in Darwin, here, the government's justification was not
a pretext. The contracting officer expressed reasonable and credible concerns that delay
could exacerbate bank erosion because of the gaps and voids in the hardpoints left by
Truckla's poor construction technique (findings 48, 50).
We also reject Truckla's allegations that the government acted in bad faith
(app. reply at 10-13), which we interpret as an allegation that the government breached
its duty of good faith and fair dealing. "Every contract imposes upon each party a duty
of good faith and fair dealing in its performance and enforcement." SIA Construction,
Inc., ASBCA No. 57693, 14-1BCA,-r35,762 at 174,986, (citing Metcalf Construction
Co., v. United States, 742 F.3d 984, 990 (Fed. Cir. 2014)). A breach of duty of good
faith and fair dealing may be shown by proving, inter alia, a lack of diligence, willful or
negligent interference, or failure to cooperate. Malone v. United States, 849 F.2d 1441,
1445 (Fed. Cir. 1988).
When the government is accused of breaching the duty of good faith and fair
dealing, we examine the reasonableness of its actions, considering all of the
15
circumstances. Free & Ben, Inc., ASBCA No. 56129, 09-1 BCA ~134,127 at 168,742.
Truckla infers bad faith from various government actions, such as its refusal to grant
time extensions, all of which we found to be reasonable (finding 48). Accordingly,
Truckla's argument to the contrary must fail.
Finally, we reject Truckla's contention that the contracting officer's consideration
of the factors set forth in FAR 49.402-3(f), Procedure for Default (app. br. at 22-31),
constitutes an abuse of discretion (id. at 22-28). This provision generally instructs
contracting officers in how to carry out default terminations. Subsection 3(f) lists factors
to be considered in determining whether to terminate a contract for default. 3
3
Subsection (f) provides:
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 or
services 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.
FAR 49.402-3(f).
16
It is well settled that this regulation does not confer rights on the defaulting
contractor, All-State Constr., Inc. ASBCA No. 50586, 06-2 BCA ~ 33,344 at 165,342,
and failure to consider one or more of the factors does not require a default termination
to be converted into a termination for convenience. DCX, Inc. v. Perry, 79 F .3d 132,
135 (Fed. Cir. 1996). Indeed, determination whether to terminate for default requires
judgment and is a not mechanical box-checking exercise. The contracting officer's
consideration of these factors is merely one element in evaluating whether there has
been an abuse of discretion. Michigan Joint Sealing, Inc., ASBCA No. 41477, 93-3
BCA ~ 26,011 at 129,323-24.
Based on the review of the record, the contracting officer reasonably considered
the relevant factors in FAR 49 .402-3( f). She reviewed the applicable contract terms
and law. She paid considerable attention to Truckla's specific failures and its excuses
for failure. She considered the availability of services from other sources, the urgency
of the services, and the time required to obtain them from other sources. She paid less
attention to the degree of Truckla' s essentiality to the government or the effect of a
termination on Truckla's ability to liquidate guaranteed loans, progress payments, or
advance payments. (Finding 48) Overall, we hold that the contracting officer's
consideration of these factors sufficient in the circumstances of this appeal despite
Truckla's assertions to the contrary.
B. The BP Oil Spill Did Not Cause Truckla's Delay
Truckla contends that its failure to complete the work on time was the result of
the BP oil spill, which Truckla contends was an excusable delay. Truckla contends that
the BP oil spill caused an acute shortage of spud barges when river stages would have
permitted work, and Truckla could not locate spud barges in time to complete the
contract. (App. hr. at 34-36)
The government does not dispute that the BP oil spill complicated Truckla's
efforts to locate spud barges. It argues rather that Truckla was at fault because it failed
to secure spud barges with long-term leases, and because it failed to pay a supplier,
impairing Truckla's ability to secure other suppliers and subcontractors who had access
to spud barges. The government notes that other contractors on Corps water projects
during the same period did not report problems locating spud barges. (Gov't br.
at 12-14; finding 48)
We have carefully examined the evidence regarding Truckla's difficulty locating
spud barges. While demand for spud barges intensified during summer and fall 2010
(finding 28), Truckla has not carried its burden to prove that the BP oil spill was an
excusable delay under the default clause, for two reasons. 4 First, Truckla located at least
4 We do not attribute fault or negligence to Truckla arising from its failure to
17
two subcontractors to perform the remaining work, PTM and Upper Missouri River
Corporation (findings 27, 29). However limited the availability of spud barges, that
limitation did not cause Truckla's delay, because Truckla found other potential
subcontractors to complete the work. Each potential subcontractor did not complete the
work within the performance period for reasons apart from the BP oil spill. PTM was
unavailable during the performance period at times coinciding with favorable river
stages (findings 27, 34, 38), and Upper Missouri declined the job because Truckla's rock
supplier cut off Truckla's supplies for nonpayment (finding 29).
Second, Truckla's fault or negligence contributed to its inability to secure spud
barges or a subcontractor with access to them. Its failure to pay the rock supplier led
that supplier to refuse to supply Truckla with rocks or barges, which caused Upper
Missouri to decline the job (finding 29). Further supporting the inference that Truckla
was at fault is that the contracting officer knew of no other Corps contractors who had
problems locating spud barges on Corps projects during this period (finding 48).
Truckla blames the government for its inability to pay the rock supplier,
because the government did not pay the full amount of its invoice for progress
payments (app. reply at 10). This contention is without merit. Truckla was responsible
to provide sufficient financial resources for the performance of the contract; its financial
incapacity is not a legitimate excuse for its failure to perform. See Danzig v. AEC Corp.,
224 F.3d 1333, 1339 (Fed. Cir. 2000); TGC Contracting Corp. v. United States,
736 F.2d 1512, 1515 (Fed. Cir. 1984); Cosmic Constr. Co., ASBCA Nos. 24014, 24036,
88-2 BCA ii 20,623.
In some instances a government failure to satisfy a payment obligation can
excuse nonperformance ifthe nonpayment was a controlling cause of the contractor's
failure to perform, e.g., Cosmic Cons tr., 88-2 BCA ii 20,623 at 104,242. That is not the
case here, first, because the government had no obligation to pay more progress
payments than it paid. The contract entitled Truckla only to progress payments based on
estimates of work accomplished "which meets the standards of quality established under
the contract." FAR 52.232-5, PAYMENTS UNDER FIXED-PRICE CONSTRUCTION
CONTRACTS (SEP 2002) (emphasis added) (finding 8). The hardpoints did not meet the
contractual quality standards (findings 20-21, 23-24). The government nevertheless
made a partial progress payment based on its estimate of accomplished work that,
although nonconforming, could readily be corrected, and stated that no additional
payments would be made until Truckla made the corrections (finding 23). Truckla never
made the corrections, even when river stages were favorable (finding 25). Had it
performed the corrections requested by the government when it had the opportunity,
Truckla could have qualified for additional progress payments. Furthermore, Truckla
secure spud barges through a long-term lease, as the contract performance
period was only 60 days and Truckla did not previously have trouble
renting spud barges on short notice (findings 9, 28).
18
made no showing that the government's nonpayment was a controlling cause of its
failure to pay the rock supplier (finding 30).
C. The Government Did Not Breach the Contract
Finally, Truckla contends that the government breached the contract by failing to
provide control points at Island 86 which, it asserts, caused Truckla to build the
hardpoints in the wrong locations (app. br. at 38-39). The contract required the
government to provide 2 control points at Island 86, which Truckla was required to use to
identify the locations for all the hardpoints and determine all other measurements
(finding 52). The government provided at least 2 control points, if not more, at Island 86.
Truckla failed to locate these control points because it did not search for them, as its
employee conceded. (Finding 53) Because the government provided the control points
that it was required to provide, there was no breach.
Truckla contends that it was "advised" by a Corps quality control employee
that the hardpoint locations could be identified with a OPS device rather than by
searching for the control points, a suggestion to which Truckla says it "acquiesced"
(app. br. at 8, 38-39). The testimony cited by Truckla does not support the assertion
that a Corps employee so advised Truckla (finding 54). Moreover, such advice, had it
been given, would not have modified Truckla's contractual responsibility to lay out the
work "from the base lines and bench marks established by the government" (finding
52); see also FAR 52.236-17, LAYOUT OF WORK (APR 1984).
Truckla also contends the government breached the contract by refusing to pay
for surveys and bond costs incurred by Truckla (app. br. at 39). There is no merit in
these contentions. These items were not separately priced, and the contract provided
that items not separately priced were to be compensated from the lump sum payments
for stone placement (findings 6-7). Accordingly, Truckla was not entitled to additional
payment for either surveys or bond costs. R.L. Bates General Contractor Paving &
Assocs., ASBCA No. 53641, 10-1 BCA ~ 34,328 at 156,550; Bean Stuyvesant, LLC,
ASBCA No. 52889, 01-1 BCA ~ 31,224 at 154,117.
We hold that the contracting officer did not abuse her discretion in determining to
terminate for default; the BP oil spill was not an excusable delay; and the government
did not materially breach the contract. The appeal challenging the default termination is
denied.
II. ASBCA No. 57752: Truckla's Claim for Additional Payment
Truckla appeals from the contracting officer's final decision denying its claim for
additional payment for stone, performance bond costs, and surveys, for which Truckla
contends it was not fully paid.
19
A construction contractor who has been properly terminated for default is
entitled to payment for work that was properly performed in accordance with the
contract prior to the default termination. See J.G. Enterprises, Inc., ASBCA No. 27150,
83-2 BCA ~ 16,808 at 85,543; Ventilation Cleaning Engineers, Inc., ASBCA No. 18580,
74-2 BCA ~ 10,873 at 51,754-55. Truckla bears the burden to prove that it performed
work for which it was entitled to be paid. See MA. Mortenson Co., ASBCA No. 53105
et al., 04-2 BCA ~ 32,713 at 161,845.
As noted above, Truckla is not entitled to separate payment for its performance
bond or survey costs because the contract provided that compensation for both of these
items was included in the payment for stone. See Section I.A. Accordingly, the merits
of this claim tum on whether Truckla was fully paid for the stone that it laid.
Truckla contends that it placed 22, 781 tons of stone and was only paid for 9,465,
thus it claims it was not paid for 13,316 tons of stone. Truckla claims entitlement to an
additional $349,944.48 for placed stone (app. hr. at 40-42). The contract provided that
Truckla was to be paid "for stone satisfactorily placed" (finding 4). While Truckla
asserts that it is "undisputed" that all 22, 781 tons of stone that it placed was "actually
used for the hardpoints" (app. br. at 40), it cites no evidence to support this contention.
The record evidence contradicts it. Truckla concedes that the hardpoints did not
conform to the contract requirements, thus some stone placed on the hardpoints was not
"satisfactorily placed" (findings 20, 24). Truckla mislaid additional stone during its
operations. PTM attempted to recover the mislaid stone but was unable to locate or
recover all of it. (Finding 44) Thus, Truckla has not shown that it, instead of PTM,
satisfactorily placed stone for which it was not paid.
PTM recovered some of the mislaid stone and placed it into the hardpoints
(finding 44). The Takeover Agreement contained an estimate of7,326 tons of stone
placed for which Truckla had not been paid (finding 42). In accordance with Truckla's
performance bond, the government paid the surety for this stone (findings 41-42).
Truckla does not argue that the government improperly paid the surety rather than
Truckla.
Finally, Truckla sought damages in an amount to be determined for reputational
harm and loss of future business (finding 56). Truckla did not address this aspect of its
claim in its post-hearing brief. 5 Accordingly we deem this aspect of its claim to have
been abandoned. See States Roofing Corp., ASBCA No. 54860 et al., 10-1 BCA
~ 34,356 at 169,664 (failure to address contention in post-hearing brief equated to
abandonment of the issue).
5 Since this claim has been abandoned, we need not address whether it sought a sum
certain and thus whether we ever had jurisdiction over it. See FAR 2.101.
20
CONCLUSION
The appeal in ASBCA No. 57564 is denied and the default termination is
sustained. Truckla's claim for additional payment in ASBCA No. 57752 is also denied.
Dated: 26 January 2017
Administrative Judge
Armed Services Board
of Contract Appeals
I concur I concur
cb_
OWEN C. WILSON
Administrative Judge Administrative Judge
Armed Services Board Acting Chairman
of Contract Appeals Armed Services Board
of Contract Appeals
I concur
RICHARD SHACKLEFORD
Administrative Judge
Vice Chairman
Armed Services Board
of Contract Appeals
21
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. 57564, 57752, Appeals of
Truckla Services, Inc., rendered in conformance with the Board's Charter.
Dated:
JEFFREY D. GARDIN
Recorder, Armed Services
Board of Contract Appeals
22