ECCI-C Metag, JV ( 2015 )

ARMED SERVICES BOARD OF CONTRACT APPEALS
Appeal of-- )
)
ECCI-C Metag, JV ) ASBCA No. 59031
)
Under Contract No. W5J9JE-10-D-0007 )
APPEARANCES FOR THE APPELLANT: Edward T. DeLisle, Esq.
Amy M. Kirby, Esq.
Cohen Seglias Pallas Greenhall &
Furman PC
Philadelphia, PA
APPEARANCES FOR THE GOVERNMENT: Thomas H. Gourlay, Jr., Esq.
Engineer Chief Trial Attorney
Daniel B. McConnell, Esq.
Geoffrey A. Mueller, Esq.
Edward J. McNaughton, Esq.
Matthew Tilghman, Esq.
Engineer Trial Attorneys
U.S. Army Engineer District, Middle East
Winchester, VA
OPINION BY ADMINISTRATIVE JUDGE DICKINSON
ON CROSS-MOTIONS FOR SUMMARY JUDGMENT
This appeal arises under a task order for the design and construction of an
Afghan National Police facility in Kunduz Province, Afghanistan. We have
jurisdiction to adjudicate this appeal pursuant to the Contract Disputes Act (CDA),
41 U.S.C. §§ 7101-7109. The Commander ofthe United States Central Command
(USCENTCOM) 1, determined that a subcontractor for appellant, ECCI-C Metag, JV
(ECCi or appellant), was actively supporting an insurgency. Through another agency,
appellant received notification of this determination by the USCENTCOM
Commander (CDRUSCENTCOM) 2 and, after providing a copy of the notification to
the contracting officer (CO) for the U.S. Army Corps of Engineers, Afghanistan
District North (Corps or the government), appellant asked the CO how to proceed.
The CO directed appellant to terminate the subcontract or else its own contract would
1
Directorate for Joint Force Dev., Joint Chiefs of Staff, Joint Publ'n (JP) 1-02,
Dep't of Def. Dictionary of Military and Assoc'd Terms, at A-179 (2010).
2
JP 1-02, at A-27.
be terminated for default. Appellant terminated the subcontractor as directed and
submitted a claim for $3,252,818.92 and 61 days of delay resulting from the directed
termination which, appellant contends, was a compensable change to the contract.
Appellant now moves for summary judgment on the basis that nothing in the contract
authorizes the CO to direct the contractor to terminate a subcontract. The government
cross-moves, arguing that appellant was contractually required to terminate the
subcontract, at its own expense, because the subcontractor's alleged conduct,
i.e., supporting an insurgency, violated provisions of the contract requiring contractor
and subcontractor personnel to comply with laws and regulations. We deny both
parties' motions.
STATEMENT OF FACTS CSOF) FOR PURPOSES OF THE MOTIONS
A. The Contract
1. On 8 March 2010, the Corps awarded Contract No. W5J9JE-10-D-0007 to
appellant. The contract was a firm-fixed-price, multiple award task order contract (the
MATOC) for "construction type work throughout Northern Afghanistan." (R4, tab 3)
2. The MATOC provided in full text the standard Disputes clause,
FAR 52.233-1, DISPUTES (JUL 2002) (R4, tab 3 at 38-39). The MATOC also set forth
in full text the standard Changes clause for fixed-price construction contracts,
FAR 52.243-4, CHANGES (JUN 2007) (id. at 45-46); and a standard Default clause,
FAR 52.249-10, DEFAULT (FIXED-PRICE CONSTRUCTION) (APR 1984) (id. at 49-50),
which states, as relevant:
(a) If the Contractor refuses or fails to prosecute the
work or any separable part, with the diligence that will
insure [sic] its completion within the time specified in this
contract including any extension, or fails to complete the
work within this time, the Government may, by written
notice to the Contractor, terminate the right to proceed
with the work (or the separable part of the work) that has
been delayed ....
(b) The Contractor's right to proceed shall not be
terminated nor the Contractor charged with damages under
this clause if--
( 1) The delay in completing the work arises from
unforeseeable causes beyond the control and without the
fault or negligence of the Contractor. Examples of such
causes include
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(i) Acts of God or of the public enemy,
[(xi)] delays of subcontractors or suppliers at any
tier arising from unforeseeable causes beyond the control
and without the fault or negligence of both the Contractor
and the subcontractors or suppliers; and
(2) The Contractor, within 10 days from the
beginning of any delay (unless extended by the
Contracting Officer), notifies the Contracting Officer in
writing of the causes of the delay. The Contracting Officer
shall ascertain the facts and the extent of delay. If, in the
judgment of the Contracting Officer, the findings of fact
warrant such action, the time for completing the work shall
be extended....
(d) The rights and remedies of the government in
this clause are in addition to any other rights and remedies
provided by law or under this contract.
3. The MATOC incorporated by reference FAR 52.225-19, CONTRACTOR
PERSONNEL IN A DESIGNATED OPERATIONAL AREA OR SUPPORTING A DIPLOMATIC OR
CONSULAR MISSION OUTSIDE THE UNITED STATES (MAR 2008), which provides in
pertinent part:
(a) Definitions. As used in this clause-
Combatant commander means the commander of a
unified or specified combatant command established in
accordance with 10 U.S.C. 161.
Designated operational area means a geographic
area designated by the combatant commander or
subordinate joint force commander for the conduct or
support of specified military operations.
3
(b) General. ( 1) This clause applies when
Contractorl31personnel are required to perform outside the
United States-
(i) In a designated operational area during-
(A) Contingency operations;
(B) Humanitarian or peacekeeping operations; or
(C) Other military operations ....
(d) Compliance with laws and regulations. The
Contractor shall comply with, and shall ensure that its
personnel in the designated operational area ... are familiar
with and comply with, all applicable-
(1) United States, host country, and third country
national laws;
(2) Treaties and international agreements;
(3) United States regulations, directives,
instructions, policies, and procedures; and
3
During notice-and-comment for FAR section 25.301 and FAR clause 52.225-19, it
was requested that the clause define the term "contractor." In response, the
FAR Council stated that "the FAR only applies to contracts as defined in
FAR Part 2, not to the entire broad range of partners, ventures, and other types
of contractors that may be used by the foreign assistance community." Federal
Acquisition Regulation; FAR Case 2005-011, Contractor Personnel in a
Designated Operational Area or Supporting a Diplomatic or Consular Mission,
73 Fed. Reg. 10,943, 10,949 (Feb. 28, 2008) (to be codified at FAR 25.301,
52.225-19); but see FAR 1.104, Applicability ("The FAR applies to all
acquisitions as defined in Part 2 of the FAR, except where expressly
excluded.") (emphasis added).
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(4) Force protection, security, health, or safety
orders, directives, and instructions issued by
the ... Combatant Commander; however, only the [CO] is
authorized to modify the terms and conditions of the
contract.
(h) Contractor personnel. The [CO] may direct the
Contractor, at its own expense, to remove and replace any
Contractor personnel who fail to comply with or violate
applicable requirements of this contract. Such action may
be taken at the Government's discretion without prejudice
to its rigbts under any other provision of this contract,
including termination for default or cause.
(p) Changes. In addition to the changes otherwise
authorized by the Changes clause of this contract, the [CO]
may, at any time, by written order identified as a change
order, make changes in place of performance or
Government-furnished facilities, equipment, material,
services, or site. Any change order issued in accordance
with this paragraph shall be subject to the provisions of the
Changes clause of this contract.
(q) Subcontracts. The Contractor shall incorporate
the substance of this clause, including this paragraph ( q), in
all subcontracts that require subcontractor personnel to
perform outside the United States-
( 1) In a designated operational area during-
(i) Contingency operations;
(ii) Humanitarian or peacekeeping operations; or
(iii) Other military operations ....
(R4, tab 3 at 30)
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4. The MATOC also provided in full text Joint Contracting Command
Iraq/Afghanistan (JCC-I/A) clause 952.225-0004, COMPLIANCE WITH LAWS AND
REGULATIONS (MAR 2009), which states:
(a) The Contractor shall comply with, and shall ensure that
its employees and its subcontractors and their employees,
at all tiers, are aware of and obey all U.S. and Host Nation
laws, Federal or DoD regulations, and [USCENTCOM]
orders and directives applicable to personnel in Iraq and
Afghanistan, including but not limited to USCENTCOM,
Multi-National Force and Multi-National Corps operations
and fragmentary orders, instructions, policies and
directives.
(b) Contractor employees shall particularly note all laws,
regulations, policies, and orders restricting authority to
carry firearms, rules for the use of force, and prohibiting
sexual or aggravated assault. Contractor employees are
subject to General Orders [sic] Number 1, as modified
from time to time, including without limitation, their
prohibition on privately owned firearms, alcohol, drugs,
war souvenirs, pornography and photographing detainees,
human casualties or military security measures.
(c) Contractor employees may be ordered removed from
secure military installations or the theater of operations by
order of the senior military commander of the battle space
for acts that disrupt good order and discipline or violate
applicable laws, regulations, orders, instructions, policies,
or directives. Contractors shall immediately comply with
any such order to remove its contractor employee.
(d) Contractor employees performing in the
USCENTCOM Area of Operations (AOR) may be subject
to the jurisdiction of overlapping criminal codes, including,
but not limited to, the Military Extraterritorial Jurisdiction
Act (18 U.S.C. Sec. 3261, et al) (MEJA), the Uniform
Code ofMilitary Justice (10 U.S.C. Sec. 801, et al)
(UCMJ), and the laws of the Host Nation. Non-US
citizens may also be subject to the laws of their home
country while performing in the USCENTCOM AOR.
Contractor employee status in these overlapping criminal
jurisdictions may be modified from time to time by the
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United States, the Host Nation, or by applicable status of
forces agreements.
(e) Under MEJA, a person who engages in felony
misconduct outside the United States while employed by
or accompanying the Armed Forces is subject to arrest,
removal and prosecution in United States federal courts.
Under the UCMJ, a person serving with or accompanying
the Armed Forces in the field during a declared war or
contingency operation may be disciplined for a criminal
offense, including by referral of charges to a General Court
Martial. Contractor employees may be ordered into
confinement or placed under conditions that restrict
movement within the AOR or administratively attached to
a military command pending resolution of a criminal
investigation.
(f) Contractors shall immediately notify military law
enforcement and the [CO] if they suspect an employee has
committed an offense. Contractors shall take any and all
reasonable and necessary measures to secure the presence
of an employee suspected of a serious felony offense.
Contractors shall not knowingly facilitate the departure of
an employee suspected of a serious felony offense or
violating the Rules for the Use of Force to depart Iraq or
Afghanistan without approval from the senior U.S.
commander in the country.
(R4, tab 3 at 263)
5. Additionally, the MATOC included several full-text clauses expressly
applicable to both prime contractors and subcontractors, including: "LOCAL
CLAUSES" 27.1, APPLICATION OF us CRIMINAL JURISDICTION ("[t]he contractor is
directed to provide all of its personnel working under this contract, and to require all of
its subcontractors to provide their personnel, with written notification that. .. contractor
and subcontractor personnel. .. may be subject to US criminal jurisdiction") (R4, tab 3
at 181); JCC-1/A 952.222-0001, PROHIBITION AGAINST HUMAN TRAFFICKING,
INHUMANE LIVING CONDITIONS, AND WITHHOLDING OF EMPLOYEE PASSPORTS
(AUG 2009) ("all contractors ('contractors' refers to both prime contractors and all
subcontractors at all tiers)") (id. at 257); JCC-1/A 952.225-0001, ARMING
REQUIREMENTS AND PROCEDURES FOR PERSONAL SECURITY SERVICES CONTRACTORS
AND FOR REQUESTS FOR PERSONAL PROTECTION (MAR 2009) ("[ c]ontractor and its
subcontractors at all tiers that require arming under this contract agree to obey all laws,
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regulations, orders, and directives applicable to the use of private security
personnel ... [; c]ontractors will ensure that all employees, including employees at any
tier of subcontracting relationships ... comply with the contents of this clause") (id.
at 258); JCC-1/A 952.225-0002, ARMED PERSONNEL INCIDENT REPORTS (MAR 2009)
("All contractors and subcontractors in the ... theater of operations shall comply with
and shall ensure that their personnel. .. are familiar with and comply with all applicable
orders, directives, and instructions ... relating to force protection and safety.") (id. at
261); and JCC-1/A 952.225-0009, MEDICAL SCREENING AND VACCINATION
REQUIREMENTS FOR LOCALLy HIRED EMPLOYEES (MAR 2009) ("[ c]ontractors, and
subcontractors at any tier shall ensure and provide satisfactory evidence that all locally
hired employees ... do not currently have active tuberculosis ... [; c]ontractor employees,
including subcontractors at any tier, who work in positions where they are working
with food or water production and distribution shall have current ... vaccinations")
(id. at 264).
B. The Task Order
6. On 11August2010, the Corps awarded Task Order No. 0003 (the TO) to
appellant for the design and construction of an Afghan National Police Uniformed
Police Provincial Headquarters facility in Kunduz Province, Afghanistan (R4, tab 14).
7. The TO included the full text ofDFARS 252.225-7040, CONTRACTOR
PERSONNEL AUTHORIZED TO ACCOMPANY U.S. ARMED FORCES DEPLOYED OUTSIDE
THE UNITED STATES (JUL 2009), which provides in pertinent part:
(a) Definitions. As used in this clause-
Combatant Commander means the commander of a unified
or specified combatant command established in accordance
with 10 U.S.C. 161.
Designated operational area means a geographic
area designated by the combatant commander or
subordinate joint force commander for the conduct or
support of specified military operations.
(b) General.
( 1) This clause applies when Contractor personnel
are authorized to accompany U.S. Armed Forces deployed
outside the United States in-
8
(i) Contingency operations;
(ii) Humanitarian or peacekeeping operations; or
(iii) Other military operations or military exercises,
when designated by the Combatant Commander.
(d) Compliance with laws and regulations. (1)
The Contractor shall comply with, and shall ensure that its
personnel authorized to accompany U.S. Armed Forces
deployed outside the United States as specified in
paragraph (b )( 1) of this clause are familiar with and
comply with, all applicable-
(i) United States, host country, and third country
national laws;
(ii) Provisions of the law of war, as well as any
other applicable treaties and international agreements;
(iii) United States regulations, directives,
instructions, policies, and procedures; and
(iv) Orders, directives, and instructions issued by
the Combatant Commander, including those relating to
force protection, security, health, safety, or relations and
interaction with local nationals.
(2) The Contractor shall institute and implement an
effective program to prevent violations of the law of war
by its employees and subcontractors ....
(h) Contractor personnel. (1) The [CO] may
direct the Contractor, at its own expense, to remove and
replace any Contractor personnel who jeopardize or
interfere with mission accomplishment or who fail to
comply with or violate applicable requirements of this
contract. Such action may be taken at the Government's
discretion without prejudice to its rights under any other
9
provision of this contract, including the Termination for
Default clause.
(p) Changes. In addition to the changes otherwise
authorized by the Changes clause of this contract, the [CO]
may, at any time, by written order identified as a change
order, make changes in the place of performance or
Government-furnished facilities, equipment, material,
services, or site. Any change order issued in accordance
with this paragraph (p) shall be subject to the provisions of
the Changes clause of this contract.
( q) Subcontracts. The Contractor shall incorporate
the substance of this clause, including this paragraph (q), in
all subcontracts when subcontractor personnel are
authorized to accompany U.S. Armed Forces deployed
outside the United States in-
(1) Contingency operations;
(2) Humanitarian or peacekeeping operations; or
(3) Other military operations or military exercises,
when designated by the Combatant Commander.
(R4, tab 14 at 7-13)
8. The TO also included, in full text, an unnumbered clause titled
CONTRACTOR PERSONNEL IN THE UNITED STATES CENTRAL COMMAND AREA OF
RESPONSIBILITY (DEVIATION 2007-00010). A preamble paragraph preceding the
clause stated:
The below DFARS DOD Class Deviation 2007-00010
applies to Local National and Third Country nationals
working on this contract. US Citizens are covered under
DFARS Clause 252.225-7040 "Contractor Personnel
Authorized to Accompany U.S. Armed Forces Deployed
Outside the United States" in Section 00700.
(R4, tab 14 at 14) The "Other Nationals" clause, Class Deviation 2007-00010,
provides in pertinent part:
10
(a) Definitions. As used in this clause-
"Combatant commander" means the commander of
a unified or specified combatant command established in
accordance with 10 U.S.C. 161.
(b) General. ( 1) This clause applies when
contractor personnel are required to perform in the United
States Central Command (USCENTCOM) Area of
Responsibility (AOR), and are not covered by the clause at
DFARS 252.225-7040, Contractor Personnel Authorized to
Accompany U.S. Armed Forces Deployed Outside the
United States.
( c) Support. Unless specified elsewhere in the
contract, the Contractor is responsible for all logistical and
security support required for contractor personnel engaged
in this contract.
(d) Compliance with laws and regulations. The
Contractor shall comply with, and shall ensure that its
personnel in the USCENTCOM AOR are familiar with and
comply with, all applicable-
( 1) United States, host country, and third country
national laws;
(2) Treaties and international agreements;
(3) United States regulations, directives,
instructions, policies, and procedures; and
(4) Force protection, security, health, or safety
orders, directives, and instructions issued by the
Combatant Commander; however, only the [CO] is
authorized to modify the terms and conditions of the
contract.
11
(h) Contractor personnel. The [CO] may direct the
Contractor, at its own expense, to remove and replace any
contractor personnel who fail to comply with or violate
applicable requirements of this contract. Such action may
be taken at the Government's discretion without prejudice
to its rights under any other provision of this contract,
including termination for default or cause.
(p) Changes. In addition to the changes otherwise
authorized by the Changes clause of this contract, the [CO]
may, at any time, by written order identified as a change
order, make changes in place of performance or
Government-furnished facilities, equipment, material,
services, or site. Any change order issued in accordance
with this paragraph shall be subject to the provisions of the
Changes clause of this contract.
(q) Subcontracts. The Contractor shall incorporate
the substance of this clause, including this paragraph (q), in
all subcontracts that require subcontractor personnel to
perform in the USCENTCOM AOR.
(R4, tab 14 at 14-18)
9. The TO included in full text an updated version of JCC-1/A 952.224-0004,
COMPLIANCE WITH LA ws AND REGULATIONS (JAN 2010) (R4, tab 14 at 27-28), which
was substantially identical to the March 2009 version included in the MATOC (see
SOF ~ 4, above).
10. Like the MATOC, the TO also included many clauses that applied
expressly to both prime contractors and subcontractors. Some of these clauses, such as
JCC-1/A 952.222-0001 (R4, tab 14 at 18), were identical to those set forth in full text
in the MATOC. Others had been updated since the date of contract award, but not
substantially so; these included JCC-1/A 952.225-0001, ARMING REQUIREMENTS AND
PROCEDURES FOR PERSONAL SECURITY SERVICES CONTRACTORS AND FOR REQUESTS
FOR PERSONAL PROTECTION (FEB 2010) (id. at 21-25); JCC-1/A 952.225-0002, ARMED
PERSONNEL INCIDENT REPORTS (JAN 2010) (id. at 25-26); and JCC-1/A 952.225-0009,
MEDICAL SCREENING AND VACCINATION REQUIREMENTS FOR LOCALLY HIRED
EMPLOYEES (JAN 2010) (id. at 29-30) (see SOF ~ 5, above).
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11. Appellant subcontracted with Arvin Kam Construction Company
(Arvin Kam) to perform some of the construction work required under the TO (app.
mot. at 2; gov't resp. at 2).
C. The National Defense Authorization Act for Fiscal Year 2012
12. The National Defense Authorization Act for Fiscal Year 2012 (NDAA
FY12) became law on 31December2011. NDAA FY12, Pub. L. No. 112-81,
125 Stat. 1298 (2011). The NDAA FY12 included, at§ 841, a "Prohibition on
Contracting with the Enemy in the [USCENTCOM] Theater of Operations." NDAA
FY12 § 841, 125 Stat. at 1510-13.
13. Pursuant to§ 841, the Secretary of Defense was required to establish a
program to use available intelligence to review persons and entities receiving United
States funds through contracts, grants, and cooperative agreements within the
USCENTCOM theater of operations and identify those who were actively supporting
an insurgency or were otherwise actively opposing United States or coalition forces in
a contingency operation. NDAA FY12 § 841(c)(l), 125 Stat. at 1512. The
CDRUSCENTCOM was responsible for the following notice requirements:
(2) NOTICE TO CONTRACTING ACTIVITIES.-If the
[CDRUSCENTCOM], acting pursuant to the program
required by paragraph ( 1), identifies a person or entity as
actively supporting an insurgency or otherwise actively
opposing United States or coalition forces in a contingency
operation, the Commander may notify the head of a
contracting activity [(HCA)] in writing of such
identification and request that the [HCA] exercise the
authority provided in subsection (a) with regard to any
contracts, grants, or cooperative agreements that provide
funding directly or indirectly to the person or entity.
NDAA FY12 § 841(c), 125 Stat. at 1512.
14. Subsection (a) of§ 841 authorized an HCA, upon receipt of the notification
described at subsection ( c) and pursuant to a request by the CDRUSCENTCOM, to
take the following actions with respect to an existing contract:
(B) ... [T]erminate for default any Department
contract, grant, or cooperative agreement upon a written
determination by the [HCA] that the contractor, or the
recipient of the grant or cooperative agreement, has failed
to exercise due diligence to ensure that none of the funds
13
received under the contract, grant, or cooperative
agreement are provided directly or indirectly to a person or
entity who is actively supporting an insurgency or
otherwise actively opposing United States or coalition
forces in a contingency operation in the [USCENTCOM]
theater of operations; or
(C) ... [V]oid in whole or in part any Department
contract, grant, or cooperative agreement upon a written
determination by the [HCA] that the contract, grant, or
cooperative agreement provides funding directly or
indirectly to a person or entity that has been identified by
the [CDRUSCENTCOM] as actively supporting an
insurgency or otherwise actively opposing United States or
coalition forces in a contingency operation in the
[USCENTCOM] theater of operations.
NDAA FY12 § 841(a)(l), 125 Stat. at 1510-11. The authority provided under
§ 841(a) to restrict, terminate, or void contracts, grants, and cooperative agreements
could not be delegated below the level of the HCA. NDAA FY12 § 84l(d)(l),
125 Stat. at 1512.
15. Subsection (b) of§ 841 required the Secretary of Defense to revise the
DFARS to require new "covered contract[s]," awarded on or after the date of
enactment, and, to the maximum extent practicable, the modification of existing
"covered contract[s]," to include a new clause to implement§ 841. NDAA FY12
§ 841(b)(l), 125 Stat. at 1511. For purposes of the new§ 841 clause, a "covered
contract" was one "with an estimated value in excess of $100,000 that will be
performed in the [USCENTCOM] theater of operations." NDAA FY12 § 841(b)(3),
125 Stat. at 1512. In crafting this new clause, Congress was motivated by concerns
that existing remedy-granting clauses were too slow and unwieldy to prevent the
continued flow of United States funds to insurgents:
The Department of Defense has informed the
committee that time-consuming legal procedures could be
required under current law before such contracts could be
terminated. As a result, U.S. taxpayer money could
continue to flow to persons supporting enemy forces for
weeks or even months after the problem has been
identified. On March 15, 2011, the Commander, United
States Forces Afghanistan, testified that legislation
addressing this issue would "be very helpful to us" and
''the sooner the better."
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The committee concludes that contracts with the
enemy have the potential to seriously undermine U.S.
national security objectives in the Central Command
Theater of Operations and should be considered to be void
as against public policy.
S. Rep. No. 112-26, at 145 (2011). Accordingly, the new clause required by§ 84l(b)
would:
(A) require[] the contractor, or the recipient of the
grant or cooperative agreement, to exercise due diligence
to ensure that none of the funds received under the
contract, grant, or cooperative agreement are provided
directly or indirectly to a person or entity who is actively
supporting an insurgency or otherwise actively opposing
United States or coalition forces in a contingency
operation; and
(B) notif[y] the contractor, or the recipient of the
grant or cooperative agreement, of the authority of the
[HCA] to terminate or void the contract, grant, or
cooperative agreement, in whole or in part, as provided in
subsection (a).
NDAAFY12 § 841(b)(2), 125 Stat. at 1511.
16. On 26 January 2012, the Director of Defense Procurement and Acquisition
Policy issued Class Deviation 2012-00005 implementing§ 841 of the NDAA FY12.
The class deviation required all "covered contracts" to be awarded on or before
31December2014 to include the new clause, DFARS 252.225-7993, PROHIBITION ON
CONTRACTING WITH THE ENEMY IN THE [USCENTCOM] THEATER OF OPERATIONS
(DEVIATION 2012-00005) (JAN 2012). Additionally, existing "covered contracts"
were required, "to the maximum extent practicable, ... [to] be modified bilaterally, in
accordance with FAR 1.108[41," to include the new clause. OFFICE OF THE UNDER
SECRETARY OF DEFENSE FOR ACQUISITION, TECHNOLOGY AND LOGISTICS, DARS
TRACKING NO. 2012-00005, CLASS DEVIATION-PROHIBITION ON CONTRACTING
WITH THE ENEMY AND ACCESS TO CONTRACTOR AND SUBCONTRACTOR RECORDS IN
THE [USCENTCOM] THEATER OF OPERATIONS (2012).
4
"FAR conventions." FAR 1.108(d), "Application ofFAR changes to solicitations
and contracts," states in pertinent part: "(3) [COs] may, at their discretion,
include the changes in any existing contract with appropriate consideration."
15
17. Neither the MATOC nor the TO was modified to include the new § 841
clause, DFARS 252.225-7993 (R4, tabs 3, 14).
D. The § 841 Notification and the Termination ofArvin Kam
18. On 24 July 2012, the CDRUSCENTCOM, Gen James N. Mattis, USMC,
issued a notification pursuant to NDAA FY12 § 841 identifying appellant's
subcontractor, Arvin Kam, as an entity that was actively supporting an insurgency.
Gen Mattis' § 841 notification stated, in pertinent part:
Pursuant to the [NDAA FY12, § 841], I have identified
The Arvin Kam Group, LLC, The Arvin Kam Construction
Company, Arvin Kam Group LLC Corporate Executives
and Senior Partners to include: Chairman/Chief Executive
Officer, Vakil Saadat, Senior Executive and Partner,
Haji Mohammad Almas Khan, and Senior Executive and
Partners [sic], Haji Khalil Fruzi as actively supporting an
insurgency and hereby request that the [HCA] exercise the
authority provided in subsection (a) with regard to any
contracts, grants, or cooperative agreements that provide
funding directly or indirectly to the person or entity.
The § 841 notification was distributed to various HCAs. (R4, tab 30)
19. On 9 August 2012, appellant received the § 841 notification regarding
Arvin Kam from a different government agency with whom appellant was also
contracting at the time. By letter dated 12 August 2012, appellant notified the Corps
that it had received the § 841 notification and provided the Corps with a list of projects
and contract values that appellant had subcontracted to Arvin Kam. Appellant
concluded its 12 August 2012 letter with a request that the Corps "'promptly inform us
if we are to take action, such as termination of this subcontractor." (R4, tab 36 at 13)
20. By letter dated 16 August 2012, CO Kerment Goss issued a cure notice to
appellant. CO Goss' cure notice stated the following, in pertinent part:
Reference [ECCi] letter dated 12 August 2012 and
CENTCOM Clause 252.225-0004 Compliance with Laws
and Regulations included in the above-referenced contract.
[ECCi] has employed Arvin Kam Group as a subcontractor
under [Task Orders 0003, 0006, 0007, and 0009]. The
U.S. Army Corps of Engineers, Transatlantic
District-North (TAN) has determined [ECCI's] continued
utilization of Arvin Kam Group on these task orders is a
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violation of the above referenced clause, based on force
protection reasons.
Therefore you are directed to terminate the services
of Arvin Kam Group on these projects, effective
immediately.
You are hereby required to terminate Arvin Kam
Group within the next ten (10) days or I shall immediately
initiate default proceedings in accordance with the terms of
contract clause 52.249-10 Default - Fixed Price
Construction.
(R4, tab 31)
21. By letter dated 18 August 2012, appellant acknowledged receipt of
CO Goss' cure notice and advised the Corps that it had been instructed by the other
government agency (see SOF if 19, above) to provide it with a cost and schedule
impact analysis prior to its deciding whether to direct appellant to terminate
Arvin Kam. In order to afford the other agency adequate time to provide appellant
with direction, thereby allowing appellant to act in a like manner with respect to all of
its Arvin Kam subcontracts, appellant requested the Corps to allow it until 21 August
2012 to terminate Arvin Kam. Appellant informed the Corps that, "[i]n any event,
ECCi considers this to be a Government-directed action by which ECCi will be owed
both time and money due to the terminations," and asked whether the Corps required
appellant's cost and schedule impact analysis by 21 August 2012. (R4, tab 32) The
record does not include a response by the Corps.
22. By letter dated 30 August 2012, appellant informed the Corps that it had
implemented the "Government-directed Termination of all services of Arvin
Kam ... based on [the Corps'] Cure Notice." Appellant noted that it had been "directed
by the Government to take this termination action against Arvin Kam due to force
protection reasons under the contract clause 952.225-0004-Compliance with Laws and
Regulations (Jul 2010)." Appellant stated that it had reserved its rights to submit a
new project schedule and a Request for Equitable Adjustment (REA) for costs
associated with the directed termination of Arvin Kam; it expressed its disagreement
that the CO could direct the termination of Arvin Kam under the purview of the
contract's default termination clause; it stated that it understood the authority to direct
the termination of Arvin Kam to flow from§ 841 of the NDAA FY12; and it noted
that neither the contract nor any task orders had been modified to include the § 841
clause, and even if they had been, the termination authority therein could not be
delegated below the level of the HCA. (R4, tab 36 at 19-20) Appellant further stated
that, because the government had knowledge of Arvin Kam's activities which
17
appellant did not have, appellant could not have been in default of any contract
requirement, the use of a cure notice was unwarranted, and the government-directed
termination of Arvin Kam thus constituted a compensable change to the contract and
task order. Finally, appellant noted that Arvin Kam's subcontract had been terminated
under a contract with another government agency (see SOF ~~ 19, 21, above), that the
other agency had already requested appellant's cost and schedule impact, and that the
other contract would be adjusted accordingly. (R4, tab 36 at 20)
E. The REA, the Claim, the Final Decision, and the Appeal
23. By letter dated 15 February 2013, appellant submitted a REA seeking an
adjustment of$3,143,861.42 and 61 days of delay (R4, tab 36 at 3, 5). Appellant
maintained: that the CO lacked the authority under the default termination clause to
direct the termination of the subcontractor, Arvin Kam; that appellant had conducted
due diligence by checking Arvin Kam's credentials under the excluded parties list
system prior to awarding the subcontract, and thus the government had knowledge
about Arvin Kam which appellant did not have; that appellant understood the CO's
direction to terminate Arvin Kam to be an implementation of the statutory authority of
NDAA FY12 § 841; that the contract had never been modified to include the§ 841
clause; and that the government-directed termination of Arvin Kam's subcontract
therefore constituted a compensable change (id. at 3-4).
24. By letter dated 24 October 2013, appellant converted its REA to a claim for
$3,252,818.92 and 61 days of delay, the revised claim amount reflecting appellant's
"actual costs incurred" (R4, tab 36 at 1). Appellant's 24 October 2013 claim was
certified in accordance with 41 U.S.C. § 7103(b) (R4, tab 36 at 1433).
25. On 28 October 2013, CO Mary Beth McNair denied appellant's REA (R4,
tab 37).
26. On 20 November 2013, CO Ralph La Rosa issued a final decision denying
appellant's 24 October 2013 claim (R4, tab 2). In his final decision, CO La Rosa
acknowledged that the reference to "CENTCOM Clause 252.225-0004 Compliance
with Laws and Regulations" in CO Goss' 16 August 2012 cure notice (see SOF ~ 20,
above) was erroneous, and that the correct citation should have been "JCC-1/A
Clause 952.225-0004 - Compliance with Laws and Regulations (Jan 2010)" (R4, tab 2
at 10). CO La Rosa also acknowledged that some of the task orders issued under the
MATOC had "different designations of the clauses {Task Order 0003, for example,
designated this clause as JCC-1/A Clause 952.225-0004, dated January 2010, while
Task Order 0009 did not include the 'JCC-1/A' appellation, and the date was June
201 O)," and that "this ha[ d] given rise to some confusion in the correspondence" (id.
at 10-11 ). Nevertheless, CO La Rosa concluded, "the fact that the title was correct
18
demonstrates that the correct Contract Clause was indicated, and ECCI was informed
of the proper authority for the [directed] termination" (id. at 11 ).
27. On 22 November 2013, appellant filed its notice of appeal from the
20 November 2013 final decision.
DECISION
In moving for summary judgment, appellant contends that the issue before us is
whether the Corps "used the authority in Section 841 of the [NDAA FYl2] properly
when [it] directed the termination of [appellant's] subcontractor, Arvin Kam" (app.
mot. at 6). Appellant argues that no clause in either the MATOC or the TO granted to
the CO the contractual right to direct appellant to terminate its subcontractor (id. at
8-10). According to appellant, the clause cited by the government as the authority for
its direction to terminate the Arvin Kam subcontract, JCC-I/A 952.225-0004, only
allows the removal of "Contractor employees" from military installations or the theater
of operations by order of the senior military commander, not the removal of entire
subcontractor entities (id. at 9). Appellant thus contends that the term "Contractor
employee," as used in paragraph (c) of JCC-I/A 952.225-0004, does not include either
"entire contractors" or subcontractors. Appellant further argues that ifthe
government's interpretation of JCC-I/A 952.225-0004 was correct, then a CO would
already have, without § 841, the authority to terminate a contract or subcontract for the
sort of conduct that Congress sought to address with§ 841, thereby rendering§ 841
redundant even before it was enacted. (Id. at 10) Accordingly, appellant argues that
the government's direction to terminate appellant's subcontractor was in fact an
unauthorized exercise of the authority of the§ 841 clause, DFARS 252.225-7993,
which had not been incorporated into the MATOC or the TO through bilateral
modification as required by § 841, and thus the government's conduct constitutes a
compensable change (id. at 8, I 0).
In its cross-motion for summary judgment, the government presents the issue as
whether the CO's direction to terminate Arvin Kam was proper under the provisions of
the TO (gov't mot. at 8). The government contends that it never used the authority of
§ 841 regarding the direction to terminate the Arvin Kam subcontract. The
government argues instead that it properly exercised the authority of paragraphs (a)
and (c) of JCC-I/A 952.225-0004, which required appellant, as the prime contractor, to
ensure that its subcontractor Arvin Kam complied with the laws of Afghanistan. The
government contends that "[t]here is also no question that engaging in support of an
insurgency was treason, and contrary to the laws of Afghanistan." (Id. at 8-10)
Accordingly, the government argues, upon learning that Arvin Kam was "violating the
laws of Afghanistan," appellant had an obligation to terminate Arvin Kam in order to
ensure that its subcontractors "obeyed all U.S. and Host Nation laws, Federal or DoD
regulations, and [USCENTCOM] orders and directives," as required by
19
JCC-I/A 952.225-0004(a) (id. at 8-9). The government thus asserts that the term
"contractor employee," as used in paragraph (c) of JCC-I/A 952.225-0004, necessarily
includes subcontractors and subcontractor employees. The government further argues
that the CO was authorized to direct the termination of the Arvin Kam subcontract
pursuant to DFARS 252.225-7040 and the "Other Nationals" clause, Class Deviation
2007-000 I 0 (id. at I 0-11 ), which allow the CO to direct a contractor, "at its own
expense, to remove and replace any contractor personnel who fail to comply or violate
applicable requirements of this contract" (DF ARS 252.225-7040(h); "Other Nationals"
clause, paragraph (h)).
It is well settled that summary judgment is appropriate only where there are no
genuine issues of material fact and the moving party is entitled to judgment as a matter
oflaw. Mingus Constructors, Inc. v. United States, 812 F.2d 1387, 1390 (Fed. Cir.
1987). A material fact is one which may affect the outcome of the case. Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). Where, as here, the parties have filed
cross-motions for summary judgment, we evaluate each motion on its own merits,
taking care to draw all reasonable inferences against the party whose motion is under
consideration. Mingus, 812 F.2d at 1391.
On an issue of contract interpretation, summary judgment may only be granted
where there is no ambiguity in the contract terms at issue which would require us to
weigh extrinsic evidence to resolve the matter. Raytheon Co., ASBCA No. 58212,
15-1BCA,35,999 at 175,865; see also Aegis Defence Servs. Ltd., ASBCA
No. 59082, 15-1BCA,35,811at175,138-39 (the necessity of considering extrinsic
evidence precludes summary judgment); Beta Sys., Inc. v. United States, 838 F.2d
1179, 1183 (Fed. Cir. 1988) ("[t]o the extent that the contract terms are ambiguous,
requiring weighing of external evidence, the matter is not amenable to summary
resolution"). An ambiguity exists when there are two or more different interpretations
of the contract language at issue, each of which is consistent with the contract
language and falls within a "zone of reasonableness." See, e.g., Classic Site Solutions,
Inc., ASBCA Nos. 58376, 58573, 14-1 BCA, 35,647 at 174,551 ("ambiguity exists
when there are two reasonable interpretations of the language under consideration");
Santa Fe Engineers, Inc., ASBCA No. 25549, 82-2 BCA, 15,982 at 79,253
(ambiguity exists only when language "is susceptible to two or more different and
reasonable constructions, each of which is consistent with the contract language");
Metric Constructors, Inc. v. NASA, 169 F.3d 747, 751 (Fed. Cir. 1999) ("both
[parties'] interpretations must fall within a zone of reasonableness"). Determining
whether such differing interpretations are reasonable begins with an examination of
the plain language of the contract, James G. Davis Constr. Corp., ASBCA Nos. 58000,
58002, 15-1BCA,35,818 at 175,154, construing the contract so as "to effectuate its
spirit and purpose giving reasonable meaning to all parts of the contract," Valley
Apparel, LLC, ASBCA No. 57606, 12-1BCA,35,013 at 172,052 (quoting Hercules,
Inc. v. United States, 292 F.3d 1378, 1381 (Fed. Cir. 2002)). In order to fall within the
20
"zone of reasonableness," a party's interpretation must be logically consistent with the
contract and the parties' objectively ascertainable intentions. See, e.g., NVT Techs.,
Inc. v. United States, 370 F.3d 1153, 1161 (Fed. Cir. 2004); Bennett v. United States,
371F.2d859, 861 (Ct. Cl. 1967). It must also "assure that no contract provision is
made inconsistent, superfluous, or redundant," Medlin Constr. Grp., Ltd. v. Harvey,
449 F.3d 1195, 1200 (Fed. Cir. 2006) (quoting Lockheed Martin IR Imaging Sys. v.
West, 108 F.3d 319, 322 (Fed. Cir. 1997)). If the contract language is susceptible to
multiple reasonable interpretations, then we must resort to extrinsic evidence to derive
a construction that effectuates the parties' intent at the time they executed the contract.
TEG-Paradigm Envtl., Inc. v. United States, 465 F.3d 1329, 1338 (Fed. Cir. 2006); see
also Int;! Source & Supply, Inc., ASBCA Nos. 52318, 52446, 00-1BCA~30,875
at 152,434 (''we do not interpret contractual terms in a vacuum; rather, our goal is to
arrive at an interpretation that accurately reflects the intentions of the parties").
Based on the record before us, there appears to be no dispute that the clause to
which the CO referred in the cure notice was JCC-1/A 952.225-0004, not
DFARS 252.225-7040 or the "Other Nationals" clause. 5 After appellant provided the
Corps with a copy of the§ 841 notification for Arvin Kam (SOF ~ 19), CO Goss
promptly issued a cure notice directing appellant to terminate the subcontractor,
referring to "CENTCOM Clause 252.225-004 Compliance with Laws and
Regulations ... based on force protection reasons" (SOF ~ 20). Upon terminating the
subcontractor, appellant acknowledged that it had been directed to do so "due to force
protection reasons under the contract clause 952.225-0004-Compliance with Laws and
Regulations (Jul 2010)" (SOF ~ 21). Thus, there appears to be no question that the
parties understood CO Goss' reference to "CENTCOM Clause 252.225-0004
Compliance with Laws and Regulations" to be a mistaken reference to
JCC-1/A 952.225-0004, although we note that the requirement to comply with "force
protection ... orders, directives, and instructions" comes not from the JCC-1/A clause,
but from DFARS 252.225-7040 and the "Other Nationals" clause.
5 The FAR clause is in the MATOC (SOF if 3), while the DFARS clause and the
"Other Nationals" clause are in the TO (SOF iii! 7, 8). It is not clear from the
record which of these three clauses, which appear to be mutually-exclusive in
their application, applies to appellant's subcontract with Arvin Kam under the
TO. However, all three clauses are substantially identical with respect to their
flow-down and "contractor personnel" provisions, and the parties do not contest
the applicability of any particular clause, so it is not necessary to decide at this
time which of the three clauses is applicable. Nonetheless, because the parties
refer only to DFARS 252.225-7040 and the "Other Nationals" clause in their
motions and pleadings, we shall confine our discussion to those two clauses.
21
Appellant asks us to infer from CO Goss' possession of the § 841 notification
regarding Arvin Kam, (SOF if 21 ), and the reference in the cure notice to "[ECCi]
letter dated 12 August 2012," (SOF if 20), that the CO was using§ 841 authority to
direct the termination of Arvin Kam. In the cure notice, however, CO Goss states that
the government "has determined [ECCi' s] continued utilization of [Arvin Kam] on
these task orders is a violation of [the JCC-VA clause]," and that either appellant shall
"terminate [Arvin Kam] within the next ten (10) days or I shall immediately initiate
default proceedings in accordance with the terms of contract clause 52.249-10 Default
- Fixed Price Construction" (SOF if 20). There is no mention whatsoever of§ 841 in
the cure notice (id.). To the extent that appellant argues that the CO improperly used
the authority of § 841 when issuing the cure notice, the record does not support
appellant's argument. Accordingly, we direct our inquiry to whether the CO properly
used the authorities invoked in the cure notice.
It is well settled that the CO has the authority to direct the removal and
replacement of a subcontractor, which generally entitles the contractor to an equitable
adjustment based upon a change in the method or manner of performance. See, e.g.,
Liles Constr. Co. v. United States, 455 F.2d 527, 531-33 (Ct. Cl. 1972) (order to
terminate and replace subcontractor was compensable change in the method and
manner of performance); Advanced Engineering & Planning Corp., ASBCA
Nos. 53366, 54044, 05-1BCAif32,806 at 162,320 (order to replace contractor
employees with subcontractor employees was compensable change), modified on other
grounds, 05-1BCAif32,935. The question now before us is ''whether [the CO] ha[s]
the contractual right to do it without obligating the Government to compensate the
contractor for any additional costs incurred." Advanced Eng'g & Planning, 05-1 BCA
if 32,806 at 162,320 (quoting Liles Constr., 455 F.2d at 531). After all, it has been
recognized that "[t]here is no greater interference with the manner and method of
performance, short of termination of the work itself, than the ordered replacement of
the craftsmen originally chosen to do the work." Liles Constr., 455 F.2d at 532. lfno
clause expressly allows the CO to direct the removal and replacement of a
subcontractor without compensation, such a direction is a compensable change. Id.
at 533. We therefore must address whether the CO may direct the termination of a
subcontractor pursuant to either JCC-1/A 952.225-0004 or the Default clause,
FAR 52.249-10.
The parties dispute the applicability of JCC-VA 952.225-0004 to
"subcontractors and their employees." The term "contractor employee" is used
throughout JCC-1/A 952.225-0004; however, paragraph (a) of the clause states that
"[t]he Contractor ... shall ensure that its employees and its subcontractors and their
employees, at all tiers, are aware of and obey all [laws and regulations]" (SOF iii! 4, 9).
No other paragraph in the clause refers to "subcontractors and their employees" (id.).
Because paragraph (a) refers to "contractor employees" and "subcontractor
employees" as distinct entities, and subsequent paragraphs of the clause only refer to
22
"contractor employees," appellant would have us read all subsequent paragraphs in the
clause as being applicable only to "contractor employees," exclusive of
"subcontractors and their employees." The government disagrees, urging upon us a
broader reading of "contractor employees" to include "subcontractor employees."
The term "contractor employee" is not expressly defined in any clause of the
contract. However, reading the entire contract reveals the government's interpretation
to be logically inconsistent. In contrast to JCC-1/A 952.225-0004, there are numerous
other JCC-1/A clauses in the MATOC and the TO which, by their express terms, govern
the conduct of contractor employees as well as subcontractor employees (SOF ifif 5,
10). Additionally, DFARS 252.225-7040 and the "Other Nationals" clause contain
mandatory subcontracts flow-down provisions at paragraph (q), "Subcontracts" (SOF
if~ 7, 8). 6 All of these clauses demonstrate that the government knows how to draft a
clause that applies with equal effect to both contractors and subcontractors either
directly or pursuant to flow-down provisions in subcontracts. However, when the
government updated JCC-1/A 952.225-0004 in January 2010-the version of the clause
set forth in full text in the TO - it did not include language to make the JCC-1/A clause
correspond to DFARS 252.225-7040 and the "Other Nationals" clause (SOF if 9). We
believe this objectively indicates an intention for the term "contractor employees" in
JCC-1/A 952.225-0004 to mean exactly what it says - "contractor employees," not
"subcontractor employees."
The government argues that appellant's interpretation would deprive it of its
remedy under the clause, i.e., ordering the removal of disruptive or disobedient
personnel, with respect to subcontractor personnel (gov't mot. at 11 ). This, too, is
inconsistent with the language of the contract. Unlike DFARS 252.225-7040 and the
"Other Nationals" clause, JCC-1/A 952.225-0004 does not authorize a CO to direct the
contractor to "remove and replace any ... personnel who ... fail to comply with or violate
applicable requirements of [the] contract" (SOF ifif 4, 7, 8). Rather, paragraph (c) of
JCC-1/A 952.225-0004 states: "Contractor employees may be ordered removed from
secure military installations or the theater of operations by order of the senior military
commander of the battle space" (SOF ~ 4) (emphasis added). The government's
interpretation is thus inconsistent with both the contract and the government's
objectively ascertained intent, and therefore it falls outside the zone of reasonableness.
The government's argument that the CO was justified in directing the
termination of the subcontractor under JCC-1/A 952.225-0004 because such authority
exists pursuant to DFARS 252.225-7040 and the "Other Nationals" clause, (gov't mot.
6
Both clauses, at paragraph (h), "Contractor personnel," allow the CO to direct the
removal and replacement of "any Contractor personnel" who fail to comply
with or violate applicable requirements of the contract.
23
at 10-11), is likewise unavailing. Those clauses both state, at paragraph (h), that the
CO may direct the removal and replacement of"contractor personnel" (SOF ~~ 7, 8).
As with JCC-1/A 952.225-0004, the term "contractor personnel" in those clauses
cannot reasonably be interpreted to include "subcontractor personnel." Such an
interpretation would render the subcontract flow-down provisions at paragraph (q) of
those clauses superfluous or redundant. See Medlin, 449 F.3d at 1200. Nor has the
government shown that DFARS 252.225-7040 or the "Other Nationals" clause were
flowed-down to the Arvin Kam subcontract. Accordingly, we conclude that the only
reasonable interpretation of the term "contractor employees" as it is used in
JCC-1/A 952.225-0004 is that it does not include "subcontractor employees," and that
JCC-1/A 952.225-0004 does not expressly allow the CO to direct the removal and
replacement of a subcontractor.
If our inquiry was limited to the question of whether "contractor employees"
includes "subcontractor employees" for purposes of the JCC-1/A clause, that would be
the end of the matter and in favor of appellant's position. However, while the JCC-1/A
clause does not expressly allow for the removal and replacement of a subcontractor,
the CO may nevertheless be entitled under certain circumstances to direct the removal
and replacement of a subcontractor pursuant to the Default clause, FAR 52.249-10.
Pursuant to paragraph (a) of JCC-1/A 952.225-0004, a contractor must "ensure
that its ... subcontractors and their employees, at all tiers, are aware of and obey all
[applicable laws, regulations, orders, instructions, policies, or directives]" (SOF ~ 4 ).
A contractor's failure to ensure that its subcontractors or their employees did not
engage in such conduct would be a breach of the requirements of paragraph (a) of the
clause. If such a breach amounted to a material breach of the contract, the CO would
be justified in terminating ECCi' s contract under the Default clause. See, e.g.,
All-State Constr., Inc., ASBCA No. 50586, 06-2 BCA ~ 33,344 at 165,341-42 (failure
to proceed as required by FAR 52.233-l(i) is a material breach justifying termination
under the government's common law rights reserved in paragraph ( d) of the Default
clause); MC.&D. Capital Corp., ASBCA No. 38181 et al., 91-1BCA~23,563 at
118,130-31, ajf'd, 948 F.2d 1251 (Fed. Cir. 1991) (unapproved variation or deviation
from requirements of a construction contract justified default termination). A breach
is material if it relates to a matter of vital importance, or goes to the essence of the
contract. Tzell Airtrak Travel Group Corp., ASBCA No. 57313, 11-2 BCA ~ 34,845
at 171,410; see also 23 SAMUEL WILLISTON & RICHARD A. LORD, A TREATISE ON THE
LA w OF CONTRACTS § 63 :3 (4th ed. 1993) (breach is material if a party fails to
perform a substantial part of the contract or one or more of its essential terms or
conditions; the breach substantially defeats the contract's purpose; or the breach is
such that upon a reasonable interpretation of the contract, the parties considered the
breach as vital to the existence of the contract). The parties have not briefed the issue
of whether a violation of the requirements of paragraph (a) of JCC-1/A 952.225-0004
would amount to a material breach of the contract, and we are not required to answer
24
that question in order to reach a decision on the parties' current motions. Accordingly,
we do not.
Even if a violation of paragraph (a) of JCC-1/A 952.225-0004 amounted to a
material breach of the contract, however, a termination for default "is a drastic
sanction ... which should be imposed (or sustained) only for good grounds and on solid
evidence," JD. Hedin Constr. Co. v. United States, 408 F.2d 424, 431 (Ct. Cl. 1969),
and the government has the burden of proving that a termination is justified, Lisbon
Contractors, Inc. v. United States, 828 F.2d 759, 765 (Fed. Cir. 1987). We cannot
agree with the government's bald contention that supporting an insurgency - much
less the cursory allegation of supporting an insurgency that appeared in the § 841
notification - was unquestionably conduct amounting to "treason ... contrary to the
laws of Afghanistan" (gov't mot. at 8). We are unfamiliar with the law of Afghanistan
on this matter, and although we are empowered under Board Rule 6( c) to "consider
any relevant material or source, including testimony, whether or not submitted by a
party" in determining foreign law, we are not obligated to do so. Weigel
Hochdrucktechnik GmbH & Co. KG, ASBCA No. 57207, 12-1BCA~34,975 at
171,924. Where, as here, the government asks us to consider the law of a foreign
country, the government bears the burden of producing appropriate evidence of the
foreign law and demonstrating its application to the matters before us. Lael Al Sahab
& Co., ASBCA No. 58346, 14-1 BCA ~ 35,738 at 174,917. We conclude that the
government has not adequately demonstrated that the CO was aware of conduct
specifically in violation of paragraph (a) of JCC-1/A 952.225-0004 prior to issuing the
cure notice.
The record before us requires additional development, and there are also
important issues that have not yet been addressed by the parties. Without knowing
what evidence the CO had at the time of issuing the cure notice of subcontractor
conduct that would constitute a failure to abide by the terms of paragraph (a) of
JCC-1/A 952.225-0004, and without knowing whether a failure by ECCi to ensure its
subcontractor's compliance with the JCC-1/A clause would amount to a material
breach of the contract, we cannot say whether or not the government was justified
under the Default clause in directing appellant to terminate its subcontractor.
Accordingly, there are material facts in dispute precluding summary judgment.
25
CONCLUSION
On the basis of the foregoing, appellant's motion for summary judgment and
the government's motion for summary judgment are denied.
Dated: 22 October 2015
DIANA ~:DICKINSON
Administrative Judge
Armed Services Board
of Contract Appeals
I concur
~ ML
~~E~·· RICHARD SHACKLEFORD
Administrative Judge Administrative Judge
Acting Chairman Vice Chairman
Armed Services Board Armed Services Board
of Contract Appeals of Contract Appeals
I certify that the foregoing is a true copy of the Opinion and Decision of the
Armed Services Board of Contract Appeals in ASBCA No. 59031, Appeal of ECCI-C
Metag, JV, rendered in conformance with the Board's Charter.
Dated:
JEFFREY D. GARDIN
Recorder, Armed Services
Board of Contract Appeals
26