DCX-CHOL Enterprises, Inc.
ASBCA No. 58742
| A.S.B.C.A. | Oct 11, 2016Background
- Navy awarded Contract No. N00104-05-C-FA80 to DCX-CHOL for submarine "stuffing tubes," classified Level I/SUB SAFE (safety-critical).
- Bilateral mod P00020 extended remaining delivery date to 15 Feb 2013.
- DCX missed the 15 Feb 2013 delivery; emails in Feb 2013 discussed supplier delays and an estimated delivery week of March 25, 2013, but no formal extension or consideration was agreed.
- On 5 Mar 2013 the contracting officer issued a show-cause letter threatening termination for default; DCX replied asserting delays and proposed shipment by 8 May 2013.
- Contract specialist recommended default termination citing chronic late deliveries and quality issues; CO terminated for default by mod P00021 on 17 Apr 2013.
- DCX moved for summary judgment seeking conversion of the default termination to a convenience termination based on alleged waiver; the Board denied the motion on 11 Oct 2016.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether government waived right to terminate for default by permitting continued performance after the due date | Navy's emails and conduct (notably the 19 Feb exchange) showed forbearance and the Navy knew DCX continued performance, so waiver occurred | Navy says there was no forbearance: no agreed extension/consideration, CO promptly issued show-cause, and termination followed; disputed facts preclude waiver finding | Denied: DCX did not prove the two De Vito elements (forebearance and known contractor reliance); no waiver shown |
| Whether there was "forbearance" by the government after the 15 Feb due date | DCX relies on contract specialist's 19 Feb email as indicating forbearance | Navy points to the 5 Mar show-cause letter that explicitly preserved rights and sought excuses, showing no forbearance | Held for Navy: record lacks evidence of circumstances indicating forbearance |
| Whether DCX continued performance in reliance with government's knowledge and consent | DCX claims supplies were manufactured/ready and continued work with Navy awareness | Navy notes DCX's communications only projected future ship dates and do not show actual continued performance or Navy consent | Held for Navy: insufficient evidence that DCX continued performance with government knowledge/consent |
| Whether summary judgment was appropriate | DCX argues no genuine issue of material fact and is entitled to judgment as a matter of law | Navy argues disputed material facts exist and DCX failed to show elements of waiver | Held: Summary judgment denied; DCX failed to meet its burden under Rule 56 and controlling precedent |
Key Cases Cited
- De Vito v. United States, 413 F.2d 1147 (Ct. Cl. 1969) (sets two-element test for government waiver of default: forbearance and contractor reliance/continued performance with knowledge)
- Switlik Parachute Co. v. United States, 573 F.2d 1228 (Ct. Cl. 1978) (addresses scope of forbearance and evidence needed to infer waiver)
- Celotex Corp. v. Catrett, 477 U.S. 317 (1986) (summary judgment burden-shifting principles)
- Mingus Constructors, Inc. v. United States, 812 F.2d 1387 (Fed. Cir. 1987) (contractor bears burden to show entitlement to summary judgment in bid/procurement context)