Seven Seas Shipchandlers LLC
ASBCA No. 60602
| A.S.B.C.A. | Oct 25, 2016Background
- Seven Seas Shipchandlers (appellant) performed five firm‑fixed‑price supply contracts for Kandahar Air Field in 2009 and submitted invoices in June 2009.
- The government’s payment office disbursed the contract funds in Afghan cash to a third party (Muhammad Qahir); the money never reached Seven Seas and was later treated as stolen.
- Seven Seas filed certified CDA claims after asserting it was not paid; the contracting officer denied them; the Board (Seven Seas I) later sustained those appeals and awarded $240,579.90 plus CDA interest.
- Because the parties disputed whether Seven Seas had already been paid (government argued apparent authority of Qahir), payment was delayed and the dispute ripened into CDA litigation that lasted years.
- After the Board decision, the government paid the principal plus CDA interest in December 2015; Seven Seas then submitted a separate claim for Prompt Payment Act (PPA) interest and sought additional PPA interest, including on CDA interest and for an extended accrual period.
- The contracting officer issued no final decision on the PPA claim; Seven Seas appealed to the ASBCA, which considered whether the PPA exception for disputes barred PPA interest.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether PPA interest is due when payment delay resulted from a dispute over payment amount | Seven Seas: PPA requires interest from 30 days after invoice; this was an undisputed amount not paid | Gov: PPA excludes interest when delay is due to a dispute over payment amount or contract compliance | Held: Delay was caused by a dispute over amount (who bore theft risk); PPA exception applies; no PPA interest due |
| Whether PPA interest may accrue beyond the date a CDA claim was filed or for more than one year | Seven Seas: sought PPA interest from June 2009 and continuing beyond payment date, including interest on CDA interest | Gov: PPA statutorily limits accrual to date CDA claim filed or one year max | Held: PPA limits accrual to CDA‑claim date or one year; Seven Seas cannot accrue the extended amount claimed |
| Whether ambiguous statutory language requires construing PPA against the government | Seven Seas: invoked canons (cites Heth, Mesa Air) to argue ambiguity and contra‑government construction | Gov: cited statutory text, regs, and fact pattern showing dispute exception controls; cited cases inapposite | Held: Court found cases cited inapposite; PPA interpretation clear here—no ambiguity supporting plaintiff |
| Whether government acted in bad faith by delaying payment processing after Board decision | Seven Seas: alleged bad faith for 8‑month delay and failure to pay PPA interest | Gov: refusal to pay PPA interest was lawful; government paid CDA interest to compensate processing time | Held: No bad faith; refusal lawful under PPA exception and CDA interest provided compensation |
Key Cases Cited
- United States v. Heth, 7 U.S. (3 Cranch) 399 (1806) (addressed retroactivity; court found it inapposite to PPA interpretation)
- Mesa Air Group, Inc. v. Dep’t of Transportation, 87 F.3d 498 (D.C. Cir. 1996) (concerned contract/regulatory status of subsidy agreements; court found it inapposite here)
Outcome: Appeal denied; Seven Seas not entitled to PPA interest.