Appeals of -- Mission1st Group, Inc.
ASBCA Nos. 62461, 62646
ARMED SERVICES BOARD OF CONTRACT APPEALS
August 16, 2021
Under Contract No. W52P1J-13-F-0031
Joshuah R. Turner, Esq.
Elizabeth J. Cappiello, Esq.
Jason N. Workmaster, Esq.
Miller & Chevalier Chartered
Washington, DC
APPEARANCES FOR THE GOVERNMENT:
Scott N. Flesch, Esq.
Army Chief Trial Attorney
Zachary F. Jacobson, Esq.
Trial Attorney
OPINION BY ADMINISTRATIVE JUDGE D‘ALESSANDRIS
In September 2013, the Army Contracting Command – Rock Island Arsenal (Army or government) awarded appellant, Mission1st Group, Inc. (M1), a task order against M1‘s General Services Administration (GSA) Information Technology (IT) Schedule 70 Contract. The task order provided for a base period and, pursuant to
M1 contends that the Army improperly exercised the option to extend services out-of-sequence, entitling it to a contractual price adjustment. According to M1, the option to extend services is really an option period 3 that can only be exercised following oрtion periods 1-2. Additionally, M1 argues that the Army‘s exercise of the
FINDINGS OF FACT
The Army Contracting Command – Rock Island Arsenal awarded Task Order No. W52P1J-13-F-0031 to Mission1st Group, Inc. on September 24, 2013, for Network and Communications, Engineering and Installation Support pursuant to M1‘s GSA IT Schedule 70 Contract No. GS35F0199Y, Special Item No. 132 51, IT Professional Services contract (R4, tab 1 at 1, 4).1 Under the task order, M1 provided theater communications and networking infrastructure and subjеct matter experts to perform project management and information assurance in support of the Army primarily in Afghanistan and Kuwait (R4, tab 1 at 4).
The Army awarded the task order as a firm-fixed price contract, with some contract line items (CLINs) such as overtime and travel paid at cost (id.). The task order provided:
This is a Firm-Fixed Price (FFP) task order with a base period and three evaluated option periods.
Base Period: 24 September 2013 to 23 June 2014
Option Period One: 24 June 2014 to 23 March 2015
Option Period Two: 24 March 2015 to 23 December 2015
Option to Extend Services: Six Month Maximum to be completed no later than 23 June 2016
(Id.). The performance work statement “Period of Performance” provides that there is a nine-month base period and “two (2) nine (9) month options” (R4, tab 2 at 51). The prices proposed by M1 and accepted by the Army included $5,355,900.79 for the nine-month base period (R4, tab 1 at 4). The Army also accepted M1‘s proposed prices for two nine-month option periods, priced at $5,382,254.68 and $5,417,880.85,
Noting that M1‘s price quote offered a significant discount from the approved GSA Schedule rates, the contracting officer noted that M1 had expressly indicated in its quote that the discount was intentional, and determined that M1‘s quote was still responsible (gov‘t supp. R4, tab 7 at 1-3). The task order‘s clause addendum included the following standard clauses from the FAR:
52.217-8, OPTION TO EXTEND SERVICES (NOV 1999)
The Government mаy require continued performance of any services within the limits and at the rates specified in the contract. These rates may be adjusted only as a result of revisions to prevailing labor rates provided by the Secretary of Labor. The option provision may be exercised more than once, but the total extension of performance hereunder shall not exceed 6 months. The Contracting Officer may exercise the option by written noticе to the Contractor within 90 days before the expiration of the contract.2
(End of Clause)
52.217-9, OPTION TO EXTEND THE TERM OF THE CONTRACT (MAR 2000)
(a) The Government may extend the term of this contract by written notice to the Contractor within the term of the contract prior to contract expiration; provided that the Government gives the Contractor a preliminary written notice of its intent to extend at least 90 days before the contract expires. The preliminary notice does not commit the Government to an extension.
(b) If the Government exercises this option, the extended contract shall be considered to include this option clause. (c) The total duration of this contract, including the exercise of any options under this clause, shall not exceed 33 months.3
(End of Clause)
(R4, tab 3 at 123)
On March 25, 2014,4 91 days prior to the end of the base period of performance, the Army provided M1 with its notice of intent to exercise the first option period in accordance with the terms and conditions of the сontract and
The government offered M1 a draft partial option period for the task order on June 10, 2014, which, if executed, would have only required M1 to perform for three-months, rather than the full nine-months contained in the contractual option period (gov‘t supp. R4, tab 4 at 1). Having received no comments from M1, the government followed-up with M1 on June 17, 2020 (R4, tab 19 at 760). In response, M1 asserted that
M1 described the additional “consequences” for the government of implementing a modification without repricing or agreed termination at the end of the three-mоnths, such as a reduction in the level of service and performance due to salary cuts of its personnel (id. at 764). On June 19, 2014, two days after receiving appellant‘s letter, the government notified M1 that it was exercising its Option to Extend Services for the task order (R4, tab 20).
On June 23, 2014, the government executed Modification No. P00009 in writing to exercise a three-month option period pursuant to contract clause
Effective July 16, 2014, the government and M1 bilaterally signed Modification No. P00010, which stated that all othеr terms and conditions remained unchanged (R4, tab 25 at 1). Effective August 22, 2014, the government and M1 bilaterally signed Modification No. P00011, under which the government exercised its Option to Extend Services for the remaining three-months, that stated:
9. The total contract value and the total funded value for the Option to Extend Services period are hereby changed from $2,149,591.00 to $4,087,141.03, a total increase of $1,937,550.03.
10. The total contract value and the total funded value for this task order are hereby changed from $7,915,976.49 to $9,853,526.52, a total increase of $1,937,550.03.
11. All other terms and conditions remain unchanged.
(R4, tab 27 at 846, 848-49)
7. The total contract value and the total funded value for the Option to Extend Services period are hereby changed from $4,087,141.03 to $4,133,723.10, a total increase of $46,582.07.
8. The total contract value and the total funded value for this task order are hereby changed from $9,853,526.52 to $9,900,108.59, a total increase of $46,582.07.
9. All other terms and conditions remain unchanged.
(R4, tab 30 at 961, 1011)
On June 24, 2019, M1 filed a certified claim in the amount of $3,694,336.73, asserting that the government improperly exercised its option to extend services, and as a result, it is entitled to excess incurred costs and a reasonable profit (R4, tab 31 at 1018). On March 5, 2020, the contracting officer denied M1‘s claim (R4, tab 32). On June 3, 2020, M1 filed a certified claim with the GSA requesting a final decision on the same matter currently before the Board (gov‘t supp. R4, tab 8). On June 3, 2020, M1 also filed a second сertified claim with the contracting officer, stating that it had already appealed the March 5, 2020 final decision to the Board, and that it believed that the Board possessed jurisdiction to entertain both counts of its complaint, but was submitting a new claim out of an abundance of caution (gov‘t supp. R4, tab 9). M1 appealed to the Board from the purported deemed denial of its June 3, 2020 claim.5
DECISION
By request of the parties, this appeal is being decided pursuant to Board Rule 11, “Submission Without a Hearing.” Unlike a motion for summary judgment, which must be adjudicated on the basis of a set of undisputed facts, pursuant to Board Rule 11, the Board “may make findings of fact on disputed facts.” Grumman Aerospace Corp., ASBCA No. 35185, 92-3 BCA ¶ 25,059 at 124,886 n.13 (Kienlen, J. dissenting).
M1 asserts that the government improperly exercised the option to extend performance out of order, thus entitling it to a contractual adjustment (app. br. at 8). Alternatively, M1 asserts that the government did not provide it with the contractually required notice, thus, entitling it to а contractual adjustment (app. br. at 9).
The task order clause describing the relevant options provides:
This is a Firm-Fixed Price (FFP) task order with a base period and three evaluated option periods.
Base Period: 24 September 2013 to 23 June 2014
Option Period One: 24 June 2014 to 23 March 2015
Option Period Two: 24 March 2015 to 23 December 2015
Option to Extend Services: Six Month Maximum to be completed no later than 23 June 2016
(R4, tab 1 at 4). Based upon the location of the option tо extend services, below option periods one and two, and the reference to three option periods, M1 contends that the option to extend services should be interpreted as being, in reality, option period three. M1 additionally cites to the end of the performance period for option period three of June 23, 2016, as evidence that the option to extend services was to be exercised following option period two, which had a performance period ending on December 23, 2015. (app. br. at 8).
In Glasgow Investigative Solutions, Inc., ASBCA No. 58111, 13-1 BCA ¶ 35,286 at 173,175-76, we held that the option to extend services pursuant to
M1 relies upon the holding of the United States Court of Appeals for the Federal Circuit in Lockheed Martin Corp. v. Walker, 149 F.3d 1377 (Fed. Cir. 1998). In Lockheed, the contract provided for a series of options that were to be exercised according to a schedule providing set periods of time for each option. The government exercised the option at CLIN 0006 to be exercised within 8-18 months after award, without first exercising the option at CLIN 0005, which was to be exercised within 8 months of award. Id. at 1378-79. The Federal Circuit held that the government had improperly exercised the options out of sequence based upon its reading of the contract
II. The Army Properly Exercised The Option For Extension Of Services Within 90 Days Of The End Of The Contract
M1 contends that, even if the Army were permitted to exercise the option to extend services without first exercising the contract options, the Army did not provide notice in accordance with the contract (app. br. at 9). As noted above, the contract provides that “[t]he Contracting Officer may exercise the option by written notice to the Contractor within 90 days before the expiration of the contract”6 (R4, tab 3 at 123) (emphasis added). The base period of the contract expired on June 23, 2014 (R4, tab 1 at 4). The government notified M1 that it was exercising its Option to Extend Services for the task order on June 19, 2014 – four days before expiration of the contract (R4, tab 20). On June 23, 2014 – the last day of the base period of the contract – the government executed Modification No. P00009 to exercise three-months of the Option to Extend Services (R4, tab 22). M1 contends that the Army‘s exеrcise of the option was untimely because “within 90 days before the expiration of the contract” means that the Army was required to exercise the option “prior to or on the 90th day before the contract expired” (app. br. at 9). M1 additionally contends that “within” should be read as “at least” (app. resp. at 6).
We interpret the contract based on the plain meaning of the words in their ordinary use. See, e.g., Access Personnel Ser., Inc., ASBCA No. 59900, 17-1 BCA ¶ 36,845 at 179,534. Here, the word “within” means “inside the range of (аn area or boundary) . . . occurring inside (a particular period of time)“. NEW OXFORD AMERICAN DICTIONARY 1985 (3d ed. 2010). Clearly, the government exercised the option “inside” the 90 day period of time before the end of the contract. Accordingly, we hold that the government properly exercised the option to extend services.
III. Even If The Army Had Not Properly Exercised The Extension Of Services, M1 Waived Any Potential Claim Through The Subsequent Bilateral7 Modifications
As an alternative basis, the government argues that, even if its exercise of the option to extend services was deficient, that M1 waived its claim by agreeing to bilateral Modification Nos. P00010, P00011, and P000128 (gov‘t br. at 16-17). The government argues that by agreeing to continue performance, with all terms and conditions remaining unchanged, M1 waived its rights to object (id.). The government analogizes M1‘s actions to that of a contractor agreeing to a new delivery schedule and waiving the right to raise pre-existing causes of delay (id. at 17). M1 contends that it did not waive any rights and that it waived, at most, its right to stop performing the contract (app. resp. at 7).
The government argues that M1 waived its claim by agreeing to the bilateral modifications. However, waiver occurs when the parties to a contract accept modified performance without changing the terms of the written contract. Here, the parties
M1 signed a bilateral modification (Modification No. 11), that extended the option period and modified the value of the option period, while providing that all other terms and conditions remained the same. “The total contract value and the total funded value for the Option to Extend Services period are hereby changed from $2,149,591 to $4,087,141.03, a total increase of $1,937,550.03” (R4, tab 27 at 849). The original amount of $2,149,591 cited in Modification No. 11 was the amount of the option to extend services in Modification No. 9 – the modification being challenged by M1 (R4, tab 22 at 768). Thus, in Modification No. 11, M1 agreed to perform the option to extend services for a price of $4,087,141.03 and that amount included performance of the option to extend services during the period covered by Modification No. 9. Therefore, giving effect to the clear and unambiguous language of the modification, M1 agreed to perform the entire option to extend services from June 24, 2014 to December 23, 2014, including the period of June 24, 2014 to September 23, 2014 covered by Modification No. 9, for $4,087,141.03. This constitutes an agreement resolving M1‘s dispute regarding the exercise of the option to extend services, and its attempt to reprice its performance of the option. Similarly, in Modification No. 12, M1 agreed to add a logistician position and agreed to a price for performance of the option to extend services from June 24, 2014 to December 23, 2014 (R4, tab 30 at 1011).
M1 cites to the Board‘s holding in Alutiiq Commercial Enterprises, LLC, 20-1 BCA ¶ 37,506, for the proposition that, at most, M1 waived its right to object to the exercise of the option, but that it did not waive the right to seek additional compensation (app. resp. at 7). According to M1, “the modifications at issue should not be ‘purport[ed] to resolve’ anything outside the scope of their plain language, particularly not the waiver оf a right to file a claim” (id.) (quoting Alutiiq, 20-1 BCA ¶ 37,506 at 182,199). While we agree with M1 that a modification only resolves the issues within the scope of the plain language of the modification, here, Modification
CONCLUSION
For the reasons stated above M1‘s appeals are denied.
Dated: August 16, 2021
DAVID D‘ALESSANDRIS
Administrative Judge
Armed Services Board of Contract Appeals
I concur
RICHARD SHACKLEFORD
Administrative Judge
Acting Chairman
Armed Services Board of Contract Appeals
I concur
OWEN C. WILSON
Administrative Judge
Vice Chairman
Armed Services Board of Contract Appeals
Dated: August 17, 2021
PAULLA K. GATES-LEWIS
Recorder, Armed Services Board of Contract Appeals