Decker & Co. v. West

• Decision Date: 21 February 1996
• Docket Number: No. 94-1409,94-1409
• Citation: 76 F.3d 1573
• Parties: 40 Cont.Cas.Fed. (CCH) P 76,887 DECKER & CO., Appellant, v. Togo D. WEST, Jr. Secretary of the Army, Appellee.
• Court: U.S. Court of Appeals — Federal Circuit

Page 1573

76 F.3d 1573

40 Cont.Cas.Fed. (CCH) P 76,887

DECKER & CO., Appellant, v. Togo D. WEST, Jr. Secretary of the Army, Appellee.

No. 94-1409.

United States Court of Appeals, Federal Circuit.

Feb. 21, 1996.

John R. Keys, Jr., Winston & Strawn, of Washington, DC, argued for appellant. Of counsel was Robert A. Berger.

Luis M. Matos, Attorney, Commercial Litigation Branch, Department of Justice, of Washington, DC, argued for appellee. With him on the brief were Frank W. Hunger, Assistant Attorney General, David M. Cohen, Director and Jeanne E. Davidson, Assistant Director. Also on the brief was Major Robert B. Lloyd, Jr., U.S. Department of the Army, of counsel.

Before PLAGER, RADER, and SCHALL, Circuit Judges.

PLAGER, Circuit Judge.

This is one of those messy government contract dispute cases in which, during the performance of the contract, neither of the parties acquitted themselves with pure grace. Working through the detailed record of such a case causes one to understand better the ancient curse of a plague o' both their houses. See William Shakespeare, Romeo and Juliet, act 3, sc. 1. ¹ Nevertheless, since the parties could not resolve their dispute, we must. The Army and Decker & Co. ("Decker") had a construction contract which the Army eventually terminated for failure to meet the completion date specified in a later modification to the contract. The Armed Services Board of Contract Appeals ("Board") upheld the Army's decision. Decker & Co. GmbH, ASBCA No. 41,089, 94-2 B.C.A. p 26,759, 1994 WL 85753 (1994). Decker appeals that decision. Decker also appeals the Board's finding that, despite what appeared to be a final notice of payment, it was not too late for certain deductions to be made by the Army from Decker's final invoice. The Government meanwhile challenges the Board's determination that it can hear an otherwise untimely appeal of the default termination merely because there was a defect in the Contracting Officer's notice of termination, and contends that there must be detrimental reliance by the contractor on the defect.

BACKGROUND

On November 5, 1986, the Army awarded Decker Contract No. DAJA76-87-C-0094 to renovate a building at McCully Barracks in There were problems from the start, beginning with the fact that the building was occupied and would be unavailable for work until sometime the following year. This led to the first of four modifications to the contract over the next 18 months; this first modification set the work, and the clock, to begin on April 1, 1987, when the building would no longer be occupied, and provided for an additional 30 days to be added to the work period (now six months). The new completion date was thus September 28, 1987.

                Wackernheim, Germany.   The original contract called for completion within 150 days (five months) of the notice to proceed.   The contract contained the usual plethora of boilerplate clauses as required by the Federal Acquisition Regulations, including clauses dealing with handling of disputes, up to and including termination for default.   The contract also contained a liquidated damages clause, triggered by failure to complete the work on time
                

On April 1, 1987, the Army told Decker that it would be requiring changes to the scope of work and that a new modification and corresponding work plans would issue to reflect those changes. During the next several months, the parties exchanged letters addressing what work could be done on the project pending Mod # 2's issuance. Decker apparently suspended much of the work pending issuance of Mod # 2, even though the Army urged Decker to continue all work unaffected by the scope of the planned modification.

Mod # 2 issued on September 18, 1987, and included a new completion date of January 21, 1988. A month later the Army wrote to Decker concerning the fact that Decker had not provided a performance schedule or work plan and had not staffed the project sufficiently in light of the hearing completion date and the considerable amount of work remaining on the project. The Army indicated that it would request a "cure notice" unless Decker provided its performance schedule within four days. ²

January 21 came and went. On January 25, 1988, the Army issued Mod # 3. This modification extended the completion date to February 10, 1988, in order to allow further time for the development of yet another modification addressing certain changes suggested by Decker. Although the parties had agreed on a price increase to reflect these proposed changes, they had not agreed on a new date for completion of the work. Decker insisted that 120 more days, or two-thirds of the original performance period, were needed, given that it had only completed about 35% of the project. The February 10 deadline passed without completion of the project or issuance of the modification. While negotiations were ongoing, the Army wrote to Decker on February 4, March 9, and May 5 regarding Decker's continued lack of progress and inadequate staffing, urging it to complete as much work as possible pending the modification and specifying work on the exterior of the building and other work that could be completed in the meantime. The May 5 letter stated that the Army would request a cure notice if it did not see more work being done.

Based on estimates from its Engineering Department, the Army determined that 50 days was sufficient to complete the project, including the proposed changes. Decker continued to insist on 120 days. Finally, on May 17, 1988, the Army issued the modification (Mod # 4) as a unilateral Change Order that specified the changes required and a corresponding price increase and set a new performance deadline of July 6, 1988, 50 days hence. This date was now a year and eight months from the date of the original contract of November 5, 1986.

Following issuance of Mod # 4, the Army continued to write to Decker concerning its low staffing and lack of progress on the project, emphasizing that timely completion of the project was critical and seeking Decker's new work performance plan. By the On August 3, 1988, approximately 21 months from the original issuance of this five month construction contract, the Contracting Officer issued a decision terminating Decker for default, citing Decker's failure to complete the project by July 6, 1988, or to increase manpower on the site despite repeated instructions to do so. The decision was a so-called 'pure' default termination because it did not mention monetary issues, such as liquidated damages, contractor costs to date, or other such items. The decision stated that Decker could appeal to the Board within 90 days, or, alternatively, to the Court of Federal Claims within 12 months. At the time the notice was issued, however, the Court of Federal Claims did not possess jurisdiction over 'pure' default terminations under the Tucker Act, 28 U.S.C. § 1491. Overall Roofing & Constr., Inc. v. United States, 929 F.2d 687 (Fed.Cir.1991). Thus the notice incorrectly advised Decker that it could appeal to the Court of Federal Claims within one year. ³

                July 6 deadline, Decker had completed only 50 percent of the project.   In a letter dated July 14, 1988, the Army informed Decker that it would collect liquidated damages under the contract for each day the project was not complete
                

A few months later, on November 12, 1988, Decker submitted an invoice for the work it had completed on the project. On January 11, 1989, two representatives of Decker met with the Army's Inspector, a Mr. Salsal, and Contracting Officer Representative Wilson, for an on-site inspection to determine the percentage of completion for the items listed in the invoice. Decker revised its final invoice to reflect the percentages agreed during this inspection, and resubmitted the invoice on January 12. On January 31, 1989, a Contracting Officer on the project, Mr. Stephen Kandul, sent a preliminary assessment of liquidated damages to Decker, stating that DM 56.000,00 would be withheld from the final invoice and that "payment of the balance, DM 215,630.66 [sic] will be made." The letter gave Decker 30 days to submit a written statement of "mitigating circumstances that precluded performance on your part." That same day, Mr. Kandul sent a memo to the Army's Finance Group requesting payment on Decker's invoice, less the liquidated damages. Neither the record nor the briefs indicate that Decker submitted any statement of mitigating circumstances.

Thus ended Decker's efforts at construction, but not Decker's efforts to receive more compensation than the Government was prepared to pay. On February 20, 1989, Decker submitted a certified claim to the Army which included its final invoice in full, along with several other cost claims not presently at issue. A month after Decker was sent the letter advising that it would be paid the DM 215.630,66 Mr. Kandul requested that the Finance Group stop payment on Decker's final invoice, citing "[m]ajor discrepancies ... discovered in the amount of work actually completed." On April 14, 1989, another CO, Ms. Victoria Busch, wrote to Decker indicating that the stop payment was being lifted, but that in addition to the deduction for liquidated damages as previously stated there would be a further deduction of DM 75.817,27 for "items for which [the Army] did not receive the services and items that were charged at the wrong percentage of completion." Ms. Busch issued a memo that same day to the Finance Group withdrawing the previous stop payment request and authorizing payment of the balance, DM 139.813,39, to Decker.

On May 31, 1989, the Army denied Decker's February 20, 1989 certified claim, except to note that the final invoice would be paid to the extent indicated in its April 14 letter. The letter did not state or otherwise indicate that it was a final decision, however, and the Army did not issue any subsequent final decision on these claims. Subsequently, on June 5, 1990,...