Securiforce Int'l Am., LLC v. United States
| Decision Date | 21 March 2016 |
| Docket Number | No. 12-759C,12-759C |
| Parties | SECURIFORCE INTERNATIONAL AMERICA, LLC, Plaintiff, v. UNITED STATES, Defendant. |
| Court | Court of Federal Claims |
Motion to Dismiss; Subject Matter Jurisdiction; Trial; Contract Disputes Act; Termination for Convenience; Termination for Cause; Breach of Contract; Abuse of Discretion; Bad Faith.
Frederick W. Claybrook, Jr., Crowell & Moring LLP, Washington, D.C., for plaintiff. With him were Gordon N. Griffin and Mary M. Gilbert, Crowell & Moring LLP, Washington, D.C., and Robert J. Wagman, Jr., Kaye Scholer LLP, Washington, D.C.
Russell James Upton, Trial Attorney, Commercial Litigation Branch, Civil Division, Department of Justice, Washington D.C., for defendant. With him were Kirk T. Manhardt, Deputy Director, Robert E. Kirschman, Jr., Director, Commercial Litigation Branch, and Benjamin C. Mizer, Principal Deputy Assistant Attorney General, Civil Division, Department of Justice, Washington, D.C. Of counsel were Jeffrey M. Lowry, Trial Attorney, Commercial Litigation Branch, Civil Division, Department of Justice, Washington D.C. and Jill Rodriguez, Assistant Counsel, DLA Counsel-Energy, Ft. Belvoir, VA.
Plaintiff, Securiforce International America, LLC (Securiforce),1 was awarded a contract by the Department of Defense Logistics Agency Energy (DLA Energy) to deliver diesel fuel and commercial specification motor gasoline to eight United States Department of State (DoS) sites in Iraq. These sites included Basrah, Umm Qasar, Embassy Baghdad, Besamaya, Sather, Shield, Taji, and Prosperity. Within three months of the award, however, the contract was partially terminated for the government's convenience. Subsequently, the remaining portions of the contract were terminated for cause. Following the terminations, plaintiff filed its complaint in this court challenging both of defendant's termination decisions.
Prior to the contract award to Securiforce, on September 29, 2010, DLA Energy issued solicitation number SP0600-10-R-0241 (the solicitation), which sought a contractor to procure and deliver fuel to Department of Defense (DoD) sites in Iraq. On November 3, 2010, DLA Energy issued Amendment 003, which amended the solicitation in order to add and correct certain clauses and "answer questions received in accordance with Amendment 001." Securiforce submitted its bid on November 10, 2010 for all the Contract Line Item Numbers (CLINs) contained in the DoD fuel solicitation, as modified by Amendment 003. On May 3, 2011, more than five months after Securiforce submitted its bid in response to the DoD fuel solicitation, DLA Energy issued Amendment 0005 to the solicitation, which updated some clauses in the solicitation and added separate, additional CLINs to provide fuel to Department of State (DoS) sites in Iraq. On May 30, 2011, Securiforce submitted its bid for the DoS CLINs added in Amendment 0005. Securiforce received a letter from DLA Energy on July 27, 2011, stating that it was not being awarded any of the initial DoD CLINs, as amended by Amendment 0003, for the delivery of fuel to DoD locations. Between August 9, 2011 and August 17, 2011, DLA Energy entered into discussions with Securiforce and other offerors regarding the DoS CLINs that had been added in Amendment 0005. Subsequently, on September 7, 2011, DLA Energy awarded a contract to Securiforce, SP0600-11-D-1022 (the contract), for the delivery of diesel fuel and commercial specification motor gasoline (MOGAS, a/k/a gasoline) from Kuwait to eight DoS sites in Iraq, including Basrah, Umm Qasar, EmbassyBaghdad, Besamaya, Sather, Shield, Taji, and Prosperity. Securiforce's Chief Executive Officer, Stephen Brierley2 signed the contract for Securiforce on September 9, 2011.
The contract was a commercial-item, requirements contract. The contract included a termination for convenience clause:
TERMINATION FOR THE GOVERNMENT'S CONVENIENCE. The Government reserves the right to terminate this contract, or any part thereof, for its sole convenience. In the event of such termination, the Contractor shall immediately stop all work hereunder and shall immediately cause any and all of its suppliers and subcontractors to cease work. Subject to the terms and conditions of this contract, the Contractor shall be paid a percentage of the contract price reflecting the percentage of the work performed prior to the notice of termination, plus reasonable charges the Contractor can demonstrate to the satisfaction of the Government using its standard record keeping system, have resulted from the termination. The Contractor shall not be required to comply with the cost accounting standards or contract cost principles for this purpose. This paragraph does not give the Government any right to audit the Contractor's records. The Contractor shall not be paid for any work performed or costs incurred which reasonably could have been avoided.
(capitalization and emphasis in original).
On or around August 29, 2011, prior to awarding the contract for DoS sites to Securiforce, DLA Energy began to draft a document intended to waive a requirement ofthe Trade Agreements Act of 1979 (TAA Waiver), 19 U.S.C. §§ 2501-2582 (2012), which dictates, generally, that when a government contract for goods exceeds a certain dollar threshold ($191,000.00), the government may only acquire goods made in the United States or in other, specified designated countries.3 Under the statute, without such a waiver, DLA Energy would not be able to contract with Securiforce for fuel to the DoS sites because Securiforce intended to procure the fuel from Kuwait and sell it to the United States government.4 The parties disagree as to the timing of when the TAA waiver was drafted. Plaintiff suggests that the waiver justification for six of its eight sites was drafted and approved before the contract was even issued. Plaintiff also claims that defendant never intended to allow Securiforce to perform the contract as it was awarded. Defendant disagrees and states that while the waiver was initially drafted before the contract was awarded, it was not until after the contract had been awarded that the agency identified a deficiency in the waiver and revised the waiver to cover only six of plaintiff's eight awarded DoS sites.
According to trial testimony in the record, typically, when a TAA waiver is required a routing form and staff summary sheet are circulated within the agency and various individuals indicate that they have reviewed the documents, making note of any comments. If changes are made to the underlying waiver, the changes would be noted or the process may have to start over with a new routing form. In this case, the TAA waiver document began circulating in the office on September 6, 2011. The contract was awarded on September 7, 2011. Then, on September 8, 2011, DLA Energy counsel, Kay Bushman, identified, for the first time, that there was a problem with the waiver. The director of DLA Energy only possessed authority to sign a waiver for goods utilized by the Department of Defense, but the sites awarded to Securiforce were being operated by the Department of State, which would be using the fuel delivered by Securiforce. As of September 8, 2011, when the problem was identified, DLA Energy believed that a waiver would have to be submitted to the United States Trade Representative and processed through the Defense Procurement Acquisitions Policy (DPAP) process in order to cover the DoS sites, or Securiforce's CLINs would have to be terminated and re-awarded to another contractor. Kathryn Fantasia, then Director of the Direct Delivery Fuels Business Unit at DLA Energy who is now retired, testified that she understood those two options to be the agency's choices—terminate for convenience Securiforce's entire contract or try to process a waiver from the United States Trade Representative through DPAP. Mr. Reeves testified that he was told by Division Chief and Contracting Officer (contractingofficer) Sandra Shepherd that the TAA could not be waived for the sites Securiforce had been awarded.
Subsequently, DLA Energy came to understand that the Office of Security Cooperation-Iraq (OSC-I), which is part of the DoD, was present at six of Securiforce's eight assigned locations. DLA Energy, therefore, thought that it could execute a TAA waiver for those six sites, avoid the DPAP waiver process, and also avoid terminating Securiforce's entire contract. DLA Energy determined that it would need to terminate only the CLINs for the delivery of fuel to two of Securiforce's sites, Embassy Baghdad (one CLIN) and Prosperity (two CLINs), which did not have a DoD presence. According to trial testimony, DLA Energy, therefore, revised the TAA waiver and accompanying documents so that it was drafted to cover the remaining six of Securiforce's eight DoS sites with apparent DoD presence. The six remaining sites were Basrah, Umm Qasar, Besamaya, Sather, Shield, and Taji. The government, however, apparently did not create a new routing form to accompany the revised waiver. Consequently, there is scant documentation of the actual timing for the waiver's approval. Nonetheless, Patrick Dulin, who served as the Deputy Director and Acting Commander of DLA Energy during the time period at issue in the above-captioned case, testified at trial that he signed the waiver on September 14, 2011. E-mail documentation and trial testimony supports the government's claim that its lack of authority to sign a waiver for sites without a DoD presence was not discovered until after the contract was awarded on September 7, 2011. As of September 9, 2011, when Mr. Brierley signed the contract, DLA Energy still was determining its best course of action and deciding whether to pursue a TAA waiver or terminate the contract for convenience.
On September 20, 2011, DLA Energy sent Securiforce a proposed, bilateral modification to its contract to terminate for convenience...
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