Case: 19-1692     Document: 41    Page: 1   Filed: 05/29/2020




   United States Court of Appeals
       for the Federal Circuit
                  ______________________

           COOPER/PORTS AMERICA, LLC,
                    Appellant

                             v.

                SECRETARY OF DEFENSE,
                         Appellee
                  ______________________

                        2019-1692
                  ______________________

     Appeal from the Armed Services Board of Contract Ap-
 peals in Nos. 61348, 61351, 61536, 61537, Administrative
 Judge James R. Sweet, Administrative Judge Owen C. Wil-
 son, Administrative Judge Richard Shackleford.
                  ______________________

                  Decided: May 29, 2020
                  ______________________

     ANDREW M. GROSSMAN, Baker & Hostetler LLP, Wash-
 ington, DC, argued for appellant. Also represented by
 WILLIAM BARRON ARBUTHNOT AVERY.

     KELLY A. KRYSTYNIAK, Commercial Litigation Branch,
 Civil Division, United States Department of Justice, Wash-
 ington, DC, argued for appellee. Also represented by
 ANTHONY F. SCHIAVETTI, JOSEPH H. HUNT, ROBERT
 EDWARD KIRSCHMAN, JR., PATRICIA M. MCCARTHY; JEFFREY
 P. HILDEBRANT, CARYL A. POTTER, III, DANIELLE RUNYAN,
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 2       COOPER/PORTS AMERICA, LLC v. SECRETARY OF DEFENSE




 Air Force Legal Operations Agency, Joint Base Andrews,
 MD.
                 ______________________

     Before DYK, TARANTO, and CHEN, Circuit Judges.
 DYK, Circuit Judge.
     Cooper/Ports America LLC (“CPA”) provided stevedor-
 ing and related terminal services to the government under
 a contract dated January 28, 2015. CPA submitted a claim
 that the government failed to provide a timely preliminary
 written notice of intent to exercise the government’s option
 to extend the parties’ contract, and that the subsequent op-
 tion exercise was ineffective. The claim was denied by a
 contracting officer, and CPA appealed before the Armed
 Services Board of Contracts Appeals (“Board”). The Board
 held that the government satisfied the preliminary written
 notice requirement. We affirm.
                        BACKGROUND
     In January 2015, CPA’s predecessor-in-interest, Ship-
 pers Stevedoring Co. (“SSC”), was awarded a contract from
 the United States Transportation Command, a component
 of the Department of Defense. The United States Trans-
 portation Command supports military transportation to
 other commands and government organizations. The con-
 tract required SSC to provide stevedoring and related ter-
 minal services along the Eastern Seaboard of the United
 States, including Charleston, South Carolina (“the
 Charleston contract,” HTC711-15-D-R036). SSC was sep-
 arately awarded a contract covering the Gulf region (“the
 Beaumont contract,” HTC711-15-D-R037).          Only the
 Charleston contract is at issue in this appeal.
     The original Charleston contract executed by SSC in-
 corporated a Federal Acquisition Regulation (“FAR”) provi-
 sion (section 52.217-9) that gave the government options to
 extend the term of the agreement for up to four one-year
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 COOPER/PORTS AMERICA, LLC v. SECRETARY OF DEFENSE           3



 periods. That provision required that the government give
 CPA “a preliminary written notice of its intent to extend at
 least 60 days before the contract expire[d].” J.A. 65; see
 also 48 C.F.R. § 52.217-9 (“Option to Extend the Term of
 the Contract”). Providing such notice did not obligate the
 government to actually exercise the option. After the pre-
 liminary notice, the government was required to exercise
 the option itself within 15 days of the contract expiration
 date. Section 52.217-9 contained no language permitting
 adjustment of the contract price.
     The original contract term expired on June 30, 2016.
 On April 28, 2016, the government provided a preliminary
 written notice of its intent to exercise the first-year option
 to extend the term of the Charleston contract to June 30,
 2017. This communication was in a formal letter titled
 “Contract HTC711-15-D-R036, Preliminary Notice of In-
 tent to Exercise Option” and stated that “[i]n accordance
 with FAR [§] 52.217-9, Option to Extend the Term of the
 Contract, [SSC is] hereby given preliminary notice of the
 Government’s intent to extend the term of the contract
 through 30 June 2017.” J.A. 107. Thereafter, on June 15,
 2016, the government exercised the first-year option, ex-
 tending the contract period to June 30, 2017. If the gov-
 ernment wished to exercise its option for a second-year
 extension, it had to provide CPA a preliminary written no-
 tice of its intent by May 1, 2017, pursuant to the 60-day
 notice requirement of section 52.217-9.
     SSC’s business experienced difficulties, and this led to
 CPA’s acquisition of SSC’s assets on September 30, 2016. 1
 CPA replaced SSC as a party to the Charleston contract
 through novation and modification agreements that were
 signed on November 15, 2016, and December 19, 2016,


     1   CPA was named “Integrated Marine Services,
 LLC” when it acquired SSC’s assets. CPA changed to its
 current name in October 2016.
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 4       COOPER/PORTS AMERICA, LLC v. SECRETARY OF DEFENSE




 respectively. Similar agreements were reached with re-
 spect to the Beaumont contract.
     After CPA purchased SSC’s assets on September 30,
 2016, it began urging the government to revise the pricings
 of the Charleston and Beaumont contracts. CPA then as-
 serted that it might default on the contracts because the
 contracts’ pricings were not profitable. On January 31,
 2017, the government’s contracting officer, William Sea-
 mon, sent an email (“the January 31 email”) to CPA’s Vice
 President of Operations, Chris Lewis, stating:
     The Government intends to exercise options at
     awarded rates on contracts HTC711-15-D-R036
     [(i.e., the Charleston contract)] and HTC711-15-D-
     R037 [(i.e., the Beaumont contract)]. With this, the
     Government expects [CPA] to continue performing
     per the terms and conditions of the contract.
 J.A. 117. The question here is whether this email consti-
 tuted a preliminary written notice with respect to the
 Charleston contract.
     No such issue exists with respect to the Beaumont con-
 tract, because on February 1, 2017, Mr. Seamon sent a for-
 mal letter, stating that “[CPA was] hereby given
 preliminary notice of the Government’s intent to extend the
 term of the [Beaumont] contract through 2 April 2018.”
 J.A. 111. But it was not until May 3, 2017, that Mr. Sea-
 mon sent a formal letter to CPA concerning the Charleston
 contract, stating that “[CPA was] hereby given preliminary
 notice of the Government’s intent to extend the term of the
 [Charleston] contract through 30 June 2018.” J.A. 109.
 The May 3 letter would not have been a timely preliminary
 notice under the contract.
     On June 9, 2017, CPA responded to the May 3 letter
 and stated that the government’s preliminary written no-
 tice under section 52.217-9 was untimely because the
 May 3 letter was received after May 1, 2017. On June 13,
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 COOPER/PORTS AMERICA, LLC v. SECRETARY OF DEFENSE          5



 2017, the government pointed to the January 31 email as
 the preliminary written notice of its intent to exercise the
 second-year option, and sent a letter exercising that option.
 On June 15, 2017, CPA responded that it would “be per-
 forming the Modification [of the Charleston contract] un-
 der protest” because that contract “w[ould] expire by its
 own terms with the conclusion of the period of performance
 on June 30, 2017.” J.A. 134.
     Beginning in July 2017, CPA filed several claims with
 the government, seeking a declaration that the Charleston
 contract had expired and requesting compensation for ad-
 ditional money for its performance under protest. A con-
 tracting officer denied the claims, and CPA appealed to the
 Board. The Board granted summary judgment in favor of
 the government, holding that “the January [31] email was
 a preliminary notice of intent,” J.A. 9, and that the “email
 unambiguously, absolutely, and positively provided pre-
 liminary written notice of the government’s intent to ex-
 tend at least 60 days before the contract expired on May 1,
 2017,” J.A. 6.
     CPA appeals, and we have jurisdiction under 41 U.S.C.
 § 7107(a)(1) and 28 U.S.C. § 1295(a)(10). We review de
 novo the “the Board’s conclusions of law, including grants
 of summary judgment,” Rex Sys., Inc. v. Cohen, 224 F.3d
 1367, 1371 (Fed. Cir. 2000), and the “interpretation of a
 government contract,” Lear Siegler Servs., Inc. v.
 Rumsfeld, 457 F.3d 1262, 1266 (Fed. Cir. 2006). After oral
 argument, at our request, the parties supplemented the
 record on appeal to include additional record documents re-
 lating to communications between the parties before and
 after their January 31 email exchange.
                         DISCUSSION
     The issue in this case is whether the government’s Jan-
 uary 31 email was a “preliminary written notice” required
 by section 52.217-9. CPA argues that the January 31 email
 was ineffective for various reasons. Some of these are
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 6       COOPER/PORTS AMERICA, LLC v. SECRETARY OF DEFENSE




 without substance, such as CPA’s contentions that the no-
 tice was unclear as to whether it referred to the Charleston
 contract (it did so specifically); that the notice was ambig-
 uous as to whether it was directed to the second option year
 or a later year (there was no ambiguity); or whether it was
 ambiguous because in contrast to the earlier notice for the
 first-year option it was informal (the contract did not re-
 quire formality). We discuss below CPA’s other arguments.
     First, CPA asserts that the notice was ambiguous be-
 cause there was no way to know whether the January 31
 email referred to the one-year option under section 52.217-
 9 or the six-month option under section 52.217-8, which
 was also provided in the contract. We have recognized that
 a required notice must be unambiguous. See McCall Stock
 Farms, Inc. v. United States, 14 F.3d 1562, 1569–70 (Fed.
 Cir. 1993); see also First Commerce Corp. v. United States,
 335 F.3d 1373, 1379–80 (Fed. Cir. 2003) (holding that a
 binding agreement requires an unambiguous acceptance);
 Holly Corp., ASBCA No. 24975, 83-1 BCA ¶ 16,327, 1983
 ASBCA LEXIS 272, at *21 (“The acceptance of an option,
 to be effectual, must be unqualified, absolute, uncondi-
 tional, unequivocal, unambiguous, positive, without reser-
 vation, and according to the terms or conditions of the
 option.”). We think that a similar standard applies to the
 sufficiency of a preliminary notice of intent to exercise an
 option in that it must provide clear notice to a reasonable
 recipient.
     The sufficiency of a notice is generally considered in the
 context of the communication between the parties. Empire
 Energy Mgmt. Sys., Inc. v. Roche, 362 F.3d 1343, 1356 (Fed.
 Cir. 2004) (considering circumstances outside the notice);
 Halifax Engineering, Inc. v. United States, 915 F.2d 689,
 691 (Fed. Cir. 1990) (same); Black’s Law Dictionary (11th
 ed. 2019) (explaining that due notice is “notice that is le-
 gally adequate given the particular circumstance”).
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 COOPER/PORTS AMERICA, LLC v. SECRETARY OF DEFENSE          7



     Here, CPA claims that the notice was unclear because
 there was another option provision in the contract. In ad-
 dition to the “Option to Extend the Term of the Contract”
 by one-year extensions (section 52.217-9), the Charleston
 contract included a separate “Option to Extend Services”
 provision (section 52.217-8). This latter provision stated
 that “[t]he Government may require continued perfor-
 mance of any services . . . . The option provision may be ex-
 ercised more than once, but the total extension of
 performance hereunder shall not exceed 6 months.”
 J.A. 65; see also 48 C.F.R. § 52.217-8. In support of its
 claim, CPA asserts that Mr. Seamon (the contracting of-
 ficer) testified that the January 31 email “could be inter-
 preted as [referring to] either -9 or -8.”          J.A. 257.
 Mr. Seamon, however, was discussing the email’s language
 on its face, and stated that he believed the January 31
 email constituted a notice:
     Q: . . . [Do] you think [the January] E-mail consti-
     tutes preliminary notice of an intent to exercise an
     option on the contract?
     A: Yes.
     Q: Okay. Why is that?
     A: Because it specifically states that the govern-
     ment intends to exercise options at award rates on
     both contracts . . . .
 J.A. 4 (alterations in original). In any event, as we discuss
 below, the subjective and uncommunicated view of the par-
 ties as to the notice is of no relevance. Unlike sec-
 tion 52.217-9, the “Option to Extend Services” provision did
 not require a preliminary written notice. That fact alone
 makes it unlikely that a reasonable recipient of the notice
 would think that the January 31 email was related to the
 “Option to Extend Services” provision. Significantly, the
 record shows that in late 2016 and early 2017 the parties
 were discussing pricing for the Charleston contract,
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 8       COOPER/PORTS AMERICA, LLC v. SECRETARY OF DEFENSE




 including the next one-year option extension period, and
 that the subject of the January 31 email was understood to
 be the option for a one-year extension period under section
 52.217-9.
     It appears that as early as October 2016 CPA asked for
 a rate increase under the contract. It is apparent that CPA
 was concerned about performing the contract at the exist-
 ing pricing during additional option periods. Only a few
 months remained in the Charleston contract that was set
 to expire on June 30, 2017. On January 21, 2017,
 Mr. Lewis of CPA emailed Mr. Seamon, stating that “I’d
 like to discuss next steps for processing the contact [sic]
 modifications for the labor increase we talked about from
 Oct. 1st.” S.A. 2. On January 24, 2017, Mr. Seamon
 emailed Mr. Lewis with a subject line “SSC-Charleston,”
 stating that he was “attach[ing] . . . the final schedule of
 rates from SSC for [the Charleston contract]” in light of
 their “rate adjustment conversation.” S.A. 4–5. In re-
 sponse, on January 24 and 25, 2017, Mr. Lewis communi-
 cated that he would “try to back into the numbers so [they
 could] have an agreed starting point,” S.A. 4, and would
 “start working on the adjustment and w[ould] forward for
 [Mr. Seamon’s] review,” S.A. 3.
     A few days later, Mr. Seamon sent the January 31
 email, stating that “[t]he Government intends to exercise
 options at awarded rates on [the Charleston and Beaumont
 contracts].” J.A. 117. At the same time, Mr. Seamon re-
 jected any price adjustments, stating that “the Govern-
 ment expects [CPA] to continue performing per the terms
 and conditions of the contract.” Id. After the January 31
 email, on February 23, 2017, Mr. Lewis emailed Mr. Sea-
 mon, urging an “increase [to be] reflected in option year two
 of the final SSC-Charleston schedule.” S.A. 36 (emphasis
 added).      The parties continued to discuss the
 “O[ption]Y[ear]2 rates.” S.A. 57 (March 21, 2017 email);
 S.A. 60 (showing future adjusted rates for the next one-
 year period). Under these circumstances, there was no
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 COOPER/PORTS AMERICA, LLC v. SECRETARY OF DEFENSE           9



 ambiguity and CPA “had sufficient notice” that the Janu-
 ary 31 email was directed to the second-year option of the
 Charleston contract. Empire, 362 F.3d at 1356 (quoting
 Halifax, 915 F.2d at 691).
     Second, CPA claims that the January 31 email was not
 effective because the government did not intend it to be a
 “preliminary written notice” under section 52.217-9, and
 that CPA did not understand it to be such a notice. This
 argument lacks merit because the January 31 email ex-
 pressly stated that “[t]he Government intends to exercise
 options at awarded rates [of the Charleston and Beaumont
 contracts].” J.A. 117. It is well established that a notice is
 judged by objective standards. See NEC Sols. (Am.), Inc. v.
 United States, 411 F.3d 1340, 1346 (Fed. Cir. 2005) (hold-
 ing that the sender’s intent and the recipient’s knowledge
 of that intent were irrelevant to whether an email consti-
 tuted notice required by a Customs statute and “the rele-
 vant inquiry [wa]s whether [the recipient] would or could
 have reasonably comprehended the e-mail as being unam-
 biguous”); see also United States v. Locke, 471 U.S. 84, 88–
 89, 102 (1985) (holding that the plaintiffs’ actual intent was
 irrelevant to whether they satisfied a federal mining stat-
 ute’s requirement to file a notice of intent to hold a mining
 claim by a certain date); Rodash v. AIB Mortg. Co., 16 F.3d
 1142, 1145–46 (11th Cir. 1994) (holding that the sender’s
 subjective intent and recipient’s misunderstanding of the
 notice required under the Truth in Lending Act (“TILA”)
 was irrelevant to compliance with that requirement), abro-
 gated on other ground by Veale v. Citibank, F.S.B., 85 F.3d
 577 (11th Cir. 1996); Hauk v. JP Morgan Chase Bank USA,
 552 F.3d 1114, 1122 (9th Cir. 2009) (holding that a sender’s
 “undisclosed intent to act inconsistent with its disclosures”
 required under the TILA was “irrelevant in determining
 the sufficiency of those disclosures”). The government’s
 purported undisclosed intent and CPA’s subjective under-
 standing here did not make an otherwise valid notice inef-
 fective.
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 10       COOPER/PORTS AMERICA, LLC v. SECRETARY OF DEFENSE




      Finally, CPA contends that the January 31 email failed
 to give notice because it “d[id] not comply with FAR
 § 17.207(g)’s requirement that any ‘written document
 which notifies the contractor of the exercise of the option
 shall cite the option clause as authority.’” Appellant’s
 Br. 24 (quoting 48 C.F.R. § 17.207(g)). CPA claims that the
 January 31 email should have explicitly identified sec-
 tion 52.217-9 in order for it to be an effective notice. We
 agree with the Board that “by its plain terms, FAR
 [§] 17.207(g) only applies to ‘[t]he contract modification or
 other written document which notifies the contractor of the
 exercise of the option,’ and not to the preliminary notice of
 the intent.” J.A. 8–9 (second alteration in original).
                        CONCLUSION
     For the foregoing reasons, we uphold the Board’s deci-
 sion.
                        AFFIRMED
                            COSTS
      No costs.
