               ARMED SERVICES BOARD OF CONTRACT APPEALS

Appeal of --                                 )
                                             )
Engineering Solutions & Products, LLC        )      ASBCA No. 58633
                                             )
Under Contract No. 000000-00-0-0000          )

APPEARANCES FOR THE APPELLANT:                       Richard L. Moorhouse, Esq.
                                                     David G. Barger, Esq.
                                                     JozefS. Przygrodzki, Esq.
                                                      Greenberg Traurig, LLP
                                                      McLean, VA

                                                     Ryan C. Bradel, Esq.
                                                      Greenberg Traurig, LLP
                                                      Washington, DC

APPEARANCES FOR THE GOVERNMENT:                      Raymond M. Saunders, Esq.
                                                      Army Chief Trial Attorney
                                                     MAJ Bruce L. Mayeaux, JA
                                                      Trial Attorney

            OPINION BY ADMINISTRATIVE JUDGE D' ALESSANDRIS

        In 2004, appellant Engineering Solutions and Products, LLC (ESP) leased a
warehouse from First Potomac Realty Trust (FPRT) to support the United States Army
(Army) Program Executive Office (PEO) Soldier. 1 At the time, ESP held a prime
contract to provide this warehouse space for government use issued by the Department
of the Treasury, Bureau of the Public Debt (BPD), Franchise Services. 2 ESP
subsequently provided the warehouse space to the Army as a subcontractor to a series
of prime contractors. In late 2005, while ESP was a subcontractor, the Army indicated
that it would be interested in leasing more warehouse space at Haymarket, Virginia.
ESP subsequently negotiated with the landlord, FPRT, for FPRT to expand the
warehouse. ESP entered into a ten-year lease with FPRT, with the base rent


1   Project Manager, Soldier Equipment (PMSEQ) was a program office within PEO
         Soldier. PMSEQ was later renamed Project Manager Soldier Protection and
         Individual Equipment (PM SPIE). (Tr. 1/135, 186)
2   BPD used this contract, and others like it, to obtain property or sources for the
         benefit of other government agencies (like the Army here) which would, in
         tum, compensate BPD for its costs.
front-loaded into years one through seven, and no base rent for years eight to ten, and
with an early termination fee.

        During the negotiations for the expansion of the warehouse, the Army reviewed
the construction design to ensure that the new space would meet its needs, helped ESP
and FPRT in negotiations with Prince William County, Virginia, planning and zoning
officials, and monitored the progress of construction activity. ESP leased the expanded
warehouse space beginning in April 2007. The Army vacated the warehouse in March
2012, approximately five years into ESP's ten-year lease with FPRT. ESP contends
that there was an implied-in-fact contract with the Army requiring the Army to pay the
early termination fee, year six rent, and other costs totaling roughly $4.2 million. ESP
submitted a certified claim that was denied by the Army's contracting officer. ESP
subsequently appealed to the Board. The Army's motion for summary judgment was
denied by the Board on 13 May 2015. Engineering Solutions & Products, LLC,
ASBCA No. 58633, 15-1BCAi\35,989, recon. denied, 16-1BCAi\36,313. The
Board held a four-day hearing beginning on 19 September 2016. Because we find that
ESP has not demonstrated the existence of an implied-in-fact contract with the Army,
we deny the appeal in its entirety.

                                 FINDINGS OF FACT

      1. In August 2001, the Department of the Treasury, BPD, Franchise Services
(FedSource), awarded Open Market Blanket Purchase Agreement (BPA) No. 4000 to
ESP (app. supp. R4, tab 79 at 1, 4; tr. 1/46).

      2. FedSource was a "franchise-fund activity" created by the Department of the
Treasury. See 31 U.S.C. § 322 'note (Department of the Treasury Franchise Fund).
FedSource awarded its own contracts for goods and services to be provided to other
agencies (supp. R4, tab 52 at 171 ).

        3. In April 2004, while ESP was a prime contractor to FedSource it leased
approximately 123,777 square feet at a warehouse located at 15395 John Marshall
Highway, Haymarket, Virginia (the Haymarket warehouse) (app. supp. R4, tab 85 at l;
compl. iii! 9, 12; tr. 2/59, 65). Preston Turner, a senior logistician for PEO Soldier,
initially identified the Haymarket property to ESP as being suitable for the Army's
purposes (tr. 2/9-10).

        4. The FedSource center in Beaufort, South Carolina (FedSource-Beaufort)
 issued at least one task order to ESP under BPA No. 4000 which involved a
 requirement to operate the Haymarket warehouse in support of the Army's PEO
 Soldier activity (tr. 1/56-57, 2/17). By Military Interdepartmental Purchase Request
 (MIPR) No. MIPR4LlBR01366, dated 16 August 2004, the PMSEQ activity within
 PEO Soldier transferred $2,610,908.23 from the Department of Defense to


                                             2
FedSource-Beaufort, "for lease, transfer/relocation, and maintenance of Haymarket
facility" with an expiration of 30 September 2004 (app. supp. R4, tab 80 at 6).

       5. In November 2004, the BPD advised ESP that its BPA did not comply with
the Federal Acquisition Regulation (FAR), and that FedSource-Beaufort would not
issue any new task orders under the BPA (supp. R4, tab 57 at 746). In a 26 March
2005 letter to FedSource BPA holders, BPD informed ESP that the final task order
issued by FedSource-Beaufort under BPA No. 4000 would expire no later than
30 April 2005 (id. at 748).

        6. In early 2005, notwithstanding, the FAR-related problems with ESP's BPA,
the Army apparently still needed to use the Haymarket warehouse, thus the FedSource
center in Baltimore (FedSource-Baltimore) awarded a task order to Westaff (USA), Inc.
(Westaff) under existing Contract No. TPD-03-C-0005. The FedSource-Baltimore task
order required Westaff to operate the Haymarket warehouse for PEO Soldier. Westaff,
in turn, entered into a subcontract with ESP for that purpose. (Supp. R4, tab 56 at 349,
tab 57 at 775; comp!. iJ 15; tr. 1/58, 61-62). While it was a subcontractor to Westaff,
ESP submited its invoices to Westaff for payment (tr. 3/135).

       7. Ms. Gerry Mosier, a procurement analyst, also referred to as a contracts
manager, was ESP's primary contact within the government during the transition from
FedSource to Westaff, but had no contracting authority in her position at PMSEQ
(although she had been a contracting officer earlier in her career). She retired from
federal service in March 2006. (Supp. R4, tab 60 at 895, tab 63 at 1009; tr. 3/63-64,
159)

        8. In approximately late 2005, while ESP was under subcontract to Westaff,
representatives of PEO Soldier, including the head of PMSEQ, COL John Norwood
(now retired); Steven Pinter, COL Norwood's deputy; and Todd Wendt, PMSEQ's
Director of Logistics, visited the Haymarket facility, and told ESP personnel that PEO
Soldier could use additional space at the Haymarket warehouse to prepare soldier
equipment sets for deployment to Iraq (tr. 1/194-95). The Army's need for additional
space was urgent due to the Global War on Terror, and expanding combat operations
in Iraq and Afghanistan (tr. 1/145, 147, 155, 192, 2/20-22). PEO Soldier processed
body armor and night vision goggles that were mission-critical equipment for the
troops (tr. 11145, 147, 155-56). COL Norwood asked ESP to engage with FPRT to see
ifthe warehouse could be expanded (tr. 1/195). COL Norwood also tasked Mr. Pinter
with determining PEO Soldier's requirements and making sure they were met through
the contracting process (tr. 4/13). Mr. Pinter helped create the statement of work
related to the expanded warehouse at Haymarket (tr. 4/7).

       9. The Army's access to the Haymarket warehouse subsequently transitioned to
a contractual vehicle with Lear Siegler Services, Inc. (Lear Siegler or LSI). Lear


                                           3
Siegler held a "Rapid Response" (also referred to as R2) indefinite-delivery,
indefinite-quantity (IDIQ) contract, which was a contract with a broad scope that
supported the Army's command, control, communications, intelligence, and
surveillance mission (tr. 3/80-82, 84).

       10. Lear Siegler had a pre-existing subcontract with ESP, Subcontract
No. 1.06.20.059, with an effective date of 31 January 2003 (supp. R4, tab 66).
Effective 6 January 2006 Lear Siegler placed an order with ESP under Subcontract
No. 1.06.20.059 to support PMSEQ (supp. R4, tab 67 at 57-58; tr. 3/160). In February
2006, the Army issued a task order to Lear Siegler to provide the expanded warehouse
space (R4, tab 3).

       11. ESP helped prepare Lear Siegler's Task Execution Plan (TEP) 3 (tr. 2/76;
supp. R4, tab 56 at 542), that was submitted as a proposed TEP to the Army
Communications-Electronics Command (CECOM) Acquisition Center, at
Fort Monmouth, New Jersey, in anticipation of receiving a task order under
Lear Siegler's existing R2 IDIQ contract to provide support to PEO Soldier, including
services at the Haymarket warehouse (R4, tabs 2-3).

       12. In paragraph 1.4 of this TEP, TEP CR-1287, REV.-Original, dated
23 December 2005, Lear Siegler sought to pass to the government liability for any
contingent fee for the early termination of ESP's "long term lease agreements," and
recognize the fee as a contract cost. Paragraph 1.4 stated:

                Team LSI's pricing includes a twelve (12) month base
                period and a twelve (12) month option period. Due to the
                period of performance constraints and the long [term] lease
                agreements ESP entered into on warehouse/office facilities
                and materiel handling equipment in support of mission
                requirements, it should be noted that an early termination
                fee may be applicable should the Government award this
                task order to someone other then [sic] LSI/ESP. In
                addition, the early termination fee is also applicable should
              · PMSEQ award this task order to Team LSI and terminate
                the effort during the period of performance.

(Supp. R4, tab 62 at 991) ESP wrote the language in paragraph 1.4 (tr. 3/110-13)

      13. On 25 January 2006, a CECOM contract specialist wrote to Lear Siegler:
"As per the ... Contracting Officer, [Debra Abbruzzese], ... [p]lease remove the language
from your TEP pertaining to an early termination cost under paragraph 1.4. The

3   The Task Execution Plan functions like a bid for a task order.

                                             4
Government will not pay an early termination cost." (Supp. R4, tab 62 at 984)
Ms. Abbruzzese directed that the language be removed from the TEP because, "[i]t
was a contingent liability that the Government was not willing to accept" (tr. 3/95).

        14. Lear Siegler complied. The changed TEP, denoted as "Rev. -A," was
incorporated in Task Order No. 118 and did not include the language about
government liability for the contingent fee for early termination of the lease (R4, tab 2
at 2, tab 3 at 21; supp. R4, tab 65 at 1025). Ms. Holderness, a contracts manager at
ESP, described her top management, specifically Mr. Livero and Mr. Hoffman, as
being of the opinion that "we could address the termination costs at a later date, and if
the government didn't want to accept it at a later time, that we could put in a claim"
(tr. 3/143-44).

        15. CECOM awarded Task Order No. 118 to Lear Siegler on 1February2006,
on a time and material basis (R4, tab 3 at 2). On 27 February 2006, the Army issued a
no-cost, unilateral modification to change the effective date of the award from
1 February to 6 January 2006 (R4, tab 5). Lear Siegler's initial performance period
under Task Order No. 118, as modified, ran until 31 January 2007, with a one-year
option (R4, tab 3 at 2, tab 5).

       16. Lear Siegler's base contract was funded in two-year increments, while the
task order was funded annually (R4, tab 1 at 2-6, tab 3 at 2).

        17. The TEP CR-1287, REV.-A as incorporated into Task Order No. 118 stated
that "ESP is currently negotiating with lending sources relative to expansion of the
Haymarket facility to 240,000 square feet." The Army accepted Lear Siegler's request
to subcontract with ESP for the Haymarket warehouse and approved, as pass-through
direct costs, ESP' s monthly rent of $198, 721.43 for the base year, with an increase to
$271,142.12 forthe option year, reflecting the timetable of the proposed warehouse
expansion. (R4, tab 3 at 2, 17, 3 8)

        18. The Task Order No. 118 Performance Work Statement (PWS) required in
part that:

              3.3 .1 The contractor shall identify storage space at
              Haymarket, Virginia to support staging facility supply,
              maintenance, packaging, storage, handling and
              transportation requirements in response to military demand
              for PM Soldier Equipment. The facility shall also have the
              capability to support inventory management actions,




                                             5
              property accountability functions and warranty
              maintenance actions.

(R4, tab 3 at 12)

       19. The TEP CR-1287, REV.-A addressed this requirement as follows:

              The Haymarket facility is commercial space leased by ESP
              in support of PEO Soldier and PMSEQ requirements. The
              facility is designed to support staging facility operations
              and office space requirements. The facility consists of
              123,000 square feet in its current configuration. The
              facility is approved for expansion to 240,000 square feet,
              which ESP is currently negotiating with the building
              owner .... ESP understands there will be no construction
              under this task order.

(R4, tab 3 at 29)

       20. Task Order No. 118 required Lear Siegler to provide the expanded
warehouse space at Haymarket to support PMSEQ (R4, tab 3 at 9, 11-12, 26-27, 29).
Lear Siegler, in tum, placed orders with ESP to provide the use of the Haymarket
warehouse to perform Task Order No. 118 (supp. R4, tab 67). Lear Siegler included in
the order it placed with ESP the same PWS that was in its own task order with the
government (tr. 31148-51).

        21. On 9 February 2006, representatives of the Army (including
Mr. Preston Turner, Ms. Gerry Mosier, and Ms. Deborah Shreve from PEO Soldier),
ESP (including Mr. Thomas Reed and Ms. Jan Holderness), and Lear Siegler held a
"Task Order 118 (TO) Kickoff Meeting" at ESP's offices in Eatontown, New Jersey
(supp. R4, tab 60 at 974). Mr. Turner was the senior logistician for PMSEQ
(tr. 1/135-36). Mr. Reed, ESP's project leader, was the primary interface with PMSEQ
personnel about operating the Haymarket warehouse (tr. 2/6, 9). He mainly dealt with
Mr. Turner (tr. 11143, 2/9-10, 20, 26). A briefing slide presented at the kickoff
meeting, and emailed to the Army the following day, stated that one "Team ESP
Focus" in the base year would be "[c]ompletion of the 112,000 sq ft expansion to
existing Haymarket Warehouse" (supp. R4, tab 60 at 974, 978). The purpose of
having this language in the briefing slide was to announce that the warehouse
expansion was a task to be completed under Task Order No. 118 (tr. 2/91).

        22. Mr. Turner, who worked for Mr. Wendt, the PMESQ director of logistics,
was assigned by his organization to monitor the buildout. He tracked the monthly rent
for the warehouse (tr. 1/169-70, 174-75, 191) reviewed the planning drawings when


                                           6
they were provided to him by ESP, and provided assistance to ESP's landlord in dealing
with Prince William County officials about the buildout (tr. 11171, 209-10, 212-13,
2/25-26, 30, 36-37). Mr. Wendt also reviewed the drawings when they were presented
to him by ESP, but gave no direction regarding the layout of the facility (tr. 11226,
2/33).

        23. Mr. Hoffman, the founder of ESP and the company's president and CEO at
the time of these events, was a former GM-15 Deputy Director of Logistics at
CECOM, and a member of the Army Acquisition Corps. He received training related
to his duties with the Army and was aware that only a warranted contracting officer
could make a binding commitment on behalf of the government. (Tr. 1121, 35-37, 52,
54,64)

        24. According to Mr. Hoffman, ESP renegotiated the warehouse lease and
Mr. McGrory, the ESP chief financial officer, was the lead negotiator (tr. 11100).
Mr. Hoffman insisted that ESP would not have entered the renegotiated lease absent
direction to do so by the Army (tr. 1130). However, Mr. Hoffman was never a party to
a conversation where Army personnel directed ESP to enter into the renegotiated lease
(tr. 11103-04). Although Mr. Hoffman believed Army personnel knew the terms of the
lease, he did not know that for a fact and he was not sure which Army personnel knew
which terms of the renegotiated lease (tr. 1142, 101). He also did not know whether
Army personnel were ever given a copy of the lease (tr. 1175).

       25. Although Mr. Hoffman testified that assurances were given that "ESP
would not be responsible for any payments for which we had no use at the facility
for," he was not the recipient of such assurances and never stated exactly who within
ESP ever received such assurances from Army personnel (tr. 1130-31). When asked
who within the Army conveyed such assurances to ESP personnel, he stated, "I do
know Preston Turner was involved. I can't speak with certainty as to who his
associates were." (Tr. 1/31)

       26. Mr. McGrory, testified that Mr. Hoffman was the recipient of assurances
from Army program personnel; the only information Mr. McGrory had about any
assurances from Army personnel, however, came from Mr. Hoffman (tr. 3/27, 38-39).

        27. Mr. Hoffman testified that the renegotiated lease term which provided that
all the rent to be paid in the first seven years, with the last three years being rent free,
was in the lease because "we were given the impression that [PMSEQ] would be in
there for an extended period, seven years or longer" (tr. 1/33).

      28. Mr. Turner recalls having a conversation with Mr. Hoffman in either 2005
or 2006. He recalls saying that the requirement "will probably be going on until 2010
or whatever like that." (Tr. 11181) Mr. Reed, who was employed by ESP until


                                              7
October 2006, and who was the primary interface with Mr. Turner, never received any
commitment about how long PMSEQ might require the Haymarket warehouse
(tr. 21103, 107). He did "expect" that the requirement would exist even after Task
Order No. 118 was completed (tr. 2/121).

        29. ESP was motivated to enter into the renegotiated lease because it believed
that this step would allow it to grow (tr. 2/23, 47-49). Mr. McGrory was involved in
the financial aspects of the warehouse expansion. He testified that the guidance he
was given by Mr. Hoffman was to ensure that whatever was done was good for the
company and good for the workforce. (Tr. 3112-14, 37-38) The renegotiated lease
was a financial aspect ofESP's expansion (tr~ 3113-14). Mr. Hoffman recognized that
there was a risk that the Army would not stay for the duration of the lease because the
ten-year term gave the Army time to provide the function internally (tr. 1/30, 98).

       30. Ms. Holderness prepared a draft letter to PEO Soldier, dated 6 January
2006, that apparently was never sent, but which stated in pertinent part:

                    Appreciating that the sole purpose in ESP's
             pursuit of the build-out initiative is in response to PEO
             Soldier direction, ESP requests PEO Soldier concurrence
             with the following prior to executing the proposed leasing
             agreement with First Potomac:

                        -   Acceptance of the lease terms and conditions
                            relative to security and other
                            deposits/rent/rent escalation/Common Area
                            Maintenance charges/occupancy terms.

                            Acceptance that ESP will invoice all
                            remaining lease and associated payments in
                            the event that PEO Soldier does not require
                            the facility (or portions thereof) through the
                            end of the leasing period.

                            An acknowledgement that ESP's agreement
                            to lease the build-out facility is contingent
                            upon ESP being the sole provider of
                            material handling equipment and the
                            personnel resources necessary to operate




                                            8
                           the staging facility operation during the
                           leasing period.

(Supp. R4, tab 60 at 892-93) Ms. Holderness agreed that at the time she prepared the
draft letter, the final terms of the renegotiated lease were not known (tr. 3/137).

       31. On 20 January 2006, via email, ESP's upper management, including
Mr. Hoffman and Mr. McGrory, discussed difficulties faced with its landlord, FPRT.
FPRT had notified ESP that it might suspend the architectural design of the warehouse
buildout. As a result, ESP personnel discussed what their alternatives might be.
(Supp. R4, tab 56 at 421) As Mr. Hoffman testified: "That is what I wanted to open
the door on to talk to Preston about. Like hey, if we can't get to the finish line with
First Potomac to satisfy everybody's requirements, then we have got to look in a
different direction." (Tr. 1/83)

       32. On 11 April 2006, ESP entered into a new lease for the Haymarket
warehouse with FPRT (supp. R4, tab 57 at 828-29; compl., 12). Ms. Holderness, the
ESP contracts manager, signed for ESP (tr. 3/104-05). The lease on the warehouse
that had been signed in June 2004, was terminated upon the execution of the
renegotiated lease. As Mr. Hoffman explained, the old lease and the renegotiated lease
"became one lease." (Supp. R4, tab 57 at 836,, 2.06; tr. 1/103)

       33. The lease that ESP signed in April 2006 provided for the expansion of the
Haymarket warehouse by the landlord and a substantial increase in rent upon the
completion of the expansion, as anticipated in Lear Siegler's Task Order No. 118
(supp. R4, tab 57 at 829-30).

       34. Mr. Reed disclosed to Mr. Turner the monthly lease amounts for the
renegotiated lease (tr. 1/163, 174-75). Mr. Turner provided his "concurrence" with the
lease costs and provided the information to the contract manager, Ms. Shreve, for her
review (tr. 1/165). However, Mr. Turner clarified that his concern was with the
buildout and monthly rent, and that he did not recall a discussion of the lease terms
and did not relay his discussion with Mr. Reed to the contracting officer (tr. 11174-75,
180). Mr. Turner lacked contracting authority (tr. 1/169, 176-77). Mr. Reed's primary
points of contact in PM SEQ for invoices and estimates were Ms. Shreve and
Ms. Mosier (tr. 2/118). Ms. Shreve was a program analyst who worked with
Ms. Mosier until her retirement. Ms. Shreve had no contracting officer authority.
Ms. Mosier, like Ms. Shreve, was a program analyst but was referred to by the title of
contract manager. Like Ms. Shreve, Ms. Mosier had no contracting authority.
(Tr. 3/62-63, 68; supp. R4, tab 63) In fact, no one assigned to PMSEQ had any
contracting authority (tr. 1/176, 3/63-64, 4/10-11). Ms. Shreve reviewed ESP's
invoices, but at some point Mr. Turner became involved in that task with her (tr. 3/77).



                                           9
        35. Mr. Reed testified that he had provided a draft copy of the renegotiated
lease to Mr. Turner (tr. 2/41, 45).

        36. Mr. Reed had no recall that the lease terms provided that all the rent would
be paid in the first seven years, and that the last three years of the lease were rent free
(tr. 2/96-97). Mr. Reed believes he mentioned the $600,000 early termination amount
to Mr. Turner in emails (tr. 2/100-01). Mr. Reed was not deeply involved in
negotiating the termination provisions of the renegotiated lease; that was instead the
purview of Mr. Hoffman and Gary Livero (tr. 2/98-99).

       37. Although Mr. Reed testified that he told Ms. Shreve the same details about
the renegotiated lease that he had told to Mr. Turner (tr. 21111-12), Ms. Shreve never
attended any meetings regarding the leasing arrangements and was never privy to any
of the details of the lease (supp. R4, tab 63; tr. 3/68-69).

        38. Ms. Shreve testified to a conversation with either Mr. Decesare or
Mr. Livero, of ESP. The individual expressed concern about entering into a ten-year
lease for the expanded warehouse in light of the fact that the government's task order
at the time had a twelve month performance period, and the government funding was
for that same period of time. Ms. Shreve testified that she responded by saying, "it
was our intentions to continue to use it, but that we couldn't guarantee anything
because we only got funding on a year-to-year basis, and only if we had a requirement,
so, you know, I can't guarantee anything after 12 months." She advised the individual
that ESP needed to make a business decision about whether or not it would lease the
facility for that period. (Supp. R4, tab 63; tr. 3/69-70, 75)

       39. Mr. Pinter testified regarding a conversation with ESP about the structure's
expansion. Mr. Pinter testified that ESP explained that "they had to sign a ten year
lease for the facility and they wanted the Government to sign a ten year contract."
Mr. Pinter explained that the government could only sign a base year with options.
(Supp. R4, tab 61; tr. 4/8-9, 10)

       40. Testimony by ESP's witnesses was uncontroverted, that in April 2006 when
the renegotiated lease was executed, it was not possible to know when any of the lease
years would begin or end because those dates could only be determined once
construction was completed (tr. 2/103-04, 3/42, 155-56).

      41. At the time of the renegotiated lease, ESP was working under a subcontract
with Lear Siegler that needed to be "recompeted" in about two years. There was no
guarantee that ESP would be successful in that re-competition. (Tr. 3/45)

       42. Mr. Turner testified that he did not see a copy of the renegotiated lease
until between 2010 to 2012 (tr. 11173-74, 175) and did not recall discussing the early


                                             10
termination provisions of the renegotiated lease with Mr. Reed, nor did he recall being
informed about the $600,000 early termination fee amount (tr. 11175). ·Mr. Wendt,
Mr. Turner's supervisor, never saw the lease until litigation commenced in 2012
(tr. 11224). He first learned that ESP had signed a long-term lease in 2007, after the
buildout construction was completed (tr. 11223-24).

       43. No evidence was presented that PMSEQ personnel, or any other Army
personnel, ever gave ESP direction to enter into the renegotiated lease (tr. 11177,
197-99, 2/50, 4111, 29, 43-44). At most, there was evidence that PMSEQ personnel
were interested in the timing of the buildout and when the expanded space would be
available for use (tr. 1/201, 2/50).

       44. In December 2006, the Army issued a no-cost, unilateral modification
extending the term of Task Order No. 118 from 31 January to 31 March 2007 (R4,
tab 11).

      45. In March 2007, the Army exercised an option to extend Lear Siegler's
performance of Task Order No. 118 through 4 March 2008 (R4, tab 14 ).

         46. On 25 April 2007, ESP and FPRT signed a First Amendment to Deed of
Lease for the Haymarket warehouse. The First Amendment to Deed of Lease stated
that it related to "a Deed of Lease dated April 11, 2006." (App. supp. R4, tab 85
at 1-2)

        47. The April 2007 First Amendment to Deed of Lease stated that the landlord
had expanded the Haymarket warehouse from approximately 123,777 square feet to
approximately 236,082 square feet, and that ESP would occupy the expanded space for
ten years, from 1 April 2007 through 3 1 March 2017. The amended lease agreement
specified monthly base rent for the first seven years (through 31 March 2014 ), but no
base rent for years eight through ten, although ESP agreed to pay, as "additional rent,"
its share of operating expenses and real estate taxes, and to pay for all utilities, in all
years. (App. supp. R4, tab 85 at 1-4)

       48. On 4 March 2008, the Army issued a no-cost, unilateral modification
extending Lear Siegler' s performance period under Task Order No. 118 from 4 March
through 31 March 2008, to avoid a lapse in service pending the award of a follow-on
task order (R4, tab 18).

       49. On 1 April 2008, the CECOM Acquisition Center awarded Lear Siegler
time-and-materials Task Order No. 200 under Contract No. DAAB07-03-D-B010.
The task order requirements included operating the Haymarket warehouse for
PMSEQ. Lear Siegler's initial performance period under Task Order No. 200 ran



                                            11
from 1 April 2008 through 31 March 2009, with a one-year option. (R4, tab 19 at 1-2,
tab 20 at 17)

        50. In paragraph 1.4 of its initial TEP proposal for Task Order No. 200,
Lear Siegler again sought to pass through a contingent fee for the early termination of
ESP's long-term lease as a contract cost. That contingent fee was rejected by the R2
contracting officer for Task Order No. 200, Ms. Fernandes. (Supp. R4, tab 68 at 8,
tab 69; tr. 31127-28) In response, Lear Siegler submitted a revised TEP in which the
contingent fee language in paragraph 1.4 was removed and the following statement
was inserted: "ESP CONCURS WTTH THIS CHANGE" (supp. R4, tab 70 at 1224;
tr. 3/127). The revised TEP with the contingent termination fee language deleted was
included in Task Order No. 200 (R4, tab 19 at 2,, 4; supp. R4, tab 70; tr. 3/123).

      51. On 1 April 2009, the Army exercised the option to extend Lear Siegler's
performance period under Task Order No. 200 through 31 March 2010 (R4, tab 22).

       52. The Army subsequently obtained access to the Haymarket warehouse
through a different contractual vehicle. On 5 March 2010, the U.S. Army Research,
Development and Engineering Command (RDECOM) Acquisition Center, Operations
Branch, at Aberdeen Proving Ground, Maryland, entered into bilateral Modification
No. 1206 to Task Order No. 0012 under Engility Corp.'s existing Contract
No. W91CRB-06-D-0037. The requirements of this task order modification included
operating the Haymarket warehouse for PMSEQ on a time-and-materials basis. The
performance period was from 26 February 2010 through 8 July 2011. (R4, tab 26 at 1,
5)

        53. Engility entered into two subcontracts with ESP relating to the Haymarket
warehouse with effective dates of 26 February 2010 (Subcontract No. 2010-1484) and
8 June 2011 (Subcontract No. 11-129) (supp. R4, tabs 75, 76). Both subcontracts
stated that Engility would issue purchase orders for specific requirements. The record
contains one purchase order placed under Engility Subcontract No. 2010-1484. It had
an initial performance period of 26 February 2010 to 20 August 2010. (Supp. R4,
tab 72 at 001-02)

       54. On 24 March 2011, the U.S. Army Contracting Command-Aberdeen
Proving Ground (ACC-APG) in Maryland, awarded Engility cost-plus-fixed-fee
Contract No. W91CRB-l l-C-0074 for support services to PEO Soldier, including the
operation of the Haymarket warehouse, from 24 March 2011 through 23 January 2012
(R4, tab 27; compl., 21).

       55. In November 2011, the Army and Engility bilaterally extended the term of
 Contract No. W91CRB-l l-C-0074 to 23 March 2012 (R4, tabs 27, 28; tr. 4119-20).



                                            12
       56. On 9 January 2012, the ACC-APG contracting officer informed
Engility that the Army would not require the Haymarket warehouse after Contract
No. W91CRB-l l-C-0074 expired on 23 March 2012 (R4, tab 31).

       57. In February 2012, ESP submitted Invoice No. 1097-11 to Engility. The
invoice sought $638,400.00 for a termination fee under ESP's lease for the Haymarket
warehouse. Engility asked the ACC-APG contracting officer for approval to pay the
ESP invoice as "other direct costs" under Contract No. W91CRB-l l-C-0074. The
Army advised Engility that it did not consider the lease-termination fee an allowable
cost. (R4, tab 36 at 1, 3; comp I. i1 29)

         58. The Army vacated the Haymarket warehouse on 23 March 2012 (compl.
i135).

       59. ESP later submitted an "invoice [to Engility] for the total amount of rent
for Year 6 through March 31, 2013, plus G&A, for a total amount of $4,186,128.99."
ESP alleges that Engility did not pay that invoice, and it is undisputed that the Army
did not pay Engility for these costs. (Compl. i1i1 28-29; answer i1i128-29)

        60. Both Task Order Nos. 118 and 200 which were issued to Lear Siegler
were fully performed. So was Task Order No. 0012 under Engility's existing
Contract No. W91CRB-06-D-0037 and Contract No. W91CRB-l l-C-0074 which was
awarded to Engility. (Tr. 4/24) All of the orders placed with ESP by Lear Siegler
under Task Order No. 118 and Task Order No. 200 were fully performed (tr. 3/164-65).
The two ESP subcontracts with Engility were fully performed (supp. R4, tabs 75, 76;
tr. 3/168-69, 4/58).

        61. Mr. Hoffman testified that ESP invoked the early termination provision of
the renegotiated lease and that he was probably the person in ESP who did so
(tr. 1/126).

       62. On 6 December 2012, ESP submitted a certified claim to ACC-APG for
$3,317,728.88 in "rent and other associated costs" allegedly paid by ESP to FPRT for
the Haymarket warehouse from 26 March 2012 through 3 December 2012 (supp. R4,
tab 56 at 327, 333). The stated basis of the claim was that an implied-in-fact contract
arose between ESP and the Army and that the Army had constructively terminated that
contract, giving rise to a right on the part of ESP to recover termination for the
convenience of the government costs (id. at 333).

       63. In response to a telephone request by Jeffrey Schoemer, the ACC-APG
contracting officer, that ESP identify who from the Army "directed" ESP to enter into
the 2007 lease amendment and "direct[ly] participa[ted] in ... the [lease] negotiations .... "



                                              13
Mr. Earl Thompson, ESP's Vice President of contracts, identified COL Norwood,
Mr. Wendt, and Ms. Shreve. (R4, tab 37 at 3-7)

        64. Mr. Schoemer issued a final decision denying ESP's claim on 5 April
2013. He concluded that ESP had no prime contract with the government to provide
the Haymarket warehouse between April 2006 and April 2007, and that ESP had
supplied no "evidence that any Government communication existed in any form
directing that ESP enter into a 10-year leasing agreement for the Haymarket, VA
facility." (R4, tab 44 at 1-2)

      65. On 24 April 2013, the Board docketed ESP's timely appeal as ASBCA
No. 58633.

                                        DECISION

       ESP asserts that it was party to an implied-in-fact contract with the Army to
expand the Haymarket warehouse and to lease the warehouse for at least seven years.
ESP, as the party asserting the existence of an implied-in-fact contract, bears the
burden of establishing by preponderate evidence the existence of a contract. ESP's
theory of an implied-in-fact contract has evolved since it first submitted its certified
claim; however, ESP has not demonstrated the existence of an implied-in-fact contract,
under of any the various permutations of its legal theory. Instead, the record evidence
demonstrates that the Army indicated to ESP that it desired more warehouse space at
the Haymarket facility. ESP, seeking to please the Army, negotiated with its landlord
to expand the warehouse. The landlord, FPRT, indicated that it would be willing to
expand the warehouse if ESP would commit to a ten-year lease. ESP recognized that
there was a risk that the Army would not stay in the facility for ten years. The Army
informed ESP that it could only commit appropriated funds and could not commit to
more than a one-year lease, but that it intended to lease the property for several years.

        ESP attempted to mitigate its risks by structuring its lease with FPRT such that
the ten years of base rent were payable over the first seven years, and by including an
early termination clause. ESP attempted to include in the contract between its prime
and the Army a provision that would make the Army liable for payment of the early
termination fee, but ESP's proposal was rejected by Army contracting officers -- not
once, but twice. ESP presented no evidence that anyone from the Army shared in
ESP's understanding of the terms of its asserted implied-in-fact contract. ESP's
argument is further undercut by the fact that its CEO was a former member of the
Army Acquisition Corps and was aware that only a contracting officer could bind the
Army.

        In total, the evidence demonstrates that ESP made a business decision to enter
into a ten-year lease with FPRT for the expansion of the Haymarket warehouse in


                                           14
order to grow the company, under the assumption that Army would stay in the
warehouse long enough to make ESP' s lease profitable. In the end, the Army stayed
five years, rather than the seven years ESP had hoped for. The fact that ESP's gamble
did not pay off does not create an implied-in-fact contract.

   I.     Implied-In-Fact Contracts

        In order to establish the existence of an implied-in-fact contract with the United
States, ESP must establish the same elements as for a written contract: 1) mutuality of
intent to contract; 2) consideration; 3) unambiguous offer and acceptance; and 4)
actual authority on the part of the government representative whose conduct is relied
upon. See, e.g., City of El Centro v. United States, 922 F .2d 816, 820 (Fed. Cir. 1990).
Like an express contract, an implied-in-fact contract must be based upon a meeting of
the minds; however, the meeting of the minds is "inferred, as a fact, from conduct of
the parties showing, in the light of the surrounding circumstances, their tacit
understanding." Trauma Service Group v. United States, 104 F .3d 1321, 1326 (Fed.
Cir. 1997) (quoting Hercules Inc. v. United States, 516 U.S. 417, 424 (1996)); United
Pacific Insurance Company, ASBCA No. 53051, 03-2 BCA ii 32,267 at 159,624.

        ESP asserts that it can establish the existence of an implied-in-fact contract by
establishing 1) government direction to perform work, 2) performance by appellant, and
3) a contracting officer's tacit ratification by accepting the work (app. br. at 15) (citing
Kaiser Marquardt, ASBCA No. 50177, 97-2 BCA ii 29,169 at 145,037). ESP's
interpretation of Marquardt as providing an alternate means of establishing the existence
of an implied-in-fact contract is not well grounded. In Marquardt, the Board denied a
motion to dismiss, holding that appellant had made allegations that, if proven, would
establish that it was ordered to perform work beyond the scope of the existing contract,
and that the contracting officer ordered appellant to continue with the work. Id. The
Board noted that an implied-in-fact contract required proof of the same elements as an
express contract including offer, acceptance, and consideration. Id. The decision then
noted that an implied-in-fact contract may arise from direction, performance and tacit
ratification, citing the Board's holding in Digicon Corporation, ASBCA No. 36907, 89-3
BCA ii 21,966 at 110,497. Id. However, Marquardt does not say that these three
elements are sufficient only that they may be sufficient to demonstrate an implied-in-fact
contract. Digicon also makes clear that appellant must satisfy the same contractual
requirements as an express contract. Digicon, 89-3 BCA ii 21,966 at 110,497. In
Digicon, the Board found that the necessary elements of offer, acceptance, consideration
 and authority were established by the government's direction to appellant to perform a
 service not covered by the contract, appellant's compliance with the direction, and tacit
 acceptance by the contracting officer. Id. Thus, we hold that ESP must establish the
 traditional elements of a valid government contract, including offer, acceptance,
 consideration and authority, but recognize that one or more of these elements may be
 proved by direction, performance, or tacit ratification.


                                             15
   II.    ESP has Not Established Authority or Mutuality of Intent to Contract on the
          Part of the Army

       The Army asserts that ESP cannot establish any of the elements of an
implied-in-fact contract. As the failure to establish any one of the elements of an
implied-in-fact contract is fatal to ESP's claim, we concentrate on the authority and
mutuality of intent to contract issues because the record is clear on these points. We
find that ESP has not established that anyone with authority to bind the government
was a party to the alleged implied-in-fact contract. See, e.g., City of El Centro, 922
F.2d at 820-21; Federal Crop Ins. Corp. v. Merrill, 332 U.S. 380, 384 (1947). ESP
did not present testimony establishing an understanding between ESP and any
government official, let alone any government official with authority to bind the
government, that the government would lease the Haymarket warehouse for seven
years, or that the government would pay the early termination fee for the lease.

       The only actions by authorized contracting officers in the record regarding
ESP's alleged implied-in-fact contract were Ms. Abbruzzese's request, prior to ESP
entering into the lease with FPRT for the expanded warehouse, that Lear Siegler delete
the proposed contract language providing that the Army would be liable for an early
termination fee (findings 11-14 ), and the similar request by Ms. Fernandes in 2008
when the Army issued a new task order to the prime contractor (finding 50). Rather
than establishing authority, these actions demonstrate the absence of a mutual intent to
contract. Additionally, Mr. Pinter, who was superior to Mr. Turner, informed ESP that
the Army could only commit to a one-year base contract with options (finding 39).

       ESP's witnesses did not testify to actions by government employees possessing
authority. Instead, ESP' s witnesses were only able to testify that other ESP employees
had an understanding that the Army would commit to a seven-year lease
(findings 25-26). While Mr. McGrory testified that Mr. Hoffman received
reassurances from the Army, Mr. Hoffman himself testified that he had not received
any such assurances (id.). Mr. Hoffman thought that assurances were provided, but
could only identify Mr. Turner as being involved in the assurances. Mr. Turner lacked
contracting authority. (Finding 34) Moreover, Mr. Hoffman was a former deputy
director of logistics with the Army and understood that only a warranted contracting
officer could bind the government (finding 23).

        No witness testified to a shared understanding with an Army official. At most,
the ESP witnesses testified that they unilaterally possessed an "understanding" that the
Army would stay in the warehouse for seven years, but they were unable to identify
any government official with contracting authority that shared in that understanding.
In fact, none of the Army officials that ESP employees interacted with had contracting
authority. (Finding 34) When ESP submitted its certified claim, the contracting


                                           16
officer asked ESP to identify the Army employees that purportedly directed ESP to
enter into the lease and participated in the lease negotiations. ESP identified
COL Norwood, Mr. Wendt, and Ms. Shreve. (Finding 63) None of these individuals
possessed contracting authority (finding 34). Moreover, as detailed above, neither did
Mr. Turner or the contracting specialists at PEO Soldier that interacted with ESP
(finding 34). Thus, ESP cannot establish the existence of an implied-in-fact contract
with an individual possessing contracting authority. City of El Centro, 922 F .2d
at 820-21.

        ESP argues that even if the Army officials did not possess contracting authority,
they possessed inherent contracting authority, or that there was a ratification of the
implied-in-fact contract. Both of ESP's arguments fail. ESP cannot establish that any
of the individuals that they interacted with possessed inherent contracting authority.
Specifically, ESP asserts that Preston Turner, at the time a senior logistician with PEO
Soldier, possessed inherent authority (app. br. at 22). An individual, who is not a
contracting officer can be found to possess "inherent" contracting authority when
contracting is an "integral" and indispensable part of their jobs. See, e.g., H. Landau
& Co. v. United States, 886 F.2d 322, 324 (Fed. Cir. 1989); Todd Pacific Shipyards
Corp., ASBCA No. 55126, 08-2 BCA ~ 33,891 at 167,756. However, here the record
demonstrates that contract administration was handled by CECOM and that none of
the PEO Soldier employees were involved in administering the contract (findings 11,
 13, 15, 34).

        There was no evidence presented in the hearing that Mr. Turner possessed any
inherent contracting authority. Instead, the record demonstrates that his role was to
monitor the buildout, but there was no evidence that Mr. Turner acted as contracting
officer. (Finding 22) The fact that Mr. Turner reviewed invoices before payment
(finding 34) does not change this conclusion. Additionally, ESP cites to Mr. Turner's
testimony that he "concurred" with the lease terms (app. br. at 22). Given the totality
of the testimony in the appeal, it appears that Mr. Turner's "concurrence" signified
that PMSEQ, as a program office, did not object to the dollar amount for the monthly
lease payment that would be passed through the prime contractor to the Army
(finding 34). ESP additionally cites to Mr. Turner's testimony that he went back to
Ms. Shreve for her concurrence. However, Mr. Turner also testified that he did not
pass any of this information on to the contracting officer. (Finding 34) Thus, in total,
the evidence does not support a finding that Mr. Turner assented to an agreement that
the Army would occupy the warehouse for a set period of years. Although knowledge
is not necessary to establish a lack of authority (see Federal Crop Ins., 332 U.S.
at 3 85), here, Mr. Hoffman, the former CEO of ESP was a former deputy director of
 logistics with the Army and was aware that only a warranted contracting officer could
 bind the government (finding 23). Thus, it would not have been reasonable for ESP to
 rely on anything that Mr. Turner may or may not have said.



                                            17
        ESP's second argument, with respect to contracting authority, that there was a
ratification, fares no better. ESP actually makes two interrelated arguments regarding
ratification: 1) that there was an institutional ratification; and 2) that the contracting
officer's acceptance of the benefits of the expanded warehouse constituted a
ratification. ESP's institutional ratification argument relies on the holding in
Silverman v. United States, 230 Ct. Cl. 710 ( 1982). In that case the plaintiff court
reporter was a subcontractor on a contract with the Federal Trade Commission (FTC)
to transcribe hearings. Silverman had not been paid for several transcripts previously
provided to the prime contractor and was concerned regarding the prime' s financial
viability. Because of this, Silverman sent the transcripts for two days of hearings to
the prime contractor c.o.d., and the prime contractor rejected the shipment. Silverman
contacted the FTC, informing it of the status of the transcripts and requesting that the
FTC not make any further payments to the prime contractor until Silverman was paid
for previously delivered transcripts. The FTC official promised to pay directly to
Silverman any amounts still due the prime contractor for the previously-furnished
transcripts and payment for the two days of transcripts currently being withheld by
Silverman in consideration for Silverman providing the transcripts directly to the FTC,
rather than providing the transcripts to the prime contractor. Id. at 703-07.

        The trial judge made factual findings, adopted by the Court of Claims, that
offer, acceptance, and consideration were evident in the FTC official's offer to pay
directly to Silverman the funds for transcripts not previously paid to the prime
contractor in exchange for Silverman releasing the two days of hearing transcripts
directly to the FTC. The trial judge also found that the FTC had ratified the
implied-in-fact agreement by accepting the transcripts. Silverman, 230 Ct. Cl. at 710
("the FTC ratified such promise"). 4 To the extent that Silverman is relevant here, it
can be distinguished by the express ratification of the agreement between Silverman
and the FTC official. This is supported by the holding in City of El Centro where the
Federal Circuit interpreted Silverman as being an implied-in-fact contract that was
ratified by an express agreement with an official possessing inherent authority. City of
El Centro, 922 F .2d at 821 ("By contrast, in the case before us there was no promise,
certainly no express promise, by an official empowered to bind the Government"); see
also Aero-Abre, Inc. v. United States, 39 Fed. Cl. 654, 658 (1997) (in City ofEl Centro
the Federal Circuit "construed Silverman not as a case in which a government agency
ratified an unauthorized agreement, but as one in which the contracting employee had
implied actual authority to bind the government"). As noted above, unlike in

4   However, the trial court judge explicitly found that the FTC official lacked
       contracting authority. Silverman, 230 Ct. Cl. at 707. One commentator has
       referred to the "appellate decisions dealing with the 'authority' issue in
       implied-in-fact contract cases" as "[a] [m]ess." "Implied-In-Fact Contracts:
       The 'Authority' Stumbling Block." 14 CIBINIC & NASH REPORT~ 5 (Jan.
       2000).

                                            18
Silverman it is clear that there was no meeting of the minds between ESP and the
Army as the Army twice rejected ESP's efforts to insert language into the prime
contract with the Army to make the Army liable for a prepayment penalty
(findings 13-14, 50).

        ESP also cites Janowsky v. United States, 133 F.3d 888 (Fed. Cir. 1998) in
support of its institutional ratification argument (app. hr. at 20-21 ). However, the facts
in Janowsky differ significantly from this appeal. Janowsky was a procedural decision
in which the plaintiff owned a vending machine business and was concerned with a
possible decline in business value if he cooperated with the FBI on a sting operation.
Janowsky, 133 F.3d at 890-91. Janowsky received a verbal promise of
indemnification from an FBI agent who lacked authority, and also had his lawyer
prepare a written agreement, with input from the FBI. Id. The FBI allowed the
undercover operation to continue, and not until after capturing one of the targets of the
probe did the FBI inform Janowsky that he would not receive the promised
indemnification. Id. at 891. The Federal Circuit held that it was error for the Court of
Federal Claims to grant summary judgment because there was a factual issue regarding
whether the FBI had institutionally ratified the agreement. Id. Significantly, the
Federal Circuit again interpreted Silverman, this time backing-off the interpretation of
Silverman contained in City of El Centro and suggesting that the holding in City of El
Centro was premised on the fact that the government did not receive a direct benefit
from the implied-in-fact contract in that case, whereas it had received a direct benefit
in Silverman. Id.

        Regardless of how Silverman is interpreted, ESP has not established institutional
ratification. Rather than ratifying a purported understanding of the parties that the
Army would compensate ESP for early termination costs, the Army rejected ESP 's
attempt to include this purported agreement in the contract (findings 13-15, 32).
Significantly, this action occurred before ESP signed the lease with its landlord FPRT.
The Army again rejected this proposed contractual provision in 2008, after ESP entered
into the lease agreement with FPRT. (Finding 50) The widespread institutional
rejection of the contract terms proposed by ESP foreclose any finding of institutional
ratification of such terms (findings 3 8-3 9).

        In a related argument, ESP alleges that the contracting officer's acceptance of the
benefits of an implied-in-fact contract can constitute ratification. Here, ESP relies upon
Healthcare Practice Enhancement Network, Inc., VABCA No. 5864, 01-1
BCA ii 31,383 at 154,986, which in tum cites Sociometrics, Inc., ASBCA No. 51620,
00-1 BCA ii 30,620. However, these cases are easily distinguishable as they involve
novice contractors in situations where it should have been clear to the contracting officer
that services were being provided without a contract. In Healthcare Practice
Enhancement, a Veterans Administration (VA) official without contracting authority
retained, by written agreement, consultants to assist in preparing a strategic plan. The


                                            19
VABCA found ratification of the express but unauthorized contract because the
contracting officer attended meetings with the consultants and the committee, of which
the contracting officer was a member, sought and received the benefits of the
consultants' work. Healthcare Practice Enhancement, 01-1BCA~31,383 at 154,987.
As the Veterans Board noted in that appeal,

                     We conclude that, in cases in which a Government
             official, though lacking actual contracting authority, enters
             into an agreement with a contractor to provide something
             of value that the Government needs and receives as a
             benefit, and either an authorized CO knew or should have
             known about it (Williams) or the non-authorized
             Government official who entered the agreement was a
             senior, or high level, official (Silverman), then the
             Government is liable to compensate the contractor.
Id.

        The facts in this appeal differ from Healthcare Practice Enhancement in that
there is no written but invalid agreement between ESP and the Army. While ESP
argues that the Army's contracting officer, as in Healthcare Practice Enhancement,
was aware of the benefits of the contract, the record here does not support such an
argument. First, the contracting officers were in CECOM and were physically isolated
from the Haymarket warehouse, and not in regular contact with ESP, a subcontractor
to a series of prime contractors (findings 11, 34). Additionally, here, the Army's
contracting officer paid the prime contractor for the use of the Haymarket warehouse
(findings 20, 49, 54). ESP fails to explain how, simply by possibly having seen a copy
of the lease agreement (a subject of conflicting testimony (findings 24, 34-37, 42))
between ESP and FPRT, the contracting officer was aware of the purported
implied-in-fact contract between ESP and the Army, when the Army was paying the
prime contractor for the provision of the same benefit - the use of the Haymarket
warehouse.

        Sociometrics is largely similar to Healthcare Enhancement Practice. In
Sociometrics, the Defense Technical Information Center (DTIC) retained appellant for
assistance with its annual fall and spring conferences. There was an express contract
with a series of option years. After the government exercised the first three option years,
Sociometrics erroneously believed that DTIC had awarded the fourth option year, when,
in fact, the government had not exercised the option. The contracting officer's
representative continued working with Sociometrics in hosting the fall conference as if
the option had been exercised, and this knowledge was imputed to the contracting
officer by the Board in holding that there was an implied-in-fact contract, ratified by the
contracting officer's acceptance of the benefits. Sociometrics, 00-1 BCA ~ 30,620
at 151, 152-53. However, again in Sociometrics the Board considered the contracting


                                           20
officer's knowledge, or actually the contracting officer's representative's knowledge, of
a service being provided to be evidence of the implied-in-fact contract. But here, the
Army paid the prime contractor for the provision of the Haymarket warehouse and there
was no ''knowing acceptance" of a benefit. In fact, rather than a "knowing acceptance"
of the benefits, the contracting officer at the time that ESP entered its lease with FPRT,
Ms. Abbruzzese, was aware of ESP's request for reimbursement of the early termination
fee before ESP entered into the lease with FPRT, and she explicitly informed the prime
contractor that the Army would not accept responsibility for the contingent liability
(findings 13-15). A later contracting officer, Ms. Fernandes, rejected ESP's second
attempt to insert liability for the early termination fee into the task order (finding 50).
The understanding of the contracting officer for a finding of ratification is key and the
knowledge of contract specialists or others involved with the contract is not relevant.
Flex/ab, L.L.C. v. United States, 424 F.3d 1254, 1263 (Fed. Cir. 2005). Thus, we hold
that ESP has not established the existence of an implied-in-fact contract with the Army.
Moreover, as ESP has not established authority, we reject ESP's argument that the fact
that the Army's rejection of the early termination fee does not preclude finding an
implied-in-fact contract for the year six rent (app. reply br. at 8-9).

   III.   ESP has not Established Entitlement under Quantum Meruit

        ESP asserts that it is entitled to recover under quantum meruit pursuant to the
Board's holding in Honeywell lnt'l, Inc., ASBCA No. 57779, 15-1BCA~36,121. In
Honeywell the Board noted that where "the government receives the goods or services
for which it contracted, but then seeks to avoid payment by arguing that the underlying
contract was unlawful" the contractor may recover under the theory of quantum
meruit. Id. at 176,340 (quoting United Pac. Ins. Co. v. United States, 464 F.3d 1325,
1334 (Fed. Cir. 2006)). ESP additionally cites to Gould, Inc. v. United States, 67 F.3d
925, 930 (Fed. Cir. 1995) for the similar proposition that quantum meruit permits the
contractor to be "compensated under an implied-in-fact contract when the contractor
confers a benefit to the government in the course of performing a government contract
that is subsequently declared invalid." As explained in more detail above, we hold that
there was no contract between ESP and the Army, express or implied-in-fact, that
would serve as the basis for recovery under quantum meruit. Recovery under quantum
meruit prevents the government from unjustly benefiting from goods or services
provided pursuant to an unenforceable contract. Here, we have held that there is no
contract. Moreover, as noted above, the Army paid the prime contractor for provision
of the Haymarket warehouse pursuant to the express contracts between the Army and
prime contractors (findings 20, 49, 54). Thus, the government paid for the benefit it
received, and there is no basis for recovery under a theory of quantum meruit.

      Finally, we note that Count I of ESP's complaint asserted that the Army
breached its prime contract with the Treasury Department's BPD (compl. ~~ 36-43).



                                           21
ESP presented no evidence in support of this argument at the hearing, or in its
post-hearing brief. This argument is waived.

                                       CONCLUSION

        ESP has not established the existence of a contract with the Army for payment
of the early termination fee, year six rent, and other costs. The appeal is denied.

          Dated: 4 August 2017

                                                    "
                                                    IJ~ /.j 'fl.a..&••- -
                                                               '



                                                  DAYID D' ALESSANDRIS
                                                  Administrative Judge
                                                  Armed Services Board
                                                  of Contract Appeals

 I concur                                         I concur
     (I      /\
  ~__.___\-----

 ~SHAcKLEFORD                                     J. REID PROUTY
 Administrative Judge                             Administrative Judge
 Acting Chairman                                  Acting Vice Chairman
 Armed Services Board                             Armed Services Board
 of Contract Appeals                              of Contract Appeals


       I certify that the foregoing is a true copy of the Opinion and Decision of the
Armed Services Board of Contract Appeals in ASBCA No. 58633, Appeal of
Engineering Solutions & Products, LLC, rendered in conformance with the Board's
Charter.

          Dated:



                                                  JEFFREY D. GARDIN
                                                  Recorder, Armed Services
                                                  Board of Contract Appeals




                                           22
