               ARMED SERVICES BOARD OF CONTRACT APPEALS

Appeal of --                                  )
                                              )
DynPort Vaccine Company LLC                   )      ASBCA No. 59298
                                              )
Under Contract No. DAMDl 7-98-C-8024          )

APPEARANCE FOR THE APPELLANT:                        Carl J. Peckinpaugh, Esq.
                                                      Counsel
                                                      Computer Sciences Corporation
                                                      Falls Church, VA

APPEARANCES FOR THE GOVERNMENT:                      Raymond M. Saunders, Esq.
                                                      Army Chief Trial Attorney
                                                     Kyle E. Chadwick, Esq.
                                                      Trial Attorney

           OPINION BY ADMINISTRATIVE JUDGE JAMES ON THE
      GOVERNMENT'S MOTION TO DISMISS FOR LACK OF JURISDICTION

       The contracting officer's (CO's) unilateral contract modification directed
appellant to perform corrective or replacement work at no cost to the government
pursuant to the contract's FAR 52.246-8, INSPECTION OF RESEARCH AND
DEVELOPMENT - COST-REIMBURSEMENT (APR 1984) clause. Appellant appealed
from the issuance of that modification. The government moves to dismiss the
appeal for lack of jurisdiction under the Contract Disputes Act (CDA), 41 U.S.C.
§§ 7101-7109, on the ground that such modification did not assert a government claim.
Appellant opposed the motion and requested that the government file the first
pleading. The government replied. We deny the motion and grant appellant's request.

         STATEMENT OF FACTS (SOF) FOR PURPOSES OF THE MOTION

        1. On 7 November 1997. the U.S. Army Medical Research Acquisition
Activity, on behalf of the Department of Defense Joint Vaccine Acquisition Program,
awarded Contract No. DAMDl 7-98-C-8024 (the contract), a cost-reimbursement, cost
sharing, award fee research and development type contract to ·'DynPort, LLC" 1 for,
inter alia, the development and licensure application of vaccines and other biological
defense products (gov't mot., ex. G-1 at 1-3, 302 ). Under contract line item number
(CLIN) 0016, DVC was required, on a cost-plus-award-fee basis, to develop and test

1
    Modification No. P00354 was issued to DynPort Vaccine Company, LLC (DVC)
         (gov't mot., ex. G-2). DVC is a wholly-owned subsidiary of Computer
         Sciences Corporation (app. opp'n, ex. A, Pandey decl. (Pandey decl.) iJ 1).
2
    Citations to pages in exhibits G-1, -3 and -4 are to their Bates numbers.
for FDA licensure application serotypes of a botulinum (BOT) vaccine (gov't mot. i-f 1,
ex. G-1at10-11; Pandey decl. ~ 2).

       2. The contract incorporates by reference the FAR 52.233-1, DISPUTES (OCT
1995) - AL TERNA TE I (DEC 1991) clause, which provides, in pertinent part:

                    ( c) Claim, as used in this clause, means a written
             demand or written assertion by one of the contracting
             parties seeking, as a matter of right, the payment of money
             in a sum certain, the adjustment or interpretation of
             contract terms, or other relief arising under or relating to
             this contract. ...

                   (d)( 1) ... A claim by the Government against the
             Contractor shall be subject to a written decision by the
             Contracting Officer.



                    (i) The Contractor shall proceed diligently with
             performance of this contract, pending final resolution of
             any request for relief. claim. appeal, or action arising under
             the contract, and comply with any decision of the
             Contracting Officer.

(Gov't mot., ex. G-1 at 61)

      3. The contract also incorporated by reference the FAR 52.246-8, INSPECTION
OF RESEARCH AND DEVELOPMENT- COST-REIMBURSEMENT (APR 1984) clause,
which provides, in pertinent part:

                     ( f) At any time during contract performance, but no
             later than 6 months (or such other time as may be specified
             in the contract) after acceptance of all the end items (other
             than designs, drawings, or reports) to be delivered under
             the contract, the Government may require the Contractor to
             replace or correct work not meeting contract requirements.
             Time devoted to the replacement or correction of such
             work shall not be included in the computation of the above
             time period. Except as otherwise provided in paragraph
             (h) below, the cost of replacement or correction shall be
             determined as specified in the Allowable Cost and
             Payment clause, but no additional fee shall be paid. The
             Contractor shall not tender for acceptance work required to

                                           2
             be replaced or corrected without disclosing the former
             requirement for replacement or correction, and when
             required, shall disclose the corrective action taken.

                    (g) (I) If the Contractor fails to proceed with
             reasonable promptness to perform required replacement or
             correction the Government may-

                    (i) By contract or otherwise, perform the
             replacement or correction, charge to the Contractor any
             increased cost, or make an equitable reduction in any fixed
             fee paid or payable under the contract;

                    (ii) Require delivery of any undelivered articles and
             shall have the right to make an equitable reduction in any
             fixed fee paid or payable under the contract; or

                    (iii) Terminate the contract for default.

                     (2) Failure to agree on the amount of increased
             cost to be charged the Contractor or to the reduction in
             fixed fee shall be a dispute.

                     (h) Notwithstanding paragraphs (f) and (g) above,
             the Government may at any time require the Contractor to
             remedy by correction or replacement, without cost to the
             Government, any failure by the Contractor to comply with
             the requirements of this contract, if the failure is due to (I)
             fraud, lack of good faith. or willful misconduct on the part
             of the Contractor's managerial personnel or (2) the conduct
             of one or more of the Contractor's employees selected or
             retained by the Contractor after any of the Contractor's
             managerial personnel has reasonable grounds to believe
             that the employee is habitually careless or unqualified.

(Gov't mot., ex. G-1 at 37)

       4. On 7 February 2012 bilateral Modification No. P00354 established a
delivery date of July 2016 for the CLIN 0016 vaccines (gov't mot.~ 1, ex. G-2 at 3).

      5. On 23 August 2013 DVC terminated for default its subcontractor, Lonza
Hopkinton, Inc., for BOT antigens under CLIN 0016 (gov't mot.~ 3, ex. G-3 at 3;
Pandey decl. ~ 4 ).


                                            3
        6. DVC's 14 November 2013 letter to CO Lawrence Mize proposed a change
order to add subcontractor FUJIFILM Diosynth Biotechnologies, U.S.A., LLC
(FDBU) to complete CLIN 0016 BOT Antigen A and Antigen B manufacturing,
testing and two technology transfer studies for $4,071, 175 ($4,629,326.19 with
DVC markup). DVC stated that such studies were required to complete manufacturing
processes and testing of the vaccine product for Ii censure and readiness for
commercial production due to the impact caused by the Lonza termination. DVC
requested a contract modification incorporating the proposed new work on or before
13 December 2013. (Gov't mot., ex. G-3 at 1, 3-5, 10)

      7. On 15 November 2013, when the parties met to discuss DVC's change
proposal, the government told DVC that it did not believe DVC was entitled to
reimbursement of its proposed technology transfer costs (gov't mot. ~ 6, ex. G-4 at 1;
Pandey decl. ~ 6 ).

         8. DVC's 26 November 2013 letter to CO Mize stated that DVC was entitled to
an increase in the contract cost for the proposed studies, such cost was allowable and
reimbursable, under the contract the government had previously reimbursed DVC for
technology transfer costs for performance-related issues, the shutdown of Lonza's
facilities was unknown and unpreventable, and DVC had expended its best efforts to
meet contractual requirements (gov't mot., ex. G-4 ).

        9. CO Mize's 20 January 2014 letter responded to DVC's 26 November 2013
letter and asserted that the government was not liable for increased costs due to DVC's
"carelessness in its conduct of the work or the degree of its disregard of contractual
duties" (gov't mot., ex. G-5, ~ 1). The CO objected to reimbursing DVC for its
proposed increased costs because previous technology transfers did not involve DVC's
failure to undertake its best efforts to meet contractual duties, there were reasonable
grounds for DVC's managerial personnel to believe DVC's employees were habitually
careless, Lonza's deficient performance resulted from DVC's "gross disregard of [its]
contractual duties" and DVC failed to acknowledge ··any failure on its own part nor
offered to re-perform at its expense or to reimburse the Government for failed
performance" (id. ~ii 3, 5, 9, 11 ). The CO asked DVC to respond by letter either
stating that it will not pay any amount for its alleged failures. or proposing an amount
DVC considered appropriate under the circumstances (id. ii 12). The letter did not
state that it was a CO's decision or advise DVC of its appeal rights.

       10. DVC's 31 January 2014 letter denied the CO's 20 January 2014 allegations
that DVC was in "gross disregard'" of its contractual responsibilities and repeated that
it was not liable for the proposed technology transfer costs. DVC argued that the CO
could redress any performance issues or concerns he had through the contract's award
fee provisions in the contract, rather than by denying DVC's incurred costs, and
suggested that the government accept DVC's original proposal. (Gov't mot., ex. G-6)


                                           4
       11. On 21 February 2014, CO Mize issued unilateral Modification No. P00431
(Mod. P00431 ), citing FAR 52.246-8(h). Mod. P0043 l incorporated DVC's
14 November 2013 proposed change order, directed DVC to proceed with the
proposed work, but at no cost to the government "due to [DVC]'s willful managerial
misconduct and/or habitual employee carelessness" and created government options to
proceed with work at different stages in accordance with the proposed change order.
(Gov't mot., ex. G-7)

       12. DVC's 14 March 2014 letter notified CO Mize that it intended to seek an
equitable adjustment for the technology transfer costs based on the work directed
under Mod. No. P00431 pursuant to the Changes clause of the contract (FAR 52.243-2
(AUG 1987) - AL TERNA TE v (APR 1984 ), which DVC stated was the authority for
Mod. P00431 (gov't mot., ex. G-8).

        13. By letter dated 23 April 2014. CO Mize exercised the Mod. P00431 option,
and directed DVC to perform the optional work pursuant to FAR 52.246-8(h) at no
cost to the government (gov't mot., ex. G-9). Neither Mod. P0043 l nor the 23 April
2014 letter stated that it was a CO's decision or advised DVC of its appeal rights.

       14. On 7 May 2014 DVC appealed to the Board from Mod. P00431 and the
23 April 2014 option exercise, asserted that such documents constituted a de facto
CO's final decision, and requested the Board to direct the government to file the initial
pleading under Board Rule 6 because the appeal was from a government claim.

        15. On 5 June 2014, in response to the Board's 9 May 2014 direction to
provide its views on DVC's request that the government file a pleading in the nature of
a complaint, the government filed its motion to dismiss this appeal for lack of
jurisdiction on the ground that Mod. P0043 l did not assert a government claim.

                                      DECISION

                                            I.

        The government argues that since Mod. P0043 I was issued during contract
performance and it has not accepted or rejected any contract deliverable, Mod. P00431
was an act of contract administration, not a government claim, citing Hughes Aircraft
Co., Electron Dynamics Division, ASBCA No. 43877, 93-3 BCA ~ 26,133 at 129,903
n.* (gov't mot. at 7, I 0-11 ). DVC argues that it is not required to complete
performance and submit its own claim in lieu of appealing the CO's unilateral
direction, citing Alliant Techsystems, Inc. v. United States, 178 F.3d 1260, 1265-66
(Fed. Cir. 1999), and Garrett v. General Electric Co., 987 F.2d 747 (Fed. Cir. 1983)
(app. opp'n at 6-8).



                                            5
        Hughes Aircraft involved a $9,402,806 contractor claim for redesign and
retesting of wave tubes. The jurisdictional issues decided were the adequacy of
appellant's claim certification and whether such claim was in dispute when submitted. 3
93-3 BCA if 26,133 at 129,899. The Board's footnote, "Unlike the situation in
General Electric .. .appellant here had not completed performance ... when the
government directed it to repair or replace the 46 wave tubes. Thus, that direction was
within the ambit of ordinary contract administration, and not a 'claim' within our
jurisdiction," 93-3 BCA ii 26,133 at 129,903, was dictum, and in any event does not
stand for the proposition that contract performance must be completed for a direction
to be considered outside the bounds of ordinary contract administration. It does not
mandate the granting of this motion. General Electric addressed a Navy demand that
GE repair defective engines at no cost after revocation of their final acceptance under
one of the remedies provided for in the contract's Inspection clause. This appeal
concerns a government order during contract performance for the contractor to
perform change order work at no cost to the government due to alleged '"willful
managerial misconduct and/or habitual employee carelessness'' pursuant to the
Inspection of Research and Development --Cost Reimbursement clause, ii (h).

        As the proponent of the Board'sjurisdiction, DVC bears the burden of proof of
suchjurisdiction. See Cedars-Sinai Medical Ctr. v. Watkins, 11 F.3d 1573, 1584 (Fed.
Cir. 1993) (invoking party has burden of proving facts sufficient to support
jurisdiction). A prerequisite of the Board's exercise of jurisdiction over appeals of
government claims under the CDA is a contracting officer's written decision asserting
a claim against the contractor. 41 U.S.C. § 7103(a)(3). The term "claim" is not
defined in the CDA. However, FAR 33.201 in November 1997 and paragraph (c) of
the contract's Disputes clause defined the term as ''a written demand or written
assertion by one of the contracting parties seeking, as a matter of right, the payment of
money in a sum certain, the adjustment or interpretation of contract terms, or other
relief arising under or relating to this contract" (SOF if 2).

                                             I I.

       We address first whether CO Mize's direction to DVC in Mod. P0043 l or in his
23 April 2014 letter to DVC was a government claim in the context of the parties'
pertinent communications. The absence of an express styling of a document as a CO's
decision or of notice of the contractor's appeal rights. or of both, does not render a
CO's decision ineffective or deprive the Board of jurisdiction. See KAL ME.I.
Manufacturing & Trade Ltd., ASBCA Nos. 44367, 45531 et al., 94-1 BCA if 26,582
at 132,257-58 (Board had jurisdiction of ASBCA No. 45531 because government
modification withholding $42,605.30 for a lost shipment constituted "a final decision



3
    Hughes was decided prior to the Federal Circuit's opinion in Rejlectone, Inc. v.
        Dalton, 60 F.3d 1572 (Fed. Cir. 1995) (en bane).
                                            6
on a government claim" notwithstanding that it was not designated a CO's decision
and contained no advice of the contractor's appeal rights.).

       In deciding the government's motion to dismiss we must consider all the facts
and circumstances in the record to determine whether the CO's unilateral
Mod. P00431 is an appealable decision. See LTV Aerospace and Defense Co., Vought
Missiles and Advanced Programs Division, ASBCA No. 35674, 89-2 BCA, 21,858
at 109,950 (in each case, the facts and circumstances surrounding how a claim arose
and how a final decision came to be issued at the time must be analyzed. CO's
unilateral modification reducing contract price was a government claim.).

       From 14 November 2013 through 23 April 2014 the parties exchanged
correspondence disputing whether DVC's proposed technology transfer work to be
performed by subcontractor FDBU had to be performed at no cost to the government
(SOF ,, 6-13). CO Mize's unilateral Mod. P00431 directed DVC to perform the work
specified in DVC's 14 November 2013 change proposal at no cost to the government
pursuant to FAR 52.246-8(h) "due to [DVC's alleged] willful managerial misconduct
and/or habitual employee carelessness," and his 23 April 2014 unilateral exercise of an
option included in Mod. P00431 was to be at no cost to the government (SOF ,, 11,
13). DVC disagreed that the conditions of 52.246-8(h) had been met, that the clause
was applicable to the relevant circumstances and appealed from the CO's issuance of
Mod. P0043 l and the 23 April 2014 letter (SOF , 14 ).

       It is clear that '"other relief" (see SOF   ~
                                               2) can include directions by the CO to the
contractor to correct or replace work and be considered a government claim under
circumstances where the Board is not being asked to take jurisdiction over ordinary
contract administration actions. General Electric, 987 f .2d 74 7. We are persuaded
under the circumstances present here, that Mod. P0043 l asserted a government claim for
"other relief' against DVC under the CDA for two reasons. First, the definition of
"claim" is to be read broadly. See Todd Construction, LP. v. United States, 656 F.3d
1306, 1311 (Fed. Cir. 2011 ). The government's argument would limit government
nonmonetary claims to instances after acceptance of work or contract completion,
contrary to the broad FAR definition of a claim. See Alliant, 178 F .3d at 1267 (court
rejected the government's argument that the Disputes clause excluded nonmonetary
claims filed before completion of performance because that "would render largely
meaningless those portions of the definition of claim that refer to requests for
nonmonetary relief'). Furthermore, such argument would improperly narrow the FAR
52.246-8(h) provision "the Government may at any time require the Contractor to
remedy ... without cost to the Government, any failure by the Contractor to comply with
the [contract] requirements'' (emphasis added) (SOF ii 3). Second, in mid-November
2013 the parties began to disagree about whether DVC was entitled to reimbursement
for its proposed $4 million change order (SOF ii~ 6-8). Their disagreement continued
until the CO directed DVC, by unilateral Mod. P0043 l and his 23 April 2014 letter, to
perform the change order work without cost to the government (SOF iii! 11, 13). The

                                              7
CO has ordered DVC to perform changed work in a cost-reimbursement contract
without compensation pursuant to one of the remedies available to it in an Inspection
clause in the contract which requires the CO to have found the contractor to have
committed serious failures in performing the contract's requirements. This does not
strike us as a dispute as to ordinary contract administration. In these circumstances, the
CO's direction was a decision asserting a government claim. Since Mod. P00431
asserted a government claim, and DVC timely appealed, we hold that we have
jurisdiction to entertain DVC's appeal.

                                           III.

       We tum to whether the government should file the initial pleading in this
appeal. Since the CO is the only one that knows specifically what facts he relied on to
determine that DVC had failed to perform the requirements of the contract such that
FAR 52.246-S(h) was available to the government, and no explicit CO decision was
issued, we determine that requiring the government to file a pleading in the nature of a
complaint would facilitate the proceedings. Beechcraft Defense Company, ASBCA
No. 59173, 14-1BCA~35,592. It shall do so within 60 days from the date of this
decision.

                                    CONCLUSION

       The government's motion is denied. The government shall file its complaint
within 60 days from the date of this Opinion.

       Dated: 15 January 2015



                                                                    S,
                                                  Administrativ Jud
                                                  Armed Service      ard
                                                  of Contract Appeals

I concur                                          I concur


/J~.hZ/
~
               .
    ~-----------
MARK N. STEMPLER
                                                  ~-
                                                  RICHARD SHACKLEFORD
Administrative Judge                              Administrative Judge
Acting Chairman                                   Vice Chairman
Armed Services Board                              Armed Services Board
of Contract Appeals                               of Contract Appeals


                                            8
      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. 59298, Appeal ofDynPort
Vaccine Company LLC. rendered in conformance with the Board's Charter.

      Dated:



                                              ~----------------


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




                                          9
