                     In the United States Court of Federal Claims
                                          No. 14-496C

                                      (Filed: May 11, 2015)


  **********************************           )     Contractual dispute over trucking
                                               )     services in Afghanistan; motion to
  MANSOOR INTERNATIONAL                        )     dismiss count of the complaint alleging
  DEVELOPMENT SERVICES, INC.,                  )     breach of the implied covenant of good
                                               )     faith and fair dealing
                        Plaintiff,             )
                                               )
         v.                                    )
                                               )
  UNITED STATES,                               )
                                               )
                        Defendant.             )
                                               )
  **********************************

       Thomas M. Brownell, Holland & Knight LLP, McLean, Virginia, for plaintiff. With
Mr. Brownell on the brief was Terry L. Elling, Holland & Knight LLP, McLean, Virginia.

       Michelle R. Musgrave and Scott A. MacGriff, Trial Attorneys, Commercial Litigation
Branch, Civil Division, United States Department of Justice, Washington, D.C., for defendant.
With Ms. Musgrave on the briefs were Joyce R. Branda, Acting Assistant Attorney General,
Civil Division, Robert E. Kirschman, Jr., Director, and Reginald T. Blades, Jr., Assistant
Director, Civil Division, United States Department of Justice, Washington, D.C. Of counsel was
Major Jennifer A. McKeel, Litigation Attorney, United States Army Legal Services Agency, Fort
Belvoir, Virginia.

                                     OPINION AND ORDER

LETTOW, Judge.

       This case arises from a contract dispute between Mansoor International Development
Services, Inc. (“Mansoor” or “plaintiff”) and the United States (“the government”), acting
through the United States Army, Bagram Regional Contracting Center (“the Army”). In August
2011, Mansoor entered into an indefinite delivery/indefinite quantity (“IDIQ”) contract with the
Army to provide trucking services in Afghanistan, which was terminated for default in March
2012. Compl. ¶¶ 4-5, 7. Thereafter, Mansoor submitted a claim to the contracting officer in the
amount of 81,473,654 Afghani (“AFN”) seeking payment for various invoices. Compl. ¶ 8.1 In
June 2013, the contracting officer issued a final decision partially denying Mansoor’s claim for
payment. See Compl. Attach. B (Contracting Officer’s Final Decision (June 11, 2013)).

        Mansoor brings this action pursuant to the Contract Disputes Act (“CDA”),2 alleging
breach of contract (Count I), Compl. ¶¶ 16-19, and breach of the implied covenant of good faith
and fair dealing (Count II), Compl. ¶¶ 20-25. The government has filed a motion to dismiss
Count II of the complaint for lack of subject matter jurisdiction pursuant to Rule 12(b)(1) of the
Rules of the Court of Federal Claims (“RCFC”) and for failure to state a claim upon which relief
can be granted pursuant to RCFC 12(b)(6). See Def.’s Mot. to Dismiss Count II of Pl.’s Compl.
for Lack of Subject Matter Jurisdiction and Failure to State a Claim (“Def.’s Mot.”) at 1, ECF
No. 16. The government’s motion has been fully briefed and was addressed at a hearing held on
May 8, 2015.

                                        BACKGROUND3

        Mansoor is an Afghan corporation based in Kabul, Afghanistan. Compl. ¶ 2. On or
about August 11, 2011, the Army awarded to Mansoor contract number W91B4N-11-D-7011
(“the contract”) for approximately 48,307,159,600 AFN. Compl. ¶ 4. The award was a multi-
award IDIQ contract to provide trucking services in Afghanistan on an initial 12-month term
pursuant to the National Afghan Trucking (“NAT”) program. Compl. ¶¶ 5, 7. The contract
divided the transportation missions into three “Suites”— Suite I (Bulk Fuels), Suite II (Dry
Cargo), and Suite III (Heavy Cargo) — based upon the type of cargo being transported and the
equipment needed for such transportation. Compl. ¶ 6. For services under each Suite, the
contract specified a series of fixed unit prices attributed to completed mission units, assets used,
and responsibility for security of the mission. Compl. ¶ 6.

        Under the terms of the contract, the Army issued task orders consisting of Transportation
Movement Requests (“TMRs”) for transportation missions. Compl. ¶ 5. The TMRs were
awarded on a competitive basis based upon NAT contractors’ rankings. Compl. ¶ 5. Payment of
the TMRs was determined by fixed-unit prices for services, distances, and delays, in addition to
other factors. Compl. ¶ 5. Payment was subject to reduction or back-charge due to quality
assurance and control factors, such as “unexcused delays, failures to comply with performance
objectives, failures to complete the mission[,] and/or pilferage or loss of the cargo.” Compl. ¶ 5.
Further, under paragraph 5.4 of the contractual Performance Work Statement (“PWS”), a



       1
        The Afghani (code: “AFN,” symbol: “Afs”) is the currency of Afghanistan. The
claimed amount, 81,473,654 AFN, amounts to 1,406,660 USD, at an exchange rate of 1 AFN =
0.01727 USD. See Compl. n.1.
       2
           The Contract Disputes Act of 1978, as amended, is codified at 41 U.S.C. §§ 7101-09.
       3
        The recitation that follows does not constitute findings of fact by the court and is
provided solely to establish a context for deciding the currently pending motion.


                                                  2
mission completed more than seven days past the required delivery date was considered “failed”
and no compensation would be awarded. Compl. Attach. B ¶ 4a.

        On March 31, 2012 the Army terminated its contract with Mansoor for default. Compl.
¶ 7.4 Thereafter, Mansoor submitted a certified claim to the contracting officer in the amount of
81,473,654 AFN for “some 519 TMRs, previously submitted under various invoices, that the
[g]overnment had refused to pay, in whole or in part, for the period between September, 2011
and June, 2012.” Compl. ¶ 8; see also Compl. Attach. A (Certification of Claims for Contract
No. W91B4N-11-D-7011 (Feb. 22, 2013)). After receiving Mansoor’s claim, the contracting
officer notified plaintiff that the Army was willing to discuss a settlement for the 519 TMRs at
issue. See Compl. Attach. B ¶ 4. During a teleconference held on April 25, 2013, the Army
explained “that settlement negotiation would center around a single claim adjudication that
would encompass all 519 TMRs which constituted [Mansoor’s] claim” and offered to pay
Mansoor a portion of its original claim. Compl. Attach. B ¶ 5. In response, Mansoor requested
that the Army evaluate each TMR individually, and on May 26, 2013, it submitted a
counteroffer. See Compl. Attach. B ¶¶ 5, 8. On June 5, 2013, the contracting officer provided
Mansoor a further counteroffer. See Compl. Attach. B ¶ 9. Mansoor rejected this latest offer and
stated that its previous counteroffer still stood. See Compl. Attach. B ¶ 9. At that time, the
Army felt that Mansoor was not willing to negotiate “in good faith by indicating [its] previous
counteroffer [still stood] even though the [g]overnment offered a higher offer.” Compl. Attach.
B ¶ 9.

        Facing a stalemate in settlement negotiations, the contracting officer issued a final
decision on June 11, 2013 in accord with the Federal Acquisition Regulations, 48 C.F.R.
(“FAR”) § 33.210. See Compl. Attach. B.5 The contracting officer stated that the Army
“agree[d] that [Mansoor] ha[d] established entitlement to part of its claims, but, based on the
results of [an] audit[,] the [Army] disagree[d] with [Mansoor] that the entirety of the claim [was]
valid.” Compl. Attach. B ¶ 9. The audit was based on an “Aggregate Claims Adjudication
(‘ACA’) method” which segregated non-meritorious TMRs, compared categories of TMRs, and




       4
        Relatedly, the termination for default is under appeal before the Armed Services Board
of Contract Appeals (“ASBCA”) as case number ASBCA 58423. Compl. ¶ 7. That appeal has
been consolidated with other pending appeals from Mansoor related to the contract at issue. See
Def.’s Mot. at 3 n.2.
       5
           The provision of the FAR states, in relevant part:

                 [C]ontracting officers are authorized, within any specific limitations
                 of their warrants, to decide or resolve all claims arising under or
                 relating to a contract subject to the [Contract] Disputes [Act]. In
                 accordance with agency policies and 33.214, contracting officers
                 are authorized to use ADR procedures to resolve claims. . . .

FAR § 33.210.
                                                   3
conducted a sampling of individual TMRs. Compl. Attach. B ¶ 2. According to the contracting
officer,

               [t]he ACA method utilizes historical data to produce a baseline for
               sampling of a NAT contract carrier’s claims. To prepare a
               proposal, the contracting officer uses the ACA method to develop
               a statistically sound payout expectation. The ACA results are then
               compared to a historical data trend analysis to audit the validity of
               a carrier’s claim. Given the discrete set of variables affecting the
               payout of individual TMRs, the large sample size of TMRs, and
               standard statistical analysis, the ACA auditing method produces a
               sound method for evaluating a particular NAT contract carrier’s
               overall claim for a set of TMRs submitted.

Compl. Attach. B. ¶ 3. This approach indicated that several TMRs reflected failed missions
where Mansoor did not ensure timely delivery pursuant to the PWS or comply with a Required
Spot Date. Compl. Attach. B. ¶¶ 4a-c; see also Compl. ¶ 9. Additionally, a large percentage of
TMRs submitted by Mansoor lacked military grid reference system coordinates and other data
“which would identify performance measurement standards necessary to validate basic
transportation services.” Compl. Attach. B. ¶ 4d. Based on the ACA method, the contracting
officer determined that Mansoor was only entitled to 30,000,000 AFN of its total claim. Compl.
Attach. B ¶ 9.

         Just short of one year after the final decision, on June 9, 2014, Mansoor filed a complaint
in this court. Count I of the complaint alleges that the Army breached the contract by refusing to
pay, in full or in part, for the 519 TMRs included in Mansoor’s certified claim. Compl. ¶ 17. In
Count II, Mansoor contends that the Army breached the implied covenant of good faith and fair
dealing because the contracting officer failed to “fairly and independently consider the merits of
the contractor’s claim.” Compl. ¶ 24. Mansoor alleges that the contracting officer “applied
undisclosed statistical analyses, involving data from other contracts, to the gross amount of
[Mansoor’s] claim, [and] refus[ed] to consider or negotiate with [Mansoor] the merits of
individual claim elements.” Id.6 In terms of relief, Mansoor seeks damages in the amount of
75,000,000 AFN, in addition to “interest, costs of suit[,] and other relief as to the [c]ourt may
seem just and proper.” Compl. at 7.




       6
         After filing its complaint, Mansoor submitted a motion to consolidate the current case
with the appeals pending before the ASBCA. Pl.’s Mot. to Consolidate Appeal with Appeals
Pending Before the Armed Services Board of Contract Appeals, ECF No. 10. The government
objected, representing to the court that it was exploring whether Mansoor engaged in fraud
during performance of the underlying contract and contending that this court should retain
jurisdiction because it possesses the juridical power to hear fraud claims. See Def.’s Response in
Opp’n to Pl.’s Mot. to Consolidate and Request for an Extension of Time, ECF No. 11. In these
circumstances, the court issued an order on January 23, 2015 denying Mansoor’s motion to
consolidate without prejudice to potential renewal. See Order of Jan. 23, 2015, ECF No. 15.
                                                 4
                                 STANDARDS FOR DECISION

                                           A. Jurisdiction

        Before proceeding to the merits, “a court must satisfy itself that it has jurisdiction to hear
and decide a case.” Hardie v. United States, 367 F.3d 1288, 1290 (Fed. Cir. 2004) (quoting
PIN/NIP, Inc. v. Platte Chem. Co., 304 F.3d 1235, 1241 (Fed. Cir. 2002)) (internal quotation
marks omitted). When deciding whether to dismiss a motion under Rule 12(b)(1) for lack of
subject matter jurisdiction, the court will “normally consider the facts alleged in the complaint to
be true and correct.” Reynolds v. Army & Air Force Exch. Serv., 846 F.2d 746, 747 (Fed. Cir.
1988) (citing Scheuer v. Rhodes, 416 U.S. 232, 236 (1974)). The plaintiff bears the burden of
“alleg[ing] in his pleading the facts essential to show [subject matter] jurisdiction” by a
preponderance of the evidence. McNutt v. General Motors Acceptance Corp. of Ind., 298 U.S.
178, 189 (1936); see also Reynolds, 846 F.2d at 748.

                                    B. Failure to State a Claim

        Dismissal is warranted under Rule 12(b)(6) if the “facts asserted by the claimant do not
under the law entitle him [or her] to a remedy.” Perez v. United States, 156 F.3d 1366, 1370
(Fed. Cir. 1998). To survive a motion to dismiss for failure to state a claim, the plaintiff’s
complaint must “contain sufficient factual matter, accepted as true, to ‘state a claim to relief that
is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678, (2009) (quoting Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 570 (2007)). A claim is facially plausible “when the plaintiff pleads
factual content that allows the court to draw the reasonable inference that the defendant is liable
for the misconduct alleged.” Id. (citing Twombly, 550 U.S. at 556). Additionally, the facts
alleged must “‘plausibly suggest[] (not merely [be] consistent with)’ a showing of entitlement to
relief.” Cary v. United States, 552 F.3d 1373, 1376 (Fed. Cir. 2009) (quoting Twombly, 550 U.S.
at 557). Although the complaint “does not need detailed factual allegations,” Twombly, 550 U.S.
at 545, it must present more than “‘naked assertion[s] devoid of ‘further factual enhancement,’”
Iqbal, 556 U.S. at 678 (citing Twombly, 550 U.S. at 557) (alteration in original), or “the-
defendant-unlawfully-harmed-me-accusation[s],” id. (citing Twombly, 550 U.S. at 555). The
court must “draw on its judicial experience and common sense” in determining whether the
plaintiff has pled adequate facts to allow the court to infer that his or her entitlement to relief is
plausible—not merely possible, id. at 679, and “must accept as true the complaint’s undisputed
factual allegations and should construe them in a light most favorable to the plaintiff,”
Cambridge v. United States, 558 F.3d 1331, 1335 (Fed. Cir. 2009) (citing Papasan v. Allain, 478
U.S. 265, 283 (1986); Gould, Inc. v. United States, 935 F.2d 1271, 1274 (Fed. Cir. 1991)).

                                              ANALYSIS

                                  A. Subject Matter Jurisdiction

       The government’s motion to dismiss Count II of the compliant pursuant to RCFC
12(b)(1) initially propounds the well-established premise that a contracting officer’s final
decision is only a jurisdictional prerequisite for a CDA suit in this court and the merits of the
dispute are addressed de novo without deference accorded to the contracting officer’s final
                                                  5
decision. See Def.’s Mot. at 8-9; see also Hernandez, Kroone & Associates, Inc. v. United
States, 110 Fed. Cl. 496, 519 (2013), reconsid. denied, 2013 WL 3199299 (Fed. Cl. June 25,
2013) (“Under the Contract Disputes Act, submission of a claim to the contracting officer is a
necessary prerequisite to bringing a direct action suit upon denial of the claim, but the
proceeding on the matter in this court is de novo, not an appeal of the contracting officer’s
denial.”) (citing 41 U.S.C. §§ 7103(e), 7104(b)(4)). The government then builds on this
principle by reclassifying and redefining Mansoor’s claim, averring that “the crux of Mansoor’s
claim for breach of the covenant of good faith and fair dealing appears to be that the contracting
officer did not analyze the TMRs in the manner that Mansoor requested.” Def.’s Mot. at 8. The
government argues that this premise for Mansoor’s claim is “irrelevant to the proceedings in this
[c]ourt because Mansoor must ‘prove the fundamental facts of liability and damages de novo.’”
Id.; see also Def.’s Reply in Support of its Mot. to Dismiss Count II of Pl.’s Compl. for Lack of
Subject Matter Jurisdiction and Failure to State a Claim (“Def.’s Reply”) at 3, ECF No. 19
(quoting Wilner v. United States, 24 F.3d 1397, 1401 (Fed. Cir. 1994)). From this constructed
postulate, the government leaps to the conclusion that the court lacks the juridical power “to
entertain Mansoor’s request that the [c]ourt review the contracting officer’s final decision.”
Def.’s Mot. at 9.

        Mansoor’s response also begins with a well-recognized axiom involving the implied
covenant of good faith and fair dealing, i.e., that “[t]he implied covenant of good faith and fair
dealing requires that the [g]overnment, including the [c]ontracting [o]fficer[,] ‘not . . . act so as
to destroy the reasonable expectations of the other party regarding the fruits of the contract.’”
Pl.’s Opp’n to Defendant’s Mot. to Dismiss Count II of Pl.’s Compl. for Lack of Subject Matter
Jurisdiction and Failure to State a Claim (“Pl.’s Opp’n”) at 3, ECF No. 18 (quoting Metcalf
Const. Co. v. United States, 742 F.3d 984, 991 (Fed. Cir. 2014) (in turn quoting Centex Corp. v.
United States, 395 F.3d 1283, 1304 (Fed. Cir. 2005))). Mansoor maintains that the Army
breached the implied covenant of good faith and fair dealing by applying the ACA methodology,
which allegedly constituted an approach to enforcement that was neither contemplated by the
parties nor consistent with the express terms of the contract. See Pl.’s Opp’n at 4. A claim based
upon these allegations, according to Mansoor, falls within the jurisdictional purview of this
court.

        The government disputes that the claims in Count II of the complaint pertain to a breach
of an obligation in the contract. See Def.’s Reply at 2 (“Mansoor’s response attempts to change
the focus of its complaint from taking issue with the method by which the contracting officer’s
final decision analyzed its claim to now suggesting that it has alleged a breach of an unidentified
express contract provision.”). Rather, it urges that “Mansoor’s allegations reflect a disagreement
with the contracting officer’s approach to Mansoor’s claim” and are insufficient to invoke this
court’s jurisdiction because a contracting officer’s final decision is irrelevant to this court’s de
novo review. See id. at 2-4.

        The government’s contention is sophistic and untenable. Although it is true that “once an
action is brought following a contracting officer’s decision, the parties start in [this] court . . .
with a clean slate,” Wilner, 24 F.3d at 1402, de novo consideration of a claim does not wholly
ignore what the contracting officer actually did. For this court to possess subject matter
jurisdiction under the CDA, “the contractor must submit a proper claim—a written demand that

                                                 6
includes (1) adequate notice of the basis and amount of a claim and (2) a request for a final
decision. In addition, the contractor must have received the contracting officer’s final decision
on that claim.” M. Maropakis Carpentry, Inc. v. United States, 609 F.3d 1323, 1328 (Fed. Cir.
2010). Here, there is not a want of subject matter jurisdiction because the foregoing
requirements have been satisfied. As plaintiff contends, the court has jurisdiction to determine
whether “the [Army] breached its duty of good faith and fair dealing by not (1) reviewing
[Mansoor’s] TMRs, (2) processing its invoices, and (3) determining its [c]laim in accordance
with the express terms of the [c]ontract.” Pl.’s Opp’n at 4.

               B. Breach of the Implied Covenant of Good Faith and Fair Dealing

        The government’s contention that Mansoor has failed to state a claim upon which relief
can be granted reprises its jurisdictional arguments, converting them to a charge that Count II of
the complaint lacks the requisite factual allegations to support a claim for breach of the implied
covenant of good faith and fair dealing. See Def.’s Mot. at 9; see also Def.’s Reply at 3. In the
government’s view, the implied duty of good faith and fair dealing “is limited to ensuring
compliance with the express terms of the contract and, thus, does not create obligations not
contemplated in the contract itself.” Def.’s Mot. at 9 (citing Bradley v. Chiron Corp., 136 F.3d
1317, 1326 (Fed. Cir. 1998); United States v. Basin Elec. Power Co-op., 248 F.3d 781, 796 (8th
Cir. 2001)). This argument focusing solely on express terms of a contract would eliminate any
possibility that the implied duty of good faith and fair dealing could itself provide the basis for a
claim that a contract was breached. That is wrong. The implied duty stems from the consensual
terms reflected in an express contract, but it addresses the parties’ reasonable expectations that
may not have been embodied in explicit contractual language.7



       7
         The government’s contention and the cases it cites in support recycle an argument it
previously made and lost in the court of appeals. The cases were critically distinguished by the
Federal Circuit in Metcalf Construction. See 742 F.3d at 994 (“The government cites [Bradley
and Basin Electric Power Cooperative] to bolster its apparent position, but [neither case] holds
that the implied duty requires a breach of an express contractual duty.”). In Metcalf
Construction, after noting that Bradley “mentions the duty of good faith and fair dealing only in
a parenthetical explaining an intermediate appellate court decision from California,” id., the
court of appeals explained that

       In Centex, . . . we declined to read Bradley’s parenthetical expansively,
       concluding that “it would be inconsistent with the recognition of an implied
       covenant if we were to hold that the implied covenant of good faith and
       fair dealing could not be enforced in the absence of an express promise to
       pay damages in the event of conduct that would be contrary to the duty of
       good faith and fair dealing.” 393 F.3d at 1306. And the government’s other
       featured case, . . . Basin Elec. Power Co-op., 248 F.3d 781 . . . , similarly
       recognizes that the implied duty in fact is not limited to “the enforcement
       of terms actually negotiated.” Id. at 796 (internal quotation marks omitted).

Id.
                                                  7
        A claim that a party to a contract breached the duty of good faith and fair dealing
implicates common law and is generally addressed by Restatement (Second) of Contracts § 205
(1981). That Section provides that “[e]very contract imposes upon each party a duty of good
faith and fair dealing in its performance and its enforcement.” Restatement (Second) of
Contracts § 205; see also Metcalf Const., 742 F.3d at 990. The Restatement observes that
“[g]ood faith performance or enforcement of a contract emphasizes faithfulness to an agreed
common purpose and consistency with the justified expectations of the other party.”
Restatement (Second) of Contracts § 205 cmt. a. And, “the implied duty exists because it is
rarely possible to anticipate in contract language every possible action or omission by a party
that undermines the bargain.” Metcalf Const., 742 F.3d at 991. Rather, “the nature of that
bargain is central to keeping the duty focused on ‘honoring the reasonable expectations created
by the autonomous expressions of the contracting parties.’” Id. (citing Tymshare, Inc. v. Covell,
727 F.2d 1145, 1152 (D.C. Cir. 1984) (per Scalia, J.)). In short, the duty “prevents a party’s acts
or omissions that, though not proscribed by the contract expressly, are inconsistent with the
contract’s purpose and deprive the other party of the contemplated value.” Id. (citing First
Nationwide Bank v. United States, 431 F.3d 1342, 1350 (Fed. Cir. 2005)).

        The duty of good faith and fair dealing most often is raised respecting the parties’
performance obligations, but it also explicitly pertains to enforcement. See Restatement (Second)
of Contracts § 205 cmt. e (“The obligation of good faith and fair dealing extends to the assertion,
settlement and litigation of contract claims and defenses.”). “Bad faith” is not a necessary
element of the duty in this regard. Importantly, the duty “also extends to dealing which is candid
but unfair.” Id. That essentially is the tenor of the allegations Mansoor presents in Count II.
Plaintiff is asserting that the contracting officer breached the duty of good faith and fair dealing
by addressing its claims using a statistical or quasi-statistical means, i.e., the “ACA method,”
that incorporated data derived from performance of unrelated contracts and did not focus on the
individual circumstances of each of the TMRs at issue. Whether that approach to enforcement
was reasonable in the setting of this contract is a question for another day, the answer to which
will turn in substantial part on the parties’ expectations under the contract. Nonetheless,
Mansoor has manifestly stated a potentially viable claim for relief based on an alleged breach of
the implied duty of good faith and fair dealing in the enforcement of the contract at issue.

                                         CONCLUSION

         For the reasons stated, the government’s motion to dismiss pursuant to RCFC 12(b)(1),
or, alternatively, RCFC 12(b)(6) is DENIED. The parties shall proceed with discovery and other
pretrial preparatory steps in accord with the scheduling order issued on April 6, 2015.

       It is so ORDERED.

                                              s/ Charles F. Lettow
                                              Charles F. Lettow
                                              Judge




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