                ARMED SERVICES BOARD OF CONTRACT APPEALS

Appeal of --                                  )
                                              )
Carro & Carro Enterprises, Inc.               )      ASBCA No. 59485
                                             )
Under Contract No. W912EP-07-C-0024           )

APPEARANCES FOR THE APPELLANT:                       Steven L. Reed, Esq.
                                                     Douglas L. Tabeling, Esq.
                                                     Lochlin B. Samples, Esq.
                                                     Jonathan R. Mayo, Esq.
                                                     Vianney Lopez, Esq.
                                                      Smith, Currie & Hancock LLP
                                                      Atlanta, GA

APPEARANCES FOR THE GOVERNMENT:                     Thomas H. Gourlay, Jr., Esq.
                                                     Engineer Chief Trial Attorney
                                                    Charles T. Pino, Esq.
                                                    Susan E. Symanski, Esq.
                                                     Engineer Trial Attorneys
                                                     U.S. Army Engineer District, Jacksonville

       OPINION BY ADMINISTRATIVE JUDGE HARTMAN ON APPELLANT'S
       MOTION TO DIRECT THE GOVERNMENT TO FILE THE COMPLAINT

        Appellant seeks an Order from the Board directing the government to file the
initial pleading or complaint in this appeal. The government opposes the motion. We
deny the motion.

              STATEMENT OF FACTS FOR PURPOSES OF THE MOTION

       The United States Army Corps of Engineers, Jacksonville District (Corps),
awarded Contract No. W912EP-07-C-0024 (Contract) to appellant, Carro & Carro
Enterprises, Inc. (CCE), on 28 September 2007 for the performance of construction work
on the Rio Puerto Nuevo flood control project in Puerto Rico that included the making of
modifications to the De Diego Bridge abutments and piers due to widening and
deepening of the existing channel, such as the drilling of shafts between existing piles of
bridge abutments and piers and the tying of those shafts to the existing bridge structure
with new cast-in-place caps (ASBCA No. 57821 (57821), R4 1, tab 4 at 1, 74). The

1
    This appeal is consolidated with Carro & Carro Enterprises, Inc., ASBCA No. 57821,
         and 19 other appeals by CCE under the captioned contract. We, however, have
Contract contained various standard Federal Acquisition Regulation (FAR) clauses,
including FAR 52.232-5, PAYMENTS UNDER FIXED-PRICE CONSTRUCTION CONTRACTS
(SEP 2002); FAR 52.233-1, DISPUTES (JUL 2002); and FAR 52.246-12, INSPECTION OF
CONSTRUCTION (AUG 1996) (57821, R4, tab 4 at 104-05, 157-59, 168-70, 182-83).
FAR 52.232-5 provides in pertinent part:

                    (b) Progress payments. The Government shall make
             progress payments monthly as the work proceeds, or at more
             frequent intervals as determined by the Contracting Officer,
             on estimates of work accomplished which meets the
             standards of quality established under the contract, as
             approved by the Contracting Officer.



                     (e) Retainage. If the Contracting Officer finds that
             satisfactory progress was achieved during any period for
             which a progress payment is to be made, the Contracting
             Officer shall authorize payment to be made in full. However,
             if satisfactory progress has not been made, the Contracting
             Officer may retain a maximum of 10 percent of the amount of
             the payment until satisfactory progress is achieved. When the
             work is substantially complete, the Contracting Officer may
             retain from previously withheld funds and future progress
             payments that amount the Contracting Officer considers
             adequate for protection of the Government and shall release
             to the Contractor all the remaining withheld funds. Also, on
             completion and acceptance of each separate building, public
             work, or other division of the contract, for which the price is
             stated separately in the contract, payment shall be made for
             the completed work without retention of a percentage.

(57821, R4, tab 4 at 158-59)

       Under the "REMARKS" block of Payment Estimate No. 31 for the performance
period of 1 November 2011 to 25 December 2011, the Corps stated:

             Pay Activity 0009 lA Install 10 Drill Shafts - At this moment
             the Government will retain $75,000 (will not pay) of the
             actual remaining amount of $152,851.23. Therefore,

      directed that complaints, answers, and supplemental Rule 4 files be filed in each
      of the different appeals.

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              $77,851.23 has been included in this payment application
              (No. 31) until a modification for a credit is negotiated.

(App. reply2, ex. 3)

       On 9 April 2014, CCE submitted to the Corps contracting officer (CO) a certified
claim stating she is withholding either $51,413.32 or $75,000.00, or both from CCE, for
alleged known Pier 2 defects and demanding Corps payment of $126,413 .42 3 for
"improper, unjustified, and unreasonable" withholding of progress payments. The claim
added that, by withholding money based on alleged defects, the Corps is effectively
asserting a government claim for which the Corps has the burden of proof. (Notice of
Appeal (NOA), ex. 8 at 1, 4)

        On 25 July 2014, the CO issued her final decision denying CCE's claim. The CO
stated the Corps "began withholding retainage" and "continued through payment estimate
#43," and "CCE was aware that the value of the deficiencies in Pier 2 were greater than
the $75,000 [the Corps] withheld." The CO added: the Corps "withheld an additional
$51,413.42" for Pier 2 defective work; the total withheld was based on "a reasonable
calculation of the damages sustained" by the Corps but is unlikely "to cover the actual
cost of the deficient work"; and "[a]s th[is] project draws to completion, the [Corps]
plans to issue a Request for Proposal...to negotiate a credit for the Pier 2 work that did
not comply with the specified quality requirements of the contract and maximum loading
requirements of the original design." (NOA, ex. 7 at 3, 5)

       On 11 August 2014, CCE timely appealed the CO's final decision to this Board.



2
  CCE submitted a reply (to the Corps' opposition to CCE's motion to have the Corps file
       the complaint) which sought, in part, to strike parts of the Corps opposition
      without obtaining leave to file such a reply. The Corps subsequently submitted an
       amended opposition to CCE's motion deleting some material objected to by CCE
       without seeking leave to do so. It also filed a "response" to CCE's request to
       strike parts of the Corps' opposition asking the Board to disregard CCE's reply
       because the reply was supplied without CCE demonstrating good cause and
       receiving leave to file that reply. We grant both parties leave to file their
      respective documents with respect to the motion to have the Corps file the
       complaint, accept the parties' documents for filing, and consider the materials in
      ruling upon CCE' s motion.
3
  Throughout the claim document, CCE sought the withheld amounts of$51,413.32 or
       $51,413.42 and $75,000.00. Since CCE specifically demanded a sum certain
       amount of$126,413.42, by calculation it appears that CCE's claim seeks
      $75,000.00 plus "$51,413.42" as withheld amounts.

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                                        DECISION

        CCE has filed a motion with the Board for an order directing the government to
file the complaint in this appeal contending the Corps' withholding of $126,413.42 for
Pier 2 defects was a government claim for a reduction in contract price, and that the
Corps bears the burden of proving its withholding was proper (app. mot. at 1-2). The
Corps has responded that it asserted a claim against CCE for the withheld amounts due to
CCE's failure to comply with contract requirements but argues that CCE possesses
sufficient information to file a complaint here and the information to accurately and fairly
determine the extent of damages due to CCE's non-conforming work rests with CCE,
which was required by contract to maintain inspection records (gov't opp'n at 1-3).

         As explained in Beechcraft Defense Co., ASBCA No. 59173, 14-1 BCA ii 35,592
at 174,395, CCE's motion to have the Board order the Corps to file the complaint in this
appeal arises from the Contract Disputes Act's requirement that (1) all claims (whether
asserted by the contractor or government) be the subject of a CO's decision (or deemed
decision), 41 U.S.C. § 7103, and that (2) proceedings before a Board of Contract Appeals
commence with an appeal from a CO decision by a "contractor," regardless of whether
the CO decision addresses a claim asserted by the contractor or government, 41 U.S.C.
§ 7104. As a result, our Rule 6 states that an appellant (i.e., contractor) shall file the
initial "pleading," i.e., complaint in appeals before us.

         This Board, however, recognizes there are appeals in which the proceedings
would be facilitated by the government's filing of the initial pleading. For example, we
have ordered the government to file the complaint in appeals from decisions where a
contractor lacked information upon which the "government" claim appealed was based.
Compare, e.g., General Dynamics Corp., ASBCA No. 49339, 96-1 BCA ii 28,244
(contractor has information regarding government claim for reimbursement of state tax
refund) with Hughes Aircraft Co., ASBCA No. 46321, 94-2 BCA ii 26,801 (government
claim for defective pricing) and LGT Corporation, ASBCA No. 44066, 93-3 BCA
ii 26, 184 (government claim for percentage of revenue that the contractor obtained from
printing ads in programs for military academy athletic events). We also recently ordered
the government to file the complaint in an appeal from a "contractor" claim appearing to
constitute a "defense" against a government claim of defective pricing, rather than a
separate claim for contract adjustment. BAE Sys. Land & Armaments Inc., ASBCA
No. 59374, 15-1 BCA ii 35,817.

       In this appeal, we have a claim submitted by CCE, a CO's final decision issued
upon that claim, and a timely appeal by CCE from the CO's decision. CCE asserts,
however, both in its claim and motion to have the government file the complaint, that its
claim seeking progress payment withholdings by the CO is actually a "government"
claim, and thus the Corps should file the complaint here. In its response to CCE's
motion, the Corps opposes our having it file the complaint in this appeal, but states that


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the claim before us is a "government" claim even though the CO has issued no final
decision seeking a specific payment from CCE and simply has retained contract
payments deemed not due CCE under a contract clause. Because we are not bound by
any concessions or stipulations made by a party that are contrary to the evidence or law,
e.g., Kaminer Constr. Corp. v. United States, 488 F.2d 980, 988 (Ct. Cl. 1973); General
Atronics Corp., ASBCA No. 37923, 91-3 BCA ii 24,047 at 120,360, we look initially at
the claim presented and determine whose claim is before us.

        While the CDA does not provide a definition of the term "claim," the Disputes
clause of the parties' contract, FAR 52.233-1, states that a claim is "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 [the] contract." Under that definition, CCE's
assertion and the government's concession that the withholdings are a "government"
claim are not supported by the current record for this appeal. The CO's final decision did
not assert an independent demand for payment in a sum certain or a contract price
reduction, as CCE contends. Rather, the decision on the claim submitted by CCE for
progress payments withheld sets forth simply that sums not paid CCE were retainage for
defective and non-conforming work performed by CCE in accordance with terms of the
Progress Payments clause, FAR 52.232-5. That clause expressly provides the Corps the
right to retain a maximum of 10 percent of the estimated progress payments until
satisfactory progress is achieved and, when work is substantially completed, the
discretion to "retain from previously withheld funds and future progress payments that
amount the Contracting Officer considers adequate for protection of the Government."
We have held a CO's mere act of withholding alone, provided for by provisions within a
contract, does not amount to assertion of a "government" claim. Sea-Land Service, Inc.,
ASBCA No. 47200 et al., 94-3 BCA ii 27,226 at 135,683; A.J Fowler Corp., ASBCA
No. 28965, 86-2 BCA ii 18,970 at 95,795; Paradyne Corp., ASBCA Nos. 29300, 29728,
84-3 BCA ii 17,600 at 87,684 (party who does not have possession of disputed money,
and against whom money has been withheld, should assert a claim). Moreover, the CO's
decision stated the Corps would seek at a future date a contract price adjustment for
defective work under the terms of the contract's Inspection of Construction clause,
FAR 52.246-12. Thus, the sum certain requirement for a "claim" by the government also
is not satisfied as the Corps is still determining the amount of damages it ultimately will
seek for defective work. See, e.g., Hanley Industries, Inc., ASBCA No. 56976, 10-1
BCA ii 34,425 at 169,930. Since the Corps' CO has not made a specific monetary
demand on CCE, but simply retained a portion of the monies sought by CCE pursuant to
a contract clause based on unsatisfactory progress, and the CO final decision does not fall
within the Disputes clause's other provisions (i.e., the adjustment or interpretation of
contract terms or other relief), there is no factual or legal basis to conclude that this
appeal presents a "government" claim.




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       In sum, the appeal presents a claim by a contractor, CCE, for a percentage of
progress payments retained by the Corps pursuant to the terms of FAR 52.232-5(e). In
Technocratica, ASBCA No. 44347 et al., 94-1BCAii26,584 at 132,288, we held:

             [T]he contract gives the Government the right to take
             retainage when it views job progress as unsatisfactory.
             FAR 52.232-5(e). The [CO] retains considerable discretion in
             deciding whether to take retainage and in what amounts, up to
             the limit prescribed by the contract. To prevail, appellant
             must show that the [CO] abused this discretion. Even if the
             cause of the progress failure is a matter of dispute, we have
             held that it is not an abuse of discretion for the Government
             to consider the lack of progress as redounding against the
             contractor for progress payment purposes. Fortec
             Constructors, ASBCA No. 27480, 83-2 BCA ii 16,727.

Accordingly, the burden of proof with respect to the claim currently before us is on CCE.

        While CCE contends it lacks sufficient information to understand the CO's
justification for the withholding, the CO specifically advised CCE that the basis for the
withholdings was defective Pier 2 drilled shafts failing to meet contract requirements and
re-affirmed in the final decision denying CCE's claim that the Corps withholdings were
for defective Pier 2 work, unsatisfactory work progress, and noncompliance with contract
work requirements. Under these circumstances, we see no reason why filing of the initial
pleading (complaint) by the Corps would facilitate further proceedings in this appeal.

                                     CONCLUSION

      CCE's motion is denied. CCE shall file its complaint under Board Rule 6 within
30 days from the receipt of this Opinion.

       Dated: 10 March 2015




(Signatures continued)



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I concur                                       I concur




                                               RICHARD SHACKLEFORD
Administrative Judge                           Administrative Judge
Acting Chairman                                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. 59485, Appeal of Carro &
Carro Enterprises, Inc., rendered in conformance with the Board's Charter.

      Dated:



                                               JEFFREYD. GARDIN
                                               Recorder, Armed Services
                                               Board of Contract Appeals




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