               ARMED SERVICES BOARD OF CONTRACT APPEALS

Appeal of--                                          )
                                                     )
Delta Engineering, Inc.                              )     ASBCA No. 58063
                                                     )
Under Purchase Order No. 0000017897              )
 Contract No. 000000-00-0-0000 (Implied-in-Fact) )

APPEARANCE FOR THE APPELLANT:                              Michael J. Trevelline, Esq.
                                                            Law Office of Michael Trevelline
                                                            Washington, DC

APPEARANCES FOR THE AUTHORITY:                             Kathryn H.S. Pett, Esq.
                                                            General Counsel
                                                           Donald A. Laffert, Esq.
                                                            Associate General Counsel
                                                           Jeffrey Weinstein, Esq.
                                                            Assistant General Counsel
                                                            Washington Metropolitan Area
                                                             Transit Authority
                                                            Washington, DC

              OPINION BY ADMINISTRATIVE JUDGE PEACOCK ON
                   THE AUTHORITY'S MOTION TO DISMISS

       Delta Engineering, Inc. (Delta or appellant) asserts that its interactions with the
Washington Metropolitan Area Transit Authority (WMATA) gave rise to an
implied-in-fact contract with WMATA. WMATA has moved to dismiss the appeal for
lack of jurisdiction and also challenges certain relief requested by appellant. The motion
is denied in part and granted in part for reasons detailed below.

        STATEMENT OF FACTS (SOF) FOR PURPOSES OF THE MOTION

      1. Delta is an engineering and manufacturing business that provides
custom-engineered products (compl. ~ 6). It is incorporated in the State of Maryland
(compl. ~ 5).

       2. WMATA was created by an interstate compact entered into by the District of
Columbia, the State of Maryland, and the Commonwealth of Virginia. See Watters v.
Washington Metropolitan Area Transit Authority, 295 F.3d 36, 39 (D.C. Cir. 2002), cert.
denied, 538 U.S. 922 (2003). Congress approved the compact in 1960. Pub. L. No.
86-794, 74 Stat. 1031. The compact was amended and Congress, in 1966, consented to,
adopted, and enacted for the District of Columbia the amendment which was titled the
Washington Metropolitan Area Transit Authority Compact (Compact). Various parts of
the Compact were later amended and approved by the signatories and Congress. See
Pub. L. No. 89-774, 80 Stat. 1324; Watters, 295 F.3d at 39 n.3. WMATA operates a
mass-transit system located in the Washington, DC metropolitan area (compl. ~ 4).

      3. Section 80 ofthe Compact is designated "Liability for Contracts and Torts." It
provides as follows (80 Stat. 1350):

                       The Authority shall be liable for its contracts and for
              its torts and those of its Directors, officers, employees and
              agents committed in the conduct of any proprietary function,
              in accordance with the law of the applicable Signatory
              (including rules on conflict of laws), but shall not be liable for
              any torts occurring in the performance of a governmental
              function. The exclusive remedy for such breach of contracts
              and torts for which the Authority shall be liable, as herein
              provided, shall be by suit against the Authority. Nothing
              contained in this Title shall be construed as a waiver by the
              District of Columbia, Maryland, Virginia and the counties
              and cities within the Zone of any immunity from suit.

         4. Delta has supplied minor products to WMATA since 2001 (compl. ~ 8).
In 2007, WMATA initiated discussions with Delta about manufacturing a major,
custom-engineered article - stock #R1823 7040 Rohr 1000 series Friction Ring (friction
rings or rings) (compl. ~ 9). After reviewing technical specifications, Delta determined
that it could engineer and locally cast the friction rings (compl. ~ 12). Knorr Brake
Corporation (Knorr) was the original equipment manufacturer of the rings (compl.
~~52-53).


       5. After appellant gave WMATA a rough estimate and WMATA made a more
formal request, Delta provided a quote of $90,000 for development of 100 friction rings
(compl. ~~ 13-16). On 11 June 2007, WMATA issued the captioned purchase order (PO)
to Delta for 100 friction rings at $900 per ring (compl. ~ 17, ex. B). The purchase order
is sometimes referenced hereinafter as the development contract.

        6. Delta asserts that during discussions in connection with and before issuance of
the PO, WMATA promised that, if the rings were fully tested and found acceptable,
appellant would be eligible to compete on future WMATA procurements of the friction
rings.· Delta allegedly stated that it would only make the investments necessary to
produce the rings if it were eligible to so compete and WMATA allegedly agreed that
Delta would be eligible and have that opportunity. Appellant refers to these
commitments as the "Agreement." (Compl. ~~ 19-21)


                                              2
        7. Delta and WMATA met on 4 March 2008 and agreed on production standards,
tests to be performed, and a reduction in the order from 100 rings to 36 (compl. ~ 23).
Michael DiPietro, appellant's president, attended for Delta (compl. ~ 25). Several
executives, branch managers, engineering and procurement representatives attended for
WMATA (compl. ~ 24 ).

      8. On 5 March 2008, WMATA employee, Ronald S. Johnson, prepared a
memorandum with minutes ofthe 4 March 2008 meeting (compl. ~ 26, ex. C). The
minutes stated:

             This memo is written to present meeting minutes with
             Michael DiPietro from Delta Engineering concerning brake
             discs. The meeting was held at the New Carrollton S&l
             facility on 03/04/08. Attendees included: Les Durrant,
             Gene Garzone, Dennis Early, Ivone Gopaul, Ed Totten,
             Michael Quander, Wallace Dent, Ron Johnson, and
             Michael DiPietro.

             Delta Engineering has been a supplier of many items to the
             Authority for several years and has always delivered a
             high-quality product. Due to dire needs of the Authority
             concerning the Knorr Friction Ring· for the Rohr 1000 Series
             Railcars, Procurement has contracted with Delta Engineering
             for an initial delivery of 100 friction rings. Delta Engineering
             has reversed engineered, provided drawings and mat~rial
             analysis of the current disc, and has contracted with
             foundries, primarily a foundry located in York, Pennsylvania,
             for the production of these discs.

             Since Delta Engineering does not have experience in the rail
             brake disc business, the attendees were concerned and
             stressed the need for dynamometer testing. It was proposed
             that Delta perform Finite Element Analysis (FAE) and
             dynamometer testing according to specifications provided by
             WMATA. Delta is to provide a price that includes a ROM
             cost for the additional work. They will also provide an
             estimate as the amount of the cost they are to absorb and
             [how] much ofthe cost WMATA will cover....

             A revised specification for brake discs will be provided to
             Delta Engineering and other companies who are interested in



                                            3
             supplying brake discs to the Authority. The specification will
             include FEA, dynamometer, and route profile specifications.

             Prior to production, the supplier must provide to the
             Authority a work schedule in order to determine realistic
             delivery dates.

             The material Delta Engineering suggests for this disc would
             be the same as the material used by Knorr. The attached
             e-mail indicates Delta's intent for conducting business with
             ~TA.                                 ,

             Delta Engineering understands the need to deliver a quality
             part within a reasonable time period once an order has been
             placed and is prepared to fulfill their obligations. Delta will
             investigate FEA and dynamometer testing, a report will be
             sent to procurement. During the qualifying stage, a quote for
             multiple units will be provided to the Authority.

             Procurement has the responsibility to negotiate the terms of
             the contract with the suppliers. Conditions of the
             specifications must be met prior to Engineering evaluations of
             the discs for a one-year qualification test.

(Compl., ex. C)

  9. The Johnson memorandum attached an undated email from Mr. DiPietro to
~ TA which stated in part:


             I am writing you today to provide status on Delta
             Engineering's progress towards the supply of[the rings] ....
             Delta Engineering Inc. is performing a collaborative and self
             funded engineering/development effort to become a friction
             ring supplier. We have taken the existing rings, reverse
             engineered them using metallurgical evaluation, mechanical
             testing, chemical analysis and performed full dimensional
             inspections. We have used this information to develop a
             manufacturing routine that shall result in identical product.
             Delta Engineering has also worked with your engineering
             dept to understand their concerns and have positioned process
             inspections along the manufacturing route to ensure quality
             product. As we understand the program Delta Engineering
             Inc. is to supply a min of 36/100 of our manufactured parts


                                            4
              for the authority to test. Once these parts pass the testing and
              Delta Engineering is granted approval to supply these parts
              the balance of the order shall be honored.

              It is our intent to provide to the authority an annual volume of
              400+ friction rings; however it is understood that the
              authority may want more or less rings from us, at which time
              an "immediately-available" quantity, lead time for other
              quantities and price shall be negotiated. It is also our intent to
              work closely with the authority to develop alternatives to
              the existing design to include: material, shape, and
              "cross-compatible" solutions.

              Our progression towards the supply of the first 36 units has
              been slower than anticipated but we are making strides
              towards this end. In short these delays have pushed back the
              supply of parts from Q4-07 to Q 1-08.

(Compl., ex. D)

        10. Appellant asserts that its email "makes it quite clear that Delta understood that
it had been promised the opportunity to become a supplier if its friction rings were of an
acceptable quality" (compl. ~ 28).

       11. On 24 March 2008, appellant sent WMATA a quote for 36 friction rings at
$1,911.10 each for a total cost of $68,799.60. Delta stated, inter alia, that it would
provide destructive dynamometer testing and part specific traceability to lot chemistry
and microstructure, but not finite elemental analysis. With respect to pricing, the quote
concluded:

              Delta Engineering Inc. has increased the unit price I disc
              on this order only to accommodate the above mentioned
              changes. $900 original price + $250 to account for the
              decrease in quantity+ $761.10 to cover the cost of
              performing dynamic testing of the friction rings ($27,400) =
              $1911.10 I disc[.]

              Delta Engineering Inc. has also invested $9,500 of design and
              engineering efforts into this project. Delta Engineering Inc.
              has purchased a custom foundry die for this project. Neither
              of these expenditures are to be recovered in the pricing
              quoted above. These expenses are to be considered Delta
              Engineering's cost-share. It is also important to note that our


                                              5
                 pricing shall remain $900 with the exception of additional
                 testing or expediting requirements that may result from this
                 collaborative effort.

(Compl.   ~   29, ex. E)

        12. WMATA revised its 11 June 2007 PO on 24 March 2008 to take into account
the 24 March 2008 Delta quote. The PO required appellant to deliver the 36 friction
rings to a WMATA address in Landover, Maryland. WMATA's "Buyer" listed in the PO
was Ivone Gopaul who attended the 4 March meeting. (Compl. ~ 29, ex. F)

        13. Delta avers that it manufactured the 36 friction rings, delivered them to
WMATA, and provided engineers to assist WMATA in testing the rings. Appellant
claims that its friction rings achieved superior performance. WMATA allegedly stated
that it was pleased with the rings, and indicated that Delta would "most likely win any
future contracts" to supply the rings. (Compl. ~~ 30-34)

       14. WMATA issued an Invitation for Bid (IFB) relating to the friction rings in
June 2010 (compl. ~ 35, ex. G). The original IFB sought bids for 500 friction rings in the
base year and 500 friction rings for each of 4 option years (compl. ~ 3 5, ex. G at 6-7).
The description of the part for each year allowed bidders to supply either friction rings
manufactured by Knorr or friction rings manufactured by Delta (compl., ex. G at 6-7).
The contract awarded pursuant to this solicitation is sometimes referenced hereinafter as
the production contract.

        15. The Solicitation Instructions for the IFB included clause No.4, "PRIOR
REPRESENTATIONS." This clause stated as follows: "The Authority assumes no
responsibility for any understanding or representations concerning this solicitation made
by any of its officers or agents prior to the issuance of the solicitation, the specifications,
or related documents." (Compl., ex. Gat 8)

       16. The solicitation, as well as the development contract/purchase order,
incorporated WMATA's General Provision "DISPUTES" clause which states:

                 (a) Except as otherwise provided in this Contract, any
                     dispute concerning a question of fact arising under or
                     related to this Contract which is not disposed of by
                     agreement shall be decided by the Contracting Officer,
                     who shall reduce his/her decision to writing and mail or
                     otherwise furnish a copy thereof to the Contractor. The
                     decision of the Contracting Officer shall be final and
                     conclusive unless, within thirty (30) calendar days from
                     the date of receipt of such copy, the Contractor mails or


                                               6
                  otherwise furnishes to the Contracting Officer a written
                  notice of appeal addressed to the Authority Board of
                  Directors. Such notice would indicate that an appeal is
                  intended and should reference the decision and contract
                  number. The decision of the Board of Directors or its
                  duly authorized representative for the determination of
                  such appeals shall be final and conclusive unless in
                  proceedings initiated by either party for review of such
                  decision in a court of competent jurisdiction, the court
                  determines the decision to have been fraudulent, or
                  capricious, or arbitrary, or so grossly erroneous as
                  necessarily to imply bad faith, or is not supported by
                  substantial evidence. In connection with any appeal
                  proceeding under this clause, the Contractor, or the
                  Authority, as the case may be, shall be afforded an
                  opportunity to be heard and offer evidence in support of
                  its appeal. Pending final decision of a dispute hereunder,
                  the Contractor shall proceed diligently with the
                  performance of the Contract and in accordance with the
                  Contracting Officer's decision. The Armed Services
                  Board of Contract Appeals is the authorized
                  representative of the Board of Directors for final
                  decisions on an appeal.

              (b) This DISPUTES clause does not preclude consideration
                  of question [sic] of law in connection with decisions
                  provided for in Section a. above. Nothing in the
                  Contract, however, shall be construed as making final the
                  decisions of the Board ofDirectors or its representative
                  on a question oflaw.

(Compl., ex. Gat GP-15 to GP-16; ex. B)

        17. Special Provision Clause 37, "GOVERNING LAW," stated: "This contract
shall be deemed to be an agreement under and shall be governed by the law of the
District of Columbia, exclusive of its conflict of law principles, and the common law of
the U.S. Federal contracts including precedents ofthe Federal Boards of Contract
Appeals" (compl., ex. G at SP-19).

        18. Delta avers that it "went through the trouble and expense of submitting a bid"
based on promises that it would have that opportunity and on the IFB statement that its
friction rings met WMATA's specifications (compl. ~~ 38-39). Appellant specifically
noted that it was required to obtain a bid bond of$165,575. It obtained the bond by


                                             7
providing a lien on real estate. The bank holding the bond will not release the bond
because WMATA will not release Delta's bid guarantee letter which Delta views as
evidence that WMATA essentially admits it promised appellant the right to bid on
solicitations. (Compl. '1['1[40-42)

         19. Appellant also notes that it took special efforts to comply with the IFB
requirement that friction rings were required shortly after award and with a modification
of the IFB (not in the record) to add a line item seeking 800 rings "with a clause requiring
initial delivery as soon as possible." Delta was required to immediately proceed with the
manufacture of 50 friction rings so they could be delivered in the first weeks of the
contract. (Compl. '1['1[44-49)

        20. Delta allegedly submitted the lowest bid in response to the IFB in June 2010.
It alleges that its profit for the base year and 4 option years would have been $827,875
given the prices bid and 25 percent profit. (Compl. '1['1[50-51) Knorr also submitted a bid
(compl. '11'11 52-53).

       21. Delta avers that it was initially told by WMATA that it had lost the friction
ring production contract. In a second conversation with WMAT A's procurement office,
appellant alleges it was told that it had been awarded the contract. In a third
conversation, WMAT A allegedly informed Delta that WMATA would award a partial
order "and that engineering was making provisions to place Delta discs alongside Knorr
discs on its trains." Thereafter, WMATA indicated Knorr would be awarded the contract
allegedly because of a mistake by WMATA. WMATA allegedly stated that its internal
rules only allowed it to purchase equipment from an OEM, and Delta was never qualified
to bid on the IFB. The rule was allegedly based on a policy mandate from the WMATA
quality department that brake discs could only be purchased from an OEM, i.e., Knorr.
(Compl. '11'11 54-59)

       22. Delta avers that WMATA did not offer any explanation for the policy change,
whether the change had been discussed, if so, who had discussed it, when the change was
made, or why it appeared to be made after Delta was the low bidder on the friction ring
IFB. In appellant's view, these questions could have been answered if it had filed a bid
protest. Delta alleges it did not do so because the WMATA procurement manager
advised that instead of pursuing a bid protest Delta should bid on the friction ring
contract which would be up for renewal each year. Appellant asserts that it followed this
"legal" advice to its detriment and in doing so missed out on profits that it might have
earned under the contract. (Compl. '1['1[63-66)

      23. In November 2011, Delta submitted a claim regarding the friction rings matter
to a WMATA contracting officer. The contracting officer did not respond to the claim.
(Compl. '1[1, ex. A) In February 2012, appellant filed a deemed denial appeal with the
WMATA Board ofDirectors (compl. '1[2, ex. I). WMATA issued a letter essentially


                                             8
denying Delta's appeal on 14 March 2012 based on arguments addressed in our decision
below (compl. ~ 3, ex. K).

       24. By letter of30 March 2012, Delta filed an appeal from the WMATA denial
with this Board. The appeal was docketed ASBCA No. 58063 on 4 April2012.

        25. Appellant's complaint includes eight causes of action. In Count I, Delta
asserts breach of an implied-in-fact contract. Under the claimed implied-in-fact
Agreement, Delta alleges it would be allowed to compete for disk brake contracts if it
invested in the engineering and manufacturing of dies for the friction rings, participated
in tests of the rings, and produced acceptable quality rings. Appellant alleges it did so
because WMATA represented that the agreement was presented to people who had
authority to ratify it and they did so. Delta claims it incurred costs totaling $206,466.48
to engineer, manufacture and test the rings. (Compl. ~~ 67-80)

      26. Count II of the complaint contends that the Agreement included a covenant of
good faith and fair dealing that was breached by WMA TA resulting in damages of
$206,466.48 (compl. ~~ 81-85).

        27. Delta argues that various WMATA officials told them that it would be able to
bid on future brake disk solicitations, that it would be in a good position to receive
contracts. Delta asserts the statements were false, appellant detrimentally relied on them,
and WMATA benefitted from Delta's reliance. As a result, in Count III Delta claims it is
entitled to compensation of $206,466.48 and punitive damages of $1,000,000. (Compl.
~~ 86-97)


      28. In Count IV, appellant characterizes the statements it says were made by
WMATA officials as negligent misrepresentations, and requests compensation of
$206,466.48 and punitive damages of$1,000,000 (compl. ~~ 98-102).

        29. Count Vis labeled "Implied-in-Fact Unjust Enrichment." Delta contends that
it provided valuable services in that WMATA was able to point to the price of the friction
rings provided and obtain price reductions from Knorr. WMATA obtained and accepted
the benefits and it would be inequitable to allow WMATA to retain them. Appellant says
it is entitled to at least $1,000,000. (Compl. ~~ 103-10)

       30. Appellant maintains, as to Count VI, that it made benefits available to
WMATA with the expectation that it would be allowed to compete for friction ring
contracts under an "Implied-in-Fact Quantum Meruit" theory. Because Delta was not
allowed to compete, it is entitled to damages of at least $1,000,000. (Compl. ~~ 111-17)

       31. Count VII alleges breach of an implied-in-fact contract under which WMATA
was to provide legal advice to appellant. This is based on Delta's conversation with the


                                              9
WMATA procurement manager who stated that appellant should not file a bid protest but
instead pursue future disk brake contracts. Delta said a bid protest would have been
successful and it lost profits by accepting the procurement manager's legal advice.
Appellant claims damages of$827,875. (Compl. ~~ 118-34)

        32. In Count VIII, appellant argues that WMATA's rejection of its friction ring
bid was done in bad faith citing what it sees as conflicting rationales for the denial. Delta
says it is entitled to compensation of$206,466.48 and punitive damages of$1,000,000.
(Compl. ~~ 135-40)

        33. The Memorandum of Understanding Between the Armed Services Board of
Contract Appeals and the Washington Metropolitan Area Transit Authority
(Memorandum ofUnderstanding), dated 10 January 2001, as extended in October 2007,
states in relevant part as follows:

                      WHEREAS, both the Authority and the ASBCA are
               willing to continue the relationship whereby the ASBCA will
               adjudicate disputes under the WMATA contracts.

                      NOW THEREFORE, the Authority and the ASBCA
               have reached the following stipulations and agreements:

                       1. The ASBCA shall provide a forum, together with
               all necessary services and facilities, for administrative
               resolution under Authority contracts containing a "Disputes"
               article for all appeals from final decisions of contracting
               officers issued under such contracts:

                                        DECISION

        WMATA contends that we lack jurisdiction to decide this appeal and alternatively
asserts that we lack authority to grant certain relief requested by Delta.

Jurisdiction

       Appellant's claim is based in essential part on an alleged implied-in-fact contract
between Delta and WMATA. WMATA's primary jurisdictional defense to these
allegations is that any agreement contained no Disputes clause which is essential to the
Board's authority to resolve WMATA disputes. The Board's agreement with WMATA
confers authority to resolve appeals from the decisions of WMATA contracting officers
pursuant to the provisions ofthe Disputes clause ofWMATA contracts. Recently, we
have detailed the history and evolution of the WMATA Disputes clause and concluded
that under the current clause the Board has jurisdiction to resolve breach claims "related


                                             10
to" WMATA contracts. Cubic Transportation Systems, Inc., ASBCA No. 57770, 12-2
BCA ~ 35,063 at 172,233-35.

        The issue now before us is whether the Board's agreement with WMATA
precludes consideration of implied-in-fact contract claims that do not expressly contain a
"Disputes clause" because they are unwritten in whole or in part. WMATA's contentions
are to be distinguished from government motions under the CDA that challenge our
jurisdiction to resolve "implied-in-fact" contractual disputes. We have typically treated
the latter as motions for failure to state a claim for which relief could be granted (see
Engage Learning, Inc. v. Salazar, 660 F.3d 1346 (Fed. Cir. 2011)) or for summary
judgment. As we stated in Ortiz Enterprises, Inc., ASBCA No. 52049, 01-1 BCA
~ 31,155 at 153,894:


                      To determine whether we have jurisdiction in a case of
              an alleged implied-in-fact contract, we in effect rule on the
              merits of the appeal as we would on a motion for summary
              judgment. See Reynolds Shipyard Corp., ASBCA No. 3 7281,
              90-1 BCA ~ 22,254 at 111,827; Choe-Kelly, Inc., ASBCA
              No. 43481, 92-2 BCA ~ 24,910 at 124,221 (where an
              implied-in-fact contract has been alleged, jurisdiction is
              intertwined with determining the merits of the allegation.
              The ASBCA has jurisdiction to entertain the appeal, at least
              to the point of establishing the existence of an implied
              contract. A Government motion to dismiss for lack of
              jurisdiction would cut off that claim in the same manner as a
              motion for summary judgment); Balboa Systems Co., Inc.,
              ASBCA No. 39400, 91-2 BCA ~ 23,715 at 118,702
              (Government motion based on contention of no
              implied-in-fact contract, is more accurately one for summary
              judgment. .. ).

        In essence, the pleading of a valid implied-.in-fact contract is generally sufficient
to support jurisdiction. Total Medical Mgmt., Inc. v. United States, 104 F.3d 1314, 1319
(Fed. Cir.), cert. denied, 522 U.S. 857 (1997); see also Protecting the Homeland
Innovations, LLC, ASBCA No. 58366, 13 BCA ~ 35,398 at 173, 667. Unlike our CDA
jurisdiction, where we now routinely assume jurisdiction over both express and
implied-in-fact contract disputes (41 U.S.C. § 7102(a)), our agreement with WMATA
provides for jurisdiction based on the presence of a contract with a Disputes clause.
WMATA considers that jurisdiction is thus dependent on the presence of a formal,
express contract. Taken to their logical conclusion, WMATA's contentions would
deprive the Board of any jurisdiction over implied-in-fact contracts and authority to
consider potentially actionable contractual communications by authorized WMA TA



                                              11
officials unless they relate to an express written agreement that contains a Disputes
clause.

        WMATA's motion challenges primarily our jurisdiction to decide claims related
to implied-in-fact contracts. Accordingly, this decision does not address the merits of
appellant's assertions or discuss in detail the elements of proof required to establish that
the parties entered into an implied-in-fact contract. Those elements of proof are: mutual
intent to contract, unambiguous offer and acceptance, consideration and contracting
authority on the part of the WMATA official(s) alleged to have entered into the
agreement. E.g., City ofEl Centro v. United States, 922 F.2d 816, 820 (Fed. Cir. 1990),
cert. denied, 501 U.S. 1230 (1991). Appellant has the burden of proving that we have
subject matter jurisdiction. Corporate Systems Resources, Inc., ASBCA No. 58398, ·13
BCA ~ 35,367 at 173,553; see also Rahil Exports, ASBCA No. 56832, 10-1 BCA
~ 34,355; RGW Communications, Inc. d/b/a Watson Cable Co., ASBCA Nos. 54495,
54557, 05-2 BCA ~ 32,972.

        WMATA's waiver of sovereign immunity "for its contracts" in Section 80 ofthe
WMATA Compact has been interpreted implicitly by the courts to apply to alleged
breach of"implied-in-fact" contracts. See, e.g., Fulcrum Int'l, Inc. v. Prince George
Center L Inc. & WMATA, 2011 U.S. Dist. LEXIS 104266 (D. Md. Sept. 15, 2011);
Monument Realty LLC v. WMATA, 535 F. Supp. 2d 60, 70-72 (D.D.C. 2008). The
question before us is whether our MOU with WMATA and our consensual jurisdiction
prescribed therein encompasses such "implied-in-fact" contract claims. The problematic,
complicating distinction is that the MOU requires the presence of a Disputes clause
according to WMATA. For the reasons stated hereinafter and to the extent that the
gravamen of appellant's averments relates to an implied-in-fact contract, we have
jurisdiction to determine whether such a contract was entered into by the parties and
resolve disputes related thereto. Although we agree with WMATA that the clause is a
prerequisite to our jurisdiction, we consider that the clause is mandatory and required to
be incorporated into the contract alleged here if proven. Alternatively, we consider that
the claimed implied terms are sufficiently "related to" the development contract purchase
order which did expressly set forth the Disputes clause.

       First, if the implied contract is established, that contract must contain a Disputes
clause in compliance with WMATA acquisition procedures. Section 2102.1 of the
WMATA Procurement Manual (2004) requires that "all contracts [for supplies and
services] entered into on behalfofthe Authority in an amount in excess of$10,000 ... shall
include a disputes clause." Application of this mandatory requirement is not restricted to
express contracts and we see no reason not to apply the requirement to "implied-in-fact"
contracts where the elements of such contracts are established. Prior to the CDA when
our jurisdiction was also dependent on a Disputes clause, we similarly concluded in Vitro
Corp. ofAmerica, ASBCA No. 14448, 72-1 BCA ~ 9287 at 43,026-27:



                                             12
              [I]t is often said that the Board is without authority to grant
              relief under a contract implied in fact or an express offer
              supported by an implied acceptance because, it is assumed,
              such contracts may not contain the standard Disputes clause.
              This is an impermissible jump in logic, as cases may and do
              arise in which we are called upon to determine whether as a
              matter of fact and law a course of cqnduct resulted in an
              express or implied contract incorporating the standard
              Disputes clause ....

                     ... [T]he Board has inherent authority to determine the
              existence or nonexistence of a contract whenever such a
              determination is a necessary predicate to the resolution of a
              dispute alleged to arise under the terms of either an express or
              implied contract that allegedly provides an appropriate
              administrative remedy.

       Alternatively, we consider that the gravamen of the dispute may properly be
considered to "relate to" the purchase order. Here the purchase order expressly sets forth
the Disputes clause. The implied-in-fact agreement may be viewed as implied ancillary
terms and conditions of that purchase order.

        WMATA does not contend that the existence of the express purchase order,
intended to prequalify appellant as an approved source for the rings, precludes the
existence of an implied contract. Cf Atlas Corp. v. United States, 895 F.2d 745, 754-55
(Fed. Cir.), cert. denied, 498 U.S. 811 (1990) (certain claimed stabilization costs were
related to the express contract costs that were included in the contract price; therefore,
there could be no implied agreement to pay costs over and above those prices). WMATA
makes no argument that any implied agreement was encompassed by, or involved the
same subject matter as, the express purchase order. Here, the alleged ancillary
arrangement was "related to" the purchase order as delineated by the parties' negotiations
which were structured and focused on the pricing and details of the prequalification
requirements. However, both parties were aware that development costs had been carved
out of the purchase order negotiations based on the alleged unwritten understanding.
Appellant expressly excluded such costs in pricing the purchase order, allegedly on
assurances from WMATA that, if its friction rings proved satisfactory, Delta would be
eligible to compete on subsequent friction ring procurements and its offers would be
fairly considered in good faith by WMATA. Here, the alleged agreement was severed
from, and not within, the agreed scope of the purchase order. Cf Trauma Service Group
v. United States, 104 F.3d 1321 (Fed. Cir. 1997) (alleged implied term of express contract
regarding x-ray technician services was covered by and within the scope of, the express
contract; facts otherwise failed to establish the existence of the implied-in-fact contract
relating to the services).


                                             13
        The authority ofthe WMATA officials allegedly making the representations to
appellant is simply one of the elements for determination by the Board in assessing
whether an implied-in-fact agreement was formed. See, e.g., Digicon Corp., ASBCA
No. 36907, 89-3 BCA ~ 21,966 (Authority issues, including ratification, go to the merits
of the claim not our jurisdiction to entertain the appeal.). Cf Monument Realty, 535
F. Supp. 2d at 70-72.

        Here, the production contract solicitation's "PRIOR REPRESENTATIONS"
clause also does not insulate WMATA from liability. If proven (including mutual intent
and assent), the communications between the parties established an implied-in-fact
contract that could not be unilaterally abrogated by a clause in a solicitation issued more
than a year after that contract was formed. In context, communications emanating from
WMATA during negotiations contemporaneous with issuance and amendment of the
purchase order were not merely "representations" within the meaning and intent of the
later production contract solicitation clause. Moreover, in this case the essence of the
alleged agreement appears corroborated by WMATA's express incorporation of the
alternative Delta specification/design for the rings into the production contract
solicitation and schedule.

Additional Jurisdictional Issues and Authority to Grant Relief Requested

        To the extent that we conclude that WMATA and appellant entered into an
implied-in-fact agreement, the relief and remedies available will depend on the precise
nature and scope of that agreement and any breach. As stated above, we do not address
the merits of the parties' contentions in this decision. The parties' arguments regarding
potential relief and remedies are therefore, in significant part, premature. We decline to
address them at this early stage in the litigation pending further development of the
record.

       Nevertheless, we agree with WMATA that it is immune from liability for punitive
damages. See, e.g., WMATA v. Quik Serve Foods, Inc., 402 F. Supp. 2d 198, 203 (D.D.C.
2005); Wainwright v. WMATA, 958 F. Supp. 6, 9-10 (D.D.C. 1997). We further concur
with WMATA that it has not waived its sovereign immunity from liability for interest
and therefore interest is not recoverable by appellant in this appeal. Cubic
Transportation Systems, 12-2 BCA ~ 35,063 at 172,235; Breda Transportation, Inc.,
ENG BCA No. 6239, 98-2 BCA ~ 30,027; Kingston Constructors, Inc. v. WMATA, 860
F. Supp. 886 (D.D.C. 1994); Muhtesem Co., ASBCA No. 57538, 12-1 BCA ~ 34,946.
Accordingly, we grant WMATA's motion to strike portions of the complaint seeking
punitive damages and interest because we lack authority to grant the requested relief.

      We are also without jurisdiction to resolve appellant's allegations in Counts VII
and VIII that it was given incorrect legal advice (ostensibly from a non-lawyer) not to


                                             14
protest award of the production contract. Those counts in essence seek to equitably estop
WMATA from disavowing that alleged misadvice. Whether the misadvice or
"malpractice" allegations are categorized as a tort or a species of contract, we are without
jurisdiction. The allegations do not relate to or arise out of the implied contract in
dispute. The alleged "legal malpractice" is unrelated in time and substance to the
operative facts involved in the alleged implied-in-fact contract in this appeal. It is not an
acquisition by WMAT A for services, supplies, or construction covered by its
Procurement Procedures Manual. It incorporates no Disputes clause and none would be
required by the Manual for the alleged "contract." To the extent the allegations have
"contractual" significance, we would have no jurisdiction over the subject matter of such
a non-procurement contract. More fundamentally, we can envision no circumstances in
this case where the WMATA official had authority to give legal advice to the contractor
that could form the subject matter of a binding contractual commitment. We also
consider that appellant could not reasonably have relied on that gratuitous advice.

        WMATA further contends that any implied-in-fact agreement simply afforded
appellant the "opportunity to bid" on subsequent procurement rings. Therefore,
WMATA contends that appellant should have filed a bid protest if it considers that it was
denied that "opportunity." Because protests ofWMATA source selection decisions must
be brought in a court of competent jurisdiction, WMATA concludes that the breach of
any implied agreement is not properly reviewable by, or within the post-award "disputes"
jurisdiction of, the Board.

        We agree with WMATA that we do not have "protest" jurisdiction as such. Cf
Coastal Corp. v. United States, 713 F.2d 728 (Fed. Cir. 1983). Here, however, appellant
alleges that there was a pre-existing implied agreement that it would be eligible and given
the opportunity to compete that predated submission of its production contract proposal.
Appellant contends that it relied on the alleged government promise that it would be
eligible to compete upon satisfactory completion of the prequalification purchase order
and testing requirements. Appellant's claims are based on the specific WMATA
agreement not on a general WMATA obligation to consider bids fairly. Express
provisions have required that multiple award contractors be provided a "fair opportunity"
to be considered for orders and provide for a CDA remedy where contractors are
improperly excluded from eligibility to compete. HMRTech2, LLC, ASBCA No. 56829,
10-1 BCA ~ 34,397; PAW & Associates, LLC, ASBCA No. 58534, 13 BCA ~ 35,462 at
173,906-07. If agreement on the pertinent terms is established in this case by the
evidence with sufficient definiteness and specificity, we see no reason to accord different
treatment to implied contracts. Cf Monument Realty, 535 F. Supp. 2d at 68-72 (detailing
cases finding preliminary agreements and agreements to negotiate to be enforceable
where sufficiently definite and a clear intent to be bound was demonstrated). Regardless
of whether Delta could have protested alleged WMATA improprieties in the evaluation
and source selection process in another forum, a protest was not appellant's exclusive
remedy and did not preclude Delta from pursuing breach of contract relief.


                                             15
        We also do not interpret appellant's allegations as limited solely to being afforded
the "opportunity" to bid. If proven, the implied agreement encompassed Delta's
eligibility and right to compete on an equal basis with Knorr and a concomitant WMAT A
obligation to abide by its duty of good faith and fair dealing during the acquisition
process. Indeed, the duty of good faith is embedd~d as an essential precept of
WMATA's procurement policy and expressly incorporated into the July 2013 WMATA
Procurement Procedures Manual at§ 2-2 which states, "These procedures require that all
parties involved in the negotiation, performance, or administration of Authority contracts
act in good faith." Cf Free & Ben, Inc., ASBCA No. 56129, 09-1 BCA ~ 34,127 at
168,742 ("Implicit in every contract are the duties of good faith and fair dealing between
the parties.") (and cases cited). We have jurisdiction to decide whether WMATA
satisfied these alleged rights and duties, even though they may require us to consider
matters related to the adequacy of competition, the provisions of the solicitation,
evaluation ofthe competing offers and/or WMATA's source selection determination. In
determining our jurisdiction over these allegations, we need not address whether the
alleged conduct, if proved, amounted to "bad faith" on the part of WMATA or whether a
breach of the duty of good faith and fair dealing necessarily requires a finding of "bad
faith."

       WMATA also labels appellant's contentions as tantamount to misrepresentation
and fraud over which the Board lacks jurisdiction. We do not view the claim as alleging
that WMATA officials engaged in criminal or fraudulent conduct. It simply alleges that
they entered into the implied agreement. Whether. the WMATA representatives'
statements and conduct allegedly relied on by appellant also constituted fraud (or
fraudulent misrepresentation) is beyond our jurisdiction as WMATA asserts. However,
we are empowered to address appellant's allegations concerning the contractual
consequences of the various communications in dispute. Cf The Federal Group, Inc. v.
United States, 67 Fed. Cl. 87, 102 (2005).

        Appellant claims that the communications resulted in an implied-in-fact
agreement. The gravamen of the claim does not seek relief based on an implied-in-law
contract. Nevertheless, in Counts V and VI appellant seeks relief for "Implied-in-Fact
Unjust Enrichment" and "Implied-in-Fact Quantum Meruit," respectively. It is well
settled that we have no jurisdiction over contracts implied-in-law. E.g., Altanmia
Commercial Marketing Co., ASBCA No. 55393, 09-1 BCA ~ 34,095. There is no basis
to extend our jurisdiction to such contracts in the case of WMAT A. WMAT A has not
waived its sovereign immunity from suits based on a contracts implied-in-law. See, e.g.,
Martin v. WMATA, 273 F. Supp. 2d 114, 119 (D.D.C. 2003); Greenbelt Ventures, LLC v.
WMATA, No. AW-10-00157, 2010 WL 3469957 (D. Md. 2010), on recon., 2011 WL
2175209 (D. Md. 2011) aff'd, 481 F. App'x 833 (4th Cir. 2012); Protecting the Homeland
Innovations, 13 BCA ~ 35,398 at 173,666-67; cf Merritt v. United States, 267 U.S. 338,
340-41 (1925) (discussing the absence of such a waiver in the Tucker Act); United States


                                             16
v. Mitchell, 463 U.S. 206 (1983); Russell Corp. v. United States, 537 F.2d 474 (Ct. Cl.
 1976). The bases and rationale for recovery under an implied-in-fact agreement are
distinct from recovery based on quantum meruit and unjust enrichment pursuant to an
equitable implied-in-law contract. E.g., Algonac Manufacturing Co. v. United States, 192
Ct. Cl. 649,673-77 (1970) (discussing in detail the distinctions between implied-in-fact
and implied-in-law contracts); RGW Communications, 05-2 BCA, 32,972; The Public
 Warehousing Co., ASBCA No. 56022, 11-2 BCA, 34,788. To the extent that appellant
seeks relief pursuant to an implied-in-law contract, we agree with WMATA that we lack
jurisdiction. Accordingly, we grant WMATA's motion to strike provisions in appellant's
complaint that are based on recovery pursuant to such a contract.

                                     CONCLUSION

       We conclude that we have jurisdiction over appellant's claims relating to the
alleged implied-in-fact contract associated with the development of the friction rings and
deny WMATA's motion to the extent indicated above. We grant WMATA's motion to
the extent that appellant seeks interest and punitive damages. We also grant WMATA's
motion to dismiss for lack of jurisdiction Delta's claims arising out ofthe alleged legal
misadvice.

      Dated: 18 March 2014




                                                 Administrative Judge
                                                 Armed Services Board
                                                 of Contract Appeals


I concur                                         I concur




~~
Administrative Judge
                                                 RICHARD SHACKLEFORD
                                                 Administrative Judge
Acting Chairman                                  Acting Vice Chairman
Armed Services Board                             Armed Services Board
of Contract Appeals                              of Contract Appeals




                                            17
      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. 58063, Appeal of Delta
Engineering, Inc., rendered in conformance with the Board's Charter.

      Dated:



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




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