Issue:

The purpose of this memorandum is to inform the Secretary and persons on the distribution list about the Board's Fiscal Year 1999 functions and activities.

Discussion:

The Board's Functions

During FY 1999, the Department issued over 17,200 contract actions obligating more than $3 billion for the procurement of commodities, supplies, services, and construction to support agency operations. In addition, the Forest Service timber sale program resulted in contracts it estimates were worth approximately $206 million through September 30, 1999. The present Board was established under the Contract Disputes Act (CDA), 41 U.S.C. §§ 601-613, and adjudicates claims arising under these contracts. The Board is empowered to grant the same relief in contract matters as the U. S. Court of Federal Claims. Board decisions are generally issued by a three-judge panel and are not reviewable within the Department. However, contractors or the Department may appeal to the U. S. Court of Appeals for the Federal Circuit. Additionally, the Board has jurisdiction over appeals from Standard Reinsurance Agreements involving the Federal Crop Insurance Corporation and from certain debarments. Under the Equal Access to Justice Act, 5 U.S.C. § 504, the Board is authorized to award attorneys' fees and costs to prevailing parties when the Government's position in litigation was not substantially justified.

After an appeal to the Board is taken, the agencies are represented before the Board by attorneys from the Office of the General Counsel. Contractors are generally represented by private counsel, although a number of contractors, particularly on small dollar value claims, represent themselves. Many of the appeals require a Board member presiding over a formal evidentiary hearing where witnesses are subject to examination and cross-examination under oath. The Board was established to provide to the fullest extent practicable, informal, expeditious and inexpensive resolution of disputes. To this end, the Board attempts to focus on the facts and underlying law through informal procedures, while typically following the guidance found in the Federal Rules of Civil Procedure and the Federal Rules of Evidence.

The number of appeals on the Board's docket, and the agencies from which the appeals originated, are set forth in the table below.

The 109 appeals now on the docket were filed by contractors from 25 states and the District of Columbia. Examples of the type of contract, the nature of the appeals disposed of in FY 1999, and the affected agencies are set forth in Attachment 1. Attachment 1 also illustrates how the Department's agencies accomplish their mission through the procurement process. Examples of the legal issues considered are set forth in Attachment 2.

Workload Data

The Board received 97 appeals during FY 1999. The Board disposed of 100 appeals during the same period. The number of cases on the docket decreased from 112 to 109. Of the 100 appeals disposed of, 48 were decided by decision or ruling which may have required discovery, a hearing, briefing, detailed findings of fact and legal analysis. The remaining 52 appeals were settled, frequently after significant Board involvement.

Steven L. Schooner and Keith D. Coleman of the George Washington University Law School Government Contracts Program published an article in the American Bar Association’s publication, The Procurement Lawyer (Vol. 34, No. 4). The article, titled The CDA at Twenty: A Brief Assessment of BCA Activity, concluded that "the AGBCA ranks third in the analysis of board activity." The ASBCA and GSBCA, the only two boards with more activity, averaged approximately 30 and 10 judges, respectively, during the 20-year CDA period studied (1978-1998). The AGBCA averaged 5 judges during the same period, and is presently staffed with only 4. Boards of comparable size have a smaller case load.

The Board has continued to take an active role in facilitating many of the settlements achieved. The Board regularly, as part of its procedure, holds telephone conference calls and prehearing conferences with the parties. During these conferences, the Board regularly engages in informal or formal Alternative Dispute Resolution (ADR) aimed at focusing the parties on the pertinent facts and law. This activity often facilitates settlement, and, at the least, narrows the case for further proceedings. The informal ADR frequently takes the form of addressing the relative strengths and weaknesses of the factual and legal positions of the parties, and giving the parties the opportunity for open and frank discussion. In other instances, the more traditional forms of ADR are used, such as mediation or a mini-hearing. Other efforts focus on achieving stipulations, minimizing discovery, or ruling informally on motions or proposed motions. These efforts have directly resulted in many of the settlements reported, as well as faster case processing of the unsettled appeals.

Legislation and Litigation

After significant activity affecting Federal procurement in recent years, Congress this year made few changes, e.g., required clarification of procedures for determinations of cost reasonableness for commercial items, required providing information to determine price reasonableness as a condition to eligibility to contract, and required agencies to provide a list to the Office of Management and Budget of activities performed by Government employees that are not inherently governmental functions. Congress also passed the Alternative Dispute Resolution Act of 1998, which requires Federal District Courts to authorize the use of ADR processes in civil actions.

As indicated above, under the Contract Disputes Act, appeals from Board decisions may only be made to the U. S. Court of Appeals for the Federal Circuit. In Raji Abdus-Salaam d/b/a One on One Consulting & Development Corp., Appellant challenged the failure of the town of Enfield, Halifax County, North Carolina, to renew a consultant agreement to develop a strategy to spur economic, business, and commercial activity in the town. Appellant based its claim on the fact that the funding for the contract allegedly originated with the Department of Agriculture. The Board dismissed the appeal, concluding that the contract was not one with an "executive agency" so as to provide CDA jurisdiction. The Appellant appealed the Board’s dismissal to the Court of Appeals for the Federal Circuit. The appeal is pending.

The name and date of the case on appeal appears in Attachment 3.

Management

Two judges were hired to fill three vacancies caused by retirements. Joseph A. Vergilio joined the Board on November 8, 1998. Judge Vergilio had been a judge on the General Services Administration Board of Contract Appeals. Anne W. Westbrook joined the Board on January 3, 1999. Judge Westbrook was the Senior Assistant District Counsel in the Savannah, Georgia, District of the U.S. Army Corps of Engineers.

The Board continues to offer ADR and to encourage the parties toward informal or formal use of ADR to settle appeals, or to achieve a faster, more economical dispute-resolution process.

Summary:

The Board continues to provide, to the maximum extent practicable, informal, economical, and expeditious resolution of disputes.

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Attachments

Attachment 1
Examples of Agencies Involved, Types of Contracts, and Appeals Disposed of in FY 1999

AGRICULTURAL RESEARCH SERVICE (ARS) John C. Grimberg Co., Inc., of Rockville, Maryland, involved rebuilding the entire interior of a four-story, 60,000 square foot laboratory and office building at the Beltsville Agricultural Research Center. The work included asbestos removal; replacement of windows, plumbing, electrical, heating, ventilating and air conditioning systems; architectural structural work; and installing slate roofing and laboratory case specialities. The appeals involved approximately 50 separate claims on behalf of the Appellant and its subcontractors for such things as additional equipment, additional insulation, unanticipated extra work, delays, inefficiencies, defective specifications, and additional overhead and profit. The appeals were settled.

ANIMAL AND PLANT HEALTH INSPECTION SERVICE (APHIS) Jim Baker d/b/a Baker Harvesting of Spearman, Texas, was a subcontractor to John Walker Trucking Inc., under a contract to eradicate Karnal Bunt, a fungal disease attacking wheat. Under the subcontract, Baker would provide combines for harvesting the wheat. The combines were damaged after Baker followed an APHIS specified sanitation procedure. Walker and Baker settled a claim with APHIS under which Baker was to receive a sum of money for damage to its equipment. Baker filed claims allegedly not covered by the settlement agreement. However, Walker did not submit or sponsor Appellant’s contract claims to the Contracting Officer (CO) or to the Board. For this reason, the Board determined that it did not have jurisdiction over Appellant’s appeal. The Board dismissed the appeal.

FARM SERVICE AGENCY (FSA) Jill Reese of Palmer, Alaska, involved a contract for the lease of office space. The Agricultural Stabilization and Conservation Service (ASCS) (now the FSA) terminated the lease because of numerous problems with the space, including a leaky roof. Appellant claimed the balance of the rent and damages for wrongful termination, asserting that the problems had been resolved. After a hearing, the Board found that the record demonstrated that the roof leaked, drains backed up, and trouble existed with sinks and drinking fountains, making the termination of the lease for cause justified. The Board further found that Appellant’s ability to lease the premises to another tenant at a higher total rent would not have been possible if the ASCS had not vacated the premises, making Appellant’s damage calculation faulty. The Board denied the appeal. Superior Cleaning Service of Bloomfield, Missouri, involved a 1985 ASCS contract for janitorial services in an office building in Bloomfield, Missouri. The contract expired by its terms in 1986, and Appellant continued to work. The Government continued to make payments at the contract rate. Appellant filed a claim asserting that she had been converted to the status of a Government employee. After the CO denied her claim, she appealed. The Government filed a Motion to Dismiss, alleging that no contract existed on which to base jurisdiction. Appellant agreed with this allegation, and the appeal was dismissed. T.C. Cutter Appraisals of Portland, Oregon, involved a contract for the appraisal of properties. The CO terminated the contract for default but did not identify the decision or a subsequent letter reaffirming the decision as "final." The Board noted the procedural defects in its docketing letter. The appeal was settled after a telephone conference call with the Board to clarify the issues. RR & VO, L.L.C. of Washington, D.C., involved a contract to ship commodities to Odessa, Ukraine, by the Commodity Credit Corporation (CCC). The carrier guaranteed arrival 40 days after loading. The carrier arrived with the cargo 18 days after loading, but the shipper, who was responsible for customs clearances, did not have the necessary paperwork in place to allow unloading the cargo until the 35th day. The shipper moved on to another port on the 27th day and did not return for unloading until the 57th day after loading. CCC determined that the cargo could have been unloaded within the 40 days, and assessed a penalty for delivery delay. The Board found that the shipper arrived well within the 40 days and waited a reasonable time for completion of paperwork for which it was not responsible. In such circumstances the Board found the imposition of a penalty improper and sustained the appeal. The Government filed a Motion for Reconsideration, which the Board denied because it raised no valid basis for reconsideration.

FEDERAL CROP INSURANCE CORPORATION (FCIC) The FCIC enters into Standard Reinsurance Agreements (SRAs) with insurance companies who provide crop insurance to producers under Multiple Peril Crop Insurance (MPCI) policies. Appeals to the Board generally involved disputes about alleged improperly paid indemnities resulting from various failures to comply with the SRA and/or FCIC loss adjustment procedures. Great American Insurance Companies (John W. Lyerly, Insured) of Cincinnati, Ohio, was an appeal that arose under an SRA. The appeal involved allegations that Appellant’s loss adjuster failed to follow approved procedures, and FCIC sought reimbursement from Appellant for reinsurance because of this failure. The appeal was settled. Rain and Hail Insurance Service, Inc. (Wilkerson Compliance) of West Des Moines, Iowa, was an appeal of an FCIC claim that Appellant had undercalculated an actual rice crop yield and failed to apply a required yield adjustment. The appeal was settled. Rural Community Insurance Services (J. Bogestad & Son Farm, Inc.) of Anoka, Minnesota, arose after an FCIC field office concluded that the insured did not have an insurable interest in the crop and Appellant appealed. The Government filed a Motion to Dismiss, claiming that the Board was without jurisdiction because the insured did not obtain a final administrative decision of the FCIC. The Board granted the Motion and dismissed the appeal. In Rain and Hail (R.A. Rowan & Company), the insured transferred an MPCI policy to Appellant and FCIC paid Appellant $24,050 towards the premiums. FCIC later concluded that Appellant had failed to notify FCIC of the transfer and thus must repay the premium amount because Appellant’s failure resulted in duplicate coverage. Appellant filed a motion for summary judgment, but the appeal was settled before the Government response was due. In Rain and Hail (1996 SRA), the issue was the Government’s liability for interest on an expense reimbursement payment that FCIC failed to make in a timely manner. The SRA provided that interest would be paid in accordance with the CDA. The Government maintained that the request for payment did not trigger the CDA requirements for interest. The Board interpreted the SRA and sustained the appeal. Great American Insurance Companies involved claims by Appellant for indemnity-payment reimbursement FCIC denied because it found Appellant’s loss adjusters used improper and/or inaccurate procedures to determine cotton and sorghum crop potential and did not require the insureds to replant the crops after the initial failure. After numerous time-extension requests to the Board, the appeal was settled. Rural Community Insurance Services (Arthur Steere Compliance, Bynum Farms Compliance, and Lawrence Bressler Compliance) involved alleged Appellant indemnity overpayments due to erroneous sales prices and different test weights used in indemnity calculations. The appeals were settled. Rural Community Insurance (Coastal Bend) involved alleged indemnity overpayments due to Appellant’s failure to properly determine whether it was practical for the insureds to replant insured acreage prior to releasing the acreage for planting a different crop. After extensive pleadings and motions to compel production of documents, the appeal was settled. In Rain and Hail (McQuaig Compliance), the Government filed a motion for summary judgment alleging Appellant improperly paid an indemnity for apple losses by including sunburned-injured apples in the production loss calculation, rather than limiting the production loss only to damaged apples indicative of defects. The Board found a material factual dispute between the parties over whether the apples in question were "damaged" or "injured." The Board denied the motion such that the matter remains for resolution on the merits. Rural Community Insurance (James T. Smith) involved a dispute over whether Appellant was liable for indemnities paid to the insured whom FCIC had concluded was not a landlord, or a tenant, and otherwise had no insurable interest in the crop. The appeal was settled after the Government filed a motion for summary judgment. In Rain and Hail (CR Partners and Jay Smith), the issue in the appeal was an indemnity payment Appellant made to an insured for a crop failure on land that had been classified as "summerfallow" (as opposed to continuous cropping) for the previous crop year. The Board previously denied the appeal. In its request for reconsideration, Appellant restated and reinforced many of its previous arguments, which did not provide the Board a basis to reconsider its decision. The Board denied reconsideration of the appeal. Continental Insurance Company/CNA Insurance Companies (1993 Nationwide Operations Review) of Overland Park, Kansas, involved Appellant’s alleged failure to comply with various provisions of the SRAs requiring agent training, loss adjustment training, actual production history reviews, underwriting, policy administration, and drug free awareness programs. A Board judge held a mediation with the parties. The appeal was settled. Rain and Hail (Leonard Hoffman) involved a dispute over whether Appellant was liable for an indemnity overpayment and premium overstatement in a case involving producer fraud. At issue was whether Appellant had adequately investigated the financial status of the insured upon which to base a decision whether to seek recovery of the funds. The appeal was settled. Rain and Hail (Compliance Case: Sherman’s Defeat) involved the actual production history of the insured and whether Appellant maintained sufficient records to support the reported production. The appeal was settled. Rural Community Insurance (Prieto and Hansen) involved a compliance case involving 32 1994 crop year raisin policyholders. The Government moved to dismiss the claims of two insured for whom the Government alleged the complaint made no factual representations. The Board found that disputed issues of material fact were raised before the FCIC, requiring the Board to deny the Motion.

Under the SRA, FCIC reimburses reinsurers’ administrative expenses, including legal expenses, as a percentage of the insurance premiums. In addition, under FCIC Manager’s Bulletin (MGR) 93-020, special litigation expenses incurred as a result of litigation initiated by insureds are reimbursed if the litigation involves an attack on FCIC-approved procedures, regulations, or policies, and if the litigation involves the probability of a court establishing a precedent detrimental to the crop insurance program. In a series of appeals brought by Rain and Hail, the entitlement to the special litigation expenses reimbursement under MGR 93-020 was extensively litigated. The Board held, among other things, that a suit based on the question of what caused a peanut crop loss, drought on land that was supposed to have been irrigated, or disease, was a factual question and not an attack on FCIC policies and procedures, and would not set a precedent detrimental to the crop insurance program, and thus did not require expense reimbursement under MGR 93-020 (Edith Kelley). In another appeal, the Board found that an insured’s request for compensatory and punitive damages, and attorney fees and costs was not an attack on FCIC policies and procedures as defined by MGR 93-020 (Ingram). In that case a factual issue was also present regarding whether the insured had practiced good farming practices. The Board found that these requests and factual issue did not require expense reimbursement under MGR 93-020. In (Carol Sprau), Appellant refused to pay for corn and soybean crop losses allegedly due to adverse weather, because Appellant concluded the losses were due to the insured’s failure to follow good farming practices including control of weeds. Appellant’s claim to recoup litigation expenses from FCIC was settled. The Board found that an insured’s ignoring numerous requirements for collecting on a policy and its counterclaim to Appellant’s collection action did not constitute an attack on FCIC policies and procedures as defined by MGR 93-020 (Billy J. Freeze, d/b/a Freeze Brothers). Where the MPCI included an arbitration clause to settle disputes about the amount of production counted towards a production guarantee due to damage, and Appellant sought to recover the expenses of arbitration, the Board found that a case involving arbitration had no probability of establishing a precedent detrimental to the crop insurance program, because the results of the arbitration would apply only to the parties to the arbitration (Michael Hat Farming Company). In (Andy Summer), the insured sued Appellant because Appellant refused to pay for a cotton crop loss that Appellant concluded was lost because the insured failed to provide sufficient effort to make normal progress towards harvest. Appellant’s appeal of the litigation expense recoupment to the Board was settled after the Board established the schedule for further proceedings.

FOREST SERVICE Appeals arose from contracts for construction. Barnes, Inc., of Lewiston, Idaho, involved a contract for widening approximately 6 miles of road on the Idaho Panhandle National Forest. Appellant claimed additional compensation for removal of extra material. The parties settled the appeal. A dispute arose over the settlement agreement, and Appellant filed another appeal and moved to enforce the settlement agreement. The appeal was again settled. DRP Construction Company of Encinitas, California, involved a contract for the Lower Walker River Bridge repair in the Klamath National Forest, California. The CO denied Appellant’s request to utilize an escrow agreement in lieu of a payment bond to provide payment protection; Appellant then claimed additional compensation for the payment bond. The Board denied the appeal. McDonald’s Excavating of Nampa, Idaho, involved a contract for trail reconstruction on the Wallowa-Whitman National Forest in Oregon. Appellant claimed additional compensation for costs to conform to Davis-Bacon Act requirements and to perform the work in a manner other than it expected. Based on the language of a release and because the Appellant failed to present any evidence of disputed facts, the Board dismissed the appeal. Tri-J Contractors of Weaverville, California, involved a contract for work on and around the Valley of the Moon Bridge and Footbridge in the Lolo National Forest in Montana. Appellant filed a claim to reprice remaining work after a reduction of the work. The appeal was settled. Meadow Valley Contractors, Inc., of Phoenix, Arizona, involved construction of the School House Campground in the Tonto National Forest in Arizona, which included paved roads, parking lots, a boat ramp, toilet buildings, campsites, an events area, and lighting. Appellant claimed compensation for delays caused by allegedly defective Government-furnished crushed aggregate. The Government claimed that Appellant used inappropriate equipment. The appeal was settled. Explosive Services, Inc., of Lima, Montana, involved construction of 4 miles of hiking and horse trails in the Beaverhead-Deerlodge National Forest in Montana. After a mutually agreed-to delay in starting work, Appellant never accepted the Notice to Proceed, and the CO terminated the contract for default. After telephone discussions between the parties and the Board, the appeal was settled after the CO changed the termination to a no-cost termination for the Government’s convenience. Herb Richards Construction Company, Inc., of Bozeman, Montana, involved a contract for the resurfacing of the Kaibab Lake Campground road in the Kaibab National Forest in Arizona. Appellant claimed entitlement to additional compensation because the Government-designated source of paving material had allegedly developed a hard crust and could not be used. The appeal was settled after the Board scheduled a hearing. Fred Winegar of Prairie City, Oregon, involved a contract to construct a 50-foot lookout tower in the Malheur National Forest in Oregon. The CO terminated the contract for default for Appellant’s failure to provide an acceptable plan for correcting deficiencies and maintaining an adequate quality-control system. The appeal was settled after the Board scheduled a hearing. Harvest Construction Company, Inc., of La Mesa, California, involved a contract for road construction and repair in the Cleveland National Forest in California. The dispute involved compensation for quantity differences in "designed quantities," among other things. The appeal was settled after the Board judge conducted a mediation/settlement conference with the parties. Inca Construction Co., Inc., of Albuquerque, New Mexico, involved a contract to enlarge the surface area of Lake Roberts in the Gila National Forest in New Mexico, as well as construction of a siltation dam and parking area. Appellant filed claims over the amount of excavation it was entitled to be paid for, and because the Government allegedly failed to lower the lake level to the agreed level in order to facilitate the excavation. The appeals were settled after the Board judge convened a mediation conference in New Mexico.

Appeals arose from Forest Service contracts for forest-fire suppression. Pepper Hewitt of Ormond Beach, Florida, involved an emergency equipment rental agreement with the Forest Service for lease of a Jeep to haul supplies for fighting the fires in the National Forests in Florida. Appellant claimed compensation for damage to the vehicle, which the Forest Service claimed was normal wear and tear for which it was not liable. The appeal was settled. Special Operations Group of Corona, California, involved a contract for crew transportation in firefighting operations. Appellant claimed compensation for work performed. The Government agreed that the work had been performed, but that Appellant had been paid. After a conference call, the parties settled the appeal.

Appeals arose from Forest Service contracts involving environmental considerations. Curt Madson, Jr. of Bend, Oregon, involved a contract for a reforestation stocking survey. The CO terminated the contract for default after Appellant failed to perform the second task order under the contract. The appeal was settled. J & D Services of Northern Minnesota, Inc., of Duluth, Minnesota, involved a contract for removal and replacement of contaminated soil in the Riverside Campground in the Boise National Forest in Idaho, and placement of the contaminated soil in a "repository vault." The contract specified payment for items relating to the vault as "designed quantities," that could vary only due to changes or an estimating error greater than 15 percent. Appellant claimed compensation for the extra excavation necessitated by modifying the side slope of the vault to accommodate proper installation of the vault liner it selected. Because Appellant proved neither that the pay item varied by more than 15, or that a vault liner was unavailable that satisfied the contract requirements within the design-data tolerances, the Board denied the appeal.

Appeals arose from Forest Service silvicultural work. Darst Atherly Contracting of Bend, Oregon, involved a contract for pre-commercial tree thinning and slash treatment on the Deschutes National Forest in Oregon, in which the Appellant claimed compensation for having to cut live limbs that originated underground. The Board held a hearing in Bend, Oregon, during which the parties settled the appeal. Campesino'95, of Redmond, Oregon, involved a contract for herbicide application in the Stanislaus National Forest, California. The Forest Service terminated the contract for default. Appellant filed a claim for lost profits resulting from the termination. The Government filed a Motion for Summary Judgment, claiming that the matter was covered by a Settlement Agreement resolving a previous appeal on the contract. The Board dismissed the appeal. Tom Fery Farm of Slayton, Oregon, involved a tree-planting contract on the Malheur National Forest in Oregon. Appellant claimed additional compensation for having to plant containerized rather than bare-root trees. After the Government filed a motion for summary judgment and conference calls were conducted with the Board judge, the appeal was settled. C&O Reforestation, Inc., of Medford, Oregon, involved a contract for lifting and processing tree seedlings in the Rogue River National Forest in Oregon. Appellant claimed additional compensation for an increase in the number of culls. The appeal was settled. Kerry Erickson, of Hayden Lake, Idaho, involved a tree-thinning contract in the Wallowa-Whitman National Forest in Oregon. The contractor sought additional compensation for trees it considered were in excess of the contract estimates and a refund of Government-assessed additional administrative costs because the contractor did not finish work on time. Because the record revealed no inaccuracy in the Government’s estimates, the Board denied this aspect of the claim. The Board found, however, that the a portion of the Government’s assessment of excess administrative costs would have been incurred even if the contractor had finished work in a timely manner. The Board sustained this part of the appeal.

Appeals arose from a variety of other types of Forest Service contracts. Avtronix Technologies, Inc., of Orem, Utah, involved a contract for aviation-related services. Appellant claimed labor costs for a number of items of work and for repairs it claimed it was entitled to be paid. The appeal was settled after the Board scheduled a conference call. Sea Side Associates Limited Partnership of Edmonds, Washington, involved a lease of the Wallowa Mountain Visitor Center and Ranger Station. Appellant requested additional compensation for items required that it was not obligated to provide by the lease such as telephone lines to the elevator, floor supports for filing cabinets, landscaping, repairing water damage to Government property, and snow removal. The appeal was settled after the Board scheduled a hearing. Summitt Development Corporation of Redding, California, involved a lease of office space for the Lassen National Forest Supervisor’s office. The CO terminated the lease for default for Appellant’s failure to show progress in meeting the occupancy date. The appeal was settled. Brown’s Chuck Wagon Catering of Medford, Oregon, involved a contract to provide mobile food service to the Siskiyou National Forest in Oregon. The Forest Service gave Appellant notice that its services would not be required after a certain date, and acknowledged that additional compensation might be due Appellant for the shortened termination notice. The appeal was settled. George’s Auto Detailing of Brookings, Oregon, involved a contract for cleaning and waxing Forest Service vehicles for two Ranger Districts of the Siskiyou National Forest. The CO terminated the contract for default for Appellant’s failure to complete work on time. The Board dismissed the appeal for failure to prosecute. Thompson Museum Consulting of St. Paul, Minnesota, involved a contract for technical planning and design of exhibits for the Northern Great Lakes Visitors’ Center. Appellant claimed compensation for extra work, and the Forest Service claimed damages for Appellant’s alleged failure to deliver certain items and for defects in delivered work. The appeals were settled. Brenda R. Ronhaar, of Camas, Washington, involved a contract for word processing services at the Gifford Pinchot National Forest in Washington. The Appellant filed a claim for compensation when the Forest Service did not exercise the final option of a contract with three 1-year options. Appellant claimed that the Forest Service had assured her that using a contract for the services was legal, on which assurance she claimed she relied to her detriment. The Board found that the contract gave the Forest Service the unilateral right to exercise the option or not, and further that Appellant had failed to prove the necessary elements of estoppel. The Board denied the appeal.

Appeals arose from Forest Service Timber Sale contracts. John R. Wood Trucking, Inc., of Grants Pass, Oregon, involved the Big Pine Density Management Timber Sale on the Siskiyou National Forest in Oregon. After the sale, the Forest Service billed Appellant for escalation to the stumpage rates. Appellant disputed that the sale was an escalated sale. The Board denied a Government motion for summary judgment because there was a dispute over what documents had been provided to Appellant before bidding. The appeal was settled. Freres Lumber Company, Inc. (Ridgetop Timber Sale), of Lyons, Oregon, involved a sale on the Willamette National Forest in Oregon. Appellant filed a claim for the value of timber lost in a fire. The Forest Service determined that the fire was caused by Appellant’s operations, denied the claim, and found Appellant liable for fire-suppression costs. The Board previously denied Appellant’s motion for partial summary judgment. The appeal was settled. Rocky Mountain Log Homes, Inc., of Hamilton, Montana, involved the North Coal Salvage Timber Sale on the Flathead National Forest in Montana. Appellant did not complete cutting the sale by the termination date, and the Forest Service assessed damages against Appellant. Appellant offered numerous reasons why the failure to cut was not its fault. The appeal was settled. Hi-Ridge Lumber Company of Yreka, California, involved the Mud Thinning Timber Sale on the Shasta-Trinity National Forest in California. Appellant claimed damages for reduced timber due to Forest Service error in the acreage in one sale unit. Appellant withdrew the appeal prior to filing a Complaint. Poston Logging of Sonora, California, involved the Fraser Timber Sale on the Stanislaus National Forest in California. The appeal involved Appellant’s claim that the Forest Service refused to allow removal of certain blue-marked timber, contrary to the terms of the contract. The Forest Service claimed that the blue marks on such trees were old and did not indicate that the trees were included timber, and also that even if the trees were included, the amount of damages should be limited to those relating to terminations for environmental reasons. After a hearing on the merits, the Board held for Appellant, concluding that the Forest Service could not retroactively apply a termination clause to limit Appellant’s damages. The Board found errors and inconsistencies in Appellant’s damage calculation, however, and awarded the Appellant less than it sought. The case is before the Board on motions for reconsideration. SDS Lumber Company of Bingen, Washington, involved the Blimp Timber Sale in the Gifford Pinchot National Forest in Washington. Appellant claimed compensation for Forest Service-caused delays to protect the northern spotted owl. After the Board denied Appellant’s motion for summary judgment, the appeal was settled. Craig Metje of Gardiner, Montana, involved the Black Butte Salvage Timber Sale in Gallatin National Forest, Montana. Appellant claimed that the Forest Service had improperly assessed contract damages. The appeal was settled. Donald Watters of Stearns, Kentucky, involved the Angel Mountain North II Timber Sale on the Daniel Boone National Forest, Kentucky. Appellant filed a claim for lost profits, equipment costs, crew time, and other costs after the CO terminated a portion of the contract. With the assistance of a Board judge who held a settlement meeting, the appeal was settled. Also settled at this meeting was Camp Dix Wood Products, and Forest Products, Inc., all located in Kentucky, where the Appellants requested replacement costs of timber pursuant to contract terms for the Spaws Creek, Flatwoods, and Wolf Knob Timber Sales, respectively. All parties participated in the above settlement meeting, where the appeals were settled. This same settlement meeting also resulted in the settlement of Forest Products, Inc., where the Appellant sought to recover lost profits, investment losses, and replacement costs of timber under the Stephens Knob Timber Sale. A similar dispute was settled by the parties involving a Kentucky forest in Feldman Lumber Co., Inc. John E. Gallno of Sonora, California, involved the Wrights Creek II Multi-Product Timber Sale on the Stanislaus National Forest, California. After a dispute developed regarding the definition of included timber, the Forest Service suspended the contract until Appellant agreed to operate the sale in accordance with the Forest Service’s interpretation of the contract. Appellant then assigned the contract to another contractor with Forest Service approval. Appellant filed a claim for lost profits. The Board previously denied a government motion to dismiss because it found the assignment language did not act as a release of Appellant’s rights against the Government. The Board held telephone conference calls to assist the parties in settling the appeal. Immediately prior to the start of the formal hearing, the Board offered the parties another opportunity to discuss settlement. The appeal was settled. Michael Dennison of Charlo, Montana, involved the Trout Creek Blowdown Timber Sale in the Lolo National Forest in Montana. Appellant appealed the CO’s assessment of damages for Appellant’s failure to complete the contract, alleging that the Forest Service caused Appellant’s failure to complete by preventing use of a rubber-tired skidder. The appeal was settled after the Board scheduled a hearing. Hoh River Timber, Inc., of Beaver, Washington, involved the Bear II Timber Sale in the Mt. Baker-Snoqualmie National Forest in Washington. Appellant claimed damages for reduction in value of timber while it was prevented from cutting because of the presence of spotted owls. It also claimed damages for 130,000 board feet of timber that were designated for wildlife protection after the sale. The appeal was settled. D & L Construction Co., Inc., of Cooper Landing, Alaska, involved the LV Ray Salvage Timber Sale on the Chugach National Forest in Alaska. Appellant claimed the amount of timber harvested was 154 MBF less than the Forest Service advertised. The Board found that the Forest Service explicitly stated that the figures were estimates, and that Appellant provided no evidence of defects in Forest Service estimating methodology. The Board denied the appeal. Hood Lumber Co., formerly Hanel Lumber Co., Inc., of Hood River, Oregon, involved the Enola Timber Sale on the Mt. Hood National Forest in Oregon. The Appellant underwent several changes of ownership, and the Government filed a motion to dismiss for lack of jurisdiction because the proper party was not before the Board. Appellant then filed a motion to substitute another company as the Appellant. The Board found that the various transfers of ownership did not violate the Anti-Assignment Act, and thus the Board had jurisdiction. The Board denied the motion to substitute, leaving the appeal in the name of Hood.

NATURAL RESOURCES CONSERVATION SERVICE (NRCS) James J. Manno Construction of Ridgway, Pennsylvania, involved a contract for construction on the Chum Creek Emergency Watershed Protection project in Adams County, Ohio. Appellant filed its appeal more than 90 days after the date of the CO’s decision, and the Board questioned its timeliness. Appellant then requested that it be allowed to withdraw its appeal and refile it in the Court of Federal Claims. The Board granted this request and dismissed the appeal. Santee Dock Builders of Vance, South Carolina, involved a contract for Appellant to clear debris from 9,000 feet of shoreline and to place riprap along the Mossy Creek in Houston County, Georgia, to repair damage caused by hurricane Alberto in 1994. NRCS terminated the contract for default. Appellant appealed. The Board found that Appellant would not have completed the contract by the completion date, and thus that the termination was reasonable. Tamarack Development of Encino, California, involved a contract for emergency watershed protection at Santa Catalina Creek in Puerto Rico. Appellant had filed claims based upon defective specifications and unanticipated water volume causing additional work and delays. The parties agreed to the assignment of a settlement judge to assist the parties’ attempts to settle. The appeal was settled. Conti Enterprises, Inc., of South Plains, New Jersey, involved a contract for construction of an emergency spillway for the Lost River Watershed in West Virginia. Appellant claimed compensation for changes and the Government filed a counterclaim for extra costs of administration. After extensive discovery, the appeal was settled. Advance Construction Services, Inc., of Brewton, Alabama, involved a contract to repair a ditch bank stabilization including removing structures, placing paving stone, installing riprap, geotextile, grout, and seeding and mulching, in Baldwin County, Alabama. Appellant sought compensation for unanticipated subgrade and water conditions. The appeal was settled after the parties participated in several conference calls with the Board.

RURAL DEVELOPMENT (RD) Raji Abdus-Salaam d/b/a One on One Consulting & Development Corp. of New York, New York, involved a contract for services to develop a strategy for long-term growth for a rural area in North Carolina. The contract was with the Town of Enfield, North Carolina, and the source of funding was unclear and may have originated from the USDA. Appellant’s contract had been terminated by the Town and Appellant appealed. The Board dismissed the appeal because its applicable jurisdiction was limited to contracts with an executive agency. Appellant has appealed the decision to the U. S. Court of Appeals for the Federal Circuit.

UNITED SOYBEAN BOARD (USB) Trent-Jones, Inc., of Princeton, New Jersey, involved a contract with the USB under which the contractor would provide USB with producer communication and related services. The Government moved to dismiss the appeal for lack of jurisdiction because the CDA does not cover contracts with nonappropriated fund activities such as the USB. Appellant opposed the motion. Because the USB is neither an executive agency nor a nonappropriated-fund activity covered by the CDA, the Board found that it does not have jurisdiction over the appeal.

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Attachment 2
Examples of Legal Issues Considered in FY 1999

Jurisdiction

Under the Contract Disputes Act (CDA), there are a number of conditions precedent to the Board's jurisdiction. An Appellant must file a written claim and timely appeal an adverse CO's decision within 90 days of the receipt of such decision. If the claim is in excess of $100,000, Appellant must provide a proper certification of the claim. If the CO fails to render a decision within 60 days on a claim of $100,000 or less, Appellant may properly appeal the "deemed denial" of such claim. In cases of Federal Crop Insurance Corporation (FCIC) appeals, the Board’s rules provide that an appeal must be filed within 90 days of receipt of the Corporation’s final determination. 7 C.F.R. § 24.5. If the Board renders a decision where it had no jurisdiction, such decision would be a nullity. Therefore, it is imperative for the Board to raise the question of jurisdiction, if reasonable to do so, even if the parties do not.

In D & L Construction Co., Inc., Appellant claimed entitlement to payment because of a discrepancy in the amount of timber harvested compared to the amount listed in the advertisement for a Timber Sale. In its Complaint to the Board, Appellant claimed that the sale did not contain the types of timber advertised, a claim that had not been made to the CO. This latter claim resulted in further damage for which Appellant claimed compensation. The Board found that it did not have jurisdiction over Appellant’s claim for timber-type differences because this claim was not the subject of a CO’s final decision.

In James J. Manno Construction, Appellant filed an appeal 95 days after the date of receipt of the CO’s decision on a contract for construction services. The Board questioned whether the appeal was timely. The Government filed a motion to dismiss the appeal. Appellant responded that it had held discussions with the CO for two weeks prior to filing its appeal and that the CO had promised that extra time would be given to file an appeal if necessary. These allegations raised questions about whether the CO had, or was reconsidering the claim and whether the CO’s action might have tolled the statute of limitations. However, Government counsel represented that the CO would deny Appellant’s allegations, though he conceded that some discussions had occurred. Appellant stated that if there were any question of timeliness, it would prefer to dismiss the appeal at the Board and file it at the Court of Federal Claims. During a conference call discussing this issue, Appellant requested that the appeal be dismissed so it could refile it at the court. The Board dismissed the appeal. In American Agrisurance, Inc. (Randy A. Schenk), the Appellant failed to file its appeal to the Board within 90 days of receipt of the FCIC final administrative determination, but claimed that an appeal to the Risk Management Agency within 90 days should allow the Board to assume jurisdiction. The Government filed a motion to dismiss for lack of jurisdiction. Because the language of the regulations is clear that appeals must be filed with the Board within 90 days, the Board dismissed the appeal for lack of jurisdiction. Thus, the Board extended its CDA holdings to its regulatory jurisdiction over FCIC appeals.

For the CDA to apply, the contract must be one with an "executive agency" of the Federal Government or with nonappropriated-fund activities such as the exchanges in the military. Trent- Jones, Inc., involved a contract with the United Soybean Board (USB) under which the contractor would provide USB with producer communication and related services. The Government moved to dismiss the appeal for lack of jurisdiction because the CDA does not cover contracts with nonappropriated-fund activities such as the USB. Appellant opposed the motion. Because the USB is neither an executive agency nor a nonappropriated-fund activity covered by the CDA, the Board found that it did not have jurisdiction over the appeal. In Raji Abdus-Salaam d/b/a One on One Consulting & Development Corp., Appellant challenged the failure of the town of Enfield, Halifax County, North Carolina, to renew a consultant agreement to develop a strategy to spur economic, business, and commercial activity in the town. Appellant based its claim of Board jurisdiction on the fact that the funding for the contract allegedly originated with the Department of Agriculture. The Board found from the facts that the dispute arose under a grant-based contract between Appellant and the town, and that it was not clear from which agency the funds arose. In any event, the contract clearly was not one with an "executive agency" so as to provide CDA jurisdiction to the Board. The Board dismissed the appeal. In evaluating a Motion for Reconsideration, the Board found Appellant to be rearguing positions that were taken, or could have been taken, during the original proceeding. The Board found these arguments insufficient to justify reconsideration, and denied the Motion. Appellant has filed an appeal with the U. S. Court of Appeals for the Federal Circuit.

Under the CDA, only a contractor, not a subcontractor, may file a claim with the CO and appeal an adverse decision to the Board. A subcontractor's appeal must be made by or authorized by the prime contractor. Jim Baker d/b/a Baker Harvesting was a subcontractor to John Walker Trucking, Inc., under a contract to eradicate Karnal Bunt, a fungal disease that attacked wheat. Under the subcontract Baker would provide combines for harvesting the wheat. The combines were damaged after Baker followed an APHIS specified sanitation procedure for the combine. The contractor and subcontractor settled a claim with APHIS under which they were to receive a sum of money for the equipment damage. Baker submitted a claim for compensation for additional equipment damage and for loss of business. Walker did not submit or sponsor Baker’s contract claims. For this reason, the Board determined that it did not have jurisdiction and dismissed the appeal.

In Hood Lumber Co., formerly Hanel Lumber Co., Inc., the Appellant underwent several changes of ownership, and the Government filed a motion to dismiss for lack of jurisdiction, claiming that the proper contractor was not before the Board because the Anti-Assignment Act prohibits transferring a contract. Appellant then filed a motion to substitute another company as the Appellant. The Board found that the various transfers of ownership did not violate the Anti-Assignment Act because, as sales of stock, mergers, and mere name changes, they did not constitute an assignment, and thus the Board had jurisdiction. The Board found, however, that Appellant’s purported sale of its assets to another concern did not allow the other party to be substituted for purposes of the appeal, and denied the motion to substitute, leaving the appeal with Hood.

In appeals involving the Federal Crop Insurance Corporation (FCIC), the regulations at 7 C.F.R. § 24.4(b) and § 400.169(d) provide that the Board has jurisdiction over appeals from final administrative determinations of the FCIC. In Rural Community Insurance Services (J. Bogestad & Son Farm, Inc.), an FCIC field office concluded that the insured did not have an insurable interest in the crop. Appellant appealed to the Board. The Government filed a motion to dismiss, claiming that the Board was without jurisdiction because the insured did not obtain a final administrative decision as required by the applicable regulations. The Appellant claimed that the Director of the Risk Management Agency had determined that the case would not be reopened, that further appeal would be futile, and that the Board therefore had jurisdiction. Based on a review of the record, the Board concluded that an appeal to Risk Management Agency seeking a final administrative determination may not have been futile, and that in any event, the regulations required such a determination, and the Board dismissed the appeal. In Rain and Hail (McQuaig Compliance), Appellant filed an appeal based on FCIC’s failure to issue a timely determination on its request for a final administrative determination. The Government filed a motion to dismiss, claiming that because the amount in issue was over $100,000, Board Rule 1(c), imposed a CDA-originated certification requirement on such a claim. Because Appellant did not certify the claim, the Government alleged that the Board did not have jurisdiction. The Board found that the certification requirement covers CDA appeals only, and that its previous assumption of jurisdiction over FCIC’s failure to issue determinations is based on FCIC regulations, not Board Rule 1(c). The Board denied the Motion.

Motions Practice

When a party moves for summary judgment it is claiming that there are no material facts in dispute and that it is entitled to judgment in its favor as a matter of law. In evaluating such a motion, the Board considers the record before it and construes all facts in the light most favorable to the party opposing the motion.

Campesino'95 involved a contract for herbicide application in the Stanislaus National Forest. The FS terminated the contract for default. Appellant filed a claim for lost profits resulting from the termination. The government filed a motion for summary judgment, claiming that the matter was covered by a Settlement Agreement resolving a previous appeal on the contract. The Appellant claimed the agreement did not cover this issue, and if it did that it had been tricked into signing it. Based on the language of the agreement that it covered "any and all claims" relating to the contract, and Appellant’s failure to present any evidence that it was tricked, the Board found that there were no issues of disputed material fact. The Board thus granted the motion and dismissed the appeal.

McDonald’s Excavating involved a contract for trail reconstruction on the Wallowa-Whitman National Forest. Appellant claimed additional compensation for costs required by conforming to Davis-Bacon Act requirements and to perform the work in a manner other than it expected. The CO refused to consider the claim because it was submitted after the Appellant executed a release of claims. The Government moved for summary judgment based on the language of the release. The Appellant admitted that it intentionally failed to submit the claim prior to executing the release in order to expedite its final payment, and present no evidence that the CO was aware of the existence of the claims. Based on the language of the release and because the Appellant failed to present any evidence of disputed facts, the Board granted the motion.

Rain and Hail (McQuaig Compliance) involved an SRA covering an MPCI policy covering an apple crop. FCIC denied Appellant reimbursement of an indemnity payment because it alleged that Appellant used an improper grading standard in determining the quantity of apples that qualified for indemnity under the contract. The Government alleged that the apples were merely sunburn injured rather than damaged, making them ineligible for indemnity payment. The Government also alleged that the inspector admitted he had included sunburn injured apples in his appraisal, making the case appropriate for summary judgment. Appellant proffered an affidavit from the inspector, however, stating that he conducted the appraisal in accordance with FCIC-approved procedures and included only apples with "material defects" eligible for indemnity payment. Because the Board must resolve any dispute over material facts in favor of the non-moving party when evaluating a motion for summary judgment, and because whether the apples were damaged or injured was a material fact, the Board denied the motion.

Termination for Default/Excess Reprocurement Costs

Generally, termination for default is appropriate if a contractor fails to deliver on time, or if a contractor fails to make satisfactory progress so as to endanger timely completion. The failure to make progress or complete on time is excusable if it is without the fault or negligence of the contractor and beyond its control. Where the Government terminates a contract for default, it may reprocure the incomplete work and assess the excess reprocurement cost against the defaulted contractor. In doing so, however, the Government must mitigate its damages. It must also offer proof that the reprocurement contractor has completed the work and has been paid.

Santee Dock Builders involved a contract to repair natural resource damage caused by hurricane Alberto in 1994. Because it was dissatisfied with Appellant’s performance, and because it believed Appellant could not complete the contract by an extended completion date, NRCS terminated the contract for default. Appellant appealed. The NRCS had been forbearing and allowed Appellant to continue work after the contract was technically in default. After a meeting in which Appellant acknowledged the gravity of the situation, the NRCS extended the completion date. The NRCS terminated the contract when Appellant’s efforts were not sufficient to ensure that Appellant could meet the extended date. After a hearing on the merits, the Board found that, while a diligent contractor could have completed the contract by the extended date, Appellant’s performance had not been diligent, and that the termination was reasonable. The Board denied the appeal.

FCIC Litigation Expense Cases

Rain and Hail Insurance Service, Inc.¹ (Edith Kelley) involved an FCIC Standard Reinsurance Agreement (SRA) and the application of FCIC Manager’s Bulletin (MGR) 93-020, which provides that special litigation expenses incurred as a result of litigation initiated by insureds are reimbursed if the litigation involves an attack on FCIC-approved procedures, regulations, or policies, and if the litigation involves the probability of a court establishing a precedent detrimental to the crop insurance program. Appellant applied for litigation expenses incurred in defending a suit by an insured, which FCIC denied. Appellant had denied coverage of peanut crop losses allegedly caused by drought, because the insured did not irrigate the fields as agreed. The insured sued Appellant and achieved partial payment on the basis that part of the loss was due to disease, not drought. FCIC claimed that the issue in the suit was purely factual and thus did not meet the tests for reimbursement in MGR 93-020. The Board found that the dispute involved determining the cause of the crop loss, a factual dispute. The Board concluded that the conditions of MGR 93-020 were not met and that litigation expenses were not reimbursable.

¹ Pursuant to a plan of reorganization, Rain and Hail L.L.C. replaced Rain and Hail Insurance Service, Inc. as the operational entity responsible for the agreements effective May 1, 1996. For purposes of this report the Board will continue to refer to these appeals under the name Rain and Hail.

Rain and Hail (Ingram) also involved an SRA and the application of MGR 93-020. Appellant claimed that the insured’s requests for a jury trial and for compensatory and punitive damages and attorney fees and costs, which are prohibited by FCIC regulations, constituted an attack on FCIC policies and procedures and thus supported reimbursement of litigation expenses under MGR 93-020. The Board found, however, that FCIC regulations prohibit jury trials only when the suit is against FCIC, and do not prohibit jury trials in cases of an insured’s suit against the reinsurance companies. The Board also concluded that the mere request for a jury trial by Appellant, as here, would not rise to an attack on FCIC policies and procedures. The Board likewise found that the mere request for compensatory and punitive damages and fees does not rise to such an attack under MGR 93-020 as to require reimbursement of litigation expenses. A further issue in the case was whether the insured had employed good farming practices and whether the loss was due to conditions beyond its control so as to make the loss covered by the policy, which Appellant alleged was an attack on FCIC policies and procedures. The Board found the issue of whether good farming practices had been employed in this case to be a factual issue, which, as described above does not meet the conditions of MGR 93-020 for litigation expense reimbursement.

Rain and Hail (Billy J. Freeze, d/b/a Freeze Brothers) also involved an SRA and the application of MGR 93-020. Appellant applied for litigation expenses incurred in defending a suit by an insured, which FCIC denied. The Appellant claimed that the litigation in this case met the MGR 93-020 criteria because the insured had not given notice of its losses prior to harvesting the crop, did not preserve a sample of the crop, and did not file its action within 1 year, thus implicitly challenging those requirements. The Board found that the insured merely ignored these requirements which does not constitute an attack on the requirements themselves. Appellant also claimed that by filing a counterclaim the insured was challenging FCIC procedures. The Board found this to be defensive strategy by the insured, not an attack on FCIC procedures. The Board denied the appeal.

Rain and Hail (Michael Hat Farming Company) also involved an SRA and the application of MGR 93-020. Appellant applied for litigation expenses incurred in defending an arbitration action, which FCIC denied because the arbitration could not result in a court ruling that would set legal precedent detrimental to the crop insurance program. The Board found that the record did not demonstrate that the result of the arbitration would reach beyond the parties and thus no precedent would be established. The fact that the insured filed a court action with a state court to confirm the award did not change this result because the action was intended to address neither the facts nor the merits of the dispute but merely confirm the award. The Board denied the appeal.

Consideration of Appeals on the Merits

Poston Logging involved a Timber Sale in California. The issue was whether certain blue-marked trees were "included timber" for harvesting. Appellant claimed that such trees were blue marked as the contract described included timber, while the Forest Service claimed that the blue marks on such trees were old and did not indicate that the trees were included timber. The Forest Service also claimed that it was common knowledge in the community that environmental considerations precluded harvesting such trees. The Forest Service claimed further that even if the trees were considered to be included in the sale, the amount of damages due Appellant should be limited under the Termination clause of the contract relating to terminations for environmental reasons. After a hearing on the merits, the Board found that the contract clearly specified that blue-marked trees were "included" in the contract, made no exclusions for size of the trees, and that "common knowledge" of environmental restrictions could not overcome the clear contract language. The Board further found that the Forest Service could not in the circumstances of this case, i.e., where it had prevented the contractor from beginning work and thus materially breached the contract, retroactively apply a Termination clause to limit Appellant’s damages. The Board found errors and inconsistencies in Appellant’s damage calculation, however, and awarded less than the amount sought. A request for reconsideration has been filed by both parties.

Jill Reese of Palmer, Alaska, involved a contract for the lease of office space. The ASCS (now the FSA) terminated the lease for numerous problems with the space. Appellant claimed the rent for the 4-year lease balance and damages for wrongful termination. The Government claimed that Appellant was not the proper party to appeal the denial of the claim, as she changed the building’s ownership by forming a corporation and transferring the property, and never appealed the final decision in the name of the entity filing the claim. Appellant disputed this conclusion, and further claimed that the termination was wrongful because the official who terminated the contract had no authority to do so. The Government claimed that even if the official had no authority, the contract limited damages to a period of 120 days, and in any event, Appellant sustained no damages because she was able to re-lease a larger space that included the Government’s space plus space that had been vacant. The Board found that procedural defects existed with several initial claims and decisions, but that one valid claim was denied and timely appealed, giving the Board jurisdiction. The Board found that the record demonstrated that the roof leaked, drains backed up, and trouble existed with sinks and drinking fountains, making the termination of the lease for cause justified. The Board further found that Appellant’s ability to lease the Government’s vacated space along with the area that had been vacant to another tenant, would not have been possible if the ASCS had not vacated the premises, making Appellant’s claim for damage questionable. The Board thus denied the appeal.

In Rain and Hail (1996 SRA), the issue was the Government’s liability for interest on an SRA payment that FCIC allegedly failed to make in a timely manner. The SRA provided that interest would be paid in accordance with the interest provisions of the CDA. Appellant maintained that the request for payment did not trigger the CDA requirements for interest in this case. The Board found that the SRA’s reference to the CDA merely dictate the rate and calculation method for interest, and did not invoke the full procedural requirements underlying interest obligations outlined in the CDA (such as submission of a "claim" distinct from a routine request for payment as in the present case). The Board further found that, absent FCIC delays, the SRA payment would have been approved on the date Appellant claimed. The Board sustained the appeal.

DRP Construction Company involved a contract for the Lower Walker River Bridge repair in the Klamath National Forest, California. The CO denied Appellant’s request to utilize an escrow agreement in lieu of a payment bond. Appellant then claimed additional compensation for reimbursement of its bonding costs. The contract specified the required forms of payment protection, which did not include escrow agreements. Appellant claimed that the contract language was ambiguous in this regard, but did not demonstrate how any ambiguity was other than patent, which would have necessitated Appellant’s inquiry as to the meaning of the provision. The Board denied the appeal.

RR & VO, L.L.C. involved a contract to ship commodities to Odessa, Ukraine, by the Commodity Credit Corporation (CCC). The carrier guaranteed arrival 40 days after loading. The carrier arrived with the cargo 18 days after loading, but the shipper, who was responsible for customs clearances, did not have the necessary paperwork in place to allow unloading the cargo until the 35th day. The shipper moved on to another port on the 27th day and did not return for unloading until the 57th day after loading. CCC determined that the cargo could have been unloaded within the 40 days, and assessed a penalty for delivery delay. The Board found that the shipper satisfied its contractual obligations because it arrived well within the 40 days and waited a reasonable time for completion of paperwork for which it was not responsible. The Board found that the contract did not specify that the shipper was required to remain in port until the 40th day waiting for others to complete necessary paperwork. In such circumstances the Board found the imposition of a penalty improper and sustained the appeal.

D & L Construction Co., Inc., involved the LV Ray Salvage Timber Sale. Appellant filed a claim with the CO because the total amount of timber harvested was 154 MBF less than the Forest Service advertised. The Board found that the Forest Service explicitly stated that the timber volume amounts were estimates, and that Appellant provided no evidence of defects in Forest Service estimating methodology beyond merely raising questions. Further, the Board found that Appellant did not prove the amount of sawtimber it harvested, but only the total amount of timber harvested. Therefore, the Board had no basis to determine damages. The Board concluded that Appellant’s case failed for lack of proof and denied the appeal.

J & D Services of Northern Minnesota, Inc., involved a contract for removal and replacement of contaminated soil at a campground in the Boise National Forest, and placement of contaminated soil in a "repository vault." The contract specified payment for vault excavation and screening, vault liner, and vault cap based on "designed quantities," and that payment could vary only due to a change in the work or if an error produced a variation in quantities of 15 percent or more. Because the excavation volume estimate was less than the volume of actual excavation, Appellant also claimed compensation for the extra excavation necessitated by modifying the side slope of the vault to accommodate proper installation of the vault liner it selected. The Board concluded that the 9,463 cubic yards of vault volume could be calculated from the drawings, and this volume need not be consistent with the 7,900 cubic yards for the "vault excavation and screening" pay item. Appellant proved neither that the change in side slopes caused a volume variation of more than 15 percent, nor that a vault liner was unavailable that satisfied the contract requirements within the design-data tolerances. The Board denied the appeal.

Kerry Erickson involved a tree-thinning contract in the Wallowa-Whitman National Forest in Oregon. The contractor sought additional compensation for thinning trees it considered were in excess of the contract estimates and a refund of Government-assessed additional administrative costs because the contractor did not finish work on time. The Forest Service elected to allow the contractor to finish work and assess excess costs rather than terminate the contract for default. Because the record, which contained evidence of a resurvey undertaken to help resolve the dispute, revealed no inaccuracy in the Government’s estimates, the Board denied this aspect of the claim. The Board found, however, that the Government’s assessment of excess administrative costs was also not supported by the record, but rather that a portion of the costs would have been incurred even if the contractor had finished work in a timely manner. The Board sustained the appeal for the supported portion of the excess administrative costs.

Brenda R. Ronhaar involved a contract for word processing services at the Gifford Pinchot National Forest in Washington. Appellant filed a claim for compensation when the Forest Service did not exercise the final option of a contract with three 1-year options. There was some question whether the agency could properly contract for in-house wordprocessing services. Appellant claimed that the Forest Service had assured her that using a contract for the services was legal, on which assurance she claimed she relied to her detriment. The Board found that the contract gave the Forest Service the unilateral right to exercise the option, that Appellant had failed to prove that she had received any overt or specific assurances regarding the appropriateness of the contract, or how she had been damaged. The Board denied the appeal.

Alternative Dispute Resolution

The Board provides Appellants and the Government with numerous methods of assistance in pursuing Alternative Dispute Resolution (ADR), and provides the parties with a notice of these procedures with the docketing of appeals. These procedures could result in ex parte communications, and the need to have the Board member participating in the ADR to recuse themselves from further participation should the ADR fail to result in a settlement. In Tamarack Development, the contract involved emergency watershed protection at Santa Catalina Creek in Puerto Rico. After the parties filed preliminary pleadings, they indicated that they had initiated settlement negotiations but had been unsuccessful in reaching an agreement. The parties agreed to have a Board member assigned as a settlement judge to assist the parties’ attempts to settle the case. The settlement judge conducted a mediation by telephone, which was successful. The appeal was settled.

Donald Watters involved a Timber Sale on the Daniel Boone National Forest. Appellant filed a claim for lost profits, equipment costs, crew time, and other costs after the CO terminated a portion of the contract. With the assistance of a Board judge who traveled to Kentucky to hold a settlement meeting, the appeal was settled. The same meeting resulted in the settlement of Camp Dix Wood Products, where the Appellant requested replacement costs of timber pursuant to contract terms; and two other disputes brought by Forest Products, Inc., where the Appellant sought additional compensation for lost profits and other expenses on three contracts.

Continental Insurance Company/CNA Insurance Companies (1993 Nationwide Operations Review) involved Appellant’s alleged failure to comply with various provisions of the SRA between the parties, and FCIC’s assessment against Appellant of $869,754 plus interest. The parties requested mediation as provided in the Board’s ADR procedures. A Board judge held a mediation with the parties in Missouri, which was successful. The appeal was settled.

Inca Construction Co., Inc. involved a contract to enlarge the surface area of Lake Roberts in the Gila National Forest in New Mexico, as well as construction of a siltation dam and parking area. A dispute arose over the amount of excavation for which the Government was required to pay and whether the Government had sufficiently lowered the level of the lake to facilitate excavation. The parties agreed to allow the Board judge to act as a mediator. The appeals were settled after a successful mediation conference in New Mexico.

Under the Boards of Contract Appeals Sharing of Neutrals Agreement, the Board offers its judges to act as a mediator or facilitator in ADR procedures in appeals before other Boards of Contract Appeals.

United States Postal Service (UPS) This case involved a dispute between the UPS and Atlantic Testing & Engineering, Inc., arising from a construction services contract. A CO’s decision had not been rendered when the parties, through the Postal Service Board of Contract Appeals, requested mediation assistance from a source outside the UPS. The Board provided a judge to assist the parties and the dispute was settled.

General Services Administration (GSA) This case involved a dispute between the GSA and two of its contractors, Glover Smith Bode, Inc., and Buckler and Moore, Inc., regarding the construction and inspection of the Federal Building in Oklahoma City, Oklahoma. The parties had opted to resolve these disputes through mediation prior to the issuance of the CO decision. One of the Board’s judges acted as a mediator and the parties were able to settle the dispute.

Reconsideration

The Board’s rules permit parties to file Motions for Reconsideration, which generally are granted only when there has been a clear error in the Board’s decision, or where newly discovered evidence not reasonably discoverable requires a different result. In Rain and Hail (CR Partners and Jay Smith), the appeal arose under a 1993 SRA. At issue in the appeal was an indemnity payment Appellant made to an insured for a crop failure on land that had been classified as "summerfallow" (as opposed to continuous cropping) for the previous crop year. The Board previously denied the appeal. In its request for reconsideration, Appellant restated and reinforced many of its previous arguments, which did not provide the Board a basis to reconsider its decision. The Board denied reconsideration of the appeal, because Appellant essentially reargued the original case without offering any new evidence or pointing out reversible Board errors.

Equal Access to Justice Act

Under the Equal Access to Justice Act (EAJA), 5 U.S.C. § 504, the Board is empowered to grant attorney fees and expenses to certain prevailing parties, other than the Government, if the Government's position was not substantially justified. The Application for the fees and expenses must be filed within 30 days of when the Board's decision on the merits becomes final. This generally would be 150 days after the Board’s decision, since either party has 120 days to appeal the Board’s decision. Staff, Inc., involved a contract for pre-commercial tree thinning on the Tongass National Forest in Alaska. The Board previously found that the contract was ambiguous in one area, but also that Appellant’s claim was greatly inflated. On another issue the Board awarded Appellant increased costs paid to its subcontractor and used a jury verdict to compensate Appellant for its own costs. The Board denied another claim. In Appellant’s application for attorneys’ fees and costs, the Board found Appellant to be a prevailing party because it achieved some of the benefit it sought in litigation. The Board further found the Government not to have been substantially justified in relying on an oral agreement to deny Appellant’s claim. Because Appellant was not completely successful in its appeal, the Board exercised its discretion to reduce the amount of attorneys’ fees and costs awarded. The Board further found that the underlying appeals were filed prior to the date that the maximum hourly rate for attorneys’ fees was raised by statute to $125 per hour, requiring the Board to apply the previous maximum of $75/hour. The Board awarded costs for transcripts, a translator, and a filing fee, but denied reimbursement for all other expenses for which Appellant did not provide details or receipts.

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Attachment 3
Appellate Review of Board Decisions During FY 1999

Cases Pending on Appeal

Raji Abdus-Salaam d/b/a One on One Consulting & Development Corp.
AGBCA Nos. 99-106-1 and 99-147-R
Decided January 26, 1999 and March 26, 1999
Fed. Cir. No.00-1405, appealed May 25, 1999

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