Government’s motion to dismiss an appeal of a termination for cause as untimely is denied, where the government’s willingness to engage the appellant and consider mutually beneficial alternatives to the termination vitiated the finality of the appeal notice and retolled the deadline for an appeal.
The government moved to dismiss the appeal of Aerospace Facilities Group Inc. challenging the termination for cause of its contract for the provision and installation of helicopter paint-booth equipment, booth monitoring systems, and a personnel protection system. The government argued the appeal was untimely as it was filed more than 90 days after the contracting officer’s contact termination for cause.
The CO terminated the contract for cause on August 4, 2016. The contract modification stated that the acceptance of any delinquent goods would be solely for the mitigation of damages. In response, AFG asked the CO if the agency had received its response to a show cause letter on July 27. AFG also later indicated it never received the physical copy of the contract modification that was mailed to its location.
On August 11, the CO invited AFG to deliver the items under the contract and to contact the Army to discuss reasonable proposals concerning the termination notice. While indicating the government would accept the delivery of late items, the CO stated that the termination for cause would stand until any such delivery was completed. In response, AFG asked the government to release the final two payments under the contract to facilitate payments to a supplier. AFG also argued it had done nothing to delay delivery of the equipment and blamed delays on the agency’s withholding of payments due to a dispute on another contract. AFG also notified the agency it would protest the show cause notice and contract termination.
On August 25, the Army division chief wrote to AFG suggesting the parties could work out the issues. Three telephone conferences followed, but no resolution was achieved. However, the parties expressed willingness to continuing working on a solution. However, on September 13, 2016, the CO issued a final decision demanding AFG repay $7,809,984.15 for unliquidated government installment payments. On November 8, 2016, AFG filed an appeal with the Armed Services Board of Contract Appeals.
The government argued the appeal was untimely because it was not filed within 90 days of appellant's receipt of the emailed CO's termination notice. AFG argued that sending the initial termination via email violated the FAR and that the CO’s subsequent communications caused confusion about the appeal deadline. The appellant also argued the government’s other actions vitiated the finality of the termination. AFG argued the final termination should toll the appeal deadline. Alternatively, AFG argued that its written communication requesting reconsideration of the termination tolled the appeal deadline.
First, the board rejected AFG’s argument that the transmission of the termination for cause via email violated the FAR, explaining that the FAR provides the CO the discretion to use a method that allows for the verification of receipt. While AFG argued it had not received the physical copy of the termination notice, the board held that the government met its burden to establish the date AFG received the final decision.
The board also found AFG’s assertion that the CO’s multiple notices caused confusion regarding the appeal deadline. AFG had argued it had not received the physical copy of the termination in the mail, and the board found it unclear how a copy of a termination notice that was not received could cause confusion.
Next, the board considered whether AFG’s emails to the CO constituted proper notice of appeal to the board, noting that an appeal with the CO may satisfy the board’s notice requirement. AFG argued that its August 24 email met the requirements for board notice, because it was sent within 90 days of the notice of termination, was provided in writing, expressed dissatisfaction with the decision, and appealed the decision. The board found the email met the first three factors, but did not appeal the decision to a higher authority. In fact, the letter specifically stated AFG hoped to rectify the termination without going through the legal process of appeals and would file a formal protest and appeal if an agreement could not be reached.
The board also concluded that AFG’s request for reconsideration of the termination did not vitiate the deadline for a timely appeal. Turning to the government’s actions, the board explained that the test for vitiation of the finality of a CO's determination is whether the contractor presented evidence showing it reasonably or objectively could have concluded the CO's decision was being reconsidered.
First, the board held that the CO’s demand letter did not vitiate finality of an earlier final decision. However, the board found that AFG plausibly argued that the agency’s telephone conferences and invitation to discuss reasonable proposals to resolve the situation had led it to believe that the termination could be reversed. The government argued that its written communications with AFG were intended to mitigate AFG's liability and not to reconsider the termination notice, and that it was clear that the termination notice was the final decision of the CO.
However, the board held that the fact that the CO did not use the word “reconsider” did not mean the government’s actions did not lead AFG to believe the government was reconsidering its decision. Rather, the board concluded that subsequent written and oral communications with the government created a cloud of uncertainty as to the status of the August 4 termination. In fact, it was the government who reached out to AFG in an email dated August 25, suggesting that the parties could arrive at a solution. In response, AFG had three telephone conferences with the agency to discuss the possible delivery of the delinquent items, and the record showed the parties discussed the merits of the termination during the calls. The CO’s September 13 demand letter acknowledged the government was willing to enter negotiations.
In sum, the board held the government’s communications reasonably led AFG to believe the termination decision would be reconsidered and that its willingness to engage the appellant vitiated the finality of the termination notice. Accordingly, the board held the November 8 appeal notice was timely.
Aerospace Facilities Group Inc.is represented by Wojciech Z. Kornacki and Theodore P. Watson of Watson & Associates, LLC. The government is represented by Raymond M. Saunders, Army Chief Trial Attorney, and by ChristinaLynn E. McCoy, Trial Attorney.