The contractor sought compensation for lost profits and contract administration costs. It argued that it had substantially performed under the contract despite failing to meet the delivery deadline. The agency contended that because the contractor failed to deliver as required, the purchase order lapsed and the contractor was entitled to nothing. ASBCA upheld the agency's position. It ruled that substantial performance had not occurred and that the contractor bore responsibility for the non-performance.
Appeal of Paragon Defense Solutions, Inc. v. DLA, ASBCA No. 64308
- Background - The agency issued a purchase order to the contractor for 644 nozzle distribution kits worth $379,960, with a delivery date of February 13, 2023. The agency deemed the contractor's failure to meet this deadline as a lapse of the order and denied the contractor's claim for $59,140. The contractor appealed to ASBCA after filing a claim with the agency.
- Substantial Performance - The contractor claimed it had begun substantial performance by issuing an order to the manufacturer. It argued that the agency's engagement in discussions signified that a binding contract was in place. However, ASBCA ruled that mere initiation of arrangements with the manufacturer did not constitute substantial performance, especially since the contractor did not fulfill the delivery terms.
- Lapse of Offer - ASBCA addressed the lapse of the agency's offer. It stated that without delivery by the due date, the offer automatically expired. The contractor's request for a delivery extension failed to satisfy the necessary evidence of delays. This justified the agency’s termination of the order. The board highlighted that the contractor could not claim a binding contract after missing the significant delivery deadline.
- Negotiation Waiver Argument - The contractor argued that the agency waived the delivery timeline by engaging in negotiations post-deadline. Nevertheless, ASBCA found no evidence of waiver as the agency maintained communications seeking necessary documentation for the extension and reiterated the necessity of completing the delivery on time. The board emphasized the contractor's failure to provide evidence as a key factor in the decision.
The contractor is represented by Mr. Weiwei Jian of Paragon Defense Solutions, Inc. The government is represented by Gary P. Bilski, John J. Pritchard, Adam J. Heer, Julie K. Phillips, and Andrew Demosthenous of the DLA Land and Maritime.