Government’s motion for summary judgment in appeal contesting a termination for cause is denied. The government alleged the contractor had failed to perform on time and meet other obligations required by the contract. But the board noted that government’s motion omitted an issue that bore directly on the contractor’s ability to perform; in fact, this issue potentially gave the contractor an affirmative defense for impossibility of performance. It wasn’t clear why the government had not discussed the issue, but the board declined to enter summary judgment for non-performance of a potentially impossible contract.
Quality Trust, Inc. (QTI) had a contract with the Air Force to install walk-in refrigeration units on a military base. The contract was only for the walk-in units; it explicitly prohibited QTI from working on exterior refrigeration system.
QTI fell behind schedule on the contract. The parties executed a modification, which extended the delivery date. The modification stated that due to contractor delay, QTI would responsible for the cost of leasing temporary refrigeration trailers.
In the midst of working on the walk-in refrigerators, QTI discovered that the exterior refrigeration system was not in working condition. QTI informed the Air Force that it could not continue work on the walk-in refrigerators until the exterior system was fixed. Air Force engineers evaluated the exterior system and confirmed that it needed to be refurbished. The Air Force acknowledged that in light of the issues with the exterior system, its needs under the contract had changed significantly.
Despite this, the Air Force did not modify the contract. Instead, it became embroiled in a dispute with QTI about payment for the refrigeration trailers. QTI refused to pay the trailers. QTI maintained that it would only pay for the trailers once the Air Force modified the contract and paid the company for the work needed on exterior refrigeration system. Work ceased, the delivery deadline passed.
The Air Force terminated the contract for cause alleging that QTI had (1) failed to perform by the completion date, (2) failed to pay for the refrigeration trailers as required by the modification, and (3) failed to provide adequate assurances in response to a cure notice. QTI appealed the termination to the ASBCA. The Air Force moved for summary judgment.
The board noted the QTI’s response to the motion for summary failed to understand what was and was not relevant to the appeal. Indeed, QTI’s response was essentially just annotations to the government’s motion with comments and non-sequiturs. Nevertheless, the board reasoned that because this was a motion for summary judgment, QTI only had to establish a single disputed fact, which it just barely succeeded in doing.
The board noted that the government mentioned in its motion that its engineers had inspected the exterior refrigeration unit, but then dropped all discussion of this issue. This issue was not beneficial to the government’s case. Indeed, it raised the possibility that QTI had an affirmative defense to the termination: impossibility of performance. The contract required QTI to warranty its work. QTI had told the government without replacement of the exterior system, it could not warranty its work.
The government had not explained why it omitted this information from its motion. The board could not rule on the motion for summary judgment with this lacunae in the record.
The government intimated that its other termination theories—failure to pay for trailers, lack of assurances—were independent of the exterior system issue, so the board could still enter summary judgment on the termination. But the board found the issues were intertwined. The obligation to pay for the trailers grew from the original refrigerator installation work. The trailers would not have been necessary without the obligation to replace the walk-in unites. The board was reluctant to enter summary judgment based on nonperformance of an obligation added to potentially impossible contract.
QTI is represented by Mr. Lawrence M. Ruiz. The government is represented by Jeffrey P. Hildebrant and Jason R. Smith of the Air Force.
