Government’s motion for summary judgment is denied, where the appellant signed a contract modification but explicitly stated it did so under protest and reserved its right to seek an equitable adjustment.
NMS Management Inc. appealed the Navy’s denial of its claim for $183,003.24 for the non-exercise of a fixed-price contract line item number.
The Navy awarded NMS a fixed-price contract that included six CLINs for provision of food service attendant services for various naval facilities in the San Diego, California, area. Performance was scheduled to expire on September 30, 2020. On March 7, 2017, the Navy informed NMS of its intention to close “temporarily” the Oceanside galley which was the subject of CLIN 2006. Prior to the exercise of the contract’s second option year, the Navy determined that it would close the Oceanside galley permanently.
The Navy directed NMS to eliminate the services under CLIN 2006. However, the agency proposed transferring services for Navy SEAL trainees to another NMS location to make up for the difference in services provided. Those services had previously been negotiated as a separate CLIN.
In response, NMS explained that CLIN 2006 was tied into the entire contract with regards to overhead costs, vehicle costs and management costs. NMS also explained that serving the Navy SEAL trainees required extensive workload and cleanup because of the mud, dirt, water, sand, etc. brought into the galley. NMS asked to negotiate this change through the normal contract change process, given that the temporary closure of one site was not being made permanent and that new services were being requested. NMS asserted that the agency was asking it to perform services for free and attested that it did not agree to this course of action.
In response, the CO stated that if the government did not exercise the CLIN in question by the end of the current fiscal year, NMS could consider submitting a claim. The Navy CO later issued a contract modification exercising option CLINs 2001 – 2005, but not CLIN 2006. NMS agreed, but under protest. NMS expressly stated that it would perform as requested but did not waive its right to seek an equitable adjustment related to the change in performance requirements.
NMS submitted a properly certified claim to the CO in which it challenged “the Government’s improper attempt at a partial exercise of its option to extend the term of the contract to exclude the fixed price line item for Navy Seal trainee feeding. The CO denied the claim, asserting that NMS had waived its right to recover costs associated with closing the Oceanside galley when it signed the contract modification. This appeal followed.
The Navy moved for summary judgment, arguing that NMS had signed the bilateral modification. However, the court noted that the Navy ignored NMS executed the modification under protest and reserved its right to file a claim. NMS emphasized those facts in its response, arguing that the modification does not constitute either a waiver or an accord and satisfaction. The board denied the Navy’s motion for summary judgment, finding the parties disputed material facts relevant to the appeal.
NMS Management Inc. is represented by Johnathan M. Bailey and Hector M. Benavides of Bailey & Bailey, P.C. The government is represented by Craig D. Jensen, Navy Chief Trial Attorney, and Kevin Lyster, Trial Attorney, Naval Fleet Logistics Center.
