ASBCA Drops a Knowledge Bomb on the Navy, Succinctly Explains Summary Judgment Standard in Claims Appeal; Appeal of Chugach Federal Solutions, Inc, ASBCA No. 61320

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Navy’s motion for summary judgment on contractor’s claims is, for the most part, denied. The board found that the Navy misunderstood the standard for summary judgment. In its motion, the Navy argued that it was entitled to judgment based on the preponderance of evidence. But the board does not weigh evidence when considering a summary judgment. To avoid summary judgment, a claimant does not need to establish its claims by a preponderance of the evidence; instead, they only need to establish facts that would support judgment in its favor. Here, the contractor had sufficiently established issues of material fact that precluded summary judgment.

Chugach Federal Solutions had a contract with the Navy to provide facility support services. Chugach lost money during performance and submitted a claim to the Navy alleging that its losses were caused by statements the agency made during contract negotiations. The Navy denied the claim. Chugach appealed to the ASBCA.

The Navy first moved for partial summary judgment, arguing that one of Chugach’s count’s alleging superior knowledge was barred by judicial estoppel. The board denied that motion. The Navy then moved to dismiss several of Chugach’s counts for lack of jurisdiction and failure to state claim. The board denied that motion, too. Now, the Navy moved for summary judgment alleging that Chugach’s losses were caused by Chugach’s aggressive bidding and inefficient performance, not by the Navy’s actions.

The board noted at the outset that “the Navy significantly misapprehend[ed] the standard of review.” Throughout its motion, the Navy argued that it was entitled to summary judgment under the preponderance of evidence standard. But the board does not weigh evidence when considering a summary judgment motion. To avoid summary judgment, the board posited, a claimant does not need to establish its entitlement to recover by a preponderance of the evidence. Rather, the claimant simply needs to establish the existence of a set of facts — with all inferences drawn in its favor — that would be sufficient to support judgment in the claimant’s favor.

The Navy moved for judgment on Chugach’s claim for negligent negotiations. The Navy contended that Chugach could not establish by a preponderance of the evidence that it would have increased its staffing if the agency had conveyed different information during negotiations. The board found this missed the mark. Chugach did not need to establish by a preponderance of the evidence that it would have increased its staffing. Instead, it only needed to provide facts that supported judgment in its favor, which it did. Chugach had provided testimony showing that the Navy had continued with the procurement after it concluded that Chugach could not perform the contract with its proposed staffing levels.

The Navy also sought judgment on Chugach’s claim of superior knowledge. Again, on this count, the Navy suggested that the Board should weigh evidence by considering the credibility of witnesses. The board reasoned that it may consider the credibility of witness after an evidentiary hearing, but at this stage, it only needed to determine whether Chugach had submitted evidence that would support entry of judgment in its favor. Once again, the board found that Chugach had provided documents and deposition testimony that indicated there were material factual issues as to the Navy’s superior knowledge.

Next, the Navy requested summary judgment on Chugach’s mutual mistake claim. Yet again, the Navy invited the board to weigh witness testimony. The board declined and simply found that Chugach had established a material issues of fact concerning the parties’ beliefs.

Finally, the Navy moved for summary judgment on Chugach’s claim for breach of the duty of good faith and fair dealing. But this time, the Navy did not ask the court to weigh evidence. Rather, the Navy argued that the claim was based on conduct that occurred during the negotiation of the contract. The duty of good faith and fair dealing applies to conduct during performance not negotiations. Chugach argued that facts learned during discovery about the Navy’s post-award conduct confirmed that the Navy violated its duty. The board found, however that these alleged facts were not presented to the contracting officer as part of the claim and thus the board lacked jurisdiction to consider the breach claim on appeal.

Chugach is represented by Richard R. O’Keefe, Jr., William A. Roberts, III, Gary S. Ward. Cara L. Lasley, and Lindy C. Bathurst of Wiley Rein LLP. The Navy is represented by Craig D. Jensen, David Marquez, Anthony Hicks, and Robyn Hamady.

ASBC - Chugach Federal Solutions