The agency terminated for default when the contractor had completed 95% of the work. The agency didn’t pay the contractor for any of the work. The contractor appealed the termination. The board found the termination was justified—the contractor had not completed work by the contract deadline. Nevertheless, the contractor’s delay was excusable. The contractor had been unable to perform for weeks while waiting for agency approvals. The board converted the default termination into a termination for convenience. The contractor was entitled to pay for the work performed.
Appeals of O-Tech Solutions, LLC, ASBCA Nos. 61898, 62095
Background
The Air Force awarded O-Tech Solutions a delivery order to install fiber optic cable at a base. The parties modified the delivery order several times to extend the period of performance. O-Tech completed most of the cable installation by August 2017.
But during subsequent testing, O-Tech discovered some cable were broken. O-Tech proposed to fix the problem by splicing the cables. The Air Force took several months, but eventually accepted O-Tech’s splicing plan. O-Tech asked the Air Force for approval of couplers and replacement cable for the repair work. The Air Force said it needed more time to approve the couples and cable. In the meantime, in May 2018, the parties executed a modification to extend the period of perform to September 2018.
A few weeks after executing the modification, the Air Force issued a cure notice, listing problems with contractor delay and use of unapproved materials. O-Tech assured the government it was able to perform and meet the September deadline.
The Air Force ultimately approved the couplers and cable proposed by O-Tech in June 2018. O-Tech performed the repair work. The Air Force identified additional issues. O-Tech continued to address those issues. But the end of September 2018, the Air Force had approved much of O-Tech’s work. A few weeks of work remained.
But the Air Force terminated the delivery order for cause. The Air Force claimed O-Tech had defaulted by not finishing the project by September 2018 deadline. At the time it terminated, the Air Force had not paid any contract funds to O-Tech.
O-Tech appealed the termination to the ASBCA. O-Tech submitted additional claims to the contracting officer to recover for work it performed and for delays. The Air Force denied the claims. O-Tech appealed the claims the ASBCA.
Analysis
Prima Facie Showing of Default
A termination for default is a government claim, so the government bears the initial burden of showing the termination was justified. Here, 95% of the project was complete at the time termination. Although a substantial amount of the contract had been completed, O-Tech had not completed all the work before the deadline passed. The termination was justified.
Excusable Delay
Once of the government had shown termination was justified, the burden shifts to the contractor to show excusable delay. In this case, O-Tech alleged it was delayed while waiting for the Air Force to approve couples and cable in May and June of 2018. The board agreed with O-Tech. The Air Force knew O-Tech could not proceed without approval. Yet the Air Force didn’t approve coupler and cables for 41 days. Had the government not delayed, O-Tech would’ve completed the project by the deadline.
Conversion to Termination for Convenience
Because O-Tech’s delay was excusable, the board converted the termination for default into a termination for convenience. O-Tech was entitled to payment of the work it performed
Additional Delay Claims
O-Tech sought money for additional delays arising out of an alleged improper stop work order, inspections, and a requirement to dig potholes for the government inspection. The board found only the pothole claim viable. The Air Force required O-Tech to dig 300 potholes. The board thought this was excessive and created additional work not required by the contract.
O-Tech’s CPAR
The Air Force issued a CPAR for O-Tech, which rated O-Tech’s performance as marginal. In light of finding O-Tech’s default excused, the board directed the Air Force to issue a new CPAR consistent with the decision.
O-Tech is represented by Ian A. Cronogue of Baker, Cronogue, Tolle & Werfel LLP. The government is represented by Caryl A. Potter II and Lieutenant Colonel Keric D. Clanahan of the Air Force.
–Case summary by Craig LaChance, Senior Editor
