The government moved to dismiss the contractor’s appeal. The government reasoned the claims asserted on appeal differed from the claims submitted to the contracting officer. The board denied the motion. So long as they arise from the same set of operative facts, an appeal can assert legal theories not presented to the agency. Here, the appeal alleged theories—breach of the duty of good faith, constructive change—that weren’t mentioned in the in the initial claim. Nevertheless, the broad outline of those theories and the facts underlying them were presented to the contracting officer.
Appeal of Shneez Veritas, LLC, ASBCA No. 62087
Background
Schneez Veritas had an IDIQ contract with the Army for trucking services in Afghanistan. The Army issued task orders under the contract. In 2013, the Army terminated the contract and the task order for convenience.
Schneez submitted a termination settlement proposal. The Army agreed to settle some of the claims asserted in the proposal in 2014. In 2015 and 2016, Schneez submitted additional claims to for unpaid invoices and penalties for delayed deliveries. In 2016, Schneez and the Army agreed to settle additional claims. The 2016 settlements released the Army from future claims.
But in 2017, Schneez submitted more claims, seeking extended overhead and late payments. Schneez said the government failed to close out the contract in a timely manner, causing the company to incur additional costs managing staff and equipment after termination. In 2018, the parties entered yet another settlement. This agreement settled certain claims for penalties and unpaid invoices. The 2018 agreement also contained a release. But this release excepted the claim for extended overhead.
In 2019, the CO issued a final decision denying the overhead claim. Shneez appealed to the ASBCA. The Army moved to dismiss for lack of jurisdiction.
Analysis
Same or Different Claims
Schneez asserted three claims on appeal: (1) charges under the termination for convenience clause, (2) breach of the duty of good due to the Army’s failure to diligently resolve outstanding claims, and (3) a constructive changes resulting from the additional work the Schneez had to perform after termination. The Army argued the latter two claims—breach of good faith, and constructive change—had not been submitted to the contracting officer, so the board lacked jurisdiction over them. The Army reasoned the 2017 claim sought overhead under an Eichleay-based theory; it never asserted a breach of the duty of good faith or a constructive change.
The board rejected the Army’s argument. A Claim asserted on appeal must arise from the same operative facts as a claim submitted to the agency. So long as the two claims arise from the same set of facts, a claim on appeal may assert a new legal theory. Here, the crux of Schneez’s duty of good faith and constructive change theories were that it had to continue to perform after termination. While the claim submitted to the agency didn’t use the words “good faith” or “constructive change,” Schneez had clearly alleged it incurred extra costs performing after termination due to the agency’s failure to timely settle. Thus, the broad theory of recovery had been presented to the agency. The appeal had simply renamed what had already been asserted in the underlying claim.
Releases
The Army also argued the releases in the parties’ prior settlement agreements barred Schneez’s claims. The board wasn’t persuaded. Despite release language in the 2016 settlement, the Army considered and resolved additional claims after execution of the agreement. This indicated the 2016 agreement was not intended to release all the claims. Additionally, the 2018 settlement specifically excepted Schneez’s overhead claim.
Shneez is represented by Marc A. Antonetti and Brian V. Johnson of Baker & Hostetler, LLP. The government is represented by Scott N. Flesch, James D. Stephens, Christopher T. DelGiorno, Major Jill B. Wiley, and Captain Dorothy D. Smith of the Army.
