Appeal of the Armed Services Board of Contract Appeals dismissal of a claim for lack of jurisdiction is denied, where the contract was awarded by the Coalition Provisional Authority using Iraqi funds and where the activity of Department of Defense offices as contract administrator did not make the federal government a party to the contract.
Agility Logistics Services Company KSC appealed the Armed Services Board of Contract Appeals’ dismissal of its claim for lack of jurisdiction.
In 2004, the Coalition Provisional Authority awarded Agility a contract to establish and operate two distribution center warehouses and staging areas as part of a supply chain management system. The contract specified that the award was made with Iraqi funds, and cautioned that the CPA would not be liable to the contractor for any performance undertaken after the impending transfer of authority from the CPA to the interim Iraqi government. The
CPA also issued a memorandum allowing the interim Iraqi government to delegate contract monitoring and performance to the CPA’s program management office. On June 15, 2004, contract administration for DFI-funded contracts was delegated to the PMO, and eventually to the Project and Contracting Office, a temporary organization within the Department of Defense that later became part of the Department of the Army. However, the delegation did not authorize the PMO or other offices to terminate, amend, or novate any contracts or grants.
Additional task orders were issued under the contract. Unlike two previous task orders, these order obligated U.S. funds. Thirteen of those orders are at issue in this appeal. In September 2010, after a period of negotiations between the parties, a U.S. contracting officer issued final decisions regarding each of the task orders. The CO determined that Agility owed the government almost $81 million due to the government’s overpayment. Agility appealed all but one of these decisions to ASBCA. Separately, in April 2011, Agility submitted a certified claim to the CO seeking approximately $47 million for unpaid fees on the task orders. The CO denied the claim, and Agility appealed that decision to the board as well.
ASBCA dismissed the appeals for lack of jurisdiction, explaining that its CDA jurisdiction was limited to contracts made by an executive agency. The board explained that the CPA is not an executive agency within the meaning of the CDA. Because the CPA awarded the contract, and because the board found that the interim Iraqi government assumed responsibility over the contract, the board determined that it would lack CDA jurisdiction absent some showing that the contract was novated or assigned to an executive agency. The board found no evidence of such a novation, but rather that the government acted as a contract administrator, not the contracting party. Agility appealed the dismissal of its case.
Agility argued that the interim Iraqi government never assumed responsibility over the contract. According to Agility, given that the CPA dissolved, if the interim Iraqi government never assumed responsibility over the contract, the government must have emerged as the contracting party. In support, Agility argued that task order no. 3 effectively amended the contract to permit the obligation of U.S. funds. Further, because the two transfer of authority memoranda both concerned only DFI-funded contracts, neither implicated the contract. Thus, Agility concluded that the interim Iraqi government never assumed authority over the contract.
However, the court disagreed, finding that task order no. 3 was issued after the interim Iraqi government assumed responsibility over DFI-funded contracts, including the underlying contract.
Agility next argued that even if the contract and task orders were ambiguous regarding the government’s privity of contract with Agility, the conduct of the parties resolved any such ambiguity. However, the court found no ambiguity as to the identity of the contracting parties. Even considering the parties’ conduct, the court found that the PCO acted as a contract administrator.
Agility argued the government exceeded the IIG’s delegation of authority in several ways, such that it would be implausible to consider the government an agent of the IIG and not a party itself to the contract or task orders. However, the court rejected the assumption that if an agent acts outside the scope of its authority, the agent becomes (or is really) a contracting party.
Next, Agility argued that each task order was a discrete contract made by an executive agency. Agility cited the Supreme Court’s decision in Kingdomware, in which the court held that separate Federal Supply Schedule orders are contracts for the purpose of the Rule of Two. However, the appeals court held that even if each of Agility’s task orders were separate contracts, none were made by an executive agency. While the task orders state they were issued by the PCO or other delegated authority, the court again explained the PCO acted as the contract administrator for another party, not as the contracting party.
Finally, Agility argued the contract was novated to make the government a party—if not to the contract, then at least to the task orders. However, the court rejected this argument, first concluding that Agility essentially reformulated its earlier arguments. The court noted the plain language of the contract stated that the federal government would not be liable to the contractor for any performance undertaken after the transfer of authority. The court concluded that no novation rendered the government a party to the contract or the task orders.
Because the contract and task orders were not issued by an executive agency and no novation rendered the federal government a party to the contract, the court affirmed ASBCA’s dismissal of the claims for lack of jurisdiction.
Agility Logistics Services Company KSC is represented by John Patrick Elwood, Michael Charness, and Joshua Stephen Johnson of Vinson & Elkins LLC. The government is represented by William James Grimaldi, Chad A. Readler, Robert E. Kirschman Jr., and Claudia Burke, Commercial Litigation Branch, Civil Division, United States Department of Justice.
