Appeal of two ASBCA decisions is affirmed in part, reversed in part, and dismissed in part. The contractor asserted claims for extra costs incurred in constructing two buildings for the Air Force. The ASBCA sustained some of the claims on appeal but denied others. Both the contractor and the government appealed to the Federal Circuit. The government argued that the board had lacked jurisdiction under the NAFI doctrine. The court held that the NAFI doctrine did not apply. The Air Force also argued that court lacked jurisdiction under the CDA because the contract was not a procurement for the benefit of the agency. The Air Force claimed that its purpose was to serve the national defense, but the contract was for the benefit of the morale and welfare of the troops, not for national defense. The court essentially found that caring for the morale and welfare of troops benefits the national defense. As to the contractor’s appeal, the court found that part of the appeal was untimely. The court was, however, persuaded that the board had erred in not fully compensating the contractor for a design change.
The Air Force awarded Parsons Evergreene, LLC a task order to design and build two building at a base in New Jersey One of the buildings was a Temporary Lodging facility for military and civilian personnel. The other building was a Visiting Quarters similar to a hotel.
Parsons completed the buildings and then submitted a claim to the Air Force seeking $34 million for additional costs it incurred during performance. The contracting officer denied almost all of Parsons’ claim. Parsons appealed to the ASBCA. The board, in two separate decisions, denied in part and sustained in part Parsons’ claims. The board awarded Parsons $10.5 million. Parson appealed to the Federal Circuit. The government filed a cross-appeal, alleging that the board and the court lacked jurisdiction over the claims.
The court first considered the government’s jurisdictional arguments. The government contended that the board had lacked jurisdiction over the claim because the contract was made by the Air Force Service Agency, a non-appropriated fund instrumentality (NAFI). For several decades, that Federal Circuit held that neither the Court of Federal Claims nor the Boards of Contract Appeals had jurisdiction over contract disputes with NAFIs. This rule was called the NAFI doctrine. But In Slattery v. united States, 635 F.3d 1298 (Fed. Cir. 2011), the Federal Circuit held that the Court of Federal Claims had Tucker Act jurisdiction over a dispute involving a NAFI. Thus, the Federal Circuit held that the NAFI doctrine does not apply to Tucker Act cases, but it had not yet decided whether to abrogate the doctrine in cases arising under the Contract Disputes Act. The Air Force argued that because Parsons’s case arose under the CDA, it was barred by the NAFI doctrine.
The court, however, found that it did not need to decide whether the NAFI doctrine applied to CDA cases because, contrary to the government’s contentions, the contract here did not involve a NAFI. The contracting documents showed that the task order had been issued by the Air Force, not the Air Force Service Agency. The Air Force is not a NAFI. The RFP that led to the task order referred to the Department of the Air Force. The contracting officer assigned to the contract was form Air Force Material Command, a part of the Air Force.
Despite this, the government argued that the contract was not a NAFI contract because the funds used for the order were non-appropriated funds. But the court noted that NAFI doctrine does not depend on whether the contract was be funded with appropriated funds. Rather, the doctrine turns on the nature of the contracting entity. An agency is only a NAFI when there is a clear expression by Congress that it intended to separate the agency from general federal revenues.
In addition to the NAFI argument, the government contended the court lacked jurisdiction under the CDA. Citing 31 U.S.C. § 6303, the government argued that a procurement contract is only an instrument that acquires goods or services for the direct benefit of the government. The buildings Parsons built, however, were intended to support the welfare, morale and recreations of services members. Because the Air Force’s primary function is national defense, the buildings did not provide a direct benefit to the agency. Since the building did not benefit the agency they could be considered a procurement under the CDA over which the court could assert jurisdiction.
The court found this argument meritless. First, it noted that the statute cited by government, 31 U.S.C. § 6303, is not part of the statutory definition of CDA jurisdiction. In any event, § 6303 does not require that procurement contracts be for the direct benefit of the government. Instead, the statute contemplates procurement contracts even when not for a government benefit so long as the agency decides that a procurement contract is appropriate. Additionally, the court noted that the government’s argument conflicted with U.S. Supreme Court precedent, which holds that military post exchanges are essential for the performance of government functions. What’s more, the government’s arguments was inconsistent with the Secretary of the Air Force’s responsibility for the morale and welfare of Air Force personnel.
The court next turned to Parsons’ appeal. As noted, for reasons of judicial efficiency and clarity, the board had issued two opinions deciding Parsons’ claims. One of those opinions addressed Parsons claim that the Air Force delayed in conducting a payroll review under the Davis-Bacon Act. The other opinion addressed Parsons other claims. Parsons had moved the board for reconsideration of the opinion that addressed its other claims but not sought reconsideration of its payroll claim. Parsons then appealed both decisions to the Federal Circuit after the board denied reconsideration.
The court noted that an appeal of a board decision to the Federal Circuit must be filed within 120 days of the decision. A motion for reconsideration will toll the appeal deadline. But Parsons never moved for reconsideration of the payroll decision. The request for reconsideration of the other decision did not toll the appeal deadline for the payroll decision. By the time Parsons appealed the payroll decision, the 120 deadline had passed. The court thus dismissed Parsons appeal of the payroll decision for lack of jurisdiction.
As to its appeal of the other claims, Parsons argued that the board had erred in denying Parsons recovery for change in brick design. The board had found that under the contract, Parsons was entitled to use a structural brick design, that is, a single wall made of closure face brick. The Air Force, however, had required Parsons to use a Baker design, which requires two walls: a concrete wall and a brick veneer. Parsons had sought to recover the costs of the Baker design. The board had only awarded Parsons a portion of its costs. The court found that board erred in not awarding Parsons the full amount of its costs.
Finally, as part of its cross-appeal, the government argued that the board had improperly shifted the burden of proving the reasonableness of costs onto the government. The court, however, found that the government had misread the board’s decision. The administrative judge who had written the main opinion had improperly shifted the burden. But two other judge’s disclaimed that portion of decision in a concurring opinion. The court found that the concurring opinion, which correctly stated the burden and which had the support of a majority of judges on the panel, was the controlling decision.
Parsons is represented by Cameron Hamrick and Raymond Monroe of Miles & Stockbridge PC. The government is represented by Robert R. Kiepura, Ethan P. Davis, Steven John Gillingham, and Robert E. Kirschman, Jr. of the Department of Justice as well as Lori R. Shapiro of the General Services Administration.
