The government’s motion to dismiss, and a surety bond holder’s motion to intervene, are denied, where the contractor’s performance bond and assignment of its claims to the surety did not waive its rights under the Contract Disputes Act to have the Armed Services Board of Contract Appeals review its case.
Ikhana LLC appealed a termination for default as well as five deemed denials of certified claims related to a contract to construct secured access lanes and remote screening facilities at the Pentagon.
After the government terminated the contract for default, the government filed a claim with Ikhana’s surety against its performance bond. The government and the surety ultimately settled the claim, which included a provision that the surety would cause Ikhana’s claims to be dismissed and to release the government from all claims.
The government moved to dismiss Ikhana’s appeals, or in the alternative sought summary judgment. The surety moved to intervene and to withdraw Ikhana’s appeals or, in the alternative, moved for summary judgment. Both the government and the surety argued that Ikhana had assigned all rights to file the claims to the surety, and thus could not bring them independent of the surety.
The board’s consideration focused solely on whether Ikhana assigned its claims to the surety, and if so, whether the assignment precluded Ikhana from pursuing its appeals. The board found that, even if the assignment were made, it did not prevent Ikhana from prosecuting its appeals. The board found that Ikhana’s indemnity agreement with its surety, and the surety’s settlement agreement with the government, improperly attempted to waive the board’s jurisdiction to hear appeals granted by the Contract Disputes Act.
The board found that the CDA conferred upon the board jurisdiction to hear appeals, and upon Ikhana the right to board review of its appeals. Ikhana’s assignment of its claims to its surety, and the surety’s subsequent attempted waiver of those claims, was ineffective. The board held that Ikhana could not contract away its unwaivable right under the CDA for board review of its claims. Accordingly, the board denied all of the motions.
Ikhana, LLC is represented by William A. Scott of Pendersen & Scott, P.C. The government is represented by Thomas H. Gourlay, Jr., Michael T. Shields, and David B. Jerger of the U.S. Army.
