AICI-Archirodon JV

CourtArmed Services Board of Contract Appeals
DecidedFebruary 26, 2025
Docket62201-QUAN
StatusPublished

This text of AICI-Archirodon JV (AICI-Archirodon JV) is published on Counsel Stack Legal Research, covering Armed Services Board of Contract Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
AICI-Archirodon JV, (asbca 2025).

Opinion

ARMED SERVICES BOARD OF CONTRACT APPEALS Appeal of - ) ) AICI-Archirodon JV ) ASBCA No. 62201-QUAN ) Under Contract No. W912ER-17-C-0014 )

APPEARANCE FOR THE APPELLANT: Scott M. Heimberg, Esq. Akin Gump Strauss Hauer & Feld, LLP Washington, D.C.

APPEARANCES FOR THE GOVERNMENT: Michael P. Goodman, Esq. Engineer Chief Trial Attorney Rebecca L. Bockmann, Esq. Samuel J. Harrison, Esq. Engineer Trial Attorneys U.S. Army Engineer District, Middle East Winchester, VA

OPINION BY ADMINISTRATIVE JUDGE OSTERHOUT

After our decision on the parties’ cross-motions for summary judgment (AICI- Archirodon JV, ASBCA No. 62201, 21-1 BCA ¶ 37,907) granting the government’s motion for entitlement but denying its motion as to quantum, the parties have briefed the quantum issue and oral arguments were held on December 14, 2022. For the reasons stated below, we determine that the government’s initial downward adjustment of $1,384,220 was excessive; however, the government’s modification to a $1,105,586.64 downward adjustment after oral argument 1 resolves the quantum dispute. Therefore, we deny the quantum appeal.

STATEMENT OF FACTS (SOF)

1. On July 19, 2021, the Board issued its decision granting the government’s motion for summary judgment on entitlement and denying the government’s motion for quantum. 2 The Board also denied appellant’s motion for summary judgment for

1 As discussed below, it is slightly more complicated, involving the payment of Contract Disputes Act (CDA) interest to make up for the initial overly large adjustment. Effectively, however, it will be as if the original downward modification were only $1,105,586.64. 2 We have already provided the background facts pertinent to this appeal in the Board’s decision on the parties’ cross-motions for summary judgment dated July 19, 2021. entitlement and granted its motion for quantum stating, “we cannot decide quantum based upon the record as we have it before us.” (Id. at 184,106) The issue of quantum was returned to the parties to determine.

2. By correspondence dated December 9, 2021, appellant requested that the Board set a schedule and date for a hearing to resolve the quantum part of this dispute as the parties had come to an impasse in resolving this issue. By Order dated December 14, 2021, the parties were directed to jointly propose hearing dates and this appeal was docketed as ASBCA No. 62201-QUAN on January 10, 2022.

3. Contract No. W912ER-17-C-0014 was awarded to AICI-Archirodon JV (appellant or AAJV) on September 25, 2017 (R4, tab 4 at 2-3). The design-build, firm fixed-price contract was for the replacement of the Mina Salman Pier at Naval Support Activity, Bahrain (R4, tab 4 at 1). The contract also included, amongst other things, individual fixed-price contract line items (CLIN) for design, mobilization and demobilization, steel pier construction (CLIN 0003AA), and operations and maintenance (id. at 4-8). As part of the pier replacement project, appellant needed to ship steel piles for the pier from South Korea, where the piles were fabricated, to Bahrain (app. br. at 2; app. initial statement of costs at 2, ex. 4a). 3 Based on the record, we find that the shipping cost for the steel piles was included in the lump sum amount for construction under CLIN 0003AA. The contract included the relevant Defense Federal Acquisition Regulation Supplement (DFARS) clause, DFARS 252.247-7023, TRANSPORTATION OF SUPPLIES BY SEA (APR 2014) (R4, tab 4 at 14) which allows contractors to request a waiver of the requirement that shipments must be made by U.S.-flag vessels under certain listed circumstances, such as when there are no U.S.-flag vessels available or when “freight charges are inordinately excessive or unreasonable.” DFARS 252.247- 7023(c)(1)-(3), TRANSPORTATION OF SUPPLIES BY SEA (APR 2014). Under this provision, contractors are also required to provide the contracting officer (CO) and the Maritime Administration, Office of Cargo Preference, U.S. Department of Transportation (MARAD) with a copy of the bill of lading. DFARS 252.247-7023(e), TRANSPORTATION OF SUPPLIES BY SEA (APR 2014). The clause further provides that “[i]n the event there has been unauthorized use of foreign-flag vessels in the performance of this contract, the Contracting Officer is entitled to equitably adjust the contract, based on the unauthorized use.” DFARS 252.247-7023(g), TRANSPORTATION OF SUPPLIES BY SEA (APR 2014).

AICI-Archirodon JV, ASBCA No. 62201, 21-1 BCA ¶ 37,907. Familiarity with that decision is assumed for purposes of resolving the quantum phase of this dispute. 3 App. br. refers to appellant’s pre-hearing brief filed March 29, 2022. Appellant filed its initial statement of costs with exhibits on February 8, 2022, and the government responded on March 8, 2022. Appellant filed an amendment to its statement of costs on March 15, 2022, and the government responded on March 22, 2022. 2 4. The related applicable August 2010 Procedures, Guidance and Information (PGI) section of the DFARS, PGI 247.573(b)(1)(ii)(C), outlines the procedures that COs are required to follow in the event a contractor finds that the U.S.-flag vessels freight charges are “excessive or otherwise unreasonable.” After a contractor has notified a CO that the U.S.-flag carrier proposed costs are excessive, the CO “shall prepare a report” taking into account a number of enumerated factors including excessive profits to the carrier and excessive costs to the government. DFARS, PGI 247-573(b)(1)(ii)(C)(1)(i)- (iii). When determining if the cost to the government is excessive, the CO is to include in their analysis factors such as: the difference in cost between the U.S.-flag vessel and the foreign-flag vessel (FFV), comparisons between rates charged on similar routes, the efficiency of the route and suitability of the vessel. DFARS, PGI 247- 573(b)(1)(ii)(C)(1)(iii). A higher cost of the U.S.-flag vessel as compared to a FFV is not sufficient alone to justify the use of a FFV. DFARS, PGI 247-573(b)(1)(ii)(C)(1)(i). The CO is then to forward this report to Military Sealift Command (MSC) and then MSC forwards the report to the Secretary of the Navy to determine if the proposed charges are excessive or unreasonable. DFARS, PGI 247-573(b)(1)(ii)(C)(2), (3). If the charges are found to be excessive, the CO gives the contractor written approval to use a non-U.S.- flag carrier. DFARS, PGI 247-573(b)(1)(ii)(C)(3).

5. In May of 2018, AAJV enlisted the help of a global vessel broker, Gulf Agency Co. (GAC), to secure a vessel capable of transporting the steel piles. GAC discovered that there were only nine U.S.-flag vessels capable of transporting this kind of cargo. (Borossay report at 4 4) Using location data from August, September, and October 2018, Mr. Borossay explained that seven of the nine U.S.-flag vessels able to transport this type of cargo “were not within global range to handle the move” (id. at 10). Additionally, only one of the two remaining vessels, the Ocean Glory, “appear[ed] to have been available for the long deviation to the Middle East” (id.). Appellant received a quote from the U.S.-flag vessel Ocean Glory for $1,384,220 prior to shipping the steel piles via FFV (R4, tab 2 at 4; Borossay report at 4). The quote was received on August 29, 2018, and was only valid until August 30, 2018 (R4, tab 6 at 11-12). AAJV submitted a request to use a FFV on August 30, 2018, citing what it viewed as excessive costs for the U.S.- flag vessel (R4, tab 6 at 1). The CO rejected the request because it was not timely in accordance with DFARS 252.247-7023 and lacked some of the requisite information (R4, tabs 7 at 1, G-1, Declaration of CO Andrea Greene (Greene decl.), at 2). AAJV shipped the piles via FFV; there is no disagreement between the parties that the actual cost of shipping via FFV was $278,633.65 (app. br. at 6 (citing R4, tab 45); gov’t resp. to app.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Cite This Page — Counsel Stack

Bluebook (online)
AICI-Archirodon JV, Counsel Stack Legal Research, https://law.counselstack.com/opinion/aici-archirodon-jv-asbca-2025.