Globe Trailer Manufacturing, Inc.

CourtArmed Services Board of Contract Appeals
DecidedJuly 10, 2019
DocketASBCA No. 60979
StatusPublished

This text of Globe Trailer Manufacturing, Inc. (Globe Trailer Manufacturing, Inc.) 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
Globe Trailer Manufacturing, Inc., (asbca 2019).

Opinion

ARMED SERVICES BOARD OF CONTRACT APPEALS

Appeal of -- ) ) Globe Trailer Manufacturing, Inc. ) ASBCA No. 60979 ) Under Contract No. W56HZV-11-D-0204' )

APPEARANCES FOR THE APPELLANT: G. Lindsay Simmons, Esq. Eric Whytsell, Esq. Jackson Kelly PLLC Washington, DC

APPEARANCES FOR THE GOVERNMENT: Arthur M. Taylor, Esq. DCMA Chief Trial Attorney Michael T. Patterson, Esq. Trial Attorney Defense Contract Management Agency Chantilly, VA

, OPINION ON CROSS-MOTIONS FOR SUMMARY JUDGMENT BY ADMINISTRATIVE JUDGE D'ALESSANDRIS .

Pending before the Board are cross-motions for summary judgment regarding the proper interpretation of the termination settlement provision for commercial item contracts, Federal Acquisition Regulation (FAR) 52.212-4(1), when the contract additionally contains a provision for first article testing, FAR 52.209-4. The Department of the Army (government or Army) awarded a requirements contract for low-bed semitrailers to appellant; Globe Trailer Manufacturing, Inc. (Globe). The commercial items .contract required Globe to submit eight trailers as part of the first article test procedures. These test trailers were separate contract line-items (CLINs) in the first delivery order. Pursuant to the first article test requirements, any work beyond the first article test units was performed at Globe's risk. Globe submitted the first article test units; however, the Army terminated the contract for convenience of the government before the first article test units were approved. After Globe submitted a termination settlement proposal, the termination contracting officer issued a final decision limiting Globe's recovery to the first article test contract line items.

In the pending cross-motions, the government contends that the first article test provision caps Globe's recovery for work related to the first articles at the amount of the first article test line items. Conversely, Globe contends that its recovery is not limited to the first article contract line items, but that it can recover all reasonable charges relating to production of the first articles. For the reasons stated below, we grant both motions in part, holding that Globe is entitled to recoyer for work performed pursuant to non-first article test contract line items that were required to be delivered prior to first article approval, but that Globe's recovery for work necessary for first article approval is limited to the amount of the CLINs for the first article test line items.

STATEMENT OF FACTS (SOF) FOR PURPOSES OF THE MOTIONS

On September 21, 2011, the Army awarded Contract W56HZV-11-D-0204 and delivery order 0001 to Globe. The contract was a five-year requirements contract for M870A4 low bed semitrailers and related deliverables. (R4, tab 1 at G-1-10) The M870A4 is a trailer intended for military use on diverse surfaces and in all climates (id. at G-46) Relevant to this appeal, the delivery order included separate CLINs including CLINOOO lAA for one shakedown test trailer, CLIN0002AA for one First Production Verification Inspection (FPVI) test trailer, CLIN0003AA for five Production Verification Test (PVT) trailers, CLIN0004AA for one Logistics Demonstration (Log Demo) test trailer, 1 CLIN0006AA for contract data requirements lists (CDRLs), and CLIN1001AA for 641 first year production trailers for a total amount of$39,613,22I.27 (R4, tab 1 at G-1-10, tab 9 at G-176, 181). CLINs 0002AA and 0003AA contain similar provisions providing that "[a]ll costs associated with the trailer ... are to be included in the unit price" (R4, tab 1 at G-5, 6). Two additional delivery orders followed (R4, tabs 15, 19).

Relevant to this appeal, the contract contained FAR 52.209-4 FIRST ARTICLE APPROVAL-GOVERNMENT TESTING (SEP 1989)-Altemate Sep/1989 I (Jan 1997) AND ALTERNATE II (SEP 1989) providing that "(h) ... [u]ntil first article approval is granted, only costs for the first article and costs incurred under this authorization are allocable to this contract for (1) progress payments, or (2) termination settlements if the contract is terminated for the convenience of the Government" (R4, tab 1 at G-66-67). The contract additionally incorporated by reference FAR 52.212-4 CONTRACT TERMS AND CONDITIONS - COMMERCIAL ITEMS providing that:

(1) Termination for the Government's convenience. The Government reserves the right to terminate this contract, or any part hereof, for its sole convenience .... Subject to the terms of this contract, the Contractor shall be paid a percentage of the contract price reflecting the percentage of the work performed prior to the notice of

1 The log demo trailer was not part of first article testing (R4, tab 1 at G-44 ); however, the contracting officer compensated Globe for the line item in the final decision (R4, tab 31 at G-339), and the government does not dispute Globe's entitlement to compensation for this contact line item.

2 termination, plus reasonable charges the Contractor can demonstrate to the satisfaction of the Government using its standard record keeping system, have resulted from the termination ....

(R4, tab 1 at G-64); FAR 52.212-4(1) 2

The contract provided for an Engineering Change Proposal (ECP) process:

C.3 .3 .1 Engineering Change Proposal (ECP) - Contractor Requested

a. Requirement for Submittal. After the Government provides Production Configuration approval based on the successful completion of [first article testing] FAT, including changes required to correct deficiencies discovered during the First Production Vehicle Inspection (FPVI) and Production Verification Test (PVT), the Contractor shall submit an Engineering Change Proposal (ECP) for any configuration change to the approved baseline for any of the M870A4 Semitrailers which impact form, fit, or function. ECPs shall be submitted for all subsequent changes identified after production start to the end of production ....

(R4, tab 1 'at G-25) Paragraph C.3.3.2 additionally provided that government directed changes would be initiated by the contracting officer requesting a technical and price proposal (R4, tab 1 at G-26).

After the contract was awarded, the Army made several changes to the design of the trailers through bilateral modifications. Modification No. POOOOI, among other things, raised the trailer deck height and changed the proposed trailer tires. (R4, tab 2 at G-83; app. supp. R4, tab 504 at 3). Modification No. P00003 incorporated domestically sourced wheels and tires on the M870A4 trailers (R4, tab 4 at G-128-29). Modification No. P00004 funded CLIN 0003AC to provide test service representatives at Aberdeen Test Center and Yuma Test Center (R4, tab 5 at G-140). In Modification No. P00006, the Navy accepted aluminum wheels as consideration for late deliveries oftest as~ets and CDRLs (R4, tab 7 at G-169). , ·

2 The contract also contains FAR 52.249-2, TERMINATION FOR CONVENIENCE OF THE GOVERNMENT (FIXED PRICE) (R4, tab 1 at 65); however, the parties agree that FAR 52.212-4(1) controls here (app. reply at 2).

3 In addition to the changes to the configuration of the first article test trailers made by contract modification, Globe asserts that the government constructively changed the contract. Globe asserts that the Navy made constructive changes including the refusal to include a+/- 3% weight variance; requiring trailer deck width extensions; providing defective wiring specifications; requiring design and manufacture of a trailer attachment shackle not required by the contract; requiring a more extensive quality assurance plan than required by the contract; and "recommending" that Globe build an additional trailer and conduct an additional test at the Aberdeen Testing Grounds (app. supp. R4, tab 552 at 39-46).

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