Maersk Line Limited

CourtArmed Services Board of Contract Appeals
DecidedApril 9, 2019
DocketASBCA No. 59791, 59792
StatusPublished

This text of Maersk Line Limited (Maersk Line Limited) 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
Maersk Line Limited, (asbca 2019).

Opinion

ARMED SERVICES BOARD OF CONTRACT APPEALS

Appeals of -- ) ) Maersk Linc Limited ) ASBCA Nos. 59791. 59792 ) Under Contract Nos. N00033-06-C-3305 ) N00033-06-C-3306 )

APPEARANCES FOR THE APPELLANT: Robert E. Korroch. Esq. William A. Wozniak. Esq. Williams Mullen Norfolk, VA

APPEARANCES FOR THE GOVERNMENT: Craig D. Jensen, Esq. Navy Chief Trial Attorney Tricia A. Nicewicz, Esq. Gordon D. Ivins, Esq. Allison M. McDadc. Esq. Trial Attorneys Military Scalift Command Norfolk. VA

OPINION BY ADMINISTRATIVE JUDGE YOUNGER

In these consolidated appeals, appellant Maersk Linc Limited (Maersk) seeks amortized "hull depreciation costs" that arc said to result from the convenience terminations of two dry cargo time charter contracts. Under a time charter, the owner is responsible for crewing and maintaining the vessel. while the charterer may employ the vessel for specified purposes. Both dry cargo time charters at issue here were follow-on contracts. The principal issue is whether we have jurisdiction. with the government asserting that Maersk's present claim differs from the claim that it submitted to the contracting officer. We dismiss the appeals for lack of jurisdiction.

FINDINGS OF FACT

A. The 2001 Contracts

1. Effective May 22, 2000. the Military Scali ft Command (MSC) awarded Contract No.N00033-00-C-3201 to Macrsk for the dry cargo time charter for the M/V LTC John U.D. Page (M/V Page) (ASBCA No. 59791 (59791) R4. tab A-1 at 1-2, tab A-3 at 13 ). In addition, cffective May 22. 2000, MSC awarded to Maersk Contract No. N00033-00-C-3202 for the dry cargo time charter for the M/V SSG Edward A. Carter, Jr. (M/V Carter) (ASBCA No. 59792 (59792), R.4, tab /\-1 at 1-2, tab A-3 at 13) (the 2001 contracts). Each of the 2001 contracts was for a term of up to and not to exceed 1,795 days, and each was for the transportation and storage of ammunition in support of the Army's Prepositioning Program (59791 R4, tab A-1 at 2, tab C-44 at 354; 59792 R4, tab A-1 at 2, tab C-29 at 313).

2. Both the M/V Page and the M/V Carter had been container ships (tr. 11 ). Maersk acquired the M/V Page in October 2000 for $10,000,000, and the M/V Carter in February 2001 for the same price (tr. 47-48; exs. A-3, -4).

3. It is undisputed that, in the interval between award and delivery of the vessels under each of the 200 I contracts. Maersk incurred costs to modify both the M/V Page and the M/V Carter to enable both vessels to transport and store ammunition (tr. 11, 17). Maersk installed additional equipment on both vessels to make them suitable for the transportation and storage of ammunition (tr. 11-12). This equipment included specialized cranes, together with air conditioning, dehumidifier systems, and sprinkler systems for the cargo holds, as well as tent-like structures above the decks called cocoons, which could house additional ammunition containers (tr. 11-12; 59791, R4, tab D-66 at 541; 59792, R4, tab D-60 at 545). Maersk depreciated the costs to make each vessel suitable to transport and store ammunition over the 59 months of the original contract period for each vessel (tr. 18).

4. Performance of the 2001 M/V Carter contract lasted for its full term and was completed on or about May 13, 2005 (59792, R4, tab A-23 at 73). Performance of the M/V Page contract, by contrast, was terminated early. and by date of October 27, 2005, MSC issued unilateral Modification No. P00028. providing for payment to Maersk of$2,190,571 in early redelivery costs (59791. R4, tab A-29 at 88).

8. The 2006 Follow-On Contracts

5. Following completion of the 2001 contracts, Maersk submitted a proposal to MSC by date of November 9, 2005. for follow-on contracts for both the MN Page and the MN Carter (59791, R4, tab 8-42 at 142; 59792. R4, tab B-27 at 98). Significantly, Maersk stated in its proposals that it did not foresee ··any work required ... to 'convert [either] vessel to a more useful military configuration'" (id.). We find that neither proposal for the 2006 follow-on contracts included any unrecovered depreciation from the 2001 contracts, or other acquisition costs (tr. 21, 26, 97; 59791 R4, tab 8-43 passim, 59792 R4, tab 8-28 passim).

6. MSC thereafter awarded the two follow-on contracts at issue here. Effective February 1, 2006, MSC awarded Contract No. N00033-06-C-3305 to Maersk for the dry cargo time charter of the M/V Page. and, effective December 8. 2005, it

2 awarded Contract No. N00033-06-3306 for the dry cargo time charter of the M/V Carter (collectively, the 2006 contracts) (59791. R4, tab C-44 at 343; 59792, R4. tab C-29 at 300).

7. The 2006 contracts contained various standard clauses, including Federal Acquisition Regulation (FAR) 52.212-4, CONTRACT TERMS AND CONDITIONS -- COMMERCIAL ITEMS (Der 2003) (59791, R4, tab C-44 at 352; 59792, R.4, tab C-29 at 311 ). Each contract· s Termination for the Convenience of the Government clause was separately set out and was identical to that appearing in FAR 52.212-4(1) (59791, R4, tab C-44 at 372; 59792, R.4, tab C-29 at 333 ).

8. The 2006 contracts contained identical Cancellation Fee clauses. which provided:

The contractor and Government agree the purpose of this clause is to induce the contractor to offer to provide and to provide the required services when the contractor otherwise would not offer to provide them because of the contractor's inability to recover its out-of-pocket costs in the event the Government docs not exercise an option to extend the term of the contract or terminates the contract for the convenience of the Government.

In the event the Government does not exercise an option to extend the term of the contract or terminates the contract for convenience, the contractor shall be entitled to not-to-exceed cancellation costs subject to the following conditions ....

''Cancellation costs" means, and only means, costs specifically identified by the contractor in its proposal and actually incurred by the contractor between contract award and vessel delivery to the Government including, and limited to. the following categories of costs: costs incurred by the contractor for vessel acquisition. re flagging costs and modification, or conversion costs, and only to the extent such modification. or conversion costs \Vere incurred in order for the vessel to meet contract requirements.

(5979 L R4, tab B-43 at 167; 59792, R4, tab C-29 at 326-27)

3 9. MSC re.delivered the MN Page to Maersk on June 22, 2010, which was before expiration of the contract (59791, R4, tab C-62 at 500-01). MSC also redelivered the MN Carter to Maersk early (59792, R4, tab C-57 at 497-98). Maersk was unable to put either ship to work after the terminations and they laid idle (tr. 19).

10. By Modification No. P00020 to the M/V Page contract dated September 28, 2011, the parties agreed to a full and complete equitable adjustment for the early redelivery of the MN Page "[w]ith the exception of hull depreciation" (59791, R4, tab C-64 at 505, 507). The parties agreed that Maersk "reserves the right to submit a request for equitable adjustment for unrecovered hull depreciation" (id. at 507). In a September 28, 2011 Memorandum to the File attached to the modification, the contracting officer and a contract specialist recited that, in March 2011, Andrew Rabuse, Maersk's General Manager for Government Ship Management, explained that hull depreciation "represents the costs associated with converting the vessel for military use by installing cranes, AC/DH systems, cargo hold sprinkler systems and other modifications necessary to meet contract requirements" (59791, R4, tab C-64 at 510).

11.

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