Armed Services Board of Contract Appeals

The Armed Services Board of Contract Appeals (ASBCA) is a neutral, independent forum whose primary function is to hear and decide post-award contract disputes between government contractors and the Department of Defense and other government agencies with whom the ASBCA has entered into agreements to provide services.

The majority of matters on the ASBCA's docket involve appeals by contractors from government contracting officers' final decisions or failures to issue decisions.

An appeal will be processed pursuant to the ASBCA's Rules. The Rules allow a contractor to represent itself without a lawyer and the rules have provisions for the accelerated processing of small dollar amount claims, which can be as much as $150,000 in the case of a qualifying small business.

Most hearings, if required, will be held by a single Administrative Judge, either at the ASBCA’s offices in Falls Church, Virginia, or, if appropriate, in a location more convenient to the parties.

Most decisions are made by a panel of three Judges, as the ASBCA functions in a collegial manner.

As a matter of judicial philosophy, the ASBCA encourages parties to attempt to negotiate a resolution of their dispute.If the parties make a joint request to the Chairman to use the ASBCA's mediation services, and the parties and the ASBCA agree the dispute is suitable for mediation, the Chairman will provide a Judge to assist the parties in developing an appropriate binding or non-binding ADR process.

The ASBCA has sample ADR forms available online for guidance.

In addition to mediating appeals on its docket, the ASBCA has, in appropriate cases, mediated disputes prior to the formal filing of a claim, prior to the issuance of a contracting officer’s final decision and prior to the filing of an appeal.

If you have any doubt  about language in a contract,  a well established rule is that a contractor should, after identification of any doubtfulness, uncertainty of meaning, intention, unclear, indefinite or confusion,  in a solicitation or a contract, notify the contracting officer immediately and get in writing or E-mail a clarification promptly.

If there is any doubt about the government’s intent when a patent ambiguity is discovered, the contractor must obtain a complete clarification. It is not sufficient for a contractor to furnish mere notice;

Failure to obtain such a clarification renders, or may render, the contractor’s interpretation of the ambiguity at variance with that of the government and potentially lead to a claim or a default termination.

Example:

The U.S. Army issued a solicitation on June 22, 2006 for 100,000 pounds of potassium chlorate that was scheduled for delivery 90 days after the date of award of a contract to Pine Bluff Arsenal by November 1, 2006.

One month later the contractor Mil-Spec Industries Corp. (“Mil-Spec”) submitted an offer for $94,400, or $0.944/lb, and accepted the terms of the RFP.

They did not take exception to the delivery schedule.

On December 7, 2006, the Army awarded the contract to a contractor.
Ninety days later would be March 6, 2007.
Section F of the contract, however, stated the delivery date as 13 February 2007.
The Army issued a modification correcting the due date to March 9, 2007 and revised the packaging to 210 - 300 pound drums.
The potassium chlorate was to be manufactured with sodium 0.04 max. by A.M. Engineering Ltd, Givat Shemuel, Israel.

The contractor failed to timely deliver the product, so the Army terminated the contract for default.

The contractor requested a 90 day extension that was denied by the Army.

The contractor appealed the default termination to the Armed Services Board of Contract Appeals (“ASBCA” or the “Board”) and the decision is listed as ASBCA No. 56070 dated August 6, 2009.

The initial question was:

Does the “plain language of the contract support only one reading or support more than one reading”?
Furthermore, “when a contract is susceptible to more than one reasonable interpretation, it contains an ambiguity.”
To show an ambiguity, the interpretations of both parties must be reasonable.
If the Court or Board determines there is an ambiguity, is the ambiguity patent or latent?

Patent  ambiguity is so glaring as to raise a duty to inquire.
“A patent ambiguity is present when the contract contains facially inconsistent provisions that would place a reasonable contractor on notice and prompt the contractor to rectify the inconsistency by inquiring.” Stated differently, “Where a government solicitation contains a patent ambiguity, the government contractor has a duty to seek clarification from the government, and its failure to do so precludes acceptance of its interpretation in a subsequent action against the government.”

The Board stated the inconsistency, i.e. the ambiguity, was patent by pointing to the fact that “the contract stated a delivery date of 13-Feb-2007 and 90 days after date of contract award” date of December 7, 2006.

.The February date is only 68 days after the actual award date – not 90 days. This discrepancy is obvious.

The ASBCA averred that “The contractor was unconcerned about the discrepancy between the 1 November 2006 delivery date, and 90 days after date of award” and the February 13, 2007 delivery date.

The Board held the contract was valid and that The contractor failed to resolve the discrepancy or ambiguity.
Therefore, the government’s interpretation will prevail.

The moral of the story is never leave a patent ambiguity unattended. Always resolve an ambiguity (discrepancy) promptly. This may be easier said than done, but some way must be found. The consequences of failure to resolve the ambiguity can be substantial. Any contract award that contains an ambiguity may be terminated for default.

See also: Alternative Dispute Resolution Program and FAR 22.000 Scope of part
 

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