Judges: D'Alessandris
Filed: Jun. 25, 2018
Latest Update: Mar. 03, 2020
Summary: Appellant Parwan Group Company (Parwan) appeals from a contracting, officer's final decision denying its claim for unanticipated security costs arising out of, a fuel delivery contract in Afghanistan. Parwan's complaint alleges no fact, that would entitle it to shift that risk back to DLA.
ARMED SERVICES BOARD OF CONTRACT APPEALS
Appeal of -- )
)
Parwan Group Company ) ASBCA No. 60657
)
Under Contract No. SP0600-13-D-9504 )
APPEARANCES FOR THE APPELLANT: Eric S. Montalvo, Esq.
Lauren R. Brier, Esq.
The Federal Practice Group Worldwide
Service
Washington, DC
APPEARANCES FOR THE GOVERNMENT: Daniel K. Poling, Esq.
DLA Chief Trial Attorney
Matthew Vasquez, Esq.
Trial Attorney
DLA Energy
Fort Belvoir, VA
OPINION BY ADMINISTRATIVE JUDGE D'ALESSANDRIS
ON THE GOVERNMENT'S MOTION FOR PARTIAL DISMISSAL
FOR LACK OF JURISDICTION AND MOTION TO DISMISS
FOR FAILURE TO STATE A CLAIM
Appellant Parwan Group Company (Parwan) appeals from a contracting
officer's final decision denying its claim for unanticipated security costs arising out of
a fuel delivery contract in Afghanistan. The Defense Logistics Agency-Energy (DLA)
moves for partial dismissal for lack of jurisdiction, alleging that portions of Parwan's
complaint raise claims that were not presented to the contracting officer for final
decision prior to the filing of Parwan's appeal. DLA also moves to dismiss the entire
appeal for failure to state a claim upon which relief can be granted. Parwan opposes
the motion.
STATEMENT OF FACTS (SOF) FOR PURPOSES OF THE MOTION
On 23 April 2012, DLA issued Solicitation No. SP0600-12-R-0208
(solicitation) seeking proposals for the transportation of government-owned fuel
products in Afghanistan (R4, tab 1 at 47). 1 Amendment No. 0005 to the solicitation
1
Citations to the Rule 4 file are to the consecutively-numbered pages unless otherwise
indicated.
contained answers to questions from offerors about a number of issues, including three
related to convoy security (R4, tab 2 at 93-94). 2 In response to those security
questions, DLA informed offerors that "vendors considering the use of armed private
security will not be considered for award" (id. at 94). Offerors were also informed that
there would be "no US Government provided escorts" for the contractor-provided
services (id.).
Parwan interpreted those responses to mean that the use of security for any
particular convoy would be left to the contractor's discretion, and that "if [the
contractor] did not provide security [it] bore the risk of non-performance for each
unsuccessful shipment" (compl. ,r 8). Accordingly, when Parwan submitted its
proposal on 27 June 2012, it did not include costs for convoy security (id. ,r,r 8, 58).
On 28 November 2012, DLA awarded Contract No. SP0600-13-D-9504
(contract) to Parwan (R4, tab 6 at 1). This fixed-price commercial item contract
consisted of a two-year base period from the date of award through 31 December
2014, and a one-year option period from 1 January 2015 through 31 December 2015,
for a total estimated contract value of $12,902,090 (R4, tab 6 at 126-27; gov't mot.
at 1-2). The contract included Federal Acquisition Regulation (FAR) clause 52.243-1,
CHANGES-FIXED-PRICE (AUG 1987), ALTERNATE IV (APR 1984), which states in
relevant part:
(a) The Contracting Officer may at any time, by
written order, and without notice to the sureties, if any,
make changes within the general scope of this contract in
any one or more of the following:
(1) Specifications.
(2) Work or services.
(3) Place of origin.
(4) Place of delivery.
(5) Tonnage to be shipped.
(6) Amount of Government-furnished property.
(b) If any such change causes an increase or
decrease in the cost of, or the time required for,
performance of any part of the work under this contract,
whether or not changed by the order, the Contracting
Officer shall make an equitable adjustment in the contract
2
When receiving a motion to dismiss for lack of jurisdiction, the facts supporting
jurisdiction are subject to fact-finding based on the Board's review of the
records. See, e.g., CCJE & Co., ASBCA Nos. 58355, 59008, 14-1 BCA
,r 35,700 at 174,816.
2
price, the delivery schedule, or both, and shall modify the
contract.
(R4, tab 6 at 143)
The contract also included two clauses relevant to Parwan's performance under
this contract - clause 952.225-0004, COMPLIANCE WITH LA ws AND REGULATIONS
(DEC 2011); and clause 252.225-7995, CONTRACTOR PERSONNEL PERFORMING IN THE
UNITED STA TES CENTRAL COMMAND AREA OF RESPONSIBILITY {DEVIATION
2011-00004) (APR 2011) (R4, tab 6 at 133, 147). These clauses imposed upon
Parwan two key obligations. First, under both clauses, Parwan was required to comply
with all host nation laws (id.). Second, under clause 252.225-7995( c ), "[u ]nless
specified elsewhere in the contract, the Contractor is responsible for all logistical
and security support required for contractor personnel engaged in this contract" ( id.
at 147).
The contract's performance work statement (PWS) reiterated Parwan's obligation
to comply with host nation laws, stating that Parwan must "remain in full compliance
with all laws, decrees, labor standards, and regulations of the Afghanistan Government"
(R4, tab 1 at 47). The PWS also stated that the U.S. Government "will not provide
security escort for trucks transporting fuel product in Afghanistan" (id. at 48).
In February 2013, after Parwan began making deliveries, the Afghan
government issued a decree stating that all convoys delivering fuel for the U.S.
Government using "southern routes" would henceforth be required to use security
escorts (R4, tab 29 at 492, 586). The decree further stated that private companies were
no longer authorized to provide security escorts, and that Parwan would be required to
use the security services of the Afghan Public Protection Force (APPF), a state-owned
enterprise of the Afghan Ministry of the Interior (id.).
By email dated 7 March 2013, Parwan informed DLA that the new requirement
to use security escorts had caused security costs for all companies transporting fuel for
the U.S. Government to "skyrocket," and that for Parwan in particular, the increased
costs had become "almost prohibitive" (app. supp. R4, tab 38 at 4). By email dated
8 March 2013, DLA advised Parwan that it was working "to find a payment solution"
(id. at 3).
On 24-25 April 2013, representatives from DLA and Parwan met to discuss the
increased security costs and the possibility of Parwan filing a request for equitable
adjustment (REA). Pursuant to that meeting, DLA instructed Parwan to submit an
REA "for the change to the method of shipping and the attendant increase in costs
incurred by Parwan." (Compl. ,r,r 15-16) By email dated 26 May 2013, Parwan
notified DLA that it was experiencing delays in delivery that it attributed to the
3
I
security escorts (app. supp. R4, tab 39). The parties thereafter exchanged additional
emails discussing the delays, with DLA twice requesting information from Parwan
concerning its "issues" with APPF (R4, tabs 10-11; app. supp. R4, tabs 40-43). By
email dated 17 June 2013, DLA also requested that Parwan advise it of what actions
could be taken by DLA to "alleviate the delays in delivery" (app. supp. R4, tab 42). It
is unclear whether Parwan ever responded to this request.
By email dated 11 July 2013, DLA requested additional information regarding
Parwan's working relationship with APPF, including "systemic problems" regarding
scheduling and cancellations. Parwan responded that same date, stating with respect to
the systemic problems that "(w]e do not really get told why a convoy is cancelled,
usually the reason given is security, we do know at times that they do not always have
the assets available." (App. supp. R4, tab 46 at 53, 55)
In July 2013, Parwan submitted two REAs to the contracting officer, neither of
which are at issue in this appeal. In an email dated 3 September 2013, Parwan
submitted a third REA (REA 3) seeking reimbursement for increased costs associated
with the security escorts, which it described as "excessive" (R4, tab 15 at 243). By
email dated 20 September 2013, Parwan amended REA 3 to include additional costs
(R4, tab 16). In October, November and December 2013, Parwan emailed the
contracting officer requesting an update on the status of its REAs, including REA 3
(R4, tabs 17-18, 20). In those emails, Parwan mentioned that it was experiencing
financial difficulties while the REAs were pending, noting that Parwan "could be
upside-down financially on this contract," that if the REAs were not approved it would
be "running at an extensive loss" and it did not "know our current financial position as
we have so many items pending" (R4, tab 17 at 276-77, tab 20 at 340).
By email dated 2 December 2013, DLA informed Parwan "[a]s a reminder" that
APPF was the "only authorized armed security provider" under Afghan law, and "[i]f
caught using unauthorized armed security you risk negative reports and/or losing your
entire contract" (R4, tab 19). By letter dated 27 March 2014, DLA denied Parwan's
requests for reimbursement, stating that the increased security costs were not
reimbursable under the contract (R4, tab 24 at 456). By letter dated 22 April 2014, the
contracting officer reiterated to Parwan that, "per the terms of the contract, DLA
Energy does not reimburse or pay any security fees, including any fees from APPF
security" (R4, tab 25 at 459).
By letter dated 31 May 2015, Parwan filed its certified claim seeking a
contracting officer's final decision on several issues raised in its REAs (R4, tab 29).
4
With respect to the security costs, the claim sought $1,022,440, 3 and made the
following points:
a. At the time it submitted its bid proposal to DLA, Parwan
was not obligated to use any armed security for its
convoys, and therefore did not include any security costs in
its bid proposal;
b. In February 2013, the Afghan Ministry of the Interior
informed Parwan that it would be required to begin using
APPF security escorts at the end of that month;
c. The terms of the contract required Parwan to comply
with all U.S. and host nation la~s; and
d. Because Afghan law now required it to use APPF
security escorts, an obligation "reinforced and reiterated"
by DLA employees, Parwan was entitled to the increased
costs of performance.
(Id. at 492-93)
Parwan's claim included invoices reflecting the increased security costs (R4,
tab 29 at 595-617). Parwan also sought a contract modification to reflect the new
security obligation, which it argued was a reasonable request because the additional
expenditure "was not contemplated in the award costs, is required by Afghan law and
indirectly by the contract, and may result in financial ruin for the company" (id.
at 493). Specifically with respect to the increased security costs, Parwan's claim made
no mention of the impact of delivery delays. 4
By letter dated 14 April 2016, DLA issued the contracting officer's final
decision, which denied the portion of Parwan's claim seeking reimbursement for the
increased security costs (R4, tab 35). DLA denied changing the contract requirements,
citing the contract provisions that required Parwan to comply with host nation law and
that assigned responsibility for security to Parwan. DLA also pointed out that a
fixed-price contract such as Parwan's places upon the contractor "maximum risk and
full responsibility for all cost and resulting profit or loss" meaning that ''the use of
3 That amount has now increased to $1,044,660 to reflect invoices Parwan received
from APPF after submission of its claim (compl. ,r,r 32-33).
4
Parwan's claim also sought recovery for costs associated with delays in
downloading fuel; however, those costs are unrelated to the increased security
costs and are not at issue in this appeal (R4, tab 29 at 493-95).
5
APPF and any costs incurred ... are not reimbursable under this contract." (Id. at 707)
Parwan filed its notice of appeal by letter dated 1 July 2016. The appeal challenges
only that portion ofDLA's decision relating to Parwan's increased security costs.
DECISION
Parwan's complaint asserts four grounds for relief. 5 Counts I and II allege that
DLA changed the contract requirements, with Count II specifically alleging that the new
security escort requirement constituted a constructive change ( comp I. ,i,i 34-54). In
Count III, Parwan alleges that a 15% increase in its overhead costs and severe delivery
delays rendered its contract with DLA commercially impracticable (id. ,i,i 55-62). Count
IV alleges that Parwan "detrimentally relied" upon DLA's repeated assurances that the
increased costs ''would be taken care of," and that based upon those assurances, Parwan
continued performance with the understanding that it would be "made whole" through
an equitable adjustment (id. ,i,i 63-70).
DLA has moved to dismiss Counts III and IV of the complaint, arguing that the
Board lacks jurisdiction to entertain these allegations because they were never
presented to the contracting officer. DLA has alternatively moved to dismiss the entire
appeal for failure to state a claim upon which relief can be granted. We address the
jurisdictional argument first.
The Board's Jurisdiction over Counts III and IV
Parwan bears the burden of proving the Board's jurisdiction by a preponderance
of the evidence. Reynolds v. Army & Air Force Exchange Service, 846 F.2d 746, 748
(Fed. Cir. 1988); United Healthcare Partners, Inc., ASBCA No. 58123, 13 BCA
,i 35,277 at 173,156. Pursuant to the Contract Disputes Act (CDA), "[e]ach claim by a
contractor against the Federal Government relating to a contract shall be submitted to
the contracting officer for a decision." 41 U.S.C. § 7103(a)(l). "The scope of [an]
appeal is determined by the claim originally submitted to the contracting officer for a
final decision." MACH II, ASBCA No. 56630, 10-1 BCA i! 34,357 at 169,673.
Accordingly, we do not possess jurisdiction over new claims that were not previously
presented to the contracting officer.
Id.
To determine whether a claim is new we examine whether it derives from the
same set of common or related operative facts as the claim presented to the contracting
officer and seeks the same or similar relief. Scott Timber Co. v. United States, 333 ·F .3d
1358, 1365 (Fed. Cir. 2003); The Public Warehousing Company, ASBCA No. 56022,
5
For purposes of this decision we will refer to those four grounds for relief as
Counts I through IV.
6
11-2 BCA ,r 34,788 at 171,227. If the operative facts in the pleadings are essentially the
same as those presented in the claim, they are within the scope of the appeal. MA CH II,
10-1 BCA ,r 34,357 at 169,673. Allegations presenting a new legal theory of recovery,
or the introduction of additional facts that do not alter the nature of the original claim, do
not constitute a new claim if they are based upon the same operative facts included in
the original claim. Trepte Construction Co., ASBCA No. 38555, 90-1 BCA ,i 22,595
at 113,385-86. Where proof of the new legal theory includes operative facts differing
from those in the original claim, however, "the essential nature of the claim has been
changed and we do not have jurisdiction over the new claim until it is presented to the
contracting officer for decision." Shams Engineering & Contracting Co. & Ramli Co.,
ASBCA Nos. 50618, 50619, 98-2 BCA ,i 30,019 at 148,525. The claim must provide a
"clear and unequivocal statement that gives the contracting officer adequate notice" of
its claim. K-Con Building Systems, Inc. v. United States, 778 F.3d 1000, 1005 (Fed. Cir.
2015) (quoting Contract Cleaning Maintenance, Inc. v. United States,
811 F.2d 586, 592
(Fed. Cir. 1987)).
Count III - Commercial Impracticability
Count III of Parwan's complaint asserts that the new security escort
requirement rendered the contract commercially impracticable. To establish
commercial impracticability, a contractor must show that "(l) a supervening event
made performance impracticable; (2) the non-occurrence of the event was a basic
assumption upon which the contract was based; (3) the occurrence of the event was not
the contractor's fault; and (4) the contractor did not assume the risk of occurrence."
Spindler Construction Corp., ASBCA No. 55007, 06-2 BCA ,i 33,376 at 165,462
(citing Seaboard Lumber Company v. United States, 308 F.3d 1283, 1294-95 (Fed.
Cir. 2002)). The doctrine applies where "the costs of performance amount to
commercial senselessness ... [not] just because performance cannot be achieved most
economically." Safety Training Systems, Inc., ASBCA Nos. 57095, 57166, 14-1 BCA
,i 35,509 at 174,051 (citing Natus Corp. v. United States, 371 F.2d 450,457 (Ct. Cl.
1967)). Thus "[a] showing of simple economic hardship is not sufficient." American
Combustion, Inc., ASBCA No. 43712, 94-3 BCA ,i 26,961 at 134,243 (citingJennie-0
Foods, Inc. v. United States, 580 F.2d 400,410 (Ct. Cl. 1978)).
Count III specifically alleges that "[a]t the time of Contract formation, both
parties assumed transportation security was neither needed nor required to ship
products along certain routes in Afghanistan," and for this reason, the solicitation did
not include a requirement "mandating the use of APPF escorts" (compl. ,i,i 56-57).
Count III further alleges that based upon this understanding, Parwan did not include
security costs in its bid price (id. ,r 58). Count III then asserts that the subsequent
requirement to use security escorts rendered the contract commercially senseless,
because Parwan incurred a 15% increase in overhead costs and experienced severe
delivery delays due to difficulties in coordinating shipments (comp 1. ,i,r 61-62).
7
DLA contends that Count III is based upon materially different facts than those
alleged in Parwan's claim, which DLA notes did not mention commercial
impracticability (gov't mot. at 7). Parwan disagrees, arguing that Count III merely
presents a new legal theory rather than a new claim (app. opp'n at 25-27). Parwan
describes the claim as having asserted that the new security requirement was
"unexpected" and "unforeseen," but fails to identify any specific language in the claim
that supports this assertion (id. at 26). Parwan also notes that the 15% increase in
security costs can easily be calculated from the invoices attached to the claim (id.).
With respect to the complaint's references to delivery delays, Parwan maintains that
they "derive directly from the change in contract" addressed in its claim, but it, again,
fails to identify any language in the claim that supports this assertion (id. at 27).
We agree with DLA. The operative facts of Parwan's claim are straightforward
and simple: 1) Parwan did not include any costs for security escorts at the time it
submitted its bid because the solicitation did not require it; 2) after performance began,
Afghan law changed, requiring Parwan to use security escorts if it wished to operate in
Afghanistan; 3) Parwan is contractually required to comply with host nation law; and
4) as a result, Parwan incurred additional costs exceeding the contract price (R4, tab 29
at 492-93). The claim does not address what the parties believed with respect to the
need for security escorts, nor does it mention a reason the solicitation did not require
security escorts (id.). Although Parwan submitted invoices for the security escort costs
with its claim, the claim document itself only minimally addresses the impact of those
costs, and it is silent with respect to the impact of delivery delays (id. at 492, 595-617).
While it is true that in determining the scope of the claim we may "examine the
totality of the correspondence ... [and] the continuing discussions, between the parties,"
Public Warehousing, 11-2 BCA ,r 34,788 at 171,228, the record here does not support
including commercial impracticability within the scope of Parwan's claim. With
respect to the impact of the increased security costs, although there are other
references to financial hardship contained in the record, they are vague and conclusory
at best (R4, tabs 15-18, 20; app. supp. R4, tab 38). In addition, while the record
indicates the parties discussed delivery delays on several occasions in 2013 prior to the
filing of REA 3 (R4, tabs 10-11; app. supp. R4, tabs 29-43, 46), it contains no
evidence Parwan ever communicated to DLA that it believed the impact of those
delays was so severe that it rendered the contract commercially senseless.
Parwan's claim is in essence a question of contract interpretation, i.e., the impact
of the change in Afghan law upon Parwan's contractual obligations. Count III goes far
beyond that limited analysis, altering the claim's essential nature by requiring factual
inquiry into whether DLA shared Parwan's a~sumption that security escorts would not
be required, why security escorts were not required by the solicitation and whether the
increased costs and the impact of delivery delays were so great that they rose to the
8
level of commercial impracticability. Because Parwan's claim did not provide a "clear
and unequivocal statement that [gave] the contracting officer adequate notice" it was
alleging commercial impracticability, we do not possess jurisdiction over Count III of
Parwan's complaint. K-Con Building Systems, 778 F.3d at 1005.
Count IV-Detrimental Reliance
Count IV of Parwan's complaint alleges that shortly after the Afghan
government imposed the new security requirement, DLA provided assurances that a
"payment solution" would be found (compl. ,r 14). Count IV further alleges that
Parwan, relying to its detriment upon those assurances, continued to perform and
"absorb[ed] the additional costs with an understanding that [it] would be made whole
th.rough an equitable adjustment" (compl. ,r,r 65-69).
In its opposition brief, Parwan elaborates on Count IV and argues that based
upon this detrimental reliance, DLA is estopped from denying liability for the security
costs (app. opp'n at 27-28). Characterizing Count IV as a new legal theory rather than
a new claim, Parwan avers that it "emerges directly" from two facts referenced in the
claim-I) that in February 2013 Parwan was required to use security escorts in order to
fulfill its contractual obligations; and 2) that this "change to its contract requirements
was 'reinforced and reiterated_ by DLA employees'" (id. at 27).
We do not agree that the difference here is merely the legal theory in the claim.
The two statements referenced by Parwan cannot be reasonably interpreted as
informing DLA that Parwan was asserting an estoppel claim. Equitable estoppel
requires: 1) some form of misleading conduct, which may consist of silence or
inaction as well as affirmative action, leading another to reasonably infer that rights
will not be asserted against it; 2) reliance upon the misleading conduct; and 3) material
prejudice due to the reliance. Mabus v. General Dynamics C4 Systems, Inc., 633 F.3d
1356, 1359 (Fed. Cir. 2011). There is nothing in Parwan's claim asserting that DLA
assured Parwan it would be paid, either falsely or otherwise, or that Parwan was
relying upon any such assurances in continuing to incur the additional costs. Count IV
introduces a new set of facts that are wholly unrelated to the claim and that materially
alter the claim's essential nature. We therefore find that Count IV is also a new claim
over which we do not possess jurisdiction.
Breach of Implied Duty to Cooperate
In its opposition brief, Parwan for the first time alleges that DLA breached its
implied duty to cooperate, and that this breach constituted a constructive change to the
contract (app. opp'n at 15) (citing R. W Jones Construction, Inc., IBCA No. 3656-96,
99-1 BCA ,r 30,268 at 149,681). DLA characterizes this allegation as an implicit
request by Parwan to amend its complaint, which it argues should be denied because it
9
I
l represents a new claim not previously presented to the contracting officer (gov't reply
at 15). Although the Board may permit a party to amend its pleadings upon conditions
fair to both parties, see Board Rule 6( d), the Board will deny a request to amend a
complaint if the amendment is essentially a new claim based upon operative facts
not already presented to the contracting officer. GSC Construction, Inc., ASBCA
No. 59046, 15-1 BCA ,r 35,882 at 175,429.
The implied duty to cooperate arises out of the implied duty of good faith and
fair dealing that every contract contains. Metcalf Construction Company v. United
States, 742 F.3d 984, 991 (Fed. Cir. 2014). The duty requires the government to do
"what is reasonably necessary to enable the contractor to perform." SEE Engineering,
Inc., ASBCA No. 39728, 94-2 BCA ,r 26,810 at 133,352. Parwan's opposition brief
alleges that DLA breached this duty when it took over a year to deny Parwan's
requests that it be reimbursed for the increased security costs (app. opp'n at 15-17).
Parwan identifies no provision in the claim itself supporting its contention that
DLA breached this duty. Instead, Parwan points to the allegations in the complaint
that even though it began requesting reimbursement for the security costs as early as
March 2013, DLA did not deny that request until 27 March 2014 (app. opp'n at 16-17
(citing compl. ,r,r 12-24, 65-68)).
It is not the complaint, however, but the claim that forms the basis for our
jurisdiction. Madison Lawrence, Inc., ASBCA No. 56551, 09-2 BCA ,r 34,235
at 169,207; MACH II, IO-I BCA ,r 34,357 at 169,673. As DLA notes, Parwan's claim
makes no reference to its earlier requests for reimbursement or any unreasonableness
on DLA's part in resolving those requests (gov't reply at 15; R4, tab 29 at 492-93).
We therefore hold that Parwan's contention that the government breached its duty to
cooperate represents a new claim not previously presented to the contracting officer
over which we do not possess jurisdiction. 6
Failure to State a Claim upon which Relief can be Granted
We next tum to DLA's contention that Parwan's complaint fails to state a claim
upon which relief can be granted (gov't mot. at 9-19). The Board will grant a motion
to dismiss for failure to state a claim when the complaint fails to allege facts
"'plausibly suggesting (not merely consistent with)' a showing of entitlement to
relief." Cary v. United States, 552 F.3d 1373, 1376 (Fed. Cir. 2009) (quoting Bell
Atlantic Corp. v. Twombly, 550 U.S. 544, 557 (2007)); American General Trading &
Contracting, WLL, ASBCA No. 56758, 12-1 BCA ,r 34,905 at 171,640. The
6
DLA also urges the Board to reject Parwan's breach allegation because it would be
futile on the merits (gov't reply at 14). Based upon our holding here, we need
not consider that argument.
10
allegation "must be enough to raise a right to relief above the speculative level." Cary,
552 F.3d at 1376. In addition, the "complaint must contain sufficient factual matter,
accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v.
Iqbal,
556 U.S. 662, 678 (2009) (quoting
Twombly, 550 U.S. at 570). We "must
accept well-pleaded factual allegations as true and must draw all reasonable inferences
in favor of the claimant." Kellogg Brown & Root Services, Inc. v. United States,
728
F.3d 1348, 1365 (Fed. Cir. 2013). We are not required, however, to accept as true
legal conclusions inaccurately portrayed as factual allegations. Exe/is, Inc., ASBCA
No. 60131, 17-1 BCA ,r 36,679 at 178,606 (citing Acceptance Ins. Companies, Inc. v.
United States,
583 F.3d 849, 853 (Fed. Cir. 2009)).
In addition to reviewing the allegations contained in the complaint, the Board
rriay consider "matters incorporated by reference or integral to the claim, items subject
to judicial notice, [and] matters of public record." A&D Auto Sales, Inc. v. United
States, 748 F.3d 1142, 1147 (Fed. Cir. 2014) (quoting SB Charles Alan Wright &
Arthur R. Miller, Federal Practice and Procedure§ 1357 (3d ed. 2004)). Here, the
focus of the complaint is the purported change in the contract's performance
requirements from what was originally contemplated by the parties. Thus we may
properly consider the contract's terms in determining whether Parwan's complaint
states a claim upon which relief can be granted. See CCIE & Co., 14-1 BCA ,r 35,700
at 174,816.
Counts III and IV having already been dismissed for lack of jurisdiction, we are
left only to evaluate the sufficiency of Counts I and II. Although far from a model of
clarity, Count I appears to assert entitlement under the Changes clause itself (compl.
,r,r 34-48). 7 However, nowhere in the complaint does Parwan allege the existence of a
written change order, which the Changes clause requires. See FAR 52.243-l(a). Thus,
to the extent that Count I seeks recovery strictly under the Changes clause, it fails to
allege facts showing Parwan is entitled to relief.
In Count II, Parwan seeks relief under a theory of constructive change. "A
constructive change occurs when a contractor performs work beyond the contract
requirements, without a formal order under the Changes clause, due either to an
express or implied informal order from an authorized government official or to
government fault." Circle, LLC, ASBCA No. 58575, 15-1 BCA ,r 36,025 at 175,974
(citing Bell/Heery v. United States, 739 F.3d 1324, 1335 (Fed. Cir. 2014)). Thus in the
absence of government action or fault, the constructive change doctrine cannot form
7 Parwan's opposition brief further confuses the issue by recharacterizing Count I as a
constructive change claim and Count II as a claim for breach of the implied
duty to cooperate (app. opp'n at 8, 10-18). Notwithstanding the confusion, we
will proceed by examining the counts as they appear in the complaint.
11
1
1
the basis for recovery. -Jnt'l Data Prods. Corp. v. United States, 492 F.3d 1317, 1325
(Fed. Cir. 2007).
Count II incorporates and expands upon an allegation appearing in Count I that
in late February 2013, DLA began "ordering" Parwan to use security escorts (compl.
,i 40), alleging that that this "demand" constituted a constructive change to the contract
(comp 1. ,i,i 49, 51, 54 ). We are not required, however, to give deference to Parwan' s
legal conclusion regarding the effect ofDLA's "demand." Exe/is, 17-1 BCA ,i 36,679
at 178,606. The terms of the parties' contract explicitly allocated to Parwan
responsibility for all security support required for contractor personnel, and further
required Parwan to comply with all host nation laws (R4, tab 1 at 47-48, tab 6 at 123,
147). Moreover, as the complaint itself concedes, it was the Afghan government, not
DLA, that mandated the use of security escorts (compl. ,i 12). 8 We therefore find that
DLA's "orders" were not intended to effect a change to the contract but rather to
enforce the contract's terms. Thus a critical element of the constructive change
doctrine-that the purported change was ordered by the government-is missing from
Count II.
Additionally, in the alternative, we hold that Counts III and IV also fail to state
a claim for relief. With respect to Count III, we note that commercial impracticability
only applies where the contractor did not assume the risk that the supervening event
might occur. Spindler Construction, 06-2 BCA ,i 33,376 at 165,462. In the case of a
fixed-price contract, however, that element cannot be established because it is the
contractor, not the government, who bears the risk of unexpected costs. Safety
Training Systems, 14-1 BCA ,i 35,509 at 174,052. Parwan's complaint alleges no fact
that would entitle it to shift that risk back to DLA.
With respect to Count IV, we note that while equitable estoppel "may be raised
either as an affirmative defense or as grounds to prevent the defendant from raising a
particular defense," it is not an independent cause of action that Parwan can assert.
Carlson v. Arnot-Ogden Memorial Hospital, 918 F.2d 411,416 (3d Cir. 1990); RGW
Communications Inc. d/b/a Watson Cable Co., ASBCA Nos. 54495, 54557, 05-2 BCA
,i 32,972 (Board is without jurisdiction to entertain contracts implicit in law). 9
8
Paragraph 12 of the complaint is ambiguous as to whether it alleges that the
requirement to use APPF security was imposed by the Afghan Ministry of
interior or the U.S. Government. Parwan's brief makes clear that it is alleging
that the Afghan Ministry imposes the requirement (app. opp'n at 5).
9
DLA argues that the same would be true with respect to promissory estoppel (gov't
reply at 13-14). While we do not believe that Parwan was asserting a claim
based upon promissory estoppel, even if it were, Count IV would still fail.
Although promissory estoppel can be used to create an affirmative cause of
action, against parties other than the government, Jablon v. United States, 657
12
Accordingly, even ifwe found that Parwan had met the CDA'sjurisdiction
requirements for Counts III and IV, we would nevertheless dismiss them for failure to
state a claim upon which relief can be granted.
CONCLUSION
The government's motion is granted. Counts III and IV of the complaint are
dismissed for lack of jurisdiction. The remaining counts at issue in this appeal, Counts
I and II, are dismissed for failure to state a claim upon which relief can be granted.
Dated: June 25, 2018
DAVID D' ALESSANDRIS
Administrative Judge
Armed Services Board
of Contract Appeals
I concur I concur
~,,____-
RICHARD SPIACKLEFORD J. REID PROUTY
Administrative Judge Administrative Judge
Acting Chairman Vice Chairman
Armed Services Board Armed Services Board
of Contract Appeals of Contract Appeals
F .2d 1064, 1068 (9th Cir. 1981 ), "[ a]n obligation based upon promissory
estoppel is a type of contract implied-in-law ... and cannot be asserted against the
government." RGW Communications, 05-2 BCA ,i 32,972 at 163,338 n.13
( citations omitted).
13
I certify that the foregoing is a true copy of the Opinion and Decision of the
Armed Services Board of Contract Appeals in ASBCA No. 60657, Appeal of Parwan
Group Company, rendered in conformance with the Board's Charter.
Dated:
JEFFREY D. GARDIN
Recorder, Armed Services
Board of Contract Appeals
14
