Red Bobtail Transportation

ARMED SERVICES BOARD OF CONTRACT APPEALS

Appeal of - )

)

Red Bobtail Transportation ) ASBCA No. 63771

)

Under Contract No. HTC711-14-D-R028 )

APPEARANCE FOR THE APPELLANT: Michael D. Maloney, Esq.

Williams Mullen PC

Tysons Corner, VA

APPEARANCES FOR THE GOVERNMENT: Caryl A. Potter, III, Esq.

Air Force Deputy Chief Trial Attorney

Geoffrey R. Townsend, Esq.

Patricia W. Walter, Esq.

Trial Attorneys

OPINION BY ADMINISTRATIVE JUDGE EYESTER

PURSUANT TO BOARD RULE 12.2

Red Bobtail Transportation (RBT) appeals a contracting officer’s final

decision (COFD) denying its breach of contract, good faith and fair dealing, and

prompt payment claim for $798.22. 1 According to RBT, the United States

Transportation Command (USTRANSCOM or government) improperly deducted

amounts from invoices for services RBT performed. USTRANSCOM argues the

claim lacks a certification and is untimely filed, and also disputes all of RBT’s

contentions.

RBT elected to pursue this appeal pursuant to the Board’s Rule 12.2,

Small Claims (Expedited) procedure. Accordingly, this decision shall have no

precedential value, and in the absence of fraud shall be final and conclusive and

may not be appealed or set aside. 41 U.S.C. § 7106(b)(4)-(5). RBT also pursued

this appeal pursuant to Board Rule 11, in which the decision rests upon written

1

Originally, the claim was for a total of $8,522.35 plus interest (compl. ¶ 1).

In its brief, RBT states that after conducting discovery, it realized of the

19 invoices it originally challenged, only two are timely (AGA0103 and

AGB0093). RBT therefore withdrew challenges to the remaining

17 invoices. (App. br. at 2 n.1) The total RBT argues is due is $292.88 for

AGA0103 and $505.34 for AGB0093, plus interest (id. at 4). After

becoming aware of the reduced claim amount, each party still submitted the

Rule 12.2 briefs.

evidence without courtroom testimony. Based on the following, we grant RBT’s

appeal in part and deny it in part.

FINDINGS OF FACT (FOF)

1. USTRANSCOM awarded fixed-priced, multiple award indefinite quantity

Contract No. HTC711-14-D-R028 to RBT, effective January 3, 2014, for National

Afghan trucking services for three suites of services: bulk fuels (suite 1), dry cargo

(suite II), and heavy cargo (suite III) (R4, tab 1 at 1, 4, 12; tab 2 at 19, 21, 24). The

period of performance included a one-year base period, 2 one-year option periods,

and a 6-month option to extend services period (R4, tab 1 at 4-6). The contract

incorporated by reference RBT’s proposal and included as attachments a Schedule

B, Unit Price Schedule (3 JAN 14) and a performance work statement (PWS)

(15 MAR 13), none of which were included in the record (id. at 9, 55).

2. The contract incorporated by reference Federal Acquisition Regulation

(FAR) 52.212-4, CONTRACT TERMS AND CONDITIONS—COMMERCIAL

ITEMS (FEB 2012) (R4, tab 1 at 9). In addition, the contract included FAR

52.216-18, ORDERING (OCT 1995), which states that all delivery and task orders

issued are subject to the terms and conditions of the contract (id. at 11).

3. As relevant here, USTRANSCOM exercised a 3-month option to extend the

contract and issue a delivery order to RBT through March 16, 2017 (app. supp. R4,

tabs 1, 2). The parties agree that the PWS effective February 1, 2016 is applicable here

because the disputed invoices are for deliveries in January and February 2017 (app. br.

at 6; gov’t br. at 1-2). 2 There is nothing in the record showing the modification which

incorporated this revised PWS and whether it was signed by RBT.

4. The relevant PWS detailed the “common mission requirements and

standards that apply to each suite of transportation service.” To start, the

government would issue a transportation movement request (TMR) for a mission for

a single asset which specified the terms and shipment data. (App. supp. R4, tab 3

at 33) The terms included the required spot date (RSD), required load date (RLD),

required delivery date (RDD), and adjusted RDD (ARDD). The RSD is the date the

asset is required at the origin location and is two days prior to the RLD. The RLD is

the date the asset is required to be ready to upload the cargo. The RDD is the

required date of delivery by the contractor and is met when the asset is at the entry

control point waiting area of the destination location. Finally, the ARDD is the shift

in delivery date based on actual load date; the adjusted RDD cannot be sooner than

2

The parties filed only one brief each and the Board’s Order dated April 10, 2024

explained that the briefs should be akin to reply and sur-reply briefs or used

to expand upon specific disputed facts or legal points.

2

the original RDD. All missions ordered were to be paid based on the number of

mission units (MUs), which were in 25 kilometer increments, between the origin

and destination on the TMR. (App. supp. R4, tab 3 at 34) Almost all missions

required security support and, in some cases, RBT was required to provide the

security using the Afghan Public Protection Force (APPF) (id. at 43-44). RBT was

responsible for meeting all RSDs, RLDs and RDDs (id. at 36).

5. The initial contract did not contain a section on deductions for missions

completed a day late, which is the issue in this appeal (see R4, tab 5 at 3-10

(COFD)). Rather, it set forth performance objectives and stated the performance

thresholds for the RLD and RDD were 90 percent on time (PWS at 30, available

at https://sam.gov/opp/837518d0a84a30a765535dd0f3e20638/view). The

government would use these performance objectives to assess contractor

performance and if a contractor failed to meet the minimum performance objectives,

it could result in less future task orders or other remedies (id. at 29-30).

6. The February 2017 revised PWS was different. This PWS stated that a

failed/partial pay mission included a completed mission where the contractor

failed to meet the RSD, RLD or RDD (app. supp. R4, tab 3 at 40). The PWS set

forth a point system to partially compensate contractors for failed/partial pay

missions as follows:

For each mission, missing RSD, RLD, or RDD (RDD

when not exclusively caused by APPF) constitutes as

one point each (each point earned is a 25% full pay

reduction) resulting in a possible maximum of 75%

full pay deduction for missing all three (RSD, RLD,

and RDD). However, in the event the missed RDD

was exclusively caused by APPF, in lieu of the 25%

full pay reduction for missing the RDD provided

above, the reduction for missing the RDD will be

applied in the following manner:

Cargo delivered one day beyond the RDD - the

contractor’s rate will be reduced by AFN 3,190.00 per

invoiced escorted mission unit. This reduction will be

applied before any percentage reductions.

Cargo delivered two or more days beyond the RDD –

the contractor’s rate will be reduced by AFN 6,380.00

per escorted mission unit. This reduction will be

applied before any percentage reductions.

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In the event the contractor missed the RDD for a

combination of reasons, of which one includes APPF,

the AFN 3,190.00 or AFN 6,380.00 stated above no

longer applies and the contractor shall receive a one

point reduction (25%) for missing the RDD. It is the

contractor’s responsibility to prove to the

Government’s satisfaction that delays were caused

solely by APPF and that delay was directly related to

missing the RDD. If the contractor is unable to clearly

demonstrate with adequate documentation that APPF

was solely at fault for missing the RDD, a one point

reduction (25% of the full pay) applies for missing the

RDD.

For example: Missing RSD, but meeting RLD and

RDD equals 1 point. Missing RSD and RDD (not

exclusively caused by APPF), but meeting RLD equals

2 points or a 50% full pay reduction). In the event the

contractor misses RDD by one day exclusively caused

by APPF and earns one point as described above, the

AFN 3,190.00 shall first be subtracted from the total

mission price prior to applying the percentage

reduction.

For example: Contractor A had a mission from ING to

KIL for six (6) MUs valued at AFN 100,000.00. The

mission was completed and the customer received their

equipment in proper condition. Contractor A failed to

meet RSD, but met RLD and RDD. For missing RSD,

this is a Failed/Partial Pay mission and the Contractor

has one (1) point. The Contractor will be paid AFN

75,000.00 (100,000 x 75%).

(Id. at 41) The PWS also included a section titled “Performance Requirements

Summary,” which set forth performance objectives as designated in the quality

assurance surveillance plan. According to the objectives, which the government

would use to assess RBT’s performance, RBT was to meet the RLD and RDD

90/95/98 percent based on random sampling or periodic inspection. (Id. at 46)

The PWS explained that the first percentage was the minimum acceptable

performance standard and the subsequent numbers represented objectives for

which RBT would be considered for a performance award.

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7. There are two transportation movement requests at issue here and in

both cases, there is no dispute that RBT delivered the required fuel one day late

(app. br. at 4; gov’t br. at 3). For the 2000 gallons of fuel delivery of AGA0103,

which had security, we find the following:

Arrival at RSD RLD RDD at Arrived at

Origin Gamberi Destination

January 8, January 10, January 12, January 14, January 15,

2017 2017 2017 2017 2017

(App. supp. R4, tab 6a, Fuel Tab, cells A7, C7, F7, G7, H7, I7, J7, K7, L7, M7,

N7, O7) The contracting officer’s representative (COR) noted that RBT missed

the delivery date by one day and deducted AFN 25,520 (id., cell AA7). In

response, RBT stated that it requested a “call sign” on January 10, 2017 which was

not issued until January 11, 2017 for January 15, 2017, a day after the RDD. RBT

also argued the adjustment was incorrect. (Id., cell AB7) The COR responded:

“Adjustment Made” (id., cell AC7). On February 17, 2017, RBT again asked the

COR to remove the deduction and the COR responded: “Adjustment Made” (id.,

cells AD7, AE7). The contracting officer, however, made a note that RBT was a

day late and it was not clear why they requested removal of the deduction, but

agreed that the deduction was incorrect and should be “AFN 19,140” (id., cell

AF7). USTRANSCOM deducted $292.88 (id., DFAS Deductions Tab, cell G41).

8. For the 1,000 gallon fuel delivery of AGB0093, with no security, we

find the following:

Arrival at RSD RLD RDD at Fenty Arrived at

Origin Destination

February 9, February 10, February 12, February 14, February 15,

2017 2017 2017 2017 2017

(App. supp. R4, tab 6b, Fuel Tab, cells A15, F15, G15, H15, J15, K15, L15, M15,

N15) Here, the COR stated that RBT missed the RDD by one day and RBT

agreed (id., cells AB15, AC15). USTRANSCOM deducted $505.34 (id., DFAS

Deductions Tab, cell G42).

9. On January 26, 2023, RBT submitted a claim for breach of contract and

good faith and fair dealing in the amount of $8,522.35 (R4, tab 4 at 1, 5). The

claim states that a certification was attached, but there is nothing in the record

showing this (id. at 8). The claim argued, as RBT does here, that these deductions

are penalty provisions and therefore unenforceable and in conflict with FAR

52.212-4 (id. at 5-7).

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10. On September 28, 2023, the contracting officer denied the claim

contending, as the government does here, that the claim was late and there was no

breach because the PWS allowed for these deductions and this type of negative

performance incentive is permissible (R4, tab 5).

DECISION

In count I of its complaint, RBT contends USTRANSCOM breached the

contract by deducting money from invoices pursuant to an unenforceable penalty

provision that also conflicted with the limitation of liability paragraph set forth in

FAR 52.212-4 (compl. at 7). In count II, RBT contends USTRANSCOM

breached the duty of good faith and fair dealing when it deducted money from the

invoices for the missed RDD despite RBT meeting the ARDD and the money

deducted far exceeded adequate consideration (id. at 8-9).

In turn, for the first time and in its Rule 12.2 brief, the government argues

the Board lacks jurisdiction because the claim was not certified (gov’t br. at 6).

The government argues that on the same day, RBT submitted two claims to the

contracting officer, this one for fuel deductions in the amount of $8,522.36 and not

certified, and another for dry goods deductions in the amount of $143,205.90

which was certified. The government argues the two claims are “essentially

identical” and based on the same set of facts and same contract, and therefore

there is no justification in treating them as separate. (Id. at 7)

If the claims involve an examination of different operative facts, then they

should be treated as two separate claims. Placeway Constr. Corp. v. United States,

920 F.2d 903, 907 (Fed. Cir. 1990) (for purposes of determining whether

certification requirement is applicable, if claims arise from a common or related set

of operative facts then a single claim exists). Here, the two claims are separate as

they were based on different sets of invoices for different missions in different

suites, and therefore involve an examination of different operative facts. Further,

and most important, the claim in this appeal now involves only deductions for

missing the RDD, while the other claim also involves deductions for issues relating

to failure of global positioning devices “pinging” at least 80 percent of the time

while on a mission (see R4, tab 5 at 2 (COFD)); K-Conn Bldg. Systems, Inc. v.

United States, 778 F.3d 1000, 1005 (Fed. Cir. 2015) (stating that “for present

purposes, we should treat requests as involving separate claims if they either

request different remedies (whether monetary or non-monetary) or assert grounds

that are materially different from each other factually or legally.”). Thus, we have

two separate claims. Therefore, pursuant to the Contract Disputes Act (CDA), the

claim here, as it is less than $100,000, did not need to be certified. 41 U.S.C.

§ 7103(b)(1).

6

Next, the government argues (again for the first time in its Rule 12.2 brief)

that RBT’s challenges relating to the two remaining invoices are time barred.

According to the government, the crux of RBT’s claim is that the deductions set

forth in the PWS are inconsistent with FAR 52.212-4 and are an unenforceable

penalty (gov’t br. at 9). Since RBT entered into the contract on January 9, 2014,

the government contends the claim accrued at that time, or on either November 11,

2014 or February 1, 2016 when USTRANSCOM amended the PWS to include the

deductions, or by March 24, 2015 when USTRANSCOM applied the deductions

on an invoice for missing the RDD (id. at 9-10). In response, RBT contends that

the proper test for claim accrual does not focus on the dates of the contract

provisions but on the dates of receipt of the final invoices showing the improper

deductions (app. br. at 2 n.1).

The CDA states that a contract claim against the government “shall be

submitted within 6 years after the accrual of the claim.” 41 U.S.C. § 7103(a)(4)(A).

The FAR further provides that “[c]ontractor claims shall be submitted, in writing, to

the contracting officer for a decision within 6 years after accrual of a claim, unless

the contracting parties agreed to a shorter time period.” FAR 33.206(a). “Whether

and when a claim has accrued is determined according to [the FAR], the language of

the contract, and the facts of the particular case.” Electric Boat Corp. v. Sec’y of the

Navy, 958 F.3d 1372, 1375 (Fed. Cir. 2020); see also Kellogg Brown & Root Servs.,

Inc. v. Murphy, 823 F.3d 622, 626 (Fed. Cir. 2016). The FAR defines “accrual of a

claim” as “the date when all events, that fix the alleged liability of either the

Government or the contractor and permit assertion of the claim, were known or

should have been known.” FAR 33.201. In order for liability to be fixed, some

injury must have occurred to the party making the claim; however, monetary

damages need not have been incurred. Id.

Here, USTRANSCOM is arguing that immediately upon release of the

PWS incorporating the basis for deductions (the first time being revision 5 dated

November 11, 2014), RBT should have filed a claim, despite the fact the

government had yet to make any deductions on RBT’s invoices because the

deliveries had not even occurred. It is not clear, at that time, what the injury

would have been to RBT. Likewise, it is not clear what the injury would have

been at the time RBT entered into the contract since the deductions at issue here

were not even in the initial contract. Further, while there may have been a

deduction on an invoice in March of 2015, those deductions did not occur on the

invoices at issue here. And finally, we note that USTRANSCOM relies on

Electric Boat Corp. to support its arguments. In that appeal, the court held

Electric Boat did not have to incur actual costs for each submarine before filing its

equitable adjustment claim because the contract specifically stated the contract

price would be adjusted if costs increased due to a change in law. Electric Boat

Corp., 958 F.3d at 1376-77. The adjustment in price in that appeal was prompted

7

by the enactment of a new law, while here the calculation of the deductions was

prompted by submission of the invoices, without which there was no basis for

calculating the deductions. See Strategic Tech. Inst., Inc. v. Sec’y of Def., 91 F.4th

1140, 1146 (Fed. Cir. 2024).

According to RBT, the claim accrued as of the date of the final invoices

here--for AGA0103 on March 3, 2017 and for AGB0093 on March 14, 2017 (app.

br. at 2 n.1 (citing app. supp. R4, tabs 6a, Invoice Tab and 6b, Invoice Tab)).

While those were the dates RBT signed the invoice, the date the contracting

officer signed them was February 28, 2017 for AGA0103 and March 13, 2017 for

AGB0093 (app. supp. R4, tabs 6a, Invoice Tab, 6b, Invoice Tab). We conclude

those were the dates the claims accrued based on the limited briefing here and

because the invoices included cells for RB and the COR to make comments and

address issues and the contracting officer to make the final decision. See Afghan

Premier Logistics, ASBCA No. 62938 et al., 22-1 BCA ¶ 38,074 at 184,905

(claims accrued the date appellant received the returned invoices indicating the

challenged reductions). Since RBT filed its claims on these invoices on

January 26, 2023, they are not time barred.

And now we finally reach the merits. RBT argues that the deductions are a

penalty and unenforceable. Specifically, RBT contends that while the FAR allows

liquidated damages to compensate the government, based on a daily rate, the PWS

section here does not compensate the government but rather punishes the

contractor (app. br. at 5-6). As RBT explains, with both deliveries RBT was one

day late. For the 1,000 gallon fuel delivery in AGB0903, since there was security,

the total deduction amounted to $292.88 and for the 2,000 fuel delivery in

AGB0903, with no security, the deduction was $505.34. (App. br. at 6-7) RBT

argues that these are random calculations which do not compensate the

government because, for example, the deduction for the delivery of 1,000 gallons

of fuel was less than the deduction for 2,000 gallons of fuel (id. at 7).

RBT also argues that FAR 52.212-4, incorporated by reference into the

contract, states that “[p]ayment shall be made for items accepted by the

Government that have been delivered to the delivery destinations set forth in this

contract” (app. br. at 8 (citing FAR 52.212-4(i)(1))). According to RBT, the same

commercial items clause requires this payment provision take precedence over

other documents and attachments, and the government may only seek an

“equitable price reduction” for nonconforming services (id. (quoting FAR 52.212-

4(a))).

The government argues these PWS sections are negative performance

incentives permitted by FAR 37.102 concerning performance-based acquisitions

(gov’t br. at 1). The government further states:

8

The purpose of this deduction (and the others defined

in the PWS) was to provide an incentive for the

contractor to perform at a level appropriate to the

needs of the Government. The deduction was not

liquidated damages and was not intended to

compensate the Government for losses. The PWS set

forth objective performance standards (e.g., meeting

the RDD) and negative incentives (e.g. a 25%

deduction) for failing to meet those standards. This is

exactly what the FAR requires of agencies entering

into service contracts.

(Id. at 2) According to the government, FAR 16.402-2(b) allows it to use positive

and negative performance incentives in services contracts (id. at 1). The

government also explains that the deduction for AGB0903 was less because

although RBT missed the RDD by one day, it was due to the APFF (security) and

the reduction was only AFN 3,190 per escorted mission. The deduction for

AGB0903 was the “standard 25%” because the entire trip was unescorted. (Gov’t

br. at 4)

Finally, the government contends FAR 52.212-4 does not limit remedies to

only equitable price reductions and adequate consideration for defective

performance. Rather, the clause allows the government to exercise any right not

prohibited by law. (Gov’t br. at 3)

Because RBT challenges the deductions as liquidated damages, it has the

burden of proving they are unenforceable. In Metro Machine DBA General

Dynamics NASSCO-Norfolk, ASBCA No. 62221, 22-1 BCA ¶ 38,096 at 185,014,

the Board explained that “liquidated damages clauses are perfectly allowable so

long as they do not appear to have been designed as a punishment for late

performance but, instead, reflect an attempt to place a value on late performance in

circumstances where ascertaining that value would be otherwise difficult, if not

impossible.” Accordingly, RBT’s “burden is an exacting one, because when

damages are uncertain or hard to measure, it naturally follows that it is difficult to

conclude that a particular liquidated damages amount or rate is an unreasonable

projection of what those damages might be.” DJ Mfg. Corp. v. United States,

86 F.3d 1130, 1134 (citations omitted).

But the government states these are not liquidated damages when it explains

the deductions are not intended to compensate the government for losses but rather

to serve as a “negative incentive.” And while the government explains, or

provides some rationale, as to why the deduction for AGB0903 was less (i.e., due

to security) than the deduction for the other invoice, this does not overcome the

9

government’s own admission that these deductions were meant as a “negative

incentive.”

And so we look to the government’s argument that the negative incentive

used here was permissible. As noted, the government cites to two separate parts of

the FAR as support--FAR subpart 37.6, Performance-Based Acquisition, and

FAR subpart 16.4, Incentive Contracts (gov’t br. at 1). FAR subpart 37.6

concerning performance based acquisitions discusses incentives (and does not

specifically mention, although does not specifically prohibit, negative incentives).

See FAR subpart 37.6. According to the government, the “purpose of the

deduction . . . was to provide an incentive for the contractor to perform at a level

appropriate to the needs of the Government” (gov’t br. at 2). So, the negative

incentive here was an incentive.

Performance incentives, when used, must correspond to the performance

standards (performance level required to meet contract requirements in terms of

quality, timeliness, quantity, etc.) in the contract. FAR 37.601(b)(2), (3);

FAR 37.603(a). The contract included a performance requirements summary with

performance objectives as designated in the quality assurance surveillance plan

showing RBT was to meet the RLD and RDD 90/95/98 percent and that 90

percent was the minimum acceptable performance standard and 95 and 98 percent

represented objectives for which RBT would be considered for a performance

award (FOF ¶ 6). If the deduction was meant to have RBT perform at a level

appropriate to the government’s needs, then the deduction should have correlated

somehow to the performance requirements set forth in the contract (the 90/95/98

percent performance standards). Since the deduction does not, or at least the

government does not explain how it does, we cannot buy into the government’s

argument the deduction was part of its performance based acquisition plan.

Further, FAR subpart 16.4, Incentive Contracts, does state that positive and

negative performance incentives shall be considered for certain service contracts.

FAR 16.402-2(b). However, FAR subpart 16.4 applies when “a firm-fixed-price

contract is not appropriate.” FAR 16.401(a). The government cites to no clauses

in the contract or any modification identifying it as a fixed-priced incentive

contract (or any type of incentive contract) nor could we find any based on the

record presented. Therefore, this subpart does not apply.

Because the government here has failed to provide any support for its

negative incentive, we grant RBT’s appeal and find it is nothing more than an

10

unenforceable penalty. 3 For these reasons, we need not address RBT’s other

arguments relating to that issue.

Finally, RBT sought interest pursuant to the Prompt Payment Act (PPA)

contending USTRANSCOM should have made full payment in March 2017 and

failed to do so (app. br. at 10). As the government notes, the PPA does not apply

to a matter in dispute (gov’t br. at 5). Specifically, the PPA states it “does not

require an interest penalty on a payment that is not made because of a dispute

between the head of an agency and a business concern over the amount of

payment or compliance with the contract” as a claim related to a dispute and

interest payable is subject to the CDA. 31 U.S.C. § 3907(c). Therefore, we deny

RBT’s claim for PPA.

CONCLUSION

Based on the foregoing, the appeal is granted in part and denied in part.

Dated: May 23, 2024

LAURA EYESTER

Administrative Judge

Armed Services Board

of Contract Appeals

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. 63771, Appeal of Red Bobtail

Transportation, rendered in conformance with the Board’s Charter.

Dated: May 23, 2024

PAULLA K. GATES-LEWIS

Recorder, Armed Services

Board of Contract Appeals

3

To be clear, we are not holding that the challenged provisions of the PWS would

be unallowable in all circumstances; merely that the arguments presented

by the government here, in this non-precedential case, did not persuade us

that the negative incentive was permissible.

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