State Corps v. United States

In the United States Court of Federal Claims

No. 14-1121C

(E-Filed: February 15, 2019)

)

STATE CORPS, )

)

Plaintiff, )

) Contract Disputes Act, 41

v. ) U.S.C. § 7104(b)(4) (2012);

) Termination for Default;

THE UNITED STATES, ) Motion for Summary

) Judgment, RCFC 56(a); Waiver

Defendant. ) of Default Not Found.

)

R. Dale Holmes, Philadelphia, PA, for plaintiff.

Amanda L. Tantum, Senior Trial Attorney, with whom appeared Chad A. Readler,

Acting Assistant Attorney General, Robert E. Kirschman, Jr., Director, and Allison Kidd-

Miller, Assistant Director, Commercial Litigation Branch, Civil Division, United States

Department of Justice, Washington, DC, for defendant. Pietro Mistretta, Assistant

District Counsel, United States Army Corps of Engineers, of counsel.

OPINION AND ORDER

CAMPBELL-SMITH, Judge.

Plaintiff State Corps (also referred to as SC) is an Afghani corporation that was

awarded a construction contract for a logistics center in Jariyan al Batnah, Qatar by the

United States Army Corps of Engineers (USACE). See ECF No. 1 at 1-3 (plaintiff’s

complaint). Defendant terminated the contract for default, and plaintiff now challenges

that decision and seeks additional compensation allegedly due to plaintiff under the terms

of the contract. See id.

Presently before the court are the parties’ motions for summary judgment. In

evaluating the motions, the court considered the following: (1) plaintiff’s revised motion

for summary judgment, ECF No. 58; (2) plaintiff’s proposed findings of uncontroverted

facts, ECF No. 59; (3) defendant’s response to plaintiff’s proposed findings of

uncontroverted facts, ECF No. 63; (4) defendant’s proposed findings of uncontroverted

facts, ECF No. 64; (5) defendant’s response to plaintiff’s motion and its cross-motion for

summary judgment, ECF No. 67; (6) plaintiff’s response to defendant’s cross-motion and

reply in support of its motion, ECF No. 70; (7) plaintiff’s response to defendant’s

proposed findings of uncontroverted facts, ECF No. 71; (8) defendant’s reply in support

of its cross-motion, ECF No. 75; and (9) defendant’s notice clarifying its proposed

findings of uncontroverted facts, ECF No. 77. The court deemed oral argument

unnecessary.

For the following reasons, plaintiff’s motion for summary judgment is DENIED,

and defendant’s cross-motion for summary judgment is GRANTED.

I. Background

A. Contract Requirements and Performance before July 24, 2013

On August 20, 2012, the USACE awarded plaintiff contract number W912ER-12-

C-0046 (the contract), to construct the United States Army Central Logistics Extension

Center (ARCENT Center) in Jariyan al Batnah, Qatar, and notified plaintiff of the award

on August 21, 2012. See ECF No. 64-1 at 1-3. The contract provided that:

The Contractor shall be required to (a) commence work under this contract

within 15 calendar days after the dates the Contractor receives the notice to

proceed, (b) prosecute the work diligently, and (c) complete the entire work

ready for use not later than 300 calendar days.

Id. at 20. The USACE issued its notice to proceed on September 27, 2012, see id. at 90,

which resulted in a required completion date of July 24, 2013, see id. at 293-94.

Under the terms of the contract, plaintiff was required to submit for approval a

variety of items related to its performance, such as: (1) “Shop Drawings” (“Drawings,

diagrams and schedules specifically prepared to illustrate some portion of the work”); (2)

[“]Product Data” showing the “size, physical appearance and other characteristics of

materials or equipment for some portion of the work”; (3) “Physical examples of

materials, equipment or workmanship”; and (4) “[O]perating and maintenance [O&M]

data” for equipment to allow “the safe and efficient operation, maintenance and repair of

the item.” Id. at 50-52. When making such submittals, unless otherwise specified for a

particular item, plaintiff was required to allow a minimum of seven calendar days

exclusive of mailing time for the USACE’s review and approval process. Id. at 54.

The default clause in the contract states:

If the Contractor refuses or fails to prosecute the work for any separable part,

with the diligence that will insure its completion within the time specified in

this contract including any extension, or fails to complete the work within

2

this time, the Government may, by written notice to the Contractor, terminate

the right to proceed with the work . . . that has been delayed.

ECF No. 64-1 at 37. It further provides that, in the event of a delay in completing the

work:

[t]he Contractor’s right to proceed shall not be terminated nor the Contractor

charged with damages under this clause, if—

(1) The delay in completing the work arises from unforeseeable causes

beyond the control and without the fault or negligence of the Contractor . . .

and

(2) The Contractor, within 10 days from the beginning of any delay (unless

extended by the Contracting Officer), notifies the Contracting Officer in

writing of the causes of the delay.

Id.

Throughout late 2012 and until the expected completion date of July 24, 2013,

numerous issues arose with the contract performance, about which the parties frequently

corresponded. See ECF No. 64 at 15-19 (defendant summarizing the course of

correspondence); ECF No. 71 at 7 (plaintiff objecting in several instances to the

paraphrasing or characterization of specific correspondence, but not objecting to the fact

of the correspondence). This course of correspondence included a letter from plaintiff to

the contracting officer, dated June 13, 2013, which reads as follows:

This is a formal response to the cure notice that was given to State Corps on

the 3rd of June 2013.

First of all, I would like to apologize on behalf of State Corps that it came

down to us being issued a cure notice. This is our first Governmental contract

in Qatar and we have always tried for successful completion of this project.

This is no excuse for being behind on the schedule but unfortunately we had

experienced some challenges at the start of the project which included getting

the company registered in Qatar and developing our team there.

One of the major challenges we had at the start of the project included the

base’s security requirements and getting badges for our staff which delayed

our early start and some issues with our previous QCMs and the first Project

Manager which put the project 110 days behind the schedule in which [] State

Corps received an unsatisfactory notice of no work performed.

3

Now we have the right technical team, Hardworking subcontractor and are

done with Badge’s issues and feel that we are able to complete the project

according to the contract requirements and time frame.

Despite the fact that we have had good construction performance onsite

during last one month, but faced some issues with our QCM program in Qatar

which caused some delay in submittal process of the project, Three weeks

ago we brought a change to the QCM position of the project and assigned

another QC Manager. With his knowledge, expertise and leadership, now

we feel that submittal process is becoming a smooth process.

Since the Cure Notice, we have received “A” and “B” codes on 10 out of 18

submittals, 5 Have been submitted to COR which are under review and 3 are

being worked and will be submitted to the COR in the next couple of days,

during the last 10 days our team have been able to submit the majority of the

items which needed to be submitted, It can show the adequacy of our team

and efforts of State Corps for successful and soon completion of the project.

On the other hand, as indicated in the attachment “Appendix A” almost all

of the long lead items have been approved, purchased and will be on site

within next one month, which will bring a large improvement to site

construction progress.

For more information about how we can overcome the delay and complete

the project, you can kindly refer to attached recovery Plan “Appendix A”

which clearly shows our plan for next months.

Currently there are a few long lead item submittals that will not meet the

current Contract completion date, So State Corps would like to request from

the US Army Corps of Engineers if it is possible to exercise for a 30 to 45

days time extension with an updated contract completion date of September

7, 2013. State Corps is committed to this project and is committed to US

Army Corps of Engineers and tries its best to complete this project by any

possible mean.

I have personally spoken with the project manager, John Hanen, and he is

fully accepted the responsibility of the project being behind. With the

headquarters, as well as the team in Qatar, we’ve come up with a recovery

plan that we feel will accomplish the completion of this project to the highest

standards that the US Army Corps of Engineers expects.

I am looking forward to hearing your kind instruction in this regard.

4

Respectfully,

Jawed Haddad

Vice President

STATE CORPS

ECF No. 64-1 at 213-14. Plaintiff’s recovery plan, which was attached to the letter,

acknowledged that the “project is 3 week[s] behind schedule,” but stated that “this

recovery plan has been made in order for us to prove to our client that the project

completion on 24th of July is undeniably possible.” Id. at 216. The request for

additional time to complete the project included in this June 13, 2013 letter, is the only

such written request that plaintiff made to the contracting officer prior to the project due

date, July 24, 2013. See ECF No. 64-2 at 134 (plaintiff admitting this fact in response to

defendant’s request for admission).

In its interrogatory responses, plaintiff identified a variety of alleged delays that

occurred entirely or primarily before the July 24, 2013 contract completion date,

including: (1) visa processing delays for its personnel; (2) delays in obtaining a license to

operate in Qatar; (3) delays related to base access; (4) delays related to the installation of

“Telecommunication Ductbanks”; (5) delays due to Qatari holidays; and (6) delays due to

weather conditions. See ECF No. 64-2 at 103-08. Plaintiff stated that these delays

totaled at least 110 days, plus an additional period of uncertain duration (estimated at

more than one week) for the delay relating to the installation of telecommunication

ductbanks. See id.

Under the terms of the contract, the USACE was required to make monthly

progress payments as the work proceeded. See ECF No. 59 at 2; ECF No. 63-1 at 3. The

USACE made six such payments on the first six estimates submitted by plaintiff. See

ECF No. 59 at 2 (citing estimates submitted between February 11, 2013 and July 15,

2013, copies of which are found at ECF No. 59-1 at 14-50).

B. Events after July 24, 2013

Plaintiff did not complete the project by July 24, 2013. In a letter to plaintiff dated

July 28, 2013, the contracting officer stated:

Since State Corps has failed to perform within the time required by the

terms of the contract, the Government is considering terminating said

contract[,] pursuant to the Contract Clause 52.249-10, titled “Default (Fixed

Price Construction)” and 52.211-10 “Commencement. Prosecution and

Completion of Work[.]”

5

The US Army Corps of Engineers is writing this letter to formally inform

State Corps of the government’s intention to pursue “Liquidated Damages”

pursuant to the Contract Clause 52.211.12, titled “Default (LIQUIDATED

DAMAGES—CONSTRUCTION)[.]”

The legal completion date for this contract has passed and was to be

completed on 24 July 2013.

ECF No. 64-1 at 286. On July 30, 2013, the contacting officer sent a more

comprehensive letter repeating her notification to plaintiff that the project was overdue,

that defendant intended to assess liquidated damages, and that defendant may terminate

the contract for default. See id. at 287-88. That letter stated, in relevant part, as follows:

1. The project completion date was 24 July 2013.

2. The contractor asked for an additional 30 to 45 days to complete the

project.

3. The contractor’s recovery schedule indicates 60 days to 25 September

2013.

4. The contractor has an exorbitant amount of submittals left to submit,

some with time frames for submission that practically cannot be met.

Additionally, with the amount of submittals left to submit and in

relation to testing & commissioning, I’m doubtful that the contractor

can meet the 25 September 2013 date for contract completion.

...

1. The Contractor shall submit a realistic Plan with dates for completing

all outstanding submittals.

2. The Contractor shall submit a realistic Plan on how they intend on

completing this project.

3. The contractor shall submit a realistic Recovery Schedule

incorporating: Remaining Submittals, O&M Manuals, Training, Test

Plans and Testing & commissioning activities.

The contract completion date was 24 July 2013. This letter is also to

notify you of the government’s intention to assess liquidated damages per

contract clause 52.211-12.

You are hereby notified that the Government considers your failure to

perform a condition that is endangering completion of this contract in a

timely matter. Therefore, unless this condition is cured within ten (10) days

after receipt of this notice, the Government may terminate for default under

the terms and conditions of the Contract Clause 52.249-10, titled “Default

(Fixed Price Construction).” If a default occurs in a contract, the contractor

6

is precluded from being awarded future federal government contracts and the

result could be very costly for the contractor. The Government reserves all

right under the contract, including the right to terminate for default if the late

performance is unexcused.

Id.

On August 13, 2013, plaintiff wrote to the contracting officer stating that “[w]e

accept USACE claim on being behind schedule. The contract has to be closed by July 24

but yet it is on middle stage.” Id. at 293. Plaintiff also represents in the same letter that

its updated recovery plan “will be submitted on Aug 13, 2013 for USACE review and this

will be our last recovery schedule.” Id. One week later, the USACE sent a cure notice to

plaintiff rejecting the recovery plan “as being insufficient to determine a realistic project

completion date.” Id. at 295. The USACE also informed plaintiff that “[a]lthough a

modest time extension is under consideration by the Contracting Officer, you will likely

continue to be in default and subject to liquidated damages,” and that “Termination for

Default is also being discussed with the possibility that your performance bond will be

called.” Id. The USACE then advised plaintiff that it had “the ability to change these

outcomes,” and provided a list of matters that required immediate attention. Id.

Plaintiff responded to the USACE’s concerns on August 25, 2013, and proposed

yet another recovery schedule. See id. at 297-329; ECF No. 64-2 at 1-5. On September

4, 2013, the USACE detailed a number of remaining deficiencies in plaintiff’s

performance and recovery plan and demanded a response within seventy-two hours. See

ECF No. 64-2 at 6-8. Twelve days later, on September 16, 2013, plaintiff responded to

each of the USACE’s concerns, and acknowledged, among other issues, that dozens of

submittals had not yet been made, and that significant uncertainty remained as to how the

fuel system would be installed. See id. at 9-10.

On September 8, 2013, plaintiff submitted its seventh estimate for the monthly

progress payment due for work performed between July 8, 2013 and August 26, 2013.

See ECF No. 59 at 2; ECF No. 59-1 at 51-58. The estimate reflected a due date of

September 22, 2013. See ECF No. 59-1 at 51. The USACE failed to make the seventh

progress payment by September 22, 2013, and on September 24, 2013, the USACE

emailed plaintiff stating:

We will need you to re-export pay request #7 Dated, 8 September 2013. This

pay request has been inadvertently deleted on our end. We are aware that

there will be interest penalties accrued on our part, due to late processing.

Please notify us as soon as this is accomplished so we can again process the

pay application.

ECF No. 59-1 at 59-60.

7

On September 23, 2013, the contracting officer issued a show cause letter to

plaintiff, stating that “[s]ince you have failed to perform within the time required by the

terms of the Contract, the Government is considering terminating said contract pursuant

to the Clause titled ‘Default’ of the contract clauses.” ECF No. 64-2 at 11. Therein, the

contracting officer explained that “we still do not have an accurate count of the submittals

still needed to complete this project” despite plaintiff’s repeated promises to complete the

submittals. Id. at 12. She also noted that plaintiff’s proposed “recovery schedule was

rejected because it was unrealistic and unachievable within the time[ ]frame of the

contract completion date,” claiming that plaintiff “simply shifted the dates arbitrarily with

no logic to explain why the completion date is slipping every time a schedule was

submitted.” Id. The letter identified several additional problems with the contract

performance. Id.

The show cause letter concluded by affording plaintiff the opportunity to explain

its deficient performance.

Pending a final decision in this matter, it will be necessary to determine

whether your failure to perform arose out of causes beyond your control and

without fault or negligence on your part. Accordingly, you are hereby

afforded the opportunity to present, in writing, any facts bearing on the

question to this office, within ten (10) days after receipt of this notice. Your

failure to present any mitigating circumstances within ten (10) days after

receipt of this notice may be considered as an admission that none exist.

Your attention is invited to the respective rights of the contractor and the

Government under the contract clause titled “Default” and the liabilities that

may be invoked in the event a decision is made to terminate for default.

Any assistance rendered to you on this contract or acceptance by the

Government of delinquent goods or services thereunder, will be solely for

the purpose of mitigating damages, and is not to be construed as a waiver of

any rights the Government may have under subject contract.

Id. at 12-13.

The next day, on September 24, 2013, the USACE wrote to plaintiff stating that it

had learned that on September 23, 2013, plaintiff’s “subcontractor and their

subcontractors did not show up on site,” and requiring plaintiff to “respond to this office

immediately when the subcontractor is coming back to the job site and your recovery

plans to complete this project.” Id. at 16. Also on September 24, 2013, the contracting

officer notified plaintiff of the USACE’s “intention to begin assessing liquidated

damages . . . at the rate of $4,694.00 per day for each calendar day following the contract

completion date until the work is completed.” Id. at 30. She also again repeated that the

8

“Government reserves all rights under the contract, including the right to terminate for

default if the late performance is unexcused.” Id.

In response to the show cause letter, plaintiff outlined a number of factors that it

claims contributed to the project delays in a letter dated October 4, 2013, including: (1)

early delays “mainly caused by making preparation and getting company registration in

Qatar,” which plaintiff contends were out of its control, id. at 43; (2) the fact that its

subcontractor “stopped working [o]n this project without any reasonable excuse on

September 22, 2013,” and the subsequent need to replace the subcontractor, id. at 43-47;

and (3) problems with the process of making submittals, that it claimed were still being

resolved, id. at 47. Plaintiff concludes the letter, stating that it “is willing to make any

effort to complete the project in a timely manner if USACE allows us to do so.” Id.

Plaintiff’s response to the show cause letter did not claim that its performance was

affected by the USACE’s failure to pay the seventh progress payment by September 22,

2013.

The surety for payment and performance bonds on plaintiff’s contract was AAUG

Insurance. See id. at 50. In a letter dated October 23, 2013, the surety expressed its

willingness to negotiate an agreement by which it would take over responsibilities under

the contract in order to mitigate its damages. See id. at 51. The letter stated, in relevant

part, as follows:

In order to do so, State Corps will need to consent to all of the terms of such

an agreement, including the payment to AAUG of all amounts under or

relating to the Contract and acknowledge that as between State Corps and

AAUG, AAUG would now possess any and all rights to receive such

payments. This would obviously work towards the completion of the project,

which currently is in significant arrears and is currently subjecting your

company to daily liquidated damages.

...

Frankly, if AAUG is able to successfully take over the now lifeless project

under contractual terms that can be agreed upon, State Corps may possibly

recognize the mitigation of future additional liquidated damages that

continue to accrue. We strongly suggest you provide such consent

immediately.

Id. The USACE proposed to plaintiff that if plaintiff cooperated in the surety’s takeover

efforts, the USACE would not terminate plaintiff for default. Id. at 130 (plaintiff

admitting this fact in response to defendant’s request for admission).

9

Plaintiff initially indicated its assent to the takeover arrangement, stating on

October 31, 2013, that it would “complete the turnover agreement in couple of days and

further we are in close contact with our surety.” Id. at 52. The USACE and the surety

signed the takeover agreement on November 7, 2013, but the agreement also required

plaintiff’s signature. Id. at 70. Plaintiff, however, “changed course as of 14

Nov[ember],” and “[wa]s not cooperating with the takeover agreement,” as of November

15, 2013. Id.

The contracting officer drafted a memorandum for the file outlining the reasons

for terminating plaintiff’s contract for default. Id. at 71-72. The memorandum read, in

part, as follows:

In accordance with FAR 49.402-3, the Contracting Officer must consider the

following factors on whether to terminate a contract for default:

a. The terms of the contract and applicable laws and regulations.

Contract clauses 52.236-7, Permits and Responsibilities, 52.249-10 Default,

52.233-1 Disputes, and 52.211-10 Commencement, Prosecution and

Completion of Work, among others, were included in the contract[] and

apply to the issues attributed to this contractor and his lack of performance.

The contract clearly states that the period of performance is mandatory. In

addition, the submittal specifications clearly addressed the requirement of

this project and they were not followed. This termination decision is in

conformance with this factor.

b. The specific failure of the contractor and the excuses for the failure.

The contractor failed to make progress. The contract was awarded on August

20, 2012, and notice to proceed (NTP) was issued on September 27, 2012.

The contractor is thirteen months into the project and has completed only

80% of the contract requirement. The period of performance was 300

calendar days from NTP which would have been July 24, 2013. See Cure

Notice and Show Cause letter. There is no reasonable likelihood that State

Corps can perform the entire contract effort since the time has elapsed. This

termination decision is in conformance with this factor.

...

g. Any other pertinent facts and circumstances.

As stated above, the Surety, AAUG indicates a willingness to attempt to enter

into a takeover agreement to get the project completed. MED will substitute

10

the surety for State Corp[s] as the prime contractor; the surety will tender a

new subcontractor or utilize Pat Engineering (the current principal

subcontractor) as the completion contractor; the surety will invoice for work

completed by new subcontractor or Pat and will distribute payments. I

anticipate that the project can be completed within remaining contract funds

with a minimal shift to the right in schedule. There will be no need to engage

in re-procurement activities. The contractor has failed to provide under

clause 52.249-10 (1) any of the unforeseen causes beyond his control and

without the fault or negligence. This termination decision is in conformance

with this factor.

DETERMINATION

I have evaluated the above issues and have determined that a Notice to

Terminate for Default of contract W912ER-12-C-0046 was considered and

determined to be in the best interest of the government.

Id.

On November 18, 2013, the contracting officer notified plaintiff by letter that its

contract was being terminated for default. See ECF No. 59-1 at 68-69. The termination

letter reads, in its entirety, as follows:

State Corps is hereby found in default under contract W912ER-12-C-

0046 awarded on August 20, 201[2]. Effective immediately, your right to

further perform under this contract is hereby terminated.

State Corps’ response to the Government’s Show Cause and Cure

Notice did not provide any information that demonstrated it could complete

the project within a reasonable time. State Corps did not show that the

default otherwise was beyond its control and without its fault or negligence.

The following are the acts or omissions constituting the default:

1. State Corps failed to make progress. The contract was awarded

on August 20, 2012, and notice to proceed (NTP) was issued

on September 27, 2012. State Corps is thirteen months into the

project and has completed only 80 percent of the contract

requirement. The period of performance was 300 calendar

days from NTP which would have been a completion date of

July 24, 2013. Despite the Government’s repeated attempt to

help State Corps, it maintained approximately a 30 percent

rejection status on submittals. State Corps continual

delinquency of proper submittals has resulted in project delays.

11

2. State Corps has falsified documents in its response to the

Government’s Show Cause letter. This falsification further

solidifies the Government’s lack of confidence in State Corps’

integrity in contracting or honesty in keeping promises made.

Based on State Corps’ inability to provide timely submittals,

falsification of documents, and completing only 80 percent of the contract

requirement, I do not believe State Corps can provide or follow a reasonable

schedule for completion.

I have determined that the failure to perform is not excusable and this

notice of termination constitutes such decision. State Corps has the right to

appeal this decision under the Disputes clause.

The Government reserves the right to charge any re-procurement costs

associated with any new contract. The Government reserves all rights and

remedies provided by law or under the contract, in addition to charging

excess costs. State Corps will be notified at a later date as to the amount of

such excess costs, if any.

This notice constitutes my decision that State Corps is in default as

specified, and is therefore, terminated for default, and that State Corps has

the right to appeal my decision under the Disputes clause.

Id.

On July 6, 2014, plaintiff submitted a claim and request for contracting officer’s

final decision challenging the default termination. See ECF No. 64-2 at 73-84. Therein,

plaintiff claimed that its “termination was improper, arbitrary, capricious, without factual

support and/or contrary to law. As such, [plaintiff] asks that USACE convert the

Termination for Default (T4D) to a Termination for Convenience (T4C). Additionally,

[plaintiff] seeks compensation from USACE in an amount no less than $1,497,466.80.”

Id. at 73.

According to plaintiff, it was entitled to an extension of the contract completion

date of 180 days, to and including December 22, 2013. See id. 79. It explains this claim

as follows:

SC’s start on the project was delayed due to an inability to obtain not only

Visas and operating licenses, but also badges for SC’s personnel to access

the installation. SC timely began processing the requisite paperwork for such

access as evidenced via the details provided above. . . . USACE was aware

the base access approval process takes 30 days. With that knowledge, SC is

12

entitled at a minimum to an extension of the Period of Performance of 30

days. By the facts as displayed here, the actual period of delay, even with

SC’s diligent efforts and requests for Government assistance, was 60 days.

Combining these two matters, SC’s ability to perform under the contract was

delayed due to no fault or negligence on the part of SC. SC was delayed in

commencing work by 42-days due to the Qatar Visa and licensing agency

issues at the outset, experienced additional Visa issues throughout the project

totaling at least another 18 days (total of 60), and throughout the project

experienced no less than 60 additional days of delay regarding Visa

approvals and 60 additional days of delay due to base access issues.

...

It should also be noted that this badging issue was identified to all parties in

the technical specifications of the project. At 1.53.4.1, the Government

advised that personnel from Afghanistan were not permitted on the base at

any time. While SC was aware of this restriction, the Government was

equally aware when they awarded the contract that they had awarded it to a

contractor primarily consisting of Afghan employees. As one of the primary

complaints against State Corps is the alleged lack of timely performance

and/or the failure to properly manage the project, the Government surely had

to understand that such impacts should have been expected when awarding

the contract to an Afghan company. While SC did indeed do its best to

minimize such impacts by hiring American employees and a subcontractor

comprised of nearly entirely (90%) Indian workers, managers and technical

staff, even those solutions lead to unnecessary delays due to base access as

explained in this submission—all of which was due to no fault or negligence

on the part of SC.

Therefore SC was entitled to an extension of the Period of Performance of

no less than 180 days, thus serving to negate, at least in part, any default per

52.249-10. An extension of 180 days would have set the CCD at December

22, 2013. On the date of termination, November 18, 201[3], when the project

was over 80% and closer to 85% complete, worst case scenario a delay in

performance, if any, was negligible at best[].

Id. at 78-79. Plaintiff also blames the USACE for its lack of progress on the project:

[The USACE’s] hindrance manifested itself when the Government failed to

properly pay SC for its progress on the project (exacerbating issues with its

subcontractor, PAT - see below), in the Government refusing to grant SC

access to the installation once it had to step in to take over the project from

13

PAT, in the Government’s failure to provide any feedback as to the

unsuitability of any corrective action plans submitted by SC, and in the

Government failing to support SC’s hiring of a replacement subcontractor.

Id. at 80.

II. Legal Standards

A. Motions for Summary Judgment

According to the Rules of the United States Court of Federal Claims (RCFC),

summary judgment is appropriate “if the movant shows that there is no genuine dispute

as to any material fact and the movant is entitled to judgment as a matter of law.” RCFC

56(a). “[A]ll evidence must be viewed in the light most favorable to the nonmoving

party, and all reasonable factual inferences should be drawn in favor of the nonmoving

party.” Dairyland Power Coop. v. United States, 16 F.3d 1197, 1202 (Fed. Cir. 1994)

(citations omitted).

A genuine dispute of material fact is one that could “affect the outcome” of the

litigation. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). “The moving

party . . . need not produce evidence showing the absence of a genuine issue of material

fact but rather may discharge its burden by showing the court that there is an absence of

evidence to support the nonmoving party’s case.” Dairyland Power, 16 F.3d at 1202

(citing Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986)). A summary judgment

motion is properly granted against a party who fails to make a showing sufficient to

establish the existence of an essential element to that party’s case and for which that party

bears the burden of proof at trial. Celotex, 477 U.S. at 324.

The Supreme Court of the United States has instructed that “the mere existence of

some alleged factual dispute between the parties will not defeat an otherwise properly

supported motion for summary judgment; the requirement is that there be no genuine

issue of material fact.” Anderson, 477 U.S. at 247-48. A nonmovant will not defeat a

motion for summary judgment “unless there is sufficient evidence favoring the

nonmoving party for [the fact-finder] to return a verdict for that party.” Id. at 249

(citation omitted). “A nonmoving party’s failure of proof concerning the existence of an

element essential to its case on which the nonmoving party will bear the burden of proof

at trial necessarily renders all other facts immaterial and entitles the moving party to

summary judgment as a matter of law.” Dairyland Power, 16 F.3d at 1202 (citing

Celotex, 477 U.S. at 323).

14

B. Termination for Default

Under the Contract Disputes Act, the court reviews a contracting officer’s decision

de novo. See 41 U.S.C. § 7104(b)(4) (2012). When a default termination is challenged

in this court, the government bears the burden of justifying the termination. E.g., Lisbon

Contractors, Inc. v. United States, 828 F.2d 759, 765 (Fed. Cir. 1987). Once default has

been established, plaintiff bears the burden of establishing that the default was excused

by fault of the government. See, e.g., Keeter Trading Co. v. United States, 79 Fed. Cl.

243, 253 (2007) (“If the government succeeds in proving default, the plaintiff then must

demonstrate ‘that the default was excusable under the terms of the contract.’”) (quoting

Airport Indus. Park, Inc. v. United States, 59 Fed. Cl. 332, 338 (2004)); see also Kennedy

v. United States, 164 Ct. Cl. 507, 512 (1964) (“If we hold that [the contractor] defaulted,

we must determine whether the default was or was not excusable.”). The wrongful

termination for default claim only implicates the contractor’s right to obtain termination

for convenience costs. See Malone v. United States, 849 F.2d 1441, 1445 (Fed. Cir.) (“If

the default was improper, the government is liable for the contractor’s termination for

convenience costs.”) (citation omitted), modified on other grounds, 857 F.2d 787 (Fed.

Cir. 1988).

III. Analysis

A. Plaintiff Was in Default on July 25, 2013

According to defendant, plaintiff was in default under the contract when it failed

to complete the project by July 24, 2013. See ECF No. 67 at 11. The contract provided

that:

[T]he Contractor shall be required to (a) commence work under this contract

within 15 calendar days after the dates the Contractor receives the notice to

proceed, (b) prosecute the work diligently, and (c) complete the entire work

ready for use not later than 300 calendar days.

ECF No. 64 at 3. The USACE issued its notice to proceed on September 27, 2012, which

resulted in a required completion date of July 24, 2013. See id. Plaintiff admits that the

contract work was not completed by that date. See ECF No. 70 at 7 (“It is undisputed

that State Corps did not complete the project by July 24, 2013, the established Contract

completion date.”).

Defendant argues that plaintiff’s failure to complete the project by July 24, 2013,

was alone sufficient to place plaintiff in default under the contract. See ECF No. 67 at

15. The default clause in the contract reads, in part, as follows:

15

If the Contractor refuses or fails to prosecute the work for any separable part,

with the diligence that will insure its completion within the time specified in

this contract including any extension, or fails to complete the work within

this time, the Government may, by written notice to the Contractor, terminate

the right to proceed with the work . . . that has been delayed.

ECF No. 64-1 at 37 (emphasis added).

As the United States Court of Claims has held, “[t]ime is of the essence in any

contract containing fixed dates for performance,” and failure to meet that fixed date can

therefore form a valid basis for default termination. DeVito v. United States, 413 F.2d

1147, 1154 (Ct. Cl. 1969). See also Empire Energy Mgmt. Sys., Inc. v. Roche, 362 F.3d

1343, 1354 (Fed. Cir. 2004) (holding that when time is of the essence in a government

contract, the agency can terminate the contract for default when the contractor fails to

meet the contract performance date). Here, not only does plaintiff admit that it failed to

meet the contract completion date, plaintiff’s delinquent performance was clearly

identified as part of the contracting officer’s termination decision. See ECF No. 59-1 at

68 (stating that as of November 18, 2013, plaintiff had “completed only 80 percent of the

contract requirement,” and that the contract had “a completion date of July 24, 2013”).

The court agrees with defendant that the undisputed material facts demonstrate

that plaintiff was properly considered in default the day after it failed to meet the contract

performance date—July 25, 2013. 1

B. Defendant Did Not Waive Plaintiff’s Default

When a contractor defaults on a contract, that default may be waived by the

contracting agency—expressly or through inaction. The Court of Claims outlined the

circumstances under which the agency’s inaction will result in a waiver as follows:

The necessary elements of an election by the non-defaulting party to waive

default in delivery under a contract are (1) failure to terminate within a

reasonable time after the default under circumstances indicating forbearance,

and (2) reliance by the contractor on the failure to terminate and continued

performance by him under the contract, with the Government’s knowledge

and implied or express consent.

1

Defendant alleges that plaintiff breached the contract in a number of additional,

material ways that would independently justify termination for default. See ECF No. 67

at 19-25. Because the court has concluded that plaintiff’s failure to complete the contract

by July 24, 2013, serves as a valid basis for the default termination, it does not reach the

merits of these assertions.

16

DeVito, 413 F.2d at 1154. The contractor bears the burden of proving the facts to

support a finding that defendant waived the default. See Indem. Ins. Co. of N. Am. v.

United States, 14 Cl. Ct. 219, 223 (1988). That burden is heavier “[w]here the right to

terminate has been expressly reserved or when liquidated damages have been imposed by

the non-breaching party.” Olson Plumbing & Heating Co. v. United States, 602 F.2d

950, 955 (Ct. Cl. 1979). The issue of waiver applies to construction contracts only in

“exceptional or rare circumstances.” Indemnity, 14 Cl. Ct.. at 224. In the context of

considering the issue of waiver, however, “whether a default termination is proper

depends upon the facts and circumstances of each case.” Id. at 223 (citing Olson, 602

F.2d at 955).

In this case, the issue of waiver was first raised by defendant in its response and

cross-motion for summary judgment. See ECF No. 67 at 16. Therein, defendant

contends that because plaintiff did not argue that defendant waived plaintiff’s default in

its opening brief, plaintiff has effectively waived its ability to make such an argument.

Id. (citing In re Gabapentin Patent Litig., 503 F.3d 1254, 1261 (Fed Cir. 2007)). The case

cited by defendant in support of its assertion does not assist the court on this point

because Gabapentin involved an express waiver of a particular argument. See

Gabapentin, 503 F.3d at 1261. To the court’s knowledge, plaintiff has made no express

statement disavowing an argument that defendant has waived its default.

In its response to defendant’s cross-motion, plaintiff quotes several authorities

discussing the concept of waiver, but does not explicitly argue that the facts of this case

involve a waiver on the USACE’s part. Instead, plaintiff speaks in terms of election,

arguing that “the Government elected to allow the Contract work to continue after the

date of State Corps’ alleged default.” ECF No. 70 at 7. Plaintiff continues:

To be clear, State Corps does not dispute that the Government reserved its

right to terminate the Contract on the basis of the elapsed Contract

completion date. However, the Government did not take action to terminate

or suspend the Contract at that time, but elected to allow the Contract work

to proceed.

Id. at 7-8. According to plaintiff, the result of such an election is that defendant is

obligated to “pay for work performed by State Corps subsequent to the alleged breach.”

Id. at 8 (citing 13 Williston on Contracts § 39:23 (4th ed. 2000)).

Contrary to plaintiff’s implicit assumption, however, an election to allow work to

continue does not automatically equate to a waiver. In Indemnity Insurance Co. v.

United States, the court considered facts that it succinctly summarized as follows:

Plaintiff has filed a motion for summary judgment requesting that [its]

termination for default by the government of its construction agreement be

17

converted to a termination for the government’s convenience. The plaintiff

bases its motion on the following facts. The original completion date passed

without government termination of the contract and plaintiff continued to

perform work which the government had knowledge of and encouraged. The

government did not establish a new completion date prior to the default

termination.

14 Cl. Ct. at 220. In that case, the government agreed to a period of forbearance so that

plaintiff could attempt to resolve deficiencies in its performance, but notified plaintiff

that “acceptance of any work [during the period of forbearance] would be for the purpose

of mitigating damages and that liquidated damages would continue to accrue.” Id. at 221.

In reaching its decision, the court in Indemnity observed that “a contracting officer

should not have to immediately terminate a contract, after a contractor’s failure to meet a

delivery date, on pain of waiving the right to do so.” Id. at 226 (citation omitted). The

court concluded that “the fact that the contracting officer did not immediately, after the

plaintiff’s failure to meet the . . . completion date, act to terminate the contract for default

does not mean the government waived its right to do so, especially since the plaintiff was

advised that the government was preserving all of its rights and was considering

termination if certain conditions were not met.” Id.

The Court of Claims reached a similar conclusion in Olson. In Olson, the court

reviewed a decision of the Armed Services Board of Contract Appeals, in which the

board determined that the government had not waived its right to terminate a contract.

When the plaintiff in Olson failed to meet the contract completion date, the government

did not terminate the contract for default, but it “sent plaintiff two letters stating that it

was not waiving its rights by permitting plaintiff to continue performance and that

liquidated damages would be assessed . . . until the date of completion.” 602 F.2d at 953.

More than a year later, after plaintiff was repeatedly unable to complete its work, the

government terminated the contract for default. See id. at 954. The board upheld the

termination for default, holding that the government was “within its rights when it

terminated plaintiff for default because plaintiff had abandoned the contract and the

Government had not waived the due date.” Id.

Relying on an election theory, the plaintiff argued to the court that the board erred

because the government “lost its right to terminate the contract for default until a new

delivery date had been set because it permitted 13 months to pass after the due date and

before it terminated the contract, encouraged plaintiff to continue to perform, and did not

set a new delivery date.” Id. at 955. The court found that defendant’s termination

decision was proper, and that plaintiff had failed to carry its burden to demonstrate

waiver. In reaching this conclusion the court noted that the government’s “express

reservation of its rights and the assessment of liquidated damages surely made clear to

plaintiff that the Government was not excusing the breach.” Id.

18

As noted above, in order to show that the USACE waived its default, plaintiff

must show both that: (1) defendant “failed to terminate within a reasonable time after the

default under circumstances indicating forbearance,” and (2) plaintiff’s reliance “on the

failure to terminate and continued performance by [it] under the contract, with the

Government’s knowledge and implied or expressed consent.” DeVito, 413 F.2d at 1154.

Plaintiff does not explicitly address either of these factors in the briefs it filed in this case.

But whatever argument it might make to support the various aspects of this waiver test, it

cannot plausibly argue that it relied on the USACE’s failure to terminate in deciding to

continue performance.

The undisputed material facts show that the USACE repeatedly and expressly

reserved its right to both terminate the contract for default and to impose liquidated

damages. After plaintiff’s failure to meet the July 24, 2013 contract completion date,

defendant made its position clear to plaintiff on at least the following seven occasions:

(1) On July 28, 2013, four days after plaintiff failed to timely complete

the work, the contracting officer wrote to plaintiff, stating that “[s]ince State Corps

has failed to perform within the time required by the terms of the contract, the

Government is considering terminating said contract,” and that the letter is

intended as formal notice to plaintiff that the USACE intended to pursue the

recovery of liquidated damages. ECF No. 64-1 at 286.

(2) On July 30, 2013, the contracting officer sent another letter repeating

her statements that the project was overdue, that defendant intended to assess

liquidated damages, and that defendant may terminate the contract for default. See

id. at 287-90. That letter stated that “[t]he Government reserves all right under the

contract, including the right to terminate for default if the late performance is

unexcused.” Id. at 290.

(3) On August 20, 2013, after receiving a proposed recovery plan from

plaintiff, the USACE rejected the proposal as unrealistic, and stated: “[a]lthough a

modest time extension is under consideration by the Contracting Officer, you will

likely continue to be in default and subject to liquidated damages,” and that

“Termination for Default is also being discussed with the possibility that your

performance bond will be called.” Id. at 295.

(4) On September 23, 2013, the contracting officer issued a show cause

letter to plaintiff, which included the subject line “Show Cause Letter—

Timeliness,” stating that “[s]ince you have failed to perform within the time

required by the terms of the Contract, the Government is considering terminating

said contract pursuant to the Clause titled “Default” of the contract clauses.” ECF

No. 64-2 at 11. The letter also stated:

19

Pending a final decision in this matter, it will be necessary to

determine whether your failure to perform arose out of causes beyond

your control and without fault or negligence on your part.

Accordingly, you are hereby afforded the opportunity to present, in

writing, any facts bearing on the question to this office, within ten (10)

days after receipt of this notice. Your failure to present any mitigating

circumstances with ten (10) days after receipt of this notice may be

considered as an admission that none exist. Your attention is invited

to the respective rights of the contractor and the Government under

the contract clause titled “Default” and the liabilities that may be

invoked in the event a decision is made to terminate for default.

Any assistance rendered to you on this contract or acceptance by the

Government of delinquent goods or services thereunder, will be solely

for the purpose of mitigating damages, and is not to be construed as a

waiver of any rights the Government may have under subject contract.

Id. at 12-13.

(5) On September 24, 2013, the contracting officer sent another letter to

plaintiff noting plaintiff’s deficient performance, stating that the USACE was

considering default termination, and again stating that:

Any assistance given to you on this contract or acceptance by the

Government of delinquent goods or services will be solely for the

purpose of mitigating damages, and it is not the intention of the

Government to condone any delinquency or to waive any rights the

Government has under the contract.

Id. at 15.

(6) Also on September 24, 2013, the contracting officer notified plaintiff

of the USACE’s “intention to begin assessing liquidated damages . . . at the rate of

$4,694.00 per day for each calendar day following the contract completion date

until the work is completed.” Id. at 30. She also again repeated that the

“Government reserves all rights under the contract, including the right to terminate

for default if the late performance is unexcused.” Id.

(7) On October 23, 2013, the surety expressed its willingness to

negotiate an agreement by which it would take over responsibilities under the

contract in order to mitigate its damages. See id. at 50-51. The USACE proposed

to plaintiff that if plaintiff cooperated in the surety’s takeover efforts, the USACE

20

would not terminate plaintiff for default. See id. at 130 (plaintiff admitting this

fact in response to defendant’s request for admission).

As was the case for the plaintiffs in Indemnity and Olson, it is simply inconceivable that

plaintiff could believe, after receiving the foregoing communications from the agency,

that defendant’s stated intentions are consistent with a finding of waiver. Indeed it is

difficult for the court to imagine how the agency could have made its position—that it

considered plaintiff to be in default, to be in danger of having its contract terminated for

default, and to be responsible for liquidated damages—any clearer.

As such, the undisputed material facts confirm that defendant did not waive

plaintiff’s default under the contract.

C. Plaintiff’s Default Was Not Excused

Defendant has met its burden to demonstrate plaintiff’s default, and plaintiff has

failed to demonstrate that defendant waived that default. Thus, in order to avoid the

consequences of its default—here termination of the contract—plaintiff must establish

that its default was excusable. See, e.g., Keeter Trading, 79 Fed. Cl. at 253 (“If the

government succeeds in proving default, the plaintiff then must demonstrate ‘that the

default was excusable under the terms of the contract.’”) (quoting Airport Indus. Park,

Inc. v. United States, 59 Fed. Cl. 332, 338 (2004)); see also Kennedy, 164 Ct. Cl. at 512

(“If we hold that [the contractor] defaulted, we must determine whether the default was

or was not excusable.”).

Plaintiff argues that its default should be excused for either of two reasons. First,

plaintiff argues that the “contracting officer materially breached the contract by failing to

pay significant amounts over an extended period of time in violation of the payment

procedures in the contract.” ECF No. 58 at 6. As a result, plaintiff claims, it “did not

have the cash flow to fund performance of the Contract work.” Id. at 11. Plaintiff states

that “[t]he Government’s breach of its payment obligations was the sole cause of State

Corps’ inability to proceed with the work at the time of the termination for default,” and

therefore, “the termination for default must be excused and converted to a termination for

convenience.” Id.

And second, plaintiff claims that the contracting officer “failed to consider, in

[her] Final Decision, or at any time, prior to the termination for default, State Corps’

outstanding request for an excusable delay related to a change in the badging process that

prevented State Corps’ employees from gaining access to the site for performance of

work.” Id. at 13. Plaintiff alleges that changes to the badging process were made on

August 7, 2013, and states that it notified the USACE of delays related to that change on

three separate occasions in September 2013. See id. The failure to consider these delays

21

prior to termination, according to plaintiff, “legally constitutes an abuse of discretion and

arbitrary and capricious behavior, which makes the termination for default invalid.” Id.

Both of these arguments fail for the same reason. Defendant admits that it did not

pay the seventh invoice submitted by plaintiff in due course, and expressly took

responsibility for any resulting interest and penalties. See ECF No. 59-1 at 59-60. The

seventh invoice, however, was not submitted until September 8, 2013, and reflected a due

date of September 22, 2013. 2 See ECF No. 59-1 at 51-58. Even assuming, as plaintiff

has alleged, that defendant’s delinquent payment resulted in plaintiff’s inability to fund

its work, see ECF No. 58 at 11, it could not possibly have caused its failure to meet the

contract completion date, which passed two months before plaintiff expected the seventh

payment from defendant.

Plaintiff’s excuse related to delays due to changes in the badging process after

August 7, 2013, is equally unavailing. According to plaintiff’s own version of events, the

changes at issue were not instituted until two weeks after the contract completion date.

Thus, even if these alleged delays were legitimate, they simply cannot operate as a legal

excuse for plaintiff’s failure to complete the contract work by July 24, 2013. 3

In its response to defendant’s cross-motion, plaintiff makes an oblique reference to

“excusable delays which prevented it from completing the project by the established

Contract completion date.” ECF No. 70 at 25. Plaintiff includes no substantive

discussion of these alleged excusable delays, but instead presents the existence of such

allegations as evidence of disputed material facts. See id. The record cites included in

this section of plaintiff’s brief refer to the delays caused by the August 7, 2013 changes in

the badging process, see ECF No. 59 at 5, which the court has previously discussed, and

2

Defendant claims payment would have been due on September 23, 2013. See

ECF No. 67 at 35 n.7.

3

Plaintiff bases part of its argument in its motion for summary judgment on the

contention that the contracting officer acted arbitrarily and capriciously because she did

not address the delays related to the August 7, 2013 badging procedures in deciding to

terminate the contract for default. See ECF No. 58 at 11-13. According to plaintiff,

“[t]his failure legally constitutes an abuse of discretion and arbitrary and capricious

behavior, which makes the termination for default invalid.” Id. at 13. Defendant takes

issue with the legal standard plaintiff urges the court to apply in this regard. See ECF

No. 67 at 45-48. The court need not resolve the parties’ disagreement as to the legal

standard or its application to the present case. As discussed more fully in the text

accompanying this footnote, the conduct challenged by plaintiff, even crediting its

version of events, is not material to the present analysis because it occurred after plaintiff

failed to meet the contract completion date.

22

to several proposed findings of uncontroverted facts discussing plaintiff’s June 13, 2013

letter to the contracting officer, see ECF No. 64 at 18; ECF No. 70 at 25.

In the June 13, 2013 letter, plaintiff provided the contracting officer with

explanations of various delays in performance, but also states as follows:

First of all, I would like to apologize on behalf of State Corps that it came

down to us being issued a cure notice. This is our first Governmental contract

in Qatar and we have always tried for successful completion of this project.

This is no excuse for being behind on the schedule but unfortunately we had

experienced some challenges at the start of the project which included getting

the company registered in Qatar and developing our team there.

...

I have personally spoken with the project manager, John Hanen, and he is

fully accepted the responsibility of the project being behind.

ECF No. 64-1 at 213-14. Plaintiff’s recovery plan, which was attached to the letter,

acknowledged that the “project is 3 week[s] behind schedule,” but stated that “this

recovery plan has been made in order for us to prove to our client that the project

completion on 24th of July is undeniably possible.” Id. at 216.

Plaintiff suggests that there is an issue of disputed material fact with regard to

whether the delays outlined in the June 13, 2013 letter could form the basis of a valid

legal excuse for its late performance. See ECF No. 70 at 25. While delays that occurred

prior to June 13, 2013, certainly avoid the timing issue that plaintiff has with the excuses

that form the primary basis of its argument, plaintiff has given the court no reason to

doubt plaintiff’s own statements—which appear in the very same letter—that there was

“no excuse” for these delays, and that plaintiff’s own project manager “fully accepted the

responsibility for the project being behind.” Id. at 213-14.

For these reasons, the court finds that the undisputed material facts support the

conclusion that plaintiff’s late performance was not excused.

IV. Conclusion

The undisputed material facts show that plaintiff was in default as of July 25,

2013, that defendant did not waive the default, and that the default was unexcused. As

such, defendant’s decision to terminate the contract for default was proper, and defendant

is entitled to summary judgment in its favor.

23

Accordingly, plaintiff’s revised motion for summary judgment, ECF No. 58, is

DENIED; and defendant’s cross-motion for summary judgment, ECF No. 67, is

GRANTED.

The court’s conclusion that defendant properly terminated the contract for default

may not end the inquiry in this case, however, as it does not speak to whether defendant

owes plaintiff any additional payments. Throughout their summary judgment briefs, the

parties offer varying versions of the outstanding balance defendant may owe to plaintiff.

Those assertions, however, were made in the context of whether defendant’s decision to

withhold certain payments was a material breach of its obligations under the contract

such that plaintiff’s termination for default should be excused, and neither party has

asked the court to make a final calculation of damages on summary judgment. See ECF

No. 58 at 10 (arguing that “the nonpayment by the Government of the $1.22 million

provides a clear basis to overturn the Government’s termination of State Corps based on a

material breach of the Contract’s payment provisions” and that the alleged breach

“entitles State Corps to a conversion of the default to a termination to convenience”);

ECF No. 67 at 26-44 (arguing the defendant’s nonpayment of progress payments was

either justified or not a material breach, and contesting the amount plaintiff claims is

presently owed); ECF No. 70 at 15-17 (identifying various disagreements between the

parties as to the amounts owed on the contract, while arguing that defendant’s

“withholding of a large amount of money over several months in contravention of the

express terms of the Contract was a material breach”); ECF No. 75 at 16-17 (defendant

noting that it has “not contended that a contractor could have no entitlement to a withheld

progress payment—rather, the only issue currently before the Court is whether the

nonpayment was a material breach, at the time of the defaults, as required to convert the

default termination to a termination for convenience”).

The court also notes that defendant claims, without explication, that “whether

[plaintiff] is now entitled to any amounts that it claims it is due . . . and whether

liquidated damages and retainage fully offset these amounts . . . would only be relevant to

Case No. 16-1074.” Id. at 17. By this statement, defendant seems to suggest that no

determination of damages should be made in this case.

The court, therefore, directs the parties to CONFER and FILE a joint status

report, on or before March 15, 2019, informing the court of the issues left to be resolved

in this case, and proposing a plan for doing so. 4 In particular, the court expects the

parties to address the impact of the court’s findings in this opinion on State Corps v.

United States, Case No. 16-1074, with which the present matter has been informally

4

If the parties determine that additional issues are outstanding, they are encouraged

to consider whether settlement discussions would be fruitful now that the court has

determined that the default termination was proper.

24

consolidated. See Case No. 16-1074, ECF No. 25 (amended scheduling order providing

guidance on the informal consolidation).

IT IS SO ORDERED.

s/Patricia E. Campbell-Smith

PATRICIA E. CAMPBELL-SMITH

Judge

25