Contrack Watts-Uejo Kogyo JV

ARMED SERVICES BOARD OF CONTRACT APPEALS

Appeals of - )

)

Contrack Watts-Uejo Kogyo JV ) ASBCA Nos. 63211, 63212, 63213

) 63214, 63215

Under Contract No. W912HV-17-D-0013-001 )

APPEARANCES FOR THE APPELLANT: Sara Beiro Farabow, Esq

Jeffrey M. Hummel, Esq.

Michael E. Wagner, Jr., Esq.

Seyfarth Shaw LLP

Washington, DC

APPEARANCES FOR THE GOVERNMENT: Michael P. Goodman, Esq.

Engineer Chief Trial Attorney

Bryan C. Naquin, Esq

Engineer Trial Attorney

U.S. Army Engineer District, Fort Worth

OPINION BY ADMINISTRATIVE JUDGE MELNICK DISMISSING THE

APPEAL FOR LACK OF JURISDICTION

These appeals were brought on behalf of a joint venture that contracted to

perform construction in Japan. Because we conclude that the individual submitting the

claim, authorizing the appeals, and retaining counsel, lacked authority to do so for the

joint venture, we dismiss for lack of jurisdiction.

FINDINGS OF FACT

I. The Joint Venture Agreement

1. On April 1, 2016, Contrack Watts, Inc. (CWI) and Uejo Kogyo K.K. (UK)

established a joint venture (the “Joint Venture” or “JV”) to combine their efforts to

perform the Multiple Award Task Order (MATOC) contract identified above (R4, tab 2).

Article 3 of the JV agreement limits each party’s authority to act for the JV with the

following relevant provisions:

3.1 No Party shall except with the prior consent of the other Party make,

directly or indirectly, solely or in association with others, any agreement

with the Employer or any third party in connection to the Project.

* * * **

3.4 No Party shall have the authority to bind or to make any commitment on

behalf of the JV or of any other Party unless such authority is expressed

in writing by Parties jointly in regard to the JV or by a Party individually

in regard to the other Party.

(Id. at 2) Article 5 of the agreement, entitled Lead Party, states:

It is mutually agreed that Mr. Wahid Hakki, CEO of Contrack Watts is

nominated as the Chairman, and Mr. Shinko Uejo, President of Uejo Kogyo is

nominated as the Vice Chairman of the Board of the Joint Venture.

It has been agreed that Mr. Wahid Hakki, CEO of Contrack Watts will act as

the Program Manager and will be representing the Joint Venture in all aspects

related to communication with the Employer and the operation performance.

Also, all active progress details shall be reported to him through documentation.

(Id. at 3) Article 6 of the agreement, entitled Supervisory Board, identifies three

members from CWI, including Mr. Hakki and Mr. Jason Roberts, and three members

from UK, including Mr. Shinko Uejo (id.). Two other provisions are also relevant.

They state:

6.3 The Supervisory Board will establish within the first two (2) months

systems and should be responsible for discussing and making decisions

on the general policy of the Joint Venture for the execution of the

Contract, Performance of the Works, and financial matters.

(Id.)

6.7 Each party shall have one vote at the Board (irrespective of the number

of members attending) and decisions of the Board shall be taken

unanimously. If unanimity cannot be achieved, then the meeting shall be

adjourned for twenty four (24) hours or any other date mutually agreed

between the Parties. If unanimity is still not achieved, the meeting shall

be reconvened within seven (7) days or any other date mutually agreed

between the Parties and the members shall attempt to finally reach

unanimous decision.

(Id. at 4) Article 10 provides that the “Agreement shall be construed in accordance

with the substantive laws of [the US & JAPAN]” (id. at 5). Article 13 states that

neither party “shall be deemed to have waived any provision” of the agreement unless

it is done in writing and signed. Similarly, Article 14 invalidates any change,

amendment, or modification unless it is in writing and executed by the parties. (Id.)

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II. The Contract, Party Representations, and Purported Claim

2. On December 19, 2016, the United States Army Corps of Engineers

(“Corps” or “government”) awarded the MATOC to the JV. The offer had been

signed by representatives of both JV partners. (R4, tabs 3-4) On the same date, the

government awarded a task order for the design and construction of a child

development center in Yokosuka, Japan (R4, tab 5). On December 23, 2016, the

parties jointly executed a letter to the government designating the JV’s six original

Supervisory Board members as “authorized representatives” who “may sign proposals,

modifications, bonds, final payment paperwork, and take any other necessary actions

on behalf of [the JV] for the aforementioned contract” (R4, tab 6). On June 8, 2017,

Mr. Roberts executed the JV’s offer for a task order to construct a Company

Operations Complex in Kyogamisaki, Japan (R4, tab 7). On September 28, 2017, the

government issued the task order for that work to the JV (R4, tab 8).

3. On January 15, 2021, the government received a letter written by UK noting

changes in the “JV committee,” which we take to mean the Supervisory Board. The

letter identifies Mr. Kevin McClain from CWI as the new board chairman. It also

names Mr. Omar El Bassiouny from CWI to the Board. The letter states that the listed

individuals “may sign proposal, modifications, bonds, final payment paperwork and

. . . any other necessary actions on behalf” of the JV for the MATOC. “However,” the

letter continues, “all matters listed must be approved by the JV committee members

listed above.” (R4, tab 17 at 17) UK emphasized to the government in a February 3,

2021 email that it had specifically revised an initial draft of the letter to add this

restrictive language for the final version (R4, tab 21). A February 24, 2021, letter to

the contracting officer from Mr. El Bassiouny of CWI confirms that UK’s January 15

letter was approved by both JV partners. It additionally opines that Mr. McLain is the

successor to the program manager powers granted to Mr. Hakki by Article 5 of the JV

Agreement. (R4, tab 25) The next day, February 25, UK notified the government that

it believed CWI had violated the JV Agreement and that the parties were engaged in a

legal dispute in Japan. It requested that the government not approve any unilateral

action taken by CWI. (R4, tab 26)

4. On March 25, 2021, CWI’s counsel wrote to the government, touting CWI’s

experience and achievements working on the contract, seeking the government to

release funds it was holding and to review a pending Request for Equitable

Adjustment (REA). She contended that CWI had the sole authority to make such

demands. She accused UK and the government of actively interfering with CWI’s

performance and financing of the contract. (R4, tab 29) A March 27 response to the

government from UK denied CWI’s claims to sole power to act without its approval

and complained that CWI was not communicating with it (R4, tab 30). By letter to the

government dated April 12, 2021, UK denied that Mr. McLain was granted any power

to act alone without the approval of the JV members (R4, tab 32).

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5. Much correspondence followed, with the government taking the position

that actions to bind the JV must be jointly advanced by the parties (R4, tab 33). On

September 16, 2021, Mr. El Bassiouny of CWI notified UK that he intended to

proceed with the submittal of a JV claim to the government. He also accused UK of

violating the JV agreement. (R4, tab 48)

6. On September 28, 2021, Mr. El Bassiouny purported to submit a certified

claim to the contracting officer on behalf of the JV for two outstanding payment

invoices and four REAs (R4, tab 49). On September 30, UK members of the

Supervisory Board wrote to the government expressing its disagreement with the

contents of Mr. El Basssiouny’s September 28 letter (R4, tab 17 at 17; tab 50). On

December 1, 2021, the contracting officer responded that the September 28 attempted

claim was not certified by an individual authorized to bind the JV as well as the fact

that one of the partners had objected to it in writing (R4, tab 1). On February 28, 2022,

CWI’s counsel filed a notice of appeal from the contracting officer’s December 1, 2021

decision, claiming now to be acting as counsel for the JV. The Board’s Recorder

divided the appeal into the five docket numbers listed above.

7. On March 30, 2022, the government filed a motion to dismiss the appeals on

two grounds. The government contends that Mr. El Bassiouny was not authorized to

certify a claim on behalf of the JV. It also argues that the appeals have not been

brought by a duly authorized representative of the contractor. 1

DECISION

We need not address whether an authorized individual certified the claim

because, regardless, we find that the claim was not submitted, and the appeals not

authorized, by an individual with authority to do so and to retain counsel for that

purpose, which deprives the Board of jurisdiction. 2

1

By order dated April 4, 2022, the Board restricted briefing to the second issue. By

order dated June 9, 2022, the Board vacated its April 4, 2022, order, permitting

full briefing of the government’s motion. The Board stated that in addition to

presenting their desired arguments, the parties should address whether the

appeal has been authorized by someone with authority to do so for the JV.

2

Even if no authorized person certified the claim, a question remains whether that fact

would dictate we lack jurisdiction. The Contract Disputes Act permits defective

certifications to be corrected. 41 U.S.C. § 7103(b)(3); see Dai Global, LLC v.

Adm’r of the United States Agency for Int’l Dev., 945 F.3d 1196 (Fed. Cir. 2019).

“A ‘defective certification’ is defined in the [Federal Acquisition Regulation] to

include ‘a certificate . . . which is not executed by a person duly authorized to

bind the contractor with respect to the claim.’” 48 C.F.R. § 33.201; see Bell

Helicopter Textron Inc., ASBCA No. 59561,

4

The Board’s jurisdiction is governed by the Contract Disputes Act (CDA),

41 U.S.C. § 7101-09. The CDA is a waiver of sovereign immunity that must be

strictly construed. Winter v. FloorPro, Inc., 570 F.3d 1367, 1370 (Fed. Cir. 2009).

Under the CDA, only a contractor can submit a claim and bring an appeal to this

Board. 41 U.S.C. §§ 7103(a), 7104(a); FloorPro, 570 F.3d. at 1369-70. And a

contractor is limited to a party to a government contract other than the government.

41 U.S.C. § 7101(7); FloorPro, 570 F.3d. at 1369-70; Kellogg Brown & Root Servs.,

Inc., ASBCA No. 59385, 20-1 BCA ¶ 37,656 at 182,825.

A joint venture is an association of partners established by contract to carry out

a specific business activity. It is essentially a partnership created for a limited purpose.

Sadelmi Joint Venture v. Dalton, 5 F.3d 510, 513 (Fed. Cir. 1993). Normally, a joint

venture has an independent existence from its partners. When the government

contracts with a joint venture, it is the joint venture that is in privity with the

government, and therefore the contractor that can submit a claim and bring an appeal,

not its partners in their own capacity. See BCC-UIProjects-ZAAZTC Team JV,

ASBCA No. 62846, 22-1 BCA ¶ 38,119 at 185,171, appeal docketed, No. 2022-2143

(Fed. Cir. Aug, 23, 2022); WorleyParsons, Intl, Inc., ASBCA No. 57930, 14-1 BCA

¶ 35,482 at 173,959; Brother’s Cleaning Serv., Inc. v. United States, 38 Fed. Cl. 106,

108 (1997). The person or entity acting on behalf of the joint venture must possess

authority to bind it as to a claim. See Kiewit/Tulsa Houston v. United States, 981 F.2d

531, 533 (Fed. Cir. 1992). However, “[t]he general rule is that each member of a joint

venture has the authority to act for and bind the enterprise, absent agreement to the

contrary[.]” Sadelmi Joint Venture, 5 F.3d at 513. The question we consider here is

whether an authorized person acted to pursue this claim, approve an appeal, and retain

counsel to do so.

Appellant does not contend that the claim and appeals have been brought with

the consent of both CWI and UK. In fact, UK requested the government not to

approve any unilateral action by CWI and has expressed disagreement with the claim

(findings 3, 6). Instead, appellant presents Mr. El Bassiouny’s declaration, in which he

testifies that along with submitting the claim he has unilaterally acted on behalf of the

JV to engage CWI’s counsel to pursue the appeals and represent the JV (El Bassiouny

decl. ¶¶ 20, 22-23). Appellant says that in his capacity as General Manager of CWI,

and as a member of the JV’s Supervisory Board, Mr. El Bassiouny is authorized to

take this action regardless of what UK thinks. Appellant also argues that under the JV

Agreement, CWI is the managing member empowered to correspond with the

government and handle all JV operations. It suggests that consequently CWI (and

therefore Mr. El Bassiouny) has a broad grant of power to pursue claims and appeals

for the JV and hire counsel to do so.

15-1 BCA ¶ 36,111 at 176,291. Neither party briefed this issue.

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As the proponent of our jurisdiction appellant bears the burden of establishing

it. Raytheon Missile Sys., ASBCA No. 58011, 13 BCA ¶ 35,241 at 173,015; see also

Gen. Mills, Inc. v. United States, 957 F.3d 1275, 1284 (Fed. Cir. 2020). We decide

any disputed facts relating to jurisdiction based upon our review of the record.

Raytheon Missile Sys., 13 BCA ¶ 35,241 at 173,016. “We may evaluate our own

jurisdiction at any time by interpreting the joint venture agreement.” In re Sarang-

Nat’l Joint Venture, ASBCA No. 54992, 06-1 BCA ¶ 33,232 at 164,681. We follow

our applicable precedent because, though the JV agreement is also to be construed in

accordance with the substantive laws of Japan, neither party cited any contrary

Japanese law. “A contract must . . . be construed as a whole and ‘in a manner that

gives meaning to all of its provisions and makes sense.’” Bell/Heery v. United States,

739 F.3d 1324, 1331 (Fed. Cir. 2014) (quoting McAbee Constr., Inc. v. United States,

97 F.3d 1431, 1435 (Fed. Cir. 1996)). A sensible reading, giving meaning to all the

agreement’s provisions, leads to the conclusion that Mr. El Bassiouny lacks the

authority he claims. Section 3.4 bars the parties from binding or making any

commitment on behalf of the JV unless both parties have granted such authority in

writing. Similarly, section 3.1 bars an individual party from making any agreement

with a third party in connection to the project without the prior consent of the other

party. (Finding 1) Initially, the partners agreed that the original members of the

Supervisory Board were authorized to sign proposals, bonds, final payment paperwork,

and take any other necessary actions on behalf of the JV for the contract.

Consequently, Mr. Roberts, who was designated as an original member of the Board

from CWI, possessed the authority to execute the JV’s offer for the Company

Operations Complex task order. (Findings 1-2)

Appellant suggests that Mr. El Bassiouny was authorized to submit this claim,

retain counsel, and prosecute these appeals for the JV given that he too was later named

one of the six members of the Supervisory Board. It is true that the January 15, 2021,

UK letter (approved by CWI) identifying the board’s reconstituted membership to

include Mr. El Bassiouny, also acknowledged that each member “may sign proposals,

modifications, bonds, final payment paperwork and . . . any other necessary actions on

behalf” of the JV for the MATOC. However, unlike the parties’ December 23, 2016,

letter describing the authority of the board’s original members, this one constrained that

power by mandating that “all matters must be approved by the JV committee members

listed above.” (Finding 3) 3 Considered as a whole, the letter reflects a grant to

3

In contrast to UK’s January 15, 2021, letter, Mr. El Bassiouny’s declaration merely

states that the JV partners appointed him “as an authorized representative and

agreed [he] could take action on behalf of the JV” (El Bassiouny decl. ¶ 11). He

does not refer to any limitations upon his exercise of that power. However,

UK’s January 15 letter was assented to by letter to the contracting officer from

Mr. Bassiouny dated February 24, 2021, without any objection by him

(finding 3). The contemporaneous nature of those letters weighs in favor of

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individual board members of signatory authority over the described matters after they

have been approved by the board. It does not empower Mr. El Bassiouny to unilaterally

decide to commit the JV to whatever he wishes. Here, other members of the

Supervisory Board from UK have expressed disagreement with the attempted claim

(finding 6). Decisions of the board require unanimous agreement by the JV parties

(finding 1). Indeed, if individual members of the Supervisory Board possessed

unfettered power to act for the JV, as appellant contends, then CWI and UK could

engage in a chaotic tug of war, with a member from CWI submitting a claim, retaining

counsel to pursue legal action, and directing the course of the litigation and arguments

to be advanced, followed at any time by another member from UK withdrawing the

claim (or altering its contents), firing counsel (or substituting a new one), and ordering

the appeal dropped (or the arguments changed). This is inconsistent with the intent of

Article 6.7, requiring unanimity in Supervisory Board decisions (finding 1). See

Kiewit/Tulsa Houston, 981 F.2d at 534 (enforcing joint venture agreement provisions

withholding from one partner or individual the authority to bind the other party except

pursuant to an express delegation in writing by unanimous vote of the partners). The

restrictions imposed upon individual board members’ authority to act for the JV that is

reflected in UK’s January 15, 2021, letter precludes that possibility.

Separately, appellant maintains that Article 5 of the agreement designates CWI

as the managing member of the JV, authorized to hire counsel and prosecute claims for

it. It suggests that authority applies to Mr. Bassiouny as well. We disagree. Article 5

designates Mr. Wahid Hakki, CEO of Contrack Watts, to act as Program Manager to

represent the JV with the government “and the operation performance.” Regardless of

the exact scope of the powers described by Article 5, one thing is certain, it grants

nothing to Mr. El Bassiouny. Contrary to appellant’s suggestion, nothing in Article 5

empowers CWI to exercise the described authority through any employees of its

choice (finding 1).

Interestingly, Mr. El Bassiouny’s February 24, 2021, letter to the contracting

officer purports to identify Mr. Kevin McClain of CWI, not himself, as the successor

to the program manager powers granted to Mr. Hakki by Article 5 (finding 3). If we

were to accept that designation it still fails to evidence that Mr. El Bassiouny

possessed authority to exercise those powers. Anyway, we doubt the validity of that

announcement given that Article 14 requires any change to the JV agreement be

executed in writing by both parties (finding 1). The record does not contain a written

agreement by the parties modifying Article 5 to vest its program manager powers in

Mr. McLain, and UK denies that Mr. McClain has been granted any unilateral

authority not subject to the approval of the Supervisory Board (finding 4). Though

UK’s January 15, 2021, letter names Mr. McLain the new Supervisory Board

concluding that the January 15 letter’s requirement for JV committee approval of

board member actions reflects the actual agreement of the parties.

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chairman, it is silent about Article 5’s program manager authority (finding 3). Even if

such a writing exists, and even if Article 5 authorized him to submit this claim,

approve an appeal, and retain counsel to pursue it, there is no evidence that

Mr. McLain has consented to any such action.

Appellant also argues that the partners’ performance of the contract

demonstrates that Mr. El Bassiouny could authorize the pursuit of these appeals. 4 In

addition to observing that Mr. Roberts of CWI signed the JV’s offer for the Company

Operations Complex, which we have distinguished above, it also notes that CWI

handled all correspondence, managed the onsite work, supplied supervisory personnel,

submitted payment applications and change order requests, established bank accounts

and an accounting system, paid subcontractors and suppliers, managed financials, and

addressed warranty claims (El Bassiouny decl. ¶¶ 12-17). It is not clear any of these

acts are commitments on behalf of the JV. Anyway, Mr. El Bassiouny does not testify

he performed any of them, or that whoever did so lacked authorization from the

Supervisory Board.

Appellant also contends that our analysis should be limited to the requirements

of Board Rule 15, governing representation before this Board. That rule recognizes

that a joint venture may be represented here by one of its members or a duly licensed

attorney at law. Board Rule 15(a). The Board’s rules do not supersede the conditions

of its jurisdiction, which are dependent upon whether the person purporting to act for

the JV was permitted to do so under the JV agreement’s terms. We hold Mr. El

Bassiouny was not authorized by the JV agreement, and arrangement established by

the parties’ January 15 and February 24, 2021 letters, to unilaterally pursue a claim,

retain counsel, and prosecute these appeals on behalf of the JV without the approval of

the JV’s Supervisory Board. Additionally, this Board requires any representative

before it, such as an attorney, be a “duly authorized representative.” See Lessors of

Abchakan Village, Logar Province, Afghanistan, ASBCA No. 61787, 21-1 BCA

¶ 37,953 at 184,325 (quoting Afghan Washington Constr. Co., ASBCA No. 60856,

18-1 BCA ¶ 37,009 at 180,242). Given that Mr. El Bassiouny was only authorized to

commit the JV to retain outside counsel with the approval of the JV’s Supervisory

Board, appellant’s counsel is not a duly authorized representative.

Appellant further argues against dismissal because it says doing so would allow

the government to enjoy a windfall by retaining funds owed to the JV. The potential

of a government windfall goes to the merits of this matter which we cannot consider if

we lack jurisdiction to entertain it. The JV agreement’s provisions barring either party

4

Appellant presented this argument in the portion of its brief addressing Mr. El

Bassiouny’s alleged authority to certify a claim, but it seems that it could also

be relevant to any power to submit a claim, retain counsel, and authorize the

appeals, so we consider it here.

8

from making commitments without the consent of the other, the parties’ declaration

that a Supervisory Board member’s actions must be approved by the Board, combined

with the agreement’s mandate that decisions of the Supervisory Board be unanimous,

reflect an intent by both parties to ensure that any one of the board’s members cannot

hijack the organization. As much as Mr. El Bassiouny may believe in the validity of

the claim and appeals he wishes to pursue here, CWI’s partner, UK, has indicated it

does not. Given all of this we have no discomfort scrutinizing Mr. El Bassiouny’s

authority to unilaterally act for the entire JV and finding it lacking. See William

Reisner Corp., ASBCA No. 39944, 90-3 BCA ¶ 23,144 (among other things

dismissing an appeal for lack of jurisdiction when the record fails to reflect that the

contractor has designated the person submitting the claim or taking the appeal as its

authorized agent or representative to do so).

CONCLUSION

The appeals are dismissed for lack of jurisdiction

Dated: September 13, 2022

MARK A. MELNICK

Administrative Judge

Armed Services Board

of Contract Appeals

I concur I concur

RICHARD SHACKLEFORD J. REID PROUTY

Administrative Judge Administrative Judge

Acting Chairman Vice Chairman

Armed Services Board Armed Services Board

of Contract Appeals of Contract Appeals

9

I certify that the foregoing is a true copy of the Opinion and Decision of the

Armed Services Board of Contract Appeals in ASBCA Nos. 63211, 63212, 63213,

63214, 63215, Appeal of Contrack Watts-Uejo Kogyo JV, rendered in conformance

with the Board’s Charter.

Dated: September 14, 2022

PAULLA K. GATES-LEWIS

Recorder, Armed Services

Board of Contract Appeals

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