DISMISSED FOR LACK OF JURISDICTION: July 6, 2011

DISMISSED FOR LACK OF JURISDICTION: July 6, 2011

CBCA 2259

RED GOLD, INC.,

Appellant,

v.

DEPARTMENT OF AGRICULTURE,

Respondent.

Anson Keller of Olsson Frank Weeda Terman Bode Matz, PC, Washington, DC,

counsel for Appellant.

Michael Gurwitz, Office of the General Counsel, Department of Agriculture,

Washington, DC, counsel for Respondent.

Before Board Judges DANIELS (Chairman), GOODMAN, and SHERIDAN.

SHERIDAN, Board Judge.

This appeal arises out of a contract, awarded to Red Gold, Inc. (Red Gold) by the

Department of Agriculture (USDA), to provide cans of salsa for use in child nutrition and

other domestic food assistance programs.

The correspondence Red Gold submitted to the USDA about this matter does not rise

to the level of a proper claim. Moreover, there was no certification language contained in

the correspondence. Without a proper and certified claim submitted to the contracting officer

for a final decision, the Board is without jurisdiction to decide this appeal. This appeal is

therefore dismissed for lack of jurisdiction.

CBCA 2259

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Background

On March 3, 2010, USDA issued an invitation for bid (IFB) for canned vegetables,

including salsa, for use in child nutrition and other domestic food assistance programs. In

response to that invitation, Red Gold bid on 97,584 cases of #10 size cans of salsa, packed

six cans to a case. The bid included not only the cost of the product but also the cost of

shipment to the various recipients. Red Gold won 92% of the total contracts in the IFB and

was awarded contract 120205348 on April 14, 2010. The contract required Red Gold to

begin delivery of the canned salsa to the various recipients by August 16, 2010, and continue

through November 15, 2010. Red Gold began production in July and early August to meet

the shipment commencement dates.

On September 24, 2010, Red Gold determined that it had made a mistake in its bid and

notified the contracting officer at USDA, explaining that its finance/auditing department had

determined that a clerical error was made when a Red Gold employee “used the F.O.B.

[freight on board] price for the 6/#10 low sodium tomato sauce in error” instead of [the price]

for salsa. Red Gold also requested that USDA engage in discussions of possible remedies.

In a reply e-mail message sent the same day, the contracting officer asked for a formal letter

with an explanation of the alleged mistakes and supporting documentation. Red Gold sent

an explanation of the mistake, with supporting documents, to the contracting officer on

September 28. The documents included, among other things, a breakdown of the bids Red

Gold submitted with corrections in pencil, an explanation of the error, and a request for a

remedy that would “at least” cover variable costs of “approximately $3.63 per case.”

The contracting officer confirmed receipt of the documents on September 29, 2010,

and asked for more information because she still could not “determine the mistake because

the amount written on the invitation (in pencil) is the same amount that [Red Gold]

submitted.” Red Gold explained that as to the salsa, an employee mistakenly used the F.O.B.

price of $10.80 per case (the correct price for low sodium tomato sauce), instead of the

F.O.B. price of $16.90 (for salsa) -- a difference of $6.10. Red Gold clarified that it did not

expect to recover the full amount, but hoped for a “remedy price” that would “at least” cover

its variable costs of $3.63 per case, and indicated that it could provide further explanations

over a conference call.

A few days later, the contracting officer requested additional information for each line

item, to which Red Gold responded with an attachment that displayed an internal worksheet

with the “intended prices” for its bid. On October 8, 2010, the contracting officer

acknowledged to Red Gold that there were “alleged mistakes in bids submitted by Red

Gold,” but emphasized that USDA could not accept the higher intended prices, especially

since Red Gold would not have been awarded the contract had it used those prices in its bids.

CBCA 2259

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She further stated that USDA would cancel the remaining unshipped loads, but pay Red Gold

for the shipped products at the stipulated contract prices. That same day, Red Gold

responded by reiterating its “hope to settle at a price that at least covers . . . material costs,

[if not] total variable costs.” However, on October 13, the contracting officer communicated

that USDA was not authorized by law to adjust the bid price upward, and that this constituted

her “final decision” on the matter.

Consequently, Red Gold filed an appeal of the contracting officer’s decision on

January 7, 2011, seeking to “amend the bid prices on the shipped cases as to recover its

costs,” in the amount of $240,000.

Discussion

The Contract Disputes Act of 1978 (CDA), 41 U.S.C. §§ 7101-7109 (previously 41

U.S.C. §§ 601-613 (2006)), provides that “each claim by a contractor against the Federal

Government relating to a contract [shall be in writing and] shall be submitted to the

contracting officer for a decision.” Id. § 7103(a)(1). The Federal Acquisition Regulation

(FAR) defines “claim” as “a written demand or written assertion by one of the contracting

parties seeking, as a matter of right, the payment in a sum certain, the adjustment or

interpretation of contract terms, or other relief arising under or relating to this contract.” 48

CFR 52.233-1(c) (2009). Interpreting the CDA and FAR, the Federal Circuit has established

that for jurisdictional purposes, a CDA claim exists for a nonroutine contract adjustment if

there is: (1) a written demand, (2) seeking, as a matter of right, (3) the payment of money in

a sum certain. Reflectone, Inc. v. Dalton, 60 F.3d 1572, 1575 (Fed. Cir. 1995) (en banc). To

comply with the sum certain requirement of a valid claim, amounts must be stated with some

specificity. G & R Service Co. v. General Services Administration, CBCA 1876, 10-2 BCA

¶ 34,506 (a “not to exceed” amount is undefined and does not qualify as a sum certain);

Sandoval Plumbing Repair, Inc., ASBCA 54640, 05-2 BCA ¶ 33,072 (modifying phrases like

“no less than” do not qualify as a sum certain).

While no particular wording is required for a claim, it must contain “a clear and

unequivocal statement that gives the contracting officer adequate notice of the basis and

amount of the claim.” Contract Cleaning Maintenance, Inc. v. United States, 811 F.2d 586,

592 (Fed. Cir. 1987). Additionally, the claim must indicate to the contracting officer that the

contractor is requesting a final decision. See Mingus Constructors, Inc. v. United States, 812

F.2d 1387 (Fed. Cir. 1987); James M. Ellett Construction Co. v. United States, 93 F.3d 1537,

1543 (Fed. Cir. 1996). The request may be either explicit or implicit, so long as what the

contractor desires by its submissions is a final decision. Id. To make this determination, the

Board looks at the totality of the correspondence, including the submissions and the

circumstances surrounding them. See EBS/PPG Contracting v. Department of Justice,

CBCA 2259

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CBCA 1295, 09-2 BCA ¶ 34,208; Guardian Environmental Services, Inc. v. Environmental

Protection Agency, CBCA 994, 08-2 BCA ¶ 33,938. The intent of the communication

governs, and a common sense analysis must be used to determine whether the contractor

communicated his desire for a contracting officer’s decision. Guardian Environmental

Services, Inc., 08-2 BCA at 167,946.

The CDA also requires that:

For claims of more than $100,000 made by a contractor, the contractor shall

certify that –

(A)

the claim is made in good faith;

(B)

the supporting data are accurate and complete to the best of the

contractor’s knowledge and belief;

(C)

the amount requested accurately reflects the contract adjustment for

which the contractor believes the Federal Government is liable; and

(D)

the certifier is authorized to certify the claim on behalf of the

contractor.

41 U.S.C. § 7103(b)(1) (previously 41 U.S.C. § 605(c)(1) (2006)); see also 48 CFR

33.207(c). Certification of a claim of more than $100,000 is not only a statutory requirement,

but also a jurisdictional prerequisite for review of a contracting officer’s decision before this

Board. Fidelity Construction Co. v. United States, 700 F.2d 1379, 1384 (Fed. Cir. 1983);

see also W.M. Schlosser Co. v. United States, 705 F.2d 1336 (Fed. Cir. 1983); Essex Electro

Engineers, Inc. v. United States, 702 F.2d 998 (Fed. Cir. 1983). Thus, lack of proper

certification deprives this Board of jurisdiction over this appeal. See B & M Cillessen

Construction Co. v. Department of Health and Human Services, CBCA 931, 08-1 BCA

¶ 33,753 (2007); V.I.C. Enterprises, Inc. v. Department of Veterans Affairs, CBCA 1089,

09-2 BCA ¶ 34,205; K Satellite v. Department of Agriculture, CBCA 14, 07-1 BCA ¶ 33,547.

Furthermore, certification after an appeal has been filed has no legal bearing on the Board’s

jurisdiction and cannot serve to cure a lack of jurisdiction. B & M Cillessen Construction

Co., 08-1 BCA at 167,083.

Upon receipt of a proper and certified claim over $100,000, the contracting officer

must within sixty days issue a decision or notify the contractor of the time within which a

decision will be issued. 41 U.S.C. § 7103(f)(2) (previously 41 U.S.C. § 605(c)(2) (2006)).

Only after these jurisdictional prerequisites have been met can this Board review a

CBCA 2259

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contractor’s appeal. See England v. Sherman R. Smoot Corp., 388 F.3d 844, 852 (Fed. Cir.

2004).

Once sufficient facts are presented which bring into question the jurisdiction of the

Board to hear the dispute, it is incumbent upon appellant to come forward with evidence

establishing jurisdiction. Appellant bears the burden of establishing subject matter

jurisdiction by a preponderance of the evidence. McNutt v. General Motors Acceptance

Corp., 298 U.S. 178, 189 (1936); Reynolds v. Army and Air Force Exchange Service, 846

F.2d 746, 748 (Fed. Cir. 1988).

We reviewed the facts of this case in the context of the aforementioned statutory and

regulatory framework and case law. We conclude that the Board is without subject matter

jurisdiction to decide the appeal. Reviewed together, Red Gold’s correspondence does not

rise to the level of a claim. Red Gold’s initial e-mail message to USDA on September 24,

2010, concerning the mistake in bid, only briefly explained the error and requested further

discussions to explore possible remedies. The letter to the contracting officer, while

including a breakdown of the bids, an explanation of the error, and a request for a remedy

that would “at least” cover variable costs of “approximately $3.63 per case,” contained no

express request that the contracting officer make a final decision. The e-mail messages that

followed between Red Gold and the contracting officer suggest no specific sum, and the

repeated requests to further discuss the matter indicate to us that it was Red Gold’s intent to

continue to engage in negotiations, as opposed to submitting a claim. That Red Gold did not

include a particular sum in any of its e-mail messages and simply requested a figure that

would cover its “variable costs” reinforces our conclusion that Red Gold never requested

payment of a “sum certain” from the contracting officer.

We also note that none of Red Gold’s correspondence to the contracting officer

contained the required certification language to claim over $100,000. Red Gold’s notice of

appeal to this Board requested relief in the sum of $240,000. This appears to be the first time

Red Gold mentioned a definite sum in its correspondence concerning this matter. As noted

above, claims over $100,000 require certification. The lack of certification deprives the

Board of jurisdiction.

Without a valid claim, the contracting officer’s “final decision” on October 13, 2010,

cannot confer jurisdiction on the Board. Whiteriver Construction, Inc. v. Department of the

Interior, CBCA 2045, 10-2 BCA ¶ 34,582. As the Court of Appeals for the Federal Circuit

has stated: “Unless the contractor has submitted a properly certified claim to the contracting

officer, there is no valid claim, the denial of which is an appealable decision of the

contracting officer.” Ball, Ball & Brosamer, Inc. v. United States, 878 F.2d 1426, 1428 (Fed.

Cir. 1989).

CBCA 2259

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Red Gold’s right to pursue its claim remains in force so long as it follows the

prescribed rules for invoking our jurisdiction. To proceed in this matter, Red Gold should

submit a proper claim to the contracting officer, and if that claim is over $100,000, provide

certification. The contractor should await a final decision on that claim. If the contracting

officer does not render a timely decision, or Red Gold is unwilling to accept the decision, it

is free to exercise its right of appeal to this Board.

Decision

This appeal is DISMISSED FOR LACK OF JURISDICTION.

________________________

PATRICIA J. SHERIDAN

Board Judge

We concur:

____________________________

STEPHEN M. DANIELS

Board Judge

_________________________

ALLAN H. GOODMAN

Board Judge