DISMISSED IN PART FOR LACK OF JURISDICTION: December 15, 2016

DISMISSED IN PART FOR LACK OF JURISDICTION: December 15, 2016

CBCA 5395

CB&I AREVA MOX SERVICES, LLC,

Appellant,

v.

DEPARTMENT OF ENERGY,

Respondent.

Noah M. Hicks II of CB&I AREVA MOX Services, LLC, Aiken, SC, counsel for

Appellant.

Matthew Butsick, Office of the General Counsel, National Nuclear Security

Administration, Department of Energy, Washington, DC; and Mary-Ellen Noone, Office of

the General Counsel, National Nuclear Security Administration, Department of Energy,

Aiken, SC, counsel for Respondent.

Before Board Judges DANIELS (Chairman), KULLBERG, and SULLIVAN.

DANIELS, Board Judge.

CB&I AREVA MOX Services, LLC (MOX Services) claims that it is entitled to a fee

of .25% more than the Department of Energy (DOE) paid, during a specified period of time,

for work performed under a contract between the two parties. In its complaint, but not in its

claim, MOX Services alleged that DOE’s National Nuclear Security Administration (NNSA)

failed to negotiate the fee percentage in good faith and that this failure was a material breach

of contract. DOE moves the Board to dismiss for lack of jurisdiction this portion of the

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complaint. After considering the motion, MOX Services’ opposition to it, and DOE’s reply,

we grant the motion.

Background

On March 22, 1999, DOE awarded to a predecessor in interest to MOX Services a

contract for mixed oxide (MOX) fuel fabrication and reactor irradiation services. The

statement of work provided that contract services were to “include but are not limited to”

“[a]ll the functions that are necessary to develop a domestic MOX Fuel Fabrication Facility

that will be licensed by the Nuclear Regulatory Commission (NRC) and located at a DOE

Host Site,” as well as “[a]ll the functions that are necessary to permit the irradiation of MOX

fuel assemblies in CLWRs [commercial light water reactors] under license from the NRC.”

The base contract was for a term of 132 months. The contract gave DOE the

unilateral right to extend the term for 48 additional months under option 1, 183 additional

months under option 2, and 27 additional months under option 3. The contract provided that

MOX Services was to be paid a fee for its work.

On May 20, 2008, DOE’s NNSA and MOX Services bilaterally executed contract

modification A124, definitizing option 1. The modification includes, in clause B.1, “Items

Being Procured,” paragraph (o). This paragraph states:

Whereas the Contractor and Government recognize the importance of

achieving approval of Contractor’s Hot Start Up and AP Start Up Plan; both

parties hereby agree to act in good faith to ensure all steps required to add this

scope with additional cost, fee, and schedule to the contract will be achieved

at the earliest practicable date, as detailed in Clause H.29 paragraph (g).

Clause H.29, “Advance Understandings,” includes in paragraph (g):

DOE has determined an early exercise of the hot start-up portion of Option II

is in the best interest of the project to ensure that all aspects of the MFFF

[MOX fuel fabrication facility] are operational before acceptance of the

MFFF. DOE commits to immediate review [sic] all of the issues associated

with an early exercise of the hot start-up and begin the process of placing hot

start-up on contract. . . . It is agreed that the following parameters shall apply

to the early exercise of hot start-up:

1)

In recognition of the increased performance risk, an increased fee rate

of 1 percentage point shall be applied to the negotiated value of

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Option 1, plus any fee bearing changes executed prior to definitization

of the hot-start scope, thus increasing the total fee to 7%.

NNSA designated the hot start-up scope of work as Early Option II or “EO2” and

requested that MOX Services prepare a proposal to define this work. MOX Services

complied by submitting a proposal dated January 26, 2009. The parties agree that they then

negotiated in good faith, pursuant to clause H.29(g)’s advance understanding, to definitize

EO2.

MOX Services submitted an updated EO2 proposal in September 2009 and a second

updated EO2 proposal at NNSA’s request in September 2010. NNSA requested a third

updated EO2 proposal (incorporating additional work scope and a production objective

involving an expedited delivery date for eight fuel cells) in August 2011.

While negotiations were continuing, on September 1, 2011, the parties bilaterally

executed contract modification 183 (mod 183). “The purpose of this modification,” mod 183

stated, “is to increase the Option 1 fee amount. . . . The fee will immediately increase to

6.75% with a subsequent increase of .25% occurring with the exercise of Early Option 2 for

a total increase in fee from 6% to 7%.” The modification deleted clause H.29(g), as included

in contract modification A124, and replaced the portions of it quoted above with the

following (with bolded portions in the original):

DOE has determined an early exercise of the hot start-up portion of Option II

is in the best interest of the project to ensure that all aspects of the MFFF are

operational before acceptance of the MFFF. It is agreed that the following

parameters shall apply to the early exercise of hot start-up:

1)

In recognition of the increased performance risk, an increased fee rate

of 1 percentage point shall be applied to the negotiated value of Option 1, plus

any fee bearing changes executed prior to definitization of the Hot-start scope,

thus increasing the total fee to 7%. Modification 183 incrementally

increased the fee percentage for Option 1 to 6.75% in recognition of

delays in exercising the Early Option 2 (EO2) scope. The remaining .25%

recognizing a total fee rate of 7% will be added to Option 1 with the

exercise of EO2.

MOX Services submitted to NNSA yet another updated EO2 proposal in February

2012. Discussions concerning this update continued for over a year until April 26, 2013. By

letter bearing that date, NNSA told MOX Services that “considering the preliminary cost

increases and current budget environment, NNSA is beginning to assess alternative

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plutonium disposition strategies. As a result, NNSA will slow down the MOX project and

activities supporting the current plutonium disposition strategy during the assessment

period.” With specific reference to the matters discussed in previous paragraphs of this

decision, NNSA said:

NNSA does not intend to continue negotiation of the Early Option II

contractor modification proposal, or exercise any portion of Option II at this

time. MOX Services need not maintain or otherwise update this proposal for

potential future negotiation. NNSA recognizes that at the time it becomes

appropriate to add operations to the MOX Services contract, the Early Option

II proposal will either be updated as necessary, or a new proposal will be

requested.

By letter dated April 1, 2015, MOX Services wrote to NNSA:

It has been almost 24 months since receiving the direction [to cease

negotiations regarding EO2], and more than 6 years since submittal of the EO2

proposal. Due to these inordinate delays that were not within MOX Services’

control, MOX Services respectfully requests that the fee percentage for the

subject contract be increased from 6.75% to 7.00%.

NNSA did not respond in writing. By letter dated September 2, 2015, MOX Services

reiterated its request. Again, NNSA did not respond.

By letter dated February 8, 2016, MOX Services “submit[ted] a certified claim for the

increase in previously paid fee from 6.75% to 7% along with an associated claim for payment

of Award Fee associated with the increase in fee.” The claim was “for $6,358,811.00 in

additions to CLIN [contract line item number] 0007 and immediate payment of $702,048 in

additional FY13 [fiscal year 2013] Award Fee.” MOX Services said, “This claim requests

relief arising under (i) Contract Clause H.29 Advance Understandings (increase in fee

percentage) and (ii) the Contract Disputes Act (payment of FY13 Award Fee).” The

contractor explained:

Using the date of NNSA’s decision not to exercise EO2 (26 April 2013) as

determinative for when the fee should have been increased from 6.75% to 7%

means that the above fee adjustments would have been issued in FY13. Had

that happened, the Award Fee pool for FY13 would have been $1,231,663.00

greater. Because Award Fee for FY13 already was paid under the existing

contract at 57% of the Award Fee pool at that time, MOX Services is claiming

the sum certain of $702,048.00 ($1,231,663 X 0.57).

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The contracting officer denied the claim by letter dated April 19, 2016, concluding

that “MOX Services is not entitled to an increased fee pool or immediate payment of award

fee.” He maintained that EO2, “if added to the Contract, would have increased scheduling

risks due to the interdependent nature of the processes,” and that in 2008, “the parties agreed

that, should the Government accept the Contractor’s future EO2 proposal, the Contractor

would be compensated for this risk through a one-percent increase to Option 1’s available

fee structure of 6.00%.” The contracting officer noted that the fee percentage for Option 1

had been increased in contract modification 183 to 6.75%, with an additional .25% “added

to Option 1 with the exercise of EO2.” He determined, “The Claim fails to identify why the

express, negotiated, bilaterally accepted conditions included in Modification 183 should be

set aside. . . . As EO2 was never exercised, it would be illogical and unreasonable for the

Government to pay the Contractor for a performance risk that the Contractor never assumed.”

Consequently, “any notion that the Contractor would be equitably entitled to additional fee

is baseless,” notwithstanding the contractor’s position that it was entitled “to the requested

0.25% fee increase [because] it ‘made a good faith effort’ to add more work to its Contract.”

MOX Services appealed this decision on July 7, 2016.

In its complaint, MOX Services requests that the Board:

(i)

find that NNSA’s failure to negotiate in good faith is a material breach

of the MOX Contract;

(ii)

find that MOX Contract Modification 183 giving MOX Services 0.75%

of the 1.00% fee increase in compensation for the original delay from

January 26, 2009, to September 1, 2011, entitled MOX Services to a fee

increase and is grounds for modifying the MOX Contract for the subsequent

delay from September 2011, to the present by increasing fee from 6.75% to

7.00%, consistent with MOX Contract Modification A124; [and]

(iii) award MOX Services $702,048.00 based on the quantum contract

analysis provided in [an exhibit to the complaint].

Discussion

The Contract Disputes Act (CDA) vests in the Civilian Board of Contract Appeals

“jurisdiction to decide any appeal from a decision of a contracting officer of any executive

agency (other than [those specified, none of which is DOE]) relative to a contract made by

that agency.” 41 U.S.C. § 7105(e)(1)(B) (2012). Because the CDA is a waiver of sovereign

immunity, its “strict limits” are a jurisdictional prerequisite to an appeal. M. Maropakis

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Carpentry, Inc. v. United States, 609 F.3d 1323, 1329 (Fed. Cir. 2010). “[T]he jurisdiction

over an appeal of a contracting officer’s decision [on a contractor’s claim] is lacking unless

the contractor’s claim is first presented to the contracting officer and that officer renders a

final decision on the claim.” England v. Swanson Group, Inc., 353 F.3d 1375, 1379 (Fed.

Cir. 2004).

A “claim” is “a written demand or written assertion by one of the contracting parties

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

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

Reflectone, Inc. v. Dalton, 60 F.3d 1572, 1575 (Fed. Cir. 1995) (en banc) (citing definition

now at 48 CFR 2.101 (2015)). There is “no requirement in the [CDA] that a ‘claim’ must

be submitted in any particular form or use any particular wording. All that is required is that

the contractor submit in writing to the contracting officer 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).

The reference to the contracting officer in the preceding sentence is important; the CDA

mandates that the contracting officer must be given an opportunity to receive and pass

judgment on every claim. Ketchikan Indian Community v. Department of Health & Human

Services, CBCA 1053-ISDA, et al., 13 BCA ¶ 35,436, at 173,808 (citing Scott Timber Co.

v. United States, 333 F.3d 1358, 1366 (Fed. Cir. 2003)).

On appeal to the Board, a contractor “may increase the amount of his claim, but may

not raise any new claims not presented and certified [if necessary, see 41 U.S.C. § 7103(b),]

to the contracting officer.” Santa Fe Engineers, Inc. v. United States, 818 F.2d 856, 858

(Fed. Cir. 1987) (citations omitted). “When a new claim is asserted that is not directly

addressed in the appellant’s original claim submission, the tribunal must examine whether

the newly posed claim derives from the same operative facts, seeks essentially the same

relief, and, in essence, merely asserts a new legal theory for the recovery originally sought.”

EHR Doctors, Inc. v. Social Security Administration, CBCA 3522, 14-1 BCA ¶ 35,630, at

174,492 (citing Scott Timber, 333 F.3d at 1365). “If the court will have to review the same

or related evidence to make its decision, then only one claim exists. . . . On the other hand,

if the claims as presented to the [contracting officer] will necessitate a focus on a different

or unrelated set of operative facts as to each claim, then separate claims exist.” Kinetic

Builder’s Inc. v. Peters, 226 F.3d 1307, 1312 (Fed. Cir. 2000) (quoting Placeway

Construction Corp. v. United States, 920 F.2d 903, 907 (Fed. Cir. 1990)).

The Board must now determine whether MOX Services’ contention that NNSA failed

to negotiate the fee percentage in good faith, and that this failure was a material breach of

contract, is the same claim that the contractor presented to the contracting officer or a

different claim. The claim presented to the contracting officer was that MOX Services was

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entitled to “relief arising under (i) Contract Clause H.29 Advance Understandings (increase

in fee percentage) and (ii) the Contract Disputes Act (payment of FY13 Award Fee).” It is

clear that the contention newly-made in the complaint seeks the same relief as the claim

presented to the contracting officer. The parties disagree as to whether the operative facts

we would have to examine to resolve the two contentions are the same. DOE maintains that

to resolve the lack of good faith contention, “the Board may have to review allegations and

evidence surrounding, for example: whether [the agency’s] actions amounted to a failure to

cooperate; whether actions by [the agency] constituted negligence; and/or the reasonableness

of any negotiation delays. In contrast, the basis for the Claim [presented to the contracting

officer] . . . requires only an analysis of the plain language of the contract.” MOX Services

asserts, to the contrary, that both contentions arise from the same operative facts “because

MOX Services referenced its good faith efforts to negotiate with NNSA, as well as the

communications and conduct between the parties during negotiations in both its claim and

Complaint.”

We side with DOE. The operative facts supporting the claim as presented require only

an analysis of the contractual language of clause H.29. Whatever action or actions NNSA

may have taken in negotiations, which MOX Services complains were in the absence of good

faith, must have occurred after the parties entered into contract modification 183. This is

because MOX Services implicitly agreed in signing that modification that prior actions were

acceptable to it. The post-mod 183 actions, regarding implementation of clause H.29, are an

entirely separate matter from the meaning of that clause. They would require proof that

NNSA “act[ed] so as to destroy the reasonable expectations of the other party regarding the

fruits of the contract.” Metcalf Construction Co. v. United States, 742 F.3d 984, 991 (Fed.

Cir. 2014) (quoting and adding emphases to Centex Corp. v. United States, 395 F.3d 1283,

1304 (Fed. Cir. 2005)). The operative facts as to NNSA’s actions and their impacts are

different from the facts relevant to an analysis of the clause itself.

It is true that clause B.1(o) of modification A124 committed NNSA, as well as MOX

Services, “to act in good faith to ensure all steps required to add . . . scope with additional

cost, fee, and schedule to the contract will be achieved at the earliest practicable date, as

detailed in Clause H.29 paragraph (g).” It is also true that MOX Services referenced in its

claim its good faith in early negotiations – something to which DOE agrees. But the

contractor’s claim does not mention clause B.1(o), nor does it mention a lack of good faith

in negotiations. The best that might be said for a connection between the claim’s reference

to clause H.29 and clause B.1(o)’s reference to good faith in negotiations is that the former

created an inference that the latter was implicated. As the Court of Federal Claims held,

however, in a decision brought to our attention by MOX Services, “[T]he Court is not aware

of any doctrine requiring contracting officers to interpret claims in such a manner, and in any

event this exercise would seem to confirm that the claim as presented failed to provide a

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‘clear and unequivocal statement’ that disclosed the ‘basis . . . of the claim.’” Affiliated

Construction Group, Inc. v. United States, 115 Fed. Cl. 607, 614 (2014) (quoting Scott

Timber, 333 F.3d at 1365).

This analysis might seem to be at odds with the intention that boards of contract

appeals “provide a swift, inexpensive method of resolving contract disputes.” S. Rep. No.

95-1118, at 12 (1978), as reprinted in 1978 U.S.C.C.A.N. 5235, 5246. This is because the

result is to allow the Board to consider MOX Services’ lack of good faith contention only if

(a) the contractor files a new certified claim making this contention, (b) the contracting

officer decides the claim in a way unsatisfactory to the contractor, (c) the contractor files an

appeal of this decision, and (d) the Board consolidates the new appeal with the one now

before it. Nevertheless, our analysis is mandated by our understanding of both statute and

decisions of the Court of Appeals for the Federal Circuit. Our role is not to make policy, but

rather, to follow the commands of these authorities. Consequently, we grant DOE’s motion

to dismiss.

Decision

Because we would have to examine different operative facts to resolve MOX

Services’ lack of good faith contention from the facts we must examine to resolve the

contractor’s claim as presented to the contracting officer, we must DISMISS FOR LACK

OF JURISDICTION the portion of the complaint which makes the lack of good faith

contention.

_________________________

STEPHEN M. DANIELS

Board Judge

We concur:

________________________

H. CHUCK KULLBERG

Board Judge

_________________________

MARIAN E. SULLIVAN

Board Judge