DENIED: September 4, 2014

DENIED: September 4, 2014

CBCA 3911

L&L EXCAVATING & LAND CLEARING, LLC,

Appellant,

v.

DEPARTMENT OF AGRICULTURE,

Respondent.

Larry E. Strickland, Manager of L&L Excavating & Land Clearing, LLC, Oak Hill,

OH, appearing for Appellant.

Vincent F. Vukelich, Office of General Counsel, Department of Agriculture,

Milwaukee, WI, counsel for Respondent.

Before Board Judges VERGILIO, POLLACK, and DRUMMOND.

VERGILIO, Board Judge.

On June 19, 2014, the Board received a notice of appeal from L&L Excavating &

Land Clearing, LLC (purchaser) concerning its Lyra Timber Sale contract, 0914-03001506,

with the Forest Service, Department of Agriculture (agency). Idled by the Government

shutdown in 2013, the purchaser seeks to recoup $18,540, said to be lost income for three

days during which additional work was not found to provide substitute income. The

contracting officer denied the claim, relying upon the contract language which permits

compensation for certain out-of-pocket expenses incurred during a suspension but prohibits

the recovery of lost profits.

The contract anticipates such periods of non-performance and provides for time

extensions but not for compensation of lost profits or income. The suspension of

performance caused by the Government shutdown does not constitute a breach of contract

CBCA 3911

2

by the agency. The purchaser is not entitled to the relief sought. Accordingly, the Board

denies the appeal.

Findings of Fact

1.

With an award date of September 2, 2011, the purchaser and agency entered

into a contract under which the purchaser was to cut and remove specified timber and provide

road maintenance. Exhibits 2, 31 (all exhibits are in the appeal file).

2.

The contract contains a Contract Term Adjustment clause, under which the

period of performance could be extended. One identified cause supporting an extension is

acts of the Government which interrupt the purchaser in active operations for ten or more

consecutive days during a normal operating season. Exhibit 31 at 183 (¶ BT8.21).

3.

The contract’s Out-of-Pocket Expenses clause states:

“Out-of-Pocket Expenses” are Unrecovered expenditures arising directly from

performing the contract that were rendered unrecovered due to delay,

interruption, or termination pursuant to BT8.33 or BT8.34. An expenditure is

“Unrecovered” within the meaning of this Subsection when Purchaser did not

gain the benefit of its expenditure because Contract operations were not

permitted. In determining whether an expenditure is “Unrecovered,”

Contracting Officer shall not conclude that an award of liquidated damages

constitutes the benefit of that expenditure.

(a)

Out-of-Pocket Expenses shall not include, in particular and

without limitation, any of the following:

...

(iii) expectancy damages; and,

(iv) anticipatory profits.

Exhibit 31 at 187 (¶ BT8.35). The clause identifies the only expenses that the agency may

reimburse. Exhibit 31 at 187 (¶ BT8.35(b) (the agency “shall reimburse Purchaser for only

the following Out-of-Pocket Expenses”--which do not include anticipated income or profit).

4.

By written directive dated October 7, 2013, the contracting officer informed

the purchaser that there were no appropriations for fiscal year 2014, and that pursuant to legal

requirements in the Antideficiency Act and under Attorney General opinions, the agency was

unable to administer existing timber sale contracts except for the minimal activities necessary

to bring about a prompt and orderly suspension of ongoing operations. The contracting

CBCA 3911

3

officer ordered the purchaser to suspend operations upon prompt completion of required

erosion control work and seasonal road maintenance work. The order further noted that,

following the completion of shutdown requirements, allowable activities would include

equipment maintenance or removal from the sale area. Exhibit 7 at 53.

5.

On October 8, 2013, the parties discussed the need for the purchaser to track

out-of-pocket expenses should it seek reimbursement under BT 8.33 due to the shutdown.

Exhibit 8 at 57. On October 10, 2013, with erosion control complete, the purchaser removed

equipment from the site. Exhibit 8 at 58.

6.

On October 17, 2013, the Government shutdown ended. Seeking to establish

a time frame for the purchaser’s resumption of performance, the contracting officer inquired

of the purchaser. The purchaser could, conditions permitting, resume operations at that time.

Exhibit 9 at 60. However, due to the weather, site conditions meant that an immediate return

to work was not possible. Exhibit 8 at 59.

7.

Site conditions did not permit reentry until November 4, 2013, when the agency

approved reentry to the site. Exhibit 12 at 71. During November 2013, the purchaser moved

equipment to the site and resumed logging operations. Exhibits 12 at 72-73, 14 at 94.

8.

In December 2013, the purchaser requested a contract term adjustment (CTA)

due to the Government shutdown and other matters. The agency granted a CTA of nine days

because of the Government shutdown (October 10-18) and ten days because of subsequent

weather which prevented a resumption of operations (October 19-28). Exhibits 15 at 95, 17

at 105-06.

9.

Through claims and revised claims the purchaser sought to recover expenses.

The agency has paid some or a portion of some out-of-pocket expenses not in dispute here

(such as equipment move out and return costs, and equipment cleaning costs). Exhibits 18,

21 at 113, 23 at 137. At issue here is the $18,540 the purchaser describes as a lost time

expense. The purchaser calculates income that would have been received for paperwood

products and saw logs during three days of the shutdown during which the purchaser was

unable to obtain replacement work. Exhibit 24.

10.

By decision dated April 22, 2014, the contracting officer denied this aspect of

the claim, with the explanation: “This claim is not being considered an out of pocket expense

per BT8.35 Out-of-Pocket Expenses. I consider this to be an anticipatory profit that is not

an unrecovered expense, per BT 8.35(a)(iv).” Exhibit 26 at 147.

11.

On June 13, 2014, the purchaser submitted a notice of appeal. Exhibit 30.

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4

Discussion

The purchaser wants to be put in the position it says it would have been in but for the

suspension of its contract, namely, receiving income on days when it was idle. However, the

contract makes no promise that work will be uninterrupted. Instead, through the Contract

Term Adjustment clause, the contract recognizes that performance may be interrupted

because of sovereign acts or other causes beyond the control of the purchaser. The clause

permits term adjustments, thereby extending the period for performance, and specifies that

there is to be no recovery of lost income or profits. Findings 2, 3.

The purchaser’s claim suggests invoking those cases which recognize that a contractor

may be put in the position in which it would have been but for a breach of contract by the

Government. However, the suspension of performance during the Government shutdown

and furlough of employees does not here amount to a breach. The Contract Term Adjustment

clause demonstrates that the contract contemplated such a cause for delay. The agency acted

within the terms of the contract in suspending performance. The sovereign act does not

constitute a breach by the agency.

Under the language of the contract, the suspension because of the lack of funding and

furlough of employees does not represent an agency breach. The purchaser has received

additional money and compensation for out-of-pocket costs arising from its additional

efforts. The purchaser is not entitled to recover the lost income sought here.

Decision

The Board DENIES the claim.

______________________________

JOSEPH A. VERGILIO

Board Judge

We concur:

______________________________

HOWARD A. POLLACK

Board Judge

______________________________

JEROME M. DRUMMOND

Board Judge