DENIED: March 1, 2023

DENIED: March 1, 2023

CBCA 7351

BRIGHTWOOD MANAGEMENT PARTNERS,

Appellant,

v.

DEPARTMENT OF VETERANS AFFAIRS,

Respondent.

S. Sadiq Gill of Durrette, Arkema, Gerson & Gill P.C., Richmond, VA, counsel for

Appellant.

Krishon Gill-Edmond and Shawn Larson, Office of General Counsel, Department of

Veterans Affairs, Washington, DC, counsel for Respondent.

Before Board Judges GOODMAN, DRUMMOND, and SHERIDAN.

SHERIDAN, Board Judge.

After the first year of contract performance by Brightwood Management Partners,

LLC (Brightwood), the Department of Veterans Affairs (VA) decided not to exercise the

contract’s first option period. Brightwood timely submitted a certified claim for damages of

$941,260.39. In its claim, Brightwood, alleging bad faith and a breach of the covenant of

good faith and fair dealing, seeks to recover lost profits and unrecoverable overhead (such

as accelerated equipment expenditures, labor costs necessary to meet the base year

requirements, and capital financing) that it alleges were incurred when the VA declined to

exercise the options. Following a hearing, we deny Brightwood’s appeal.

CBCA 7351

2

Background

On October 1, 2020, the VA awarded contract 36C78621D0021 to Brightwood. The

contract was for grounds maintenance and internments at Hampton National Cemetery (the

cemetery). The initial base term of the contract was one year. The contract also included

Federal Acquisition Regulation clause 52.217-9, Option to Extend the Term of the Contract,

which allows for up to four one-year option periods. 48 CFR 52.217-9 (2020).

Brightwood began performance on the grounds of the cemetery in October 2020.

Early in the contract, funding delays were experienced because of congressional budget

issues and the fact that the VA was operating under a continuing resolution. Throughout this

time, Brightwood continued to perform, even though payments from the VA were sometimes

late. Also during this period, the cemetery was experiencing changes in leadership and went

through a series of acting directors in the final months of 2020. Michael Faust became the

permanent director of the cemetery on April 12, 2021. As the cemetery director, Mr. Faust

worked alongside the contracting officer representatives, Paul Zagaruyka and James Jacobs,

to administer the contract.

Within days of becoming the director, Mr. Faust raised a series of negative

observations relating to the care and aesthetics of the cemetery. Mr. Faust then did a

walk-through of the grounds of the cemetery with Brightwood’s owner, Vernon Lee. During

this walk-through, as well as in a series of follow-up communications from both Mr. Faust

and Mr. Jacobs, Brightwood was notified of specific performance concerns involving

maintenance of the cemetery grounds, including headstone cleaning, mowing, equipment

storage, and improper burial setup. Messrs. Faust and Jacobs emphasized the importance of

completing corrective action by Memorial Day 2021 because the cemetery would see a large

influx of families and guests.

When these concerns were not resolved, Messrs. Jacobs and Zagaruyka issued the first

contract discrepancy report (CDR) on May 21, 2021. In the subsequent weeks, two

additional CDRs were issued on May 24 and June 24, 2021, related to Brightwood’s

performance issues at the cemetery.

On July 28, 2021, Mr. Jacobs certified to Mr. Zagaruyka that Brightwood had not

performed in a satisfactory manner and that the VA did not wish to exercise the contract’s

first option. Brightwood was notified of this decision on July 29, 2021.

Brightwood timely submitted a certified claim on September 15, 2021. In its claim,

Brightwood asserted that the VA had acted in bad faith and breached the covenant of good

faith and fair dealing by not exercising the option. Brightwood argued that it was denied its

economic expectancy under the contract while also having to accelerate its costs to perform

CBCA 7351

3

for the base year without the opportunity to amortize the costs over the option years.

Brightwood asserted that its performance issues primarily stemmed from difficulty

communicating and working with the VA.

In its claim, Brightwood further contended that Mr. Faust did not want to continue

working with it and was seeking a new contractor during Brightwood’s base period.

Brightwood alleged that Mr. Faust entertained other landscape contractors before

Brightwood’s contract was completed, intending to award the subsequent contract to the new

contractor. During the hearing, Brightwood presented testimony by its employees that Mr.

Faust took these contractors around the cemetery by golf cart to survey the facility in order

to prepare a bid. A former employee, Colleen Fuller, claimed that Mr. Faust made comments

to the staff that any contractor would be better than Brightwood and suggested that he fired

the contractor at the cemetery at which he previously worked due to poor performance.

Discussion

I.

Bad Faith

The law regarding the Government’s non-exercise of contract options is wellestablished. Attenuation Environmental Company v. Nuclear Regulatory Commission,

CBCA 4920, et al., 16-1 BCA ¶ 36,521, at 177,917. Options are made to benefit the

Government, and absent express terms in the contract limiting the Government’s discretion,

contractors do not have a right to relief if the Government fails to exercise an option. Id.; see

Government Systems Advisors, Inc. v. United States, 847 F.2d 811, 813 (Fed. Cir. 1988).

Brightwood’s allegations of bad faith are anchored in its unfounded belief that

Mr. Faust was out to get Brightwood because he had another contractor that he wanted to use

for the cemetery.1 The Board has held that one way to overcome the Government’s decision

not to exercise an option is for a contractor to demonstrate that the decision was made in bad

faith or was so arbitrary or capricious as to constitute an abuse of discretion. See, e.g.,

Blackstone Consulting Inc. v. General Services Administration, CBCA 718, 09-1 BCA

¶ 34,103, at 168,636; Greenlee Construction, Inc. v. General Services Administration, CBCA

416, 07-1 BCA ¶ 33,514, at 166,062; Sword & Shield Enterprise Security, Inc. v. General

Services Administration, CBCA 2118, 12-1 BCA ¶ 34,922, at 171,725 (2011). The proof

must be “almost irrefragable” and is usually “equated with evidence of some specific intent

to injure the plaintiff.” Sword & Shield, 12-1 BCA at 171,725.

1

Throughout this litigation, Brightwood has raised allegations both of bad faith

and lack of good faith and fair dealing (often conflating the two). Here, we address each in

turn.

CBCA 7351

4

Brightwood has not demonstrated that the VA evidenced bad faith by not exercising

the contract’s options. Brightwood had a history of performance issues, as evidenced by the

three CDRs issued by Messrs. Jacobs and Zagaruyka. These reports give specific details of

Brightwood’s performance shortfalls. Photos included in the record support the VA’s

determination that Brightwood was performing poorly. Brightwood alleges that the reports

are a result of Mr. Faust’s hostility towards them, but the record reflects that the problems

began before Mr. Faust was hired. The full picture of the poor performance became evident

in the Spring after Mr. Faust was permanently in place as the cemetery director.

The testimony presented at hearing relating to Mr. Faust taking perceived prospective

contractors on tours of the cemetery was convoluted and did not establish that what

Brightwood claims actually took place. Ms. Fuller’s testimony was not compelling. The VA

is not required, as Brightwood suggests, to explain or justify Mr. Faust’s actions. In order

to prevail here, Brightwood must demonstrate that the VA engaged in bad faith, which it has

not done. Finally, contrary to Brightwood’s contention, Mr. Faust had no authority to select

the subsequent contractor so there is no merit to the suggestion that Mr. Faust was steering

the procurement process in a certain direction.

II.

Good Faith and Fair Dealing

Brightwood also alleges that the VA breached its duty of good faith and fair dealing

by declining to exercise the option years. A claim based on a breach of the covenant of good

faith and fair dealing is different from an allegation of bad faith. Sigma Services, Inc. v.

Department of Housing and Urban Development, CBCA 2704, 12-2 BCA ¶ 35,173, at

172,591. “An allegation of breach of the covenant of good faith and fair dealing is an

allegation that the party’s contracting partner deprived it of the fruits of the contract.” Id.;

see Rivera Agredano v. United States, 70 Fed. Cl. 564, 575 n.9 (Fed. Cl. 2006). The

covenant of good faith and fair dealing cannot be used to expand a party’s duties outside of

what is within the contract and does not create a right or obligation where one does not

already exist. Sigma Services, 12-2 BCA at 172,591. Here, the VA is only exercising a right

that it had from the original contract—the right not to exercise an option. The VA is under

no obligation to exercise an option.

Brightwood contends that Mr. Zagaruyka’s failure to issue timely task orders during

the term of the contract violated the covenant of good faith and fair dealing by unfairly

impairing Brightwood’s performance. However, during the hearing, Mr. Zagaruyka testified

that the contract’s funding delays causing the untimely task orders were due to much larger

issues funding the contract’s continuing resolution appropriations source. Brightwood

introduced no evidence that the VA forced it to perform without task orders being issued, and

we see no evidence of harm to Brightwood from the VA’s failure to issue the task orders.

CBCA 7351

5

Brightwood has not presented compelling evidence that the VA acted in bad faith or

in violation of the covenant of good faith and fair dealing by not exercising the contract

options. The VA would have been free to pursue a different contractor after Brightwood’s

base year was completed even had there been no performance issues.

Decision

The appeal is DENIED.

Patricia J. Sheridan

PATRICIA J. SHERIDAN

Board Judge

We concur:

Allan H. Goodman

ALLAN H. GOODMAN

Board Judge

Jerome M. Drummond

JEROME M. DRUMMOND

Board Judge