Some times it’s easy to forget that the world of government contracting, including the many agencies which oversee its administration, exist within an overarching federal system of delegated powers, which comes to bear on the outcome of disputes.
The Armed Services Board of Contract Appeals receives its authority from sections of the Contract Disputes Act, and exists primarily as a neutral, independent forum to hear and decide post-award contract disputes between government contractors and certain government agencies, but its power to hear cases is limited. The Board recently issued a decision with a reminder that it does not have jurisdiction over requests for specific performance or injunctive relief.
The decision was an appeal arising from an Army and Air Force Exchange Service contract awarded to Kostas Greek Food – Zorbas to provide a mobile kebab food concession at a U.S. Army garrison in South Korea. The Army had moved to dismiss an appeal by Kostas, arguing the Board lacked jurisdiction because Kostas sought an extension of the contract. The Board agreed with the Army’s argument that they had no authority to grant such a remedy.
The mobile food concession was a two-year contract awarded by the Army to Kostas on March 5, 2019. As is common, the contract in short required Kostas to obtain “all necessary permits and licenses” and to supply a food service truck. The contract also contained a “Termination” clause, which allowed for either party to terminate the contract upon written notice to the other party in the event of a contract breach.
The parties exchanged multiple emails between March and July 2019, with details about Kostas’ responsibility to obtain proper forms and licenses, as well as about the food service truck itself and when it would be delivered.
In response to a letter in August from Mr. Kostas that he was still waiting on the food truck, the CO sent a cure letter stating that Kostas had failed to begin performance on March 15, 2019, later amended to July 31, 2019. The cure letter directed Kostas to commence performance no later than September 8, 2019, and explained that failure by Kostas to comply with the contract may result in termination for default.
After additional emails in August and September about the status of the food truck, the CO sent a letter dated September 23, 2019 terminating the contract for default. The letter stated that Kostas failed to remedy the deficiencies highlighted in the cure letter dated August 27, 2019, to timely provide South Korean working visas, and to commence work by September 2, 2019.
Two days later Mr. Kostas acknowledged receipt of the termination and asked if the CO would forward his appeal to the Board, or if he had to directly appeal to the Board. Kostas then submitted an appeal (pro se) to the Board of the CO’s September 23 termination. The notice of appeal provided a historical perspective of the contract, reasons for Kostas’ failure to commence work, and requested that it be allowed to continue the contract beginning November 10, 2019, saying, “[t]herefore, I would ask you to accept my request to continue my contract No KO190001 with Camp Humphreys and starting date on November 10, 2019.”
On December 9, 2019, Mr. Kostas submitted Kostas’ complaint by email consisting of a single page stating that he was “appealing the termination” to continue work on the contract, and stating that he expects to receive a work permit in “40 days”. On January 14, 2020, the government moved to dismiss Kostas’ appeal for lack of subject matter jurisdiction “for failure to state a claim on which relief can be granted” as the Board “has no authority to grant injunctive relief” of an “extension of the Contract”.
Board Orders on January 27 and March 2, 2020 provided Kostas an opportunity to respond to the government’s motion to dismiss for lack of jurisdiction, and Kostas did so in a letter dated March 5, 2020, which contained a single paragraph stating that it had received its South Korean work permit and wished to continue to commence the contract. Attached to the March 5 letter was a notarized and English translated Republic of Korea short-term work visa for a “Georgios Kostas” with a 90 day validation range of February 2 to May 17, 2020. The Board accepted the March 5 letter as Kostas’ response to the government’s motion.
At the Board, the first issue was whether the Board had jurisdiction to hear the appeal. The Army moved for dismissal, arguing the Board did not have jurisdiction because it did not have authority to order injunctive relief, which in Kostas’ case, was allegedly an ‘extension of the Contract’ requested by Mr. Kostas. As support for its argument, the Army cited a previous decision stating that “the Board has neither authority nor jurisdiction to order a contract reinstated.’”
The Army then quoted a portion of Kostas’ notice of appeal, which stated, “accept my request to continue my contract No KO190001 with Camp Humphreys and starting date on November 10, 2019,” and pointed out that Kostas’ complaint also asked the Board to reinstate and extend its contract with the government, which the Army asserted were forms of injunctive relief and specific performance.
The Board agreed with the government on this issue, specifically, that it does not have jurisdiction to reinstate a contract. Kostas had asked the Board to accept its request to continue its contract to begin on November 10, 2019 and requested a contract extension. To the extent such requests could be read to seek injunctive relief or specific performance, the Board agreed they were beyond its jurisdiction.
As a result, the Board granted this part of the government’s motion. The Board’s decision recognizes that contractor disputes are governed by a broad and complex framework comprised of rules, regulations, procedures, and administrative guidance which functions in the midst of a larger all-encompassing system of government. Agency powers are delegated, and thus limited. Here, the Board’s domain to hear cases was limited by the authority it was granted, which almost resulted in denial of what otherwise may have been a valid legal claim by the contractor.
In the end, there remained a lone bright spot in the case, as the Board ultimately decided it was able to hear the case on another issue, an encouraging reminder that if you are a contractor with a legitimate claim within the borders of what the Board can decide, the Board stands ready and willing to do what it has done for the past fifty years, serve as a neutral independent forum to hear and decide your dispute. The challenge becomes finding one’s way through the vast web of authority affecting government contracting without getting lost, and forfeiting credible claims in the process, like Kostas almost did in this case.
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