CBCA 4776

DENIED: May 26, 2016 CBCA 4776 CAE USA, INC., Appellant, v. DEPARTMENT OF HOMELAND SECURITY, Respondent. Joseph P. Hornyak and Gregory R. Hallmark of Holland & Knight LLP, Tysons Corner, VA, counsel for Appellant. William H. Butterfield and Julia A. LoBosco, U.S. Coast Guard, Department of Homeland Security, Washington, DC, counsel for Respondent. Before Board Judges DANIELS (Chairman), WALTERS, and LESTER. LESTER, Board Judge. Appellant, CAE USA, Inc. (CAE), seeks to recover the costs that it incurred in developing a full-motion flight simulator (FFS), which it had planned to use to provide avionics training services under an indefinite-delivery/indefinite-quantity (IDIQ) contract with the United States Coast Guard (Coast Guard). Under the IDIQ contract, CAE had to use FFSs, which CAE was to furnish, to provide training for two different kinds of aircraft, the HC-130H and an upgraded version of that aircraft, the Avionics 1 Upgrade (A1U). The Coast Guard ordered a sufficient quantity of HC-130H aircraft training services to satisfy its CBCA 4776 2 minimum ordering obligations under the contract, but it never ordered any A1U services because it canceled the A1U program. CAE does not complain about the Coast Guard’s failure to order any A1U training services. Nevertheless, it argues that, under the contract, the Coast Guard was required to provide (as Government-furnished equipment (GFE)) a set of A1U avionics that CAE would incorporate into one of its FFSs. Although the Coast Guard delivered the A1U avionics package to CAE, the Coast Guard requested its return soon after canceling the A1U program. CAE argues that it was entitled to hold the A1U avionics package throughout the life of the IDIQ contract (including option years), even if the Coast Guard did not order any A1U services, and that the Coast Guard’s breach of CAE’s possessory rights precluded CAE from earning income through the provision of A1U training services to third parties. CAE further argues that, even if the contract language itself does not provide it with an absolute right to keep the A1U avionics for the life of the contract, the Coast Guard breached its implied duty of good faith and fair dealing, either by not allowing CAE to continue to hold the avionics or by failing to provide CAE with greater information about the possibility that the Coast Guard might cancel the A1U program (so that CAE could have avoided the costs of developing its FFS). As a damage for the Coast Guard’s breach, CAE seeks to recover more than $8 million in costs that it incurred in developing its FFS. Both parties have filed motions for summary relief, and, with limited exception, neither party has contested the other’s statement of uncontested facts. After studying the parties’ briefs, as well as the provisions of the contract at issue and the relevant case law, we must deny CAE’s motion and grant summary relief to the Coast Guard. Statement of Facts The History of the HC-130H Aircraft and the A1U Development 1. The HC-130H, the Coast Guard’s Long Range Surveillance legacy aircraft, has been in service for more than thirty years. Respondent’s Statement of Uncontested Facts (RSUF) ¶ 1 (citing Appeal File, Exhibit 3 ¶ 1.2). 2. Since at least 2008, CAE was the incumbent contractor under contract no. HSCG23-08-D-PBR005, providing simulator and other related training to the Coast Guard on the HC-130H aircraft. RSUF ¶ 3; Appellant’s Statement of Uncontested Facts (ASUF) ¶ 3; Exhibit 6 at 4. 3. In early 2010, CAE issued a press release announcing that it had developed “a new C-130H full-mission simulator,” featuring “C-130 glass cockpit avionics systems” that CBCA 4776 3 CAE “offers to C-130 operators considering avionics modernization programs for existing C-130 Hercules aircraft.” RSUF ¶ 4; Exhibit 1 at 1. In the press release, CAE indicated that its Tampa training center had “three C-130E/H reconfigurable full-mission simulators” and that it had “the largest installed base of civil and military full-flight simulators and training devices” in the world. RSUF ¶ 4; ASUF ¶ 10; Exhibit 1 at 1. 4. An FFS is a complex device used to train pilots and other aircrew by simulating the experience of flying a real airplane. ASUF ¶ 1.