CBCA 3389

DENIED: December 9, 2016 CBCA 3389, 4818 AKAL SECURITY, INC., Appellant, v. DEPARTMENT OF HOMELAND SECURITY, Respondent. Terrence M. O’Connor, Stephanie D. Wilson, and Frank R. Gulino of Berenzwig Leonard LLP, McLean, VA, counsel for Appellant. Song U. Kim, Geoffrey Harriman, Cassandra Maximous, and Mark Menacker, Office of the Principal Legal Advisor, Immigration and Customs Enforcement, Department of Homeland Security, Washington, DC, counsel for Respondent. Before Board Judges SOMERS, VERGILIO, and GOODMAN.1 VERGILIO, Board Judge. The Board received from Akal Security, Inc. notices of appeal concerning its contract, ACL-2-C-003, with Immigration and Customs Enforcement, successor to the United States Immigration and Naturalization Service (INS), of the Department of Homeland Security (agency). The contractor had provided detention officers (guard services) and supervision under a fixed-price contract. During the performance period some employees filed lawsuits, which became a class action, against the contractor alleging that the contractor had violated California laws by providing insufficient pay and/or benefits in terms of breaks. The matter 1 The panel has changed from the original because of the retirement of Board Judge Stern. CBCA 3389, 4818 2 was resolved through a settlement agreement, approved by a state court, under which the contractor paid $9,738,535.31 (covering unpaid wages, enhancement payments to named plaintiffs, and legal fees and costs to class counsel). The contractor here seeks that amount plus $1,355,681.95 (said to be a portion of its legal fees and costs incurred in defending the lawsuit and negotiating the settlement agreement), for a total of $11,094,217.26, all denied by a contracting officer in response to two certified claims. In CBCA 3389, the contractor seeks relief under theories of mutual mistake (regarding the applicability of California wage and benefits laws to this contract) and an agency breach of the duty to cooperate and not hinder performance (allegedly by impeding the contractor’s ability to comply with California law regarding meal and rest breaks). The Board grants the agency’s motion for summary relief. Mutual mistake cannot exist as asserted for two reasons. The written contract does not state that compliance with California wage and benefits laws is not required or specify that such laws are inapplicable. The contract places on the contractor the obligation to comply with all applicable laws. The asserted mistake as to the applicability of law does not lend itself to the relief sought; any agency belief was not a part of the written contract. Any mistake was unilateral. The contractor’s allegations of lack of cooperation and hindrance do not identify any instance when the contractor did not or could not perform as it desired because of an agency action or inaction. Allegations of what the agency would not have allowed or permitted (in contrast to actual actions and inactions) are not material. That is, deposition testimony by agency personnel of what would not have been permitted does not translate into actual interference in the past; the contractor has not identified harm arising during performance. In CBCA 4818, the contractor seeks the same relief under the same contract. Even without reaching the question of timeliness of each element of the claim, the contractor’s three theories do not survive the agency’s motion to dismiss for failure to state a claim upon which relief can be granted. Design specifications did not exist. During performance, the contractor never sought a determination under the Ambiguities clause; nor has an ambiguity been identified which required resolution. While the contractor maintains that the agency hindered and interfered with the contractor’s performance by not informing the contractor on the applicability of California law to wages and benefits under this contract, the contract placed the responsibility of compliance on the contractor; the agency was not obligated to perform the contractor’s work of determining legal liabilities and obligations. Under the fixed price contract no duty arose for the agency to provide legal research or interpretation as sought by the contractor during performance and thereafter. The contractor was obligated to perform in accordance with applicable state laws for the agreed upon price; the contractor assumed the risk that it misunderstood the law or failed to pay or provide benefits to employees as required.