CBCA 5179

CBCA 5179 GRANTED; CBCA 5440 DISMISSED AS MOOT: February 1, 2017 CBCA 5179, 5440 PARADISE PILLOW, INC., Appellant, v. GENERAL SERVICES ADMINISTRATION, Respondent. Daniel A. Bellman of Bellman Law, Granville, OH, counsel for Appellant. Michael J. Noble, Office of General Counsel, General Services Administration, Washington, DC, counsel for Respondent. Before Board Judges DANIELS (Chairman), SOMERS, and ZISCHKAU. DANIELS, Board Judge. Paradise Pillow, Inc. (Paradise) appeals the deemed denial, by a General Services Administration (GSA) contracting officer, of a claim for payment due to the termination for the Government’s convenience of a delivery order for blankets. We grant the appeal on Paradise’s motion for summary relief. Background The facts upon which this appeal is based were described in detail in our decision in Paradise Pillow, Inc. v. General Services Administration, CBCA 3562, 15-1 BCA ¶ 36,153, a case which involved the same parties and actions under the same delivery order. We CBCA 5179, 5440 2 summarize those facts here and refer the reader to that decision for a more complete recitation. GSA, at the request of the Federal Emergency Management Agency (FEMA), contracted with Paradise to supply 150,000 blankets, on a rushed basis right after a hurricane, to two locations in New Jersey. The arrangement was specified in a delivery order which provided that Paradise would be paid $2,584,500 for the blankets. The delivery order was issued under a multiple award schedule contract between GSA and Paradise. After Paradise made its deliveries, FEMA decided that the blankets were not needed and asked Paradise – and another company which had contracted to supply an equal number of blankets – to pick up the blankets and accept their return. Paradise agreed to do so, provided that the Government paid the company’s standard restocking fee of 35% of the contract price. GSA and Paradise then bilaterally modified the Paradise delivery order. The modification states: The contractor shall pick up all 150,000 units of blankets on December 3, 2012: 75,000 units from Wharton, NJ and and [sic] 75,000 units from Farmin[g]dale, NJ locations. The amount of this Purchase Order shall be decreased from $2,584,500.00 to $904,575.00. The $904,575.00 is the contractor’s restocking fee of 35%. Applying the 35% restocking fee to the original purchase order amount of $2,585,500.00 [sic], results in the amended amount of $904,575.00. Paradise sent personnel and transport trailers to the two specified New Jersey locations and picked up the blankets. Two days after the contract modification was signed, however, GSA sent to Paradise a very different document, terminating the delivery order for “default/cause.” This document says that the order “is cancelled in its entirety . . . because Contractor did not meet delivery deadline.” The Board held that the termination was not justified because GSA could not prove that Paradise did not meet the delivery deadline. The contract against which the order had been placed contained a clause stating that “[i]f it is determined that the Government improperly terminated this contract for default, such termination shall be deemed a termination for convenience.” We consequently converted the termination to one for the convenience of the Government. CBCA 5179, 5440 3 The contract’s Termination for the Government’s Convenience clause is one of the contract terms and conditions for commercial items, set forth at 48 CFR 52.212-4 (2005). The clause reads as follows: The Government reserves the right to terminate this contract, or any part hereof, for its sole convenience. In the event of such termination, the Contractor shall immediately stop all work hereunder and shall immediately cause any and all of its suppliers and subcontractors to cease work. Subject to the terms of this contract, the contractor shall be paid a percentage of the contract price reflecting the percentage of the work performed prior to the notice of termination, plus reasonable charges the Contractor can demonstrate to the satisfaction of the Government using its standard record keeping system, have resulted from the termination.