ASBCA 60128

ARMED SERVICES BOARD OF CONTRACT APPEALS Appeals of -- ) ) Ikhana, LLC ) ASBCA Nos. 60462, 60463, 60464 ) 60465,60466,61102 ) Under Contract No. W912DR-13-C-0051 ) APPEARANCE FOR THE APPELLANT: William A. Scott, Esq. Pedersen & Scott, P.C. Charleston, SC APPEARANCES FOR THE GOVERNMENT: Thomas H. Gourlay, Jr., Esq. Engineer Chief Trial Attorney Michael T. Shields, Esq. David B. Jerger, Esq. Engineer Trial Attorneys U.S. Army Engineer District, Baltimore OPINION BY ADMINISTRATIVE JUDGE SWEET ON THE GOVERNMENT'S MOTION TO DISMISS, OR IN THE ALTERNATIVE FOR SUMMARY JUDGMENT AND SURETY'S MOTION TO INTERVENE AND TO WITHDRAW THE APPEALS, OR FOR SUMMARY JUDGMENT Appellant Il<hana, LLC brings these actions seeking ( 1) to convert a termination for default to a termination for convenience (ASBCA No. 61102); and (2) damages for breach of contract (ASBCA Nos. 60462-60466). The government has moved to dismiss, or in the alternative for summary judgment, arguing that Ikhana lacks standing because a surety-The Guarantee Company of North America, USA (the surety)-is the real party in interest. The surety also has moved to intervene. Further, the surety has moved to withdraw the appeals, or in the alternative for summary judgment. The surety raises the same basic argument as the government. The motions are denied. STATEMENT OF FACT (SOF) FOR PURPOSES OF THE MOTIONS 1. The government awarded Contract No. W912DR-13-C-0051 (0051 contract) to Ikhana to construct secured access lanes and remote screening facilities at the Pentagon (R4, tab 2). 2. In connection with the 0051 contract, Ikhana executed performance and payment bonds with the surety (R4, tab 14 ).  3. Part of the consideration Ilrnana offered for the bonds was to execute an indemnity agreement with the surety (gov't mot., ex. B). Under the indemnity agreement, an "EVENT OF DEFAULT" occurred when, inter alia, (I) Ilrnana was declared to be in default; (2) Ilrnana breached any terms of the indemnity agreement; or (3) there was "a payment by SURETY on any BOND" (id.~ 13). Ilrnana agreed that, in the event of such a default, it would assign to the surety a possessory right to collateral-which included "contract rights" (id.~~ IO(a)(i), 12). Moreover, upon an event of default, the surety may: [A ]ssert and prosecute any right or claim hereby assigned, transferred or otherwise conveyed in the name of [Ilrnana] and to compromise and settle any such right or claim on such terms as it considers reasonable under the circumstances in its sole and absolute discretion, subject only to the requirement that it act in good faith, which shall be defined as the absence of deliberate or willful malfeasance. (Gov't mot., ex. B, ~ 14(c)) The indemnity agreement also stated that Ilrnana: [H]ereby irrevocably constitute and appoint SURETY as their true and lawful attorney with the right, but not the obligation, to exercise all of the rights of [Ilrnana] assigned, transferred and conveyed to SURETY in this Agreement, hereby giving and granting to SURETY full power and authority to make, execute, endorse and deliver any agreements for the full protection intended to be given to SURETY hereunder as [Ikhana] might or could do. (Id.~ 18) 4. After performance began, Ikhana encountered problems. In October 2015, Ikhana filed four claims (affirmative claims) with the contracting officer (CO). In the affirmative claims, Ikhana asserted that defective plans and specifications, unforeseen conditions, and government-caused delays caused increased costs and delays. (R4, tabs 129, 135, 137-38) The CO did not issue a final decision on the affirmative claims. 5. On 17 December 2015, the government terminated the contract for default (R4, tab 142). 6. On 25 February, 2016, Ikhana appealed the termination for default, as well as the deemed denial of its affirmative claims (collectively, appeals). 2  7. Thereafter, the government made a claim with the surety against the performance bond (gov't mot., ex.