CBCA 4775

DISMISSED WITH PREJUDICE IN PART; DENIED IN PART: March 5, 2020 CBCA 4775, 5360, 6334 NVS TECHNOLOGIES, INC., Appellant, v. DEPARTMENT OF HOMELAND SECURITY, Respondent. Cheryl Cathey, Chief Operating Officer of NVS Technologies, Inc., Menlo Park, CA, appearing for Appellant. Marion Cordova, Office of the General Counsel, Department of Homeland Security, Washington, DC, counsel for Respondent. Before Judges SOMERS (Chair), GOODMAN, and ZISCHKAU. GOODMAN, Board Judge. Appellant, NVS Technologies, Inc. (NVS), has filed these three appeals from two final decisions issued by a contracting officer of the Department of Homeland Security (DHS or respondent) in response to an uncertified and certified claim, docketed as CBCA 4775 and 5360, and a deemed denial of a certified claim, docketed as CBCA 6334. The incrementally-funded, cost-reimbursement contract required appellant to research and develop (R&D) a system to detect bio-threats. Funded at $5,021,006 for the first phase, the contract had a total estimated cost value (contract ceiling) of $18,307,266 for all four phases. During contract performance, contract modifications increased the allotted funds to $23,426,988.41 and the total estimated cost value to $30,214,760. Once funding had reached this level, respondent’s acting director of its Chemical and Biological Defense Division CBCA 4775, 5360, 6334 2 elected to discontinue funding pursuant to the contract’s Limitations of Funds (LOF) clause. Thereafter, although appellant did not request that the contract be terminated for convenience, as was its right pursuant to the LOF clause, the contracting officer elected to do so, which enabled appellant to submit a termination for convenience settlement proposal and be compensated for its termination costs. Appellant has been paid its costs of performance in the amount of the allotted funds, $23,426,988.41, and its termination costs. Appellant’s claims sought additional costs, in excess of the total it has received, for contract performance and termination costs, alleging that respondent terminated the contract for convenience in bad faith and that appellant is owed additional termination costs.1 On September 12-14, 2018, the Board held a hearing on the merits in CBCA 4775 and 5360 on the claim for bad faith termination for convenience.2 Thereafter, the parties agreed to consolidate CBCA 6334 with the other appeals for a decision on the merits, and the Board ordered consolidation of the three appeals. We dismiss with prejudice the claim for additional termination costs, as it has been resolved through a binding alternative dispute resolution (ADR) proceeding. We deny the claims for bad faith termination for convenience. Background The Contract, Contract Modifications, and Contract Performance The Department of Homeland Security’s Science and Technology (S&T) Directorate, through its Homeland Security Advanced Research Projects (HSARPA) Chemical and Biological Defense Division (CBD), issued a long range broad agency announcement (BAA),3 BAA 09-05, which remained open for proposed R&D projects through December 31, 2009. The BAA listed numerous “Topical Areas of strategic interest” and allowed for 1 In its post-hearing briefs, appellant asserts that respondent breached the implied duty of good faith and fair dealing, and we address that issue in this decision. We do not address quantum, as appellant has not proved entitlement to additional costs or damages. 2 Hearing testimony is designated by “Transcript.” 3 Federal Acquisition Regulation (FAR) 35.016 states: “BAA’s (sic) may be used by agencies to fulfill their requirements for scientific study and experimentation directed toward advancing the state-of-the-art or increasing knowledge or understanding rather than focusing on a specific system or hardware solution.” CBCA 4775, 5360, 6334 3 multiple awards of research and R&D contracts under any topic. Offerors were requested to propose their own statement of work “detailing the scope and objectives of the effort, the technical approach, and the performance goals.” BAA 09-05 at 2. On April 21, 2010, DHS S&T entered into contract no. HSHQDC-10-C-00053 (the contract) with New Venture Strategies LLC.