ASBCA 57297

ARMED SERVICES BOARD OF CONTRACT APPEALS Appeal of ~ ) ) Donaldson Enterprises, Inc. ) ASBCA No. 57927 ) Under Contract No. W912CN-10-D-0030 ) APPEARANCE FOR THE APPELLANT: Carl H. Osaki, Esq. Honolulu, HI APPEARANCES FOR THE GOVERNMENT: Raymond M. Saunders, Esq. Army Chief Trial Attorney Brian E. Bentley, Esq. Trial Attorney OPINION BY ADMINISTRATIVE JUDGE FREEMAN Donaldson Enterprises, Inc. (DEI) appeals a contracting officer's (CO's) decision deducting $3,627.48' from a delivery order invoice under the captioned contract (hereinafter Contract 0030). The deduction was for the value of government property allegedly converted by a subcontractor for private use in the course of performance of the contract. We find that DEI was contractually responsible for the loss of the government property at issue, but the value of that property was no more than $3,051.28, when it was converted to private use. We sustain the appeal to the extent of the difference, $576.20, between the government deduction and our finding as to the value of the converted property. We deny the appeal in all other respects. FINDINGS OF FACT 1. On 29 September 2010, DEI was awarded Contract 0030 to blast, excavate, crush, and transport rock from a government quarry at Schofield Barracks to designated government work sites on the island of Oahu, Hawaii. Contract 0030 was a requirements contract. The specified work was to be performed only as authorized by delivery orders issued under the Ordering clause. (R4, tab 2 at 1, 8-13, 27-28) 1 The amount deducted in the CO's decision was $3,627.20. However, when implemented by modification to a delivery order price, the deduction was $3,627.48. For purposes of this decision we consider the difference de minimis and find that the amount deducted was the amount in the implementing modification.  2. Contract 0030 included, among other provisions, the FAR 52.212-4, Contract Terms and Conditions-Commercial Items (Jun 2010) clause. Paragraphs (d) and (j) of that clause stated in relevant part: (d) Disputes. This contract is subject to the Contract Disputes Act of 1978, as amended (41 U.S.C. 601-613). Failure of the parties to this contract to reach agreement on any request for equitable adjustment, claim, appeal or action arising under or relating to this contract shall be a dispute to be resolved in accordance with the clause at FAR 52.233-1, Disputes, which is incorporated herein by reference.... (j) Risk of loss. Unless the contract specifically provides otherwise, risk of loss or damage to the supplies provided under this contract shall remain with the Contractor until, and shall pass to the Government upon: (2) Delivery of the supplies to the Government at the destination specified in the contract, if transportation is f.o.b. destination. (R4, tab 2 at 16, 19) The contract line item numbers (CLINs) and Delivery Information in the contract designated all CLINs as "FOB: Destination" (id. at 8-13, 15) 3. Delivery Order 0001 under Contract 0030 was issued effective 25 February 2011. It required DEI to blast, excavate, crush, and transport 952 tons of rock from the Schofield quarry to the Kahuku Training Area. The specified delivery date was 1-25 March 2011. (R4, tab 5 at 1, 3-4) Delivery Order 0001 was the only order authorizing work under Contract 0030 to be performed in March 2011.2 DEI subcontracted the crushing and transporting work to MEI Corporation (MEI) (tr. 1/22). 4. On 9 March 2011, before DEI began performing Delivery Order 0001, MEI loaded 80.85 tons of crushed rock at the Schofield quarry and stockpiled it at a site where it was constructing a parking area for a private bus company in the city of Kapolei. MEI loading tickets 299 and 300, machine printed by the MEI loader at the quarry, show a 2 Delivery Order 0002 was initially issued on 2 March 2011 for 2,640 tons of crushed rock for delivery in the period 1-25 March 2011 (R4, tab 9 at 1, 4-5).