Free Response to Proposed Findings of Uncontroverted Fact - District Court of Federal Claims - federal

Case 1:07-cv-00348-EGB

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IN THE UNITED STATES COURT OF FEDERAL CLAIMS ESSEX ELECTRO ENGINEERS, INC., Plaintiff, v. THE UNITED STATES, Defendant. ) ) ) ) ) ) ) ) )

Case No. 07-348C (Judge Bruggink)

DEFENDANT'S RESPONSE TO PLAINTIFF'S PROPOSED FINDINGS OF UNCONTROVERTED FACT Pursuant to Rule 56(h)(2) of the Rules of this Court, defendant responds to plaintiff's proposed findings of uncontroverted fact as follows:

1. Fixed price Supply Contract No. F04606-94-D-0401 [Contract-0401] was awarded to Essex Electro Engineers, Inc. [Essex] on September 30, 1994. The Contract was a 100% small business set aside for the production and supply of Generator Sets. Essex completed the Contract in January, 2002. (Complaint, ¶ 6). Response: Defendant does not dispute this fact. 2. On June 26, 2000, Essex submitted to the Contracting Officer a certified Contract Disputes Act [CDA] claim on Contract-0401 for an equitable adjustment for Government-caused performance delays to Essex's performance resulting from Government changes. (Complaint, ¶¶ 8 through 17; Def's Proposed Findings, Exh. A, p. 1). Response: Defendant does not dispute this fact.

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3. For almost six years, the Government asserted that it was unable to address, negotiate or resolve Essex's claim because of the hostilities in Afghanistan and the preparation and conduct of the war in Iraq; and the Government had never disputed Essex's entitlement to the claim. (Complaint, ¶¶ 19 to 20]. Response: Defendant does not agree that it "ha[s] never disputed Essex's entitlement to the claim." Indeed, the Contracting Officer issued two memoranda to Essex that demonstrate that the Government's initial settlement offer was "made in an attempt to compromise a disputed claim." See April 20, 2006 Memorandum from Contracting Officer to Essex, ¶ 5 (emphasis added); see also May 15, 2006 Memorandum from Contracting Officer to Essex, ¶ 3 (both memoranda attached hereto). Second, the parties understood that no settlement would be finalized until the execution of a contract modification. April 20, 2006 Memorandum at ¶ 2. Finally, the April 20, 2006 memorandum explains that the purpose of the modification would be to release the Government "from any and all liability to the contractor for any outstanding and/or anticipated claims against this contract." Id. (emphasis added). 4. On May 18, 2006, the Government and Essex agreed to a final settlement of Essex's Contract CDA claim in an amount due of $1,164,832.00, plus accrued interest since June 26, 2000. (Complaint, ¶ 21; Def's Proposed Findings, Exh. A, p. 1). Both the Contracting Officer and Essex confirmed the Date of settlement (May 18, 2006), with

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payment required within a reasonable time or the agreement would be enforceable as a stipulation of entitlement and quantum. (Def's Exh. A; Append. pp. 1-2). Response: Defendant does not agree that any settlement agreement was binding until the July 17, 2007 settlement modification was executed by the parties. Defendant agrees that the Government and Essex agreed in principle to certain settlement terms on May 18, 2006 in the amounts stated above. Defendant further agrees that the parties understood that payment would have to be made "as soon as possible using the Government's best efforts" or "within a reasonable period of time." Defendant, however, notes that while Append. pp. 2 indicates Essex's view that "this agreement will be enforceable as a stipulation of Essex's entitlement and quantum," Essex understood that a final settlement required a contract modification, see Append. pp. 1. Moreover, even according to Essex's May 19, 2006 e-mail, the parties agreed that the Government would make "payment to Essex of $1,164,832.00 plus CDA interest on that amount from June 26, 2000, to and including May 19, 2006." No e-mail on May 19, 2006 mentions Prompt Payment Act interest or any other interest penalty or any specific payment date. 5. Essex allowed no more than 60 days from May 18, 2006, in order for a funding modification and the payment to occur. (Append. pp. 3-4). Response: Defendant agrees that counsel for Essex proposed, on May 31, 2006, that Essex would "allow a period of no more than 60 days from May 18, 2006, in

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order for the funding modification an payment to occur." The Contracting Officer, however, did not accept Essex's proposal. Def. Mot. at Exhibit A. 6. The Contracting Officer and higher management were fully aware that under the settlement agreement the funding and payment due date of July 17, 2006, was definite and that the payment must be made by that date. (Append. pp. 5-7). Response: Defendant does not agree that any settlement agreement was binding until the July 17, 2007 settlement modification was executed by the parties. Defendant also does not agree that the parties ever negotiated a July 17, 2006 payment due date. Defendant agrees that the contracting officer was aware that Essex insisted that the settlement be finalized and paid by July 17, 2006. 7. With no explanation other than "holidays" and people "being on leave," it was not until July 17, 2006, that the funding Contract Modification P00007 was issued by the Contracting Officer and signed for the final settlement agreement of May 18, 2006. The Modification directed the payment agency, DFAS, to make the payment "AS SOON AS POSSIBLE". The Modification "changed" Section B of Contract-0401 ["Supplies or Services"] to add Contract Line Item Number [CLIN] 0009, the payment due for the CDA claim, and CLIN 0010, the accrued CDA interest on the amount found due on the CDA claim up to the date of the settlement on May 18, 20006. The Modification included a release of the "Government from any and all liability under this contract for further equitable adjustments or claims attributable to the facts or circumstances giving rise to the claim." (Def.'s Exh. A; Complaint ¶ 22).

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Response: Defendant agrees that Contract Modification P00007 was issued on July 17, 2007; that modification was not simply for "funding" but rather constituted the settlement agreement. Defendant agrees with the remainder of the allegations contained in paragraph 7 to the extent supported by the modification cited, which is the best evidence of its contents; otherwise defendant disagrees with the remainder of the allegations contained in paragraph 7. 8. On July 17, 2006, Essex submitted its Invoice "B809-CLAIM" for payment of the amounts on CLIN 0009 and CLIN 0010 in Modification P00007, stating that payment was due July 17, 2006, "upon receipt of this invoice." (Complaint ¶ 27; Append. pp. 4-8). Response: Defendant does not dispute this fact. 9. Also, on July 17, 2006, the Contracting Officer issued Contract-0401, Delivery Order 0004 "for Supplies or Services," again specifying CLINs 0009 and 0010 and requiring that DFAS "MUST" pay "as soon as possible..." (Complaint ¶ 23; Append. pp. 9-10). Response: Defendant does not dispute that, to effectuate the settlement, defendant issued Form 1155 entitled "ORDER FOR SUPPLIES OR SERVICES." The form speaks for itself, but defendant denies that it actually obtained any additional supplies or services from Essex with the aforementioned form.

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10. Essex's Invoice was recorded by MOCAS [the DFAS electronic payment tracking system] with a "Payment Due" date of July 26, 2006. (Complaint ¶ 31; Append. p. 11). Response: Defendant does not dispute this fact. 11. On August 30, 2006, Essex received the payment of its Invoice for CLINs 0009 and 0010, without any interest beyond the CLIN 0010 accrued interest as of May 18, 2006. (Complaint ¶ 29]. Response: Defendant does not dispute this fact. 12. After waiting ten days, on September 11, 2006, Essex submitted its written request/demand under FAR 32.907-1(c)(1) for the late payment interest penalty required to have been paid on August 30, 2006, under FAR 32.907-1(a) and for the additional penalty amount under FAR 32.907-1(c) because of the failure of the Government to pay the late payment interest penalty within ten days. (Complaint ¶ 32; Append. pp. 12-13). Response: Defendant does not dispute this fact, but avers that it is immaterial for the purpose of resolving the pending motions.

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13. On December 29, 2006, Essex submitted its CDA claim to the assigned Contracting Officer for the Prompt Payment late payment interest penalty and additional penalty for nonpayment. (Complaint ¶ 38). Response: Defendant does not dispute this fact, but avers that it is immaterial for the purpose of resolving the pending motions. 14. It was not until May 17, 2007, that a new Contracting Officer informed Essex that "[a]fter discussions with legal counsel, the Government's position is that interest is not payable under the Prompt Payment Act (PPA)." (Complaint ¶ 47). Response: Plaintiff does not cite any evidence in support this fact. Defendant does not have sufficient information either to confirm or dispute this fact, and avers that it is immaterial for the purpose of resolving the pending motions. 15. In an effort to amicably resolve the question of interest due in this matter, Essex incurred accrued administration costs for attorney fees and expenses for 63.25 Hours of professional services and expenses of $190.50 in communications and research from and after May 18, 2006, to and including May 17, 2007, when the new Contracting Officer refused to pay the interest claim, although the Contracting Officer never issued a final decision under the CDA. (Complaint ¶¶ 52-54; Append. pp. 1417). Response: Defendant does not have sufficient information either to confirm or dispute this fact.

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Respectfully submitted,

PETER D. KEISLER Assistant Attorney General

JEANNE E. DAVIDSON Director s/ Brian M. Simkin BRIAN M. SIMKIN Assistant Director s/ Matthew H. Solomson MATTHEW H. SOLOMSON Trial Attorney, Commercial Litigation Branch Civil Division Department of Justice Attn: Classification Unit, 8th Floor 1100 L Street, N.W. Washington, D.C. 20530 Tel: (202) 305-3274 Fax: (202) 514-8624 November 13, 2007 Attorneys for Defendant

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