Free Motion to Amend Pleadings - Rule 15 - District Court of Federal Claims - federal

Case 1:06-cv-00157-FMA

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DEFENSE LOGISTICS AGENCY
DI=FENSE SUPPLY CENTER RICHMOND 8000 JEFFERSON DAVIS HIGHWAY RICHMOND,VIRGINIA 23297-6100 N REPLY

~E~ER I)SCR-FAS ro Mr. H. James Yates President Yates International, LLC 231460th St., P.O. Box9206 Itampton, Virginia 23670-0260 CERTIFIED MAIL NO: 7002 3150 0000 3928 5180 Re: Final Decision, Yates International, LLC UnitedStates of America, vs. Fed. CI. No. 06-157C Dear Mr. Yates: ] ntroduetion This is a contractingofficer's final decision, pursuantto the ContractDisputesAct, 41 U.S.C. § 605(a), demanding paymentby Yates International LLC and/or Yates Fire Protection Service, Inc. ("Yates") of $127,576.79,in connectionwith costs incurred by the Government lesulting from Yates' abandonment two contracts. of ]]aekground OnSeptember16, 2003, Defense SupplyCenter Richmond (DSCR),a field activity l he DefenseLogistics Agency (DLA),awardedcontract SP0450-03-D-1411 Yates Fire to i)rotection Service, Inc. for the refurbishmentof 11,101cylinders stored at Pirmasens,Germany (the "RefurbishmentContract"). On September29, 2003, DSCR awardedcontract SP0450-03D-4141 YatesFire Protection Service, Inc. to provideindustrial gas supportto various military to :nstallations in Germany "Refill Contract"). Thecontracts were subsequentlymodified (the : dentify YatesInternational, LLC, company a related to YatesFire Protection, as the contractor. 3oth contracts weresubstantially performed a facility in Spijkenisse, Holland at (the "Yates facility"). Bothcontracts included clause 52.249-8, Default (Fixed-PriceSupplyand Service). In December 2004, Yates informedDSCR it wasexperiencingfinancial difficulties that ?erformingthe contracts. It submitteda request for equitable adjustment(REA) both on :ontracts. DSCR granted in part the REA the Refurbishment for Contract and the parties ~xecuteda bilateral modificationto the contract on February11, 2005, whereby DSCR agreed to pay $42,921.75to settle Yates' REA. DSCR denied the REA the Refill Contract. DSCR for also sent showcauseletters to Yatesrequestingassurancesthat it would continueto perform the :ontracts. Yates did not respondto the showcause notices. OnFebruary25, 2005, Yates abandoned Yates facility. Thecontracts were terminatedfor default on March3, 2005. the

EXHIBIT "A"

Case 1:06-cv-00157-FMA

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An inspection of the facility found that Yates had abandonedsignificant amountsof ,3overnment-FurnishedProperty (GFP), including 8,731 gas cylinders, at the Yates facility. Mthough the Governmenthad paid for valves for all of the cylinders, 2,627 of the abandoned ,,'ylinders did not include valves. Accordingto Trevor Noble, the managerat the Yates facility, ¯ :he cylinders were shipped to Holland without valves by Jim Yates, a principal in Yates Fire .?rotection and Yates International. The RefurbishmentContract set the price for cylinder valves .at $12.50. Using this valuation, $32,837.50 in GFPwas unaccounted for. Further, in addition to :he abandoned GFP,Yates also left other debris scattered around the facility. Yates also left the facility completely unsecured. On March9, 2005, DSCR sent a letter to Yates Fire Protection .rod Yates International noting that Yates had abandonedthe Yates facility and would be held :esponsible for potential losses of GFP.Yates did not return to secure the GFP. DSCR therefore forced to expediently secure the GFPat the Yates facility. On was March 10, 2005, DSCR issued contract SP0406-05-M-Z791 Exploitatiemaatschappij Laanweg to BV,the ownerof the Yates facility property, to lease the property and provide security for four weeks until a replacement contractor could take control of the GFP. This contract cost DSCR t;31,837.41. On May3, 2005, DSCR issued contract SP0406-05-D-4067to International Gas & 3ervices, NV("IGS") to perform the remainder of the Refurbishment Contract and Refill Eontract.~ This contract included a separate line item, CLIN 9905, for cleaning up the debris in the Yates facility and removingof the GFPto an IGS facility. The costs for the performance of this line item are $62,901.88. Determinations 1. The Government's requirements under contract SP0406-05-M-Z791 arose as a direct result of Yates' abandonment the contract and the subsequent termination for default. The of services covered by this contract were similar to those acquired under the Refurbishment Contract and Refill Contract. Thus, Yates is liable for $31,837.41 based on clause 52.249-8, Default (Fixed-Price Supply and Service), in the Refurbishmentand Refill Contracts, as well common law breach of contract. 2. The Government's requirements under CLIN 9905 under contract SP0406-05-D-4067 arose as a direct result of Yates' abandonment the contract and the subsequent termination for of default. The services covered by this contract were similar to those acquired under the Refurbishment Contract andRefill Contract. Thus, Yates is liable for $62,901.88 based on clause 52.249-8, Default (Fixed-Price Supply and Service), in the Refurbishment and Refill Contracts, as well as common breach of contract. law 3. The GFPcylinders abandoned by Yates were missing 2,627 cylinder valves. Yates accepted payment the valves. Yates is therefore liable for its failure to obtain and/or secure for the cylinder valves in the amountof $32,837.50.

ContractSP0406-05-D-4067 is ongoing the Government not thereforeable to assessthe entire and is reprocurement it will incur underthis or anyother follow-on costs contractto the Refill Contract Refurbishment and Contract.However, because nature of CLIN of the contract is severable the 9905 fromthe remainder the contract of because wasa one-time resulting from it cost YatesInternational'sdefault, the Governmentassertingdamages is for this single CLIN Bydoingso, the Governmentin noway now. is forfeiting or waiving right to seek additional its reprocurement from costs Yatesin the future under this or anyother contract.

Case 1:06-cv-00157-FMA

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TheGovernment hereby demands paymentof $127,576.79,plus interest. This is a final c.ecision of the ContractingOfficer. You appeal this decision to the Boardof Contract may e~ppeals. If youdecide to appeal, youmust, within 90 days fromthe date youreceive the c.ecision, mail or otherwisefurnish written notice to the Boardof ContractAppealsand providea ~ opyto the ContractingOfficer fromwhose decision the appeal is taken. Thenotice shall iadicate that an appealis intended, reference this decision, and identify the contract by number. Instead of appealingto the Boardof ContractAppeals,youmaybring an action directly in the UnitedStates Courtof Federal Claimswithin 12 months the date youreceive this decision. of Sincerely,

ContractingOfficer Supplier Support Division

Case 1:06-cv-00157-FMA

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Poelmark Here

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Vlr. H. James Yates President .... ~, "Ko'~; ....... Yates International, LLC ~:,: ~.~...~,_~. ......... ,Ic~,s~,z~ 231460th St., P.O. Box9206.... Hampton, Virginia 23670-0260~ s,,t ro