A contractor prevailed on claims that the Navy furnished defective tooling and drawings for manufacturing aircraft ejection seat components, recovering over $150,000 despite the government’s termination for convenience. The Board found the government’s own post-contract statements admitting it lacked proper tooling data constituted admissions against interest proving the equipment was unsuitable for performance.
Appeal of Scot Cardillo dba Engineers Tooling Support, ASBCA No. 61612
Background – The Navy contracted with Engineers Tooling Support (ETS) to manufacture primer cups and anvils for ejection systems in naval aircraft. The contract required ETS to use government-furnished equipment, facilities, and materials at the Naval Surface Warfare Center in Indian Head, Maryland. Between 2011 and 2015, ETS delivered over 1.5 million parts worth approximately $1.9 million. The Navy terminated the contract for convenience in 2016. ETS submitted a certified claim in 2017 for nearly $790,000, alleging defective specifications, tooling, and government interference. The contracting officer denied the claim in 2018, and ETS appealed to the ASBCA.
Defective Government-Furnished Equipment – ETS claimed the government provided eight defective die sets that could not produce acceptable parts without extensive modification. The contract incorporated FAR 52.245-1, which requires government-furnished property to be suitable for contract performance and provides for equitable adjustments when it is not. ETS’s owner testified credibly that seven of eight die sets had serious defects, and the government refused to provide updated drawings. The Board found this testimony persuasive, particularly when combined with smoking-gun evidence: a 2020 government “Sources Sought” notice stating the government “does not possess and cannot provide the data necessary to fabricate the tooling,” and 2022 briefing slides admitting that drawings “do not match actual hardware dimensions” and “[t]ooling cannot be manufactured to existing drawings.” The Board ruled these post-contract statements were admissions against interest proving the tooling was unsuitable. The government failed to respond to ETS’s FAR 52.245-1 arguments in its brief, effectively conceding the issue. The Board awarded ETS $88,324.81 for costs incurred dealing with defective equipment.
Scrap Management and Facilities Claims Denied – ETS sought $48,304 for handling and storing scrap materials, claiming the government failed to arrange proper facilities or personnel to remove scrap. The Board rejected this claim because ETS pointed to no contract provision making scrap removal the government’s responsibility. In fact, the contract required ETS to “dispose of non-conforming material” and “in-process rejects/reworks,” indicating scrap disposal was the contractor’s obligation. The Board also denied a related $48,303 claim for allegedly inadequate facilities and a $45,952 claim for out-of-scope facilities and equipment costs. ETS’s own proposal had stated it would use government facilities at no additional cost and would provide its own equipment for die and punch modifications. The contractor could not now claim extra compensation for using its own facilities when the contract required using government facilities and ETS had promised no additional charges.
Professional Services and Settlement Preparation Costs – ETS requested $108,998 for legal, accounting, and internal services costs. The Board applied FAR 31.205-33, which allows costs incurred to materially further contract negotiations or settlement but bars costs for prosecuting claims. The Board denied $14,840 claimed for internal hours by ETS’s owner and his wife, finding insufficient detail about what services qualified for recovery. The Board also denied costs for three law firms and an accounting firm where invoices provided only numbers without describing the work performed. However, the Board awarded $40,140 for McGrath Law Group’s services preparing the December 2016 termination settlement proposal. The invoice dates (October-December 2016) corresponded to the settlement proposal, and descriptions showed the work related to settlement rather than claim prosecution. The Board found this amount allowable and reasonable under FAR 31.205-33.
Jurisdiction and Other Claims – The government argued certain claims about scrap materials, facilities, and overages had been resolved in a February 2017 termination closeout modification and were not appealable. The Board disagreed, finding jurisdiction existed because these costs were included in ETS’s April 2017 certified claim that the contracting officer denied in the January 2018 final decision being appealed. The Board denied ETS’s $21,760 claim for undelivered overage parts because ETS never actually delivered them to the government despite agreeing to include them in a termination settlement. The Board also denied $302,817 in delay and administrative costs because ETS pointed to calculations that provided no bottom-line dollar figure and failed to properly apply the Eichleay formula for unabsorbed home office overhead damages.
The contractor is represented by **Mark Martins** of The Mark Martins Law Office, PLLC and **Christopher C. Bouquet** of The Law Office of Christopher C. Bouquet, PLLC. The government is represented by **Sharon G. Hutchins, Julie C. Ruggieri,** and **David M. Ruddy** of the Navy.