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2 min read

ASBCA's Decision on Optimum Construction's Equitable Adjustment Appeal

two hands ripping apart a contract in the foreground as a man sitting at a table holds his head in one hand in the backgroud

Frazier Investments, Inc. (Optimum Construction) was involved in a contract dispute with the Department of the Air Force regarding a contract modification and equitable adjustment. The dispute involves several key parties, including John Frazier, the president of Frazier Investments, Inc., Caryl A. Potter III, the deputy chief trial attorney for the government, and Nicholas T. Iliff, Jr., the trial attorney for the government. 

Background: The Contract Modification and Supplemental Agreement

The disagreement began when the Air Force unexpectedly changed Optimum's work schedule, leading to increased costs and requiring them to work during unconventional hours, including nights and weekends. In response to this change, Optimum engaged in negotiations with the Air Force and eventually agreed to a contract modification that would entail an additional cost of $199,536.84 for their services.

Within this modification, there was an associated supplemental agreement that stated both parties considered the modification to be a full satisfaction of their rights to an equitable adjustment. However, once the work was completed, Optimum's subcontractor, Pugh, requested their own equitable adjustment, which Optimum did not support. Optimum later pursued its own claim for an equitable adjustment, but it was denied by the Air Force based on the terms of the supplemental agreement in the modification.

Dissatisfied with the contracting officer's decision, Optimum appealed the ruling to the Armed Services Board of Contract Appeals (ASBCA). The parties agreed to present the appeal under Board Rule 11, which permits the establishment of factual findings on disputed matters and allows for a decision to be made without a formal hearing. As the proponent of the claim, Optimum bore the burden of proof, while the Air Force assumed the burden of proof for any affirmative defense presented.

The Board's Determination on Optimum's Entitlement to Equitable Adjustment

The Board determined that Optimum failed to substantiate its entitlement to an equitable adjustment since there were no changes beyond the requirements stipulated in the modification. Additionally, the Board concluded that the modification constituted an accord and satisfaction, thereby rendering Optimum's claim invalid. Optimum's assertions of duress and unconscionability were also dismissed by the Board.

The Air Force did not explicitly invoke the defense of accord and satisfaction. However, the Board has the authority to permit the amendment of pleadings to align with the evidence presented. In this case, the Board examined the plain language of the modification, which clearly indicated the existence of an accord and satisfaction, consequently negating Optimum's claims.

Optimum argued that the Air Force utilized duress and violated FAR 36.214 regulations. Nonetheless, the Board determined that these particular arguments did not constitute new claims. Furthermore, Optimum was unable to provide sufficient evidence to support their allegations of duress or unconscionability.

Ultimately, Frazier Investments, Inc. (Optimum Construction)'s appeal against the Department of the Air Force was ultimately denied by the Board.

Read more: Contract Disputes Act