Nauset Construction Corporation v. Secretary of the Army

N OTE: This disposition is nonprecedential.
United States Court of Appeals
for the Federal Circuit
______________________
NAUSET CONSTRUCTION CORPORATION,
Appellant
v.
SECRETARY OF THE ARMY,
Appellee
______________________
2021-2305, 2022-1853
______________________
Appeals from the Armed Services Board of Contract
Appeals in Nos. 61673, 61675, Administrative Judge Lis B.
Young, Administrative Judge Owen C. Wilson, Adminis-
trative Judge Richard Shackleford.
______________________
Decided: March 4, 2024
______________________
J OHN J OSEPH MCN AMARA , Lane McNamara LLP,
Southborough, MA, argued for appellant. Also represented
by ELISE M. K UEHN.
WILLIAM J AMES G RIMALDI, Commercial Litigation
Branch, Civil Division, United States Department of Jus-
tice, Washington, DC, argued for appellee. Also repre-
sented by BRIAN M. BOYNTON, P ATRICIA M. MCCARTHY ,
F RANKLIN E. WHITE, J R.
Case: 21-2305 Document: 54 Page: 1 Filed: 03/04/2024

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NAUSET CONSTRUCTION CORPORATION v.
SECRETARY OF THE ARMY
2
______________________
Before REYNA, T ARANTO, and STOLL , Circuit Judges.
STOLL , Circuit Judge.
Nauset Construction Corp. appeals the final decision of
the Armed Services Board of Contract Appeals, which dis-
missed Nauset’s appeal of a default termination of a gov-
ernment contract as untimely under the Contract Disputes
Act. In particular, Nauset challenges the Board’s fact find-
ings that (1) Nauset was not prejudiced by the appeal no-
tice provided in the government’s termination letter; and
(2) the government’s behavior following the termination
letter did not vitiate the finality of the termination letter.
Because the Board’s findings are supported by substantial
evidence, we affirm the Board’s dismissal.
BACKGROUND
On November 1, 2013, the National Guard Bureau
awarded a contract to Nauset to build the Guard’s Unit
Training Equipment Site Project in Camp Edwards, Mas-
sachusetts. On November 17, 2017, the contracting officer
terminated Nauset’s contract for default. The termination
letter stated: “[T]he Government is completely Terminat-
ing Nauset for Default . . . . This notice constitutes such de-
cision, and Nauset has the right to appeal under the
Disputes clause of the contract.” J.A. 348. The termination
letter, however, did not include the specific notice of appeal
rights language required by Federal Acquisition Regula-
tion (FAR) 33.211(a)(4)(v). Specifically, under that appli-
cable FAR provision, the termination notice was required
to contain language notifying the contractor that they “may
appeal [the] decision to the agency board of contract ap-
peals . . . within 90 days” of receipt of the decision or, alter-
natively, “bring an action directly in the United States
Court of Federal Claims.” FAR 33.211(a)(4)(v).
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NAUSET CONSTRUCTION CORPORATION v.
SECRETARY OF THE ARMY
3
Within 90 days of receipt of the termination letter,
Nauset submitted two letters to the contracting officer.
First, on January 17, 2018, Nauset submitted a letter titled
“Response to Termination of November 17, 2017 and Cer-
tified Termination Claim and Request for Final Decision
under the Contract Disputes Act.” J.A. 357. In this letter,
Nauset disputed the termination and stated that it in-
tended to submit a claim for costs. Nauset also stated that
it “takes exception to the government’s decision to termi-
nation for default . . . [and that it] will continue to vehe-
mently invest every available resource to support [its]
Claim, [its] position and reputation.” J.A. 370. The con-
tracting officer acknowledged receipt of this letter by email
stating “Email received.” J.A. 411. Then, on February 12,
2018, Nauset submitted a “Claim for Extended Time and
Unpaid Completed Contract Work – Part 2 and Wrongful
Termination.” J.A. 372. In the “Wrongful Termination”
section of the letter, Nauset stated that it “intends to de-
fend its position and prove that the government’s decision
to terminate was based on . . . circumstances . . . beyond
[its] control” and that it “submits this wrongful termination
claim in accordance with the Contract Disputes Act.”
J.A. 374–75. The contracting officer again acknowledged
receipt via email stating “Received.” J.A. 413.
On June 27, 2018, 222 days after the termination no-
tice, Nauset appealed the decision to the Board. J.A. 129.
The government filed a motion to dismiss, arguing that
Nauset’s appeal of the termination for default was un-
timely. Nauset replied that its appeal was not time-barred
because, among other things, the government gave inade-
quate notice of Nauset’s appeal rights and Nauset reason-
ably and detrimentally relied on the lack of notice and was
thus prejudiced by the lack of notice. In addition, Nauset
asserted that the government’s conduct following the ter-
mination vitiated the finality of the termination for default.
The Board rejected each of these arguments and ultimately
dismissed Nauset’s appeal as untimely. See Nauset
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NAUSET CONSTRUCTION CORPORATION v.
SECRETARY OF THE ARMY
4
Construction Corp., ASBCA Nos. 61673, 61675, 21-1 BCA
¶ 37852, 2021 WL 2029232 (May 5, 2021) (Board Decision).
Nauset appeals. We have jurisdiction under 28 U.S.C.
§ 1295(a)(10).
D ISCUSSION
On appeal, Nauset argues that the Board erred in find-
ing that the termination notice did not prejudice Nauset.
Alternatively, Nauset asserts that the Board erred in find-
ing that the government’s conduct did not vitiate the final-
ity of the termination. We address each argument in turn
below.
Our review of the Board’s decision is limited by statute.
Under the Contract Disputes Act, we review the Board’s
legal determinations de novo and we may only set aside the
Board’s findings of fact if they are “(A) fraudulent, arbi-
trary, or capricious; (B) so grossly erroneous as to neces-
sarily imply bad faith; or (C) not supported by substantial
evidence.” 41 U.S.C. § 7107(b)(2). Whether the termina-
tion letter prejudiced Nauset presents a question of fact
that we review for substantial evidence. See Bannum, Inc.
v. United States, 404 F.3d 1346, 1353 (Fed. Cir. 2005)
(“Prejudice is a question of fact.”); see also Godley v. United
States, 5 F.3d 1473, 1476 (Fed. Cir. 1993) (stating that
whether the appellant suffered prejudice was a factual
question). Similarly, whether the government’s actions vi-
tiated the finality of the termination letter, or in other
words, whether Nauset could reasonably believe that the
contracting officer was reconsidering her decision, is a
question of fact reviewed for substantial evidence. See Ra-
Nav Lab’ys, Inc. v. Widnall, 137 F.3d 1344, 1346, 1348
(Fed. Cir. 1998) (determining that substantial evidence
supports the ASBCA’s finding that the government’s con-
duct following termination did not vitiate the termination
of the contract); Am. Elec. Lab’ys, Inc. v. United States,
774 F.2d 1110, 1116 (Fed. Cir. 1985) (determining whether
substantial evidence supports the ASBCA’s finding that a
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NAUSET CONSTRUCTION CORPORATION v.
SECRETARY OF THE ARMY
5
party’s reliance on the government’s conduct was unrea-
sonable).
I
Substantial evidence supports the Board’s finding that
there was no prejudice or detrimental reliance here. While
the termination notice was technically deficient under FAR
33.211(a)(4)(v), the notice stated that “Nauset has the right
to appeal under the Disputes clause of the contract.”
J.A. 348. It was reasonable for the Board to determine that
this provided sufficient information to allow Nauset to look
to the disputes clause of the contract, which would have
ultimately led Nauset to 41 U.S.C. § 7104, stating Nauset’s
appeal rights. In addition, while not necessary to our deci-
sion, the record also shows that Nauset’s counsel reviewed
the termination decision and conducted research on Nau-
set’s appeal rights under FAR.
Nauset argues that this finding is inconsistent with the
Board’s finding that Nauset was confused and did not un-
derstand that the termination notice starts the 90-day ap-
peal clock. But, as Nauset’s counsel admitted at oral
argument, any prejudice or detrimental reliance must be
reasonable. See Oral Arg. at 3:06–3:45, https://oralargu-
ments.cafc.uscourts.gov/default.aspx?fl=21-2305_1208202
3.mp3; see also J-Way Southern, Inc. v. U.S. Army Corps of
Engs., 34 F.4th 40, 48 (1st Cir. 2022) (finding that the
party’s asserted detrimental reliance on a termination no-
tice was unreasonable) (citing J-Way Southern, Inc.
v. United States, 516 F. Supp. 3d 84, 91 (D. Mass. 2021)).
Here, while Nauset may have been confused, substantial
evidence supports the Board’s finding that such confusion
would have been unreasonable given the clear path from
the termination notice to the FAR provision that provides
Nauset’s appeal rights. Specifically, the termination notice
pointed Nauset to the disputes clause of the contract, which
incorporated FAR 52.233-1 (2002). FAR 52.233-1 explains
that the contract is subject to the Contract Disputes Act,
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NAUSET CONSTRUCTION CORPORATION v.
SECRETARY OF THE ARMY
6
formerly at 41 U.S.C. §§ 601–13. A quick search for the
Contract Disputes Act would lead Nauset to the current
version found at 41 U.S.C. §§ 7101–09, with § 7104 provid-
ing information on appeal rights. Thus, while the notice of
appeal was technically defective, Nauset’s appeal rights
were reasonably discernible, and substantial evidence sup-
ports the Board’s weighing of the evidence and finding that
it is hard to imagine that Nauset would not know of its ap-
peal rights by exercising a little diligence. See, e.g., J-Way
Southern, 34 F.4th at 49 (“[F]rom the adequate-notice
standpoint, [the termination notice] provided the relevant
regulatory and statutory breadcrumbs a reader could (and
should) follow to find the appellate logistics.”).
II
For the reasons below, we also hold that substantial
evidence supports the Board’s finding that the govern-
ment’s conduct did not vitiate the finality of the termina-
tion decision. Nauset argued that it reasonably believed
that the contracting officer was reconsidering the termina-
tion decision based on the contracting officer’s emails ac-
knowledging receipt of Nauset’s January 17, 2018 and
February 12, 2018 letters, as well as a letter from the con-
tracting officer on March 26, 2018, stating that she was
still reviewing Nauset’s February 12 claim. Nauset also
pointed to communication between its attorney and gov-
ernment counsel on November 28, 2017 and communica-
tions with the government starting in April 2018 as
support for its belief. The Board did not consider the com-
munications after February 15, 2018—the end of the 90-
day appeal window—stating that “[i]t is well settled that
the government’s actions must have occurred within the
90-day jurisdictional window in order to vitiate the finality
of the termination.” Board Decision, 2021 WL 2029232.
The Board ultimately found that Nauset did not provide
sufficient evidence to demonstrate that it reasonably could
have concluded that the contracting officer was reconsider-
ing the termination decision.
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NAUSET CONSTRUCTION CORPORATION v.
SECRETARY OF THE ARMY
7
At the outset, we hold that the Board erred in holding
as a matter of law that evidence of events that occurred
after the 90-day appeal window are per se irrelevant to this
factual inquiry. While we recognize that such evidence
most often will have no bearing on an appellant’s under-
standing of the finality of the contracting officer’s decision
during the appeal window, it cannot be said that such evi-
dence will never have any bearing on the issue. The
Board’s per se rule is therefore incorrect, and further, not
supported by our precedent. The Supreme Court has cau-
tioned against such rigid per se rules in other instances.
See Octane Fitness, LLC v. ICON Health & Fitness, Inc.,
572 U.S. 545, 553 (2014) (rejecting a per se framework as
“unduly rigid”); KSR Int’l Co. v. Teleflex Inc., 550 U.S. 398,
415, 419–20 (2007) (rejecting a “rigid approach” and cau-
tioning against “transform[ing] [a] general principle into a
rigid rule”); Festo Corp. v. Shoketsu Kinzoku Kogyo Ka-
bushiki Co., 535 U.S. 722, 738 (2002) (stating that doctrine
is to be applied in a “flexible way, not a rigid one”). The
Board’s error here, however, was harmless. Our review of
the evidence, including the post-90-day appeal window ev-
idence, confirms the Board’s view that in this case, Nauset
could not have reasonably concluded that the contracting
officer’s termination decision was being reconsidered prior
to the appeal deadline.
In other words, the Board’s finding that the contracting
officer’s conduct did not vitiate the finality of the termina-
tion decision is supported by substantial evidence. When
Nauset asked the contracting officer to reconsider the ter-
mination decision, the contracting officer’s emails stated
“Email received” and “Received” with nothing further.
J.A. 411, 413. Because the contracting officer merely
acknowledged receipt, it was reasonable for the Board to
conclude that Nauset could not have reasonably believed
that the contracting officer was reconsidering her decision
based on Nauset’s request for reconsideration or the of-
ficer’s emails. Further, while the government counsel told
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NAUSET CONSTRUCTION CORPORATION v.
SECRETARY OF THE ARMY
8
Nauset’s attorney eleven days after the termination notice
that it was possible that the termination for default could
be converted to a termination for convenience, the record—
including an affidavit by Nauset’s attorney—does not indi-
cate that the counsel had any further communication or
that the contracting officer was involved in any such con-
versation. As such, the evidence supports the Board’s find-
ing that the statement by government counsel was not
sufficient to indicate that the contracting officer was recon-
sidering the decision.
CONCLUSION
For the foregoing reasons, we affirm the decision of the
Board dismissing Nauset’s appeal.
AFFIRMED
COSTS
No costs.
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