US Military Corp

ARMED SERVICES BOARD OF CONTRACT APPEALS Appeal of - ) ) US Military Corp ) ASBCA No. 64321 ) Under Contract No. N39040-25-P-0117 ) APPEARANCE FOR THE APPELLANT: Mr. Mike Maxwell Representative APPEARANCES FOR THE GOVERNMENT: Tracey R. Rockenbach, Esq. Acting Navy Chief Trial Attorney Carl F. Olson, Esq. Trial Attorney Portsmouth Naval Shipyard, NH Matthew S. Hawkins, Esq. Associate Counsel Washington Navy Yard, DC OPINION BY ADMINISTRATIVE JUDGE ARNETT This appeal arises from a termination for cause of a contract awarded by the Department of the Navy (the government or Navy) to appellant US Military Corp (USMC) for the lease of forklifts. It turns on whether the termination for cause was justified. The Board has jurisdiction over this appeal pursuant to the Contract Disputes Act of 1978 (CDA), 41 U.S.C. §§ 7101-7109. The parties elected to submit this appeal on the record pursuant to Board Rule 11. Only the propriety of the termination is before the Board. Because we conclude that the termination for cause was not justified, the appeal is sustained, and the termination for cause is converted to a termination for the convenience of the government. FINDINGS OF FACT Background: 1. On June 24, 2025, the Navy issued Request for Quotation No. N3904025Q3027 (the RFQ), seeking quotes for the lease of forklifts at Naval Station Norfolk, VA (R4, tab 1 at 1-3; gov’t proposed findings of fact (PFOF) ¶ 1). The RFQ sought pricing for two “6K# Counterbalance, Pneumatic, IC” forklifts and provided a list of specifications with a box for offerors to check, indicating whether their proposed equipment met each of the listed specifications (id. at 3-5). Offerors were required to submit “tech sheets” for their proposed equipment (id. at 1). 2. On June 25, 2025, USMC submitted a quote in response to the RFQ (R4, tab 2 at 13). USMC’s quote indicated that its proposed equipment complied with each of the listed specifications and included tech sheets for a Doosan D30S-7 diesel forklift (id. at 16-17, 25-28). By email dated June 11, 2026, USMC forwarded to the Board a rental reservation from United Rentals dated June 27, 2025, which indicates that USMC reserved two 6K pneumatic diesel forklifts for rent beginning July 28, 2025. The Offer: 3. On July 21, 2025, the Navy notified USMC via email that it was “pleased to award” a purchase order to USMC for forklift rental (R4, tab 5 at 65). The email stated, “Please respond to confirm your receipt and understanding of this correspondence, and attach a signed copy of the DD 1449 (sign Block 30a-c confirming your Acceptance) at your earliest convenience.” (Id.at 66). 1 Both the Navy’s email and Box 28 of the Purchase Order required that USMC sign the Purchase Order to accept it (id.; R4, tab 3 at 29). 4. The Purchase Order 2 was for the lease of two 3-ton forklifts in accordance with the specifications of the Statement of Work (SOW) (R4, tab 3 at 32). Delivery was required on or before July 28, 2025, and the period of performance was from July 28, 2025 to September 7, 2025 (id. at 42). The Purchase Order listed the same specifications from the RFQ 3 which included a requirement that each forklift “will have enclosed cab with heat and operator cooling fan (A/C preferred). EXCEPTION: Rain Canopy will only be considered if no bidder is able to meet this specification without need for exception(s)” (id. at 33-34). The government characterizes this language as requiring “either forklifts with a cab and AC, or a cooling fan and canopy” (gov’t br. at 5). 4 The Purchase Order did not specify any brand name, make, or model of forklift to be provided. 1 The government’s July 21, 2025 email in the record at R4, tab 5 at 65-66 does not include an attached copy of the Purchase Order. 2 Standard Form 1449 is a Solicitation/Contract/Order for Commercial Products and Commercial Services (R4, tab 3 at 29). In this case, it was the Purchase Order. 3 We note that the specifications were not well stated, consisting of a list of criteria with unchecked “yes/no” boxes which leaves one to deduce what is required. 4 The government’s brief is not paginated. Citations are to the page of the .pdf. 2 Acceptance of the Offer: 5. On July 21, 2025, USMC responded via email stating, “Good day, see attached contract . . . .” (R4, tab 4 at 63-64). 5 On the same day, the Navy replied with a copy of the Purchase Order signed by both the contracting officer and USMC Representative Mike Maxwell (id. at 63; R4, tab 3 at 29-30). 6. In signing the Purchase Order, USMC agreed “to furnish and deliver all items set forth or otherwise identified” in the Purchase Order “subject to the terms and conditions specified” (R4, tab 3 at 29). We find that USMC accepted the Navy’s offer presented in the Purchase Order resulting in a contract between the parties. We also find that the contract required USMC to provide, by July 28, 2025, forklifts that met the specifications, not necessarily the specific forklifts USMC proposed. Post-award Communications: 7. On July 23, 2025, USMC emailed the Navy Contracting Officer’s Representative (COR), stating: Good day, the two Fork Lifts with Cab are no longer available, what is available are 2 each 6K Forklift Diesel with open Cab, I will find out if they have a canopy and a fan, please let me know right away rental equipment is first come 1st serve? (R4, tab 5 at 72). Tech sheets for a Toyota diesel forklift were attached to USMC’s email (id. at 74-85). We find that this email notified the Navy that the specific forklifts that USMC had proposed on June 25, 2025 were not available as of July 23, 2025 and USMC proposed alternate diesel forklifts made by Toyota. 8. On July 23, 2025, the COR responded: If they are outside of the contract specifications the customer will have to approve. I find it odd to state first come first serve, is this United Rentals? We are under contract for the specified forklifts in the statement of work. I do not have the authority to change the terms of the contract. I have copied the Contracting Officer and will get back to you. 5 USMC’s July 21, 2025 email in the record at R4, tab 4 at 63-64 does not include an attached copy of the Purchase Order. 3 (Id. at 87) 9. On July 23, 2025, USMC responded: Good day, that is correct United Rental was the supplier that said they do not have any Forklifts with Cab or without Cab. Herc can deliver Monday two 6K Forklifts without Cab and AC that meet specifications and Herc said they can order the Fan and Canopy but probably will not be here in time. Summer is the busiest season with Caterpillar, Hyster, Yale and Eastern Lift forklifts are all out on rent. (Id. at 86) We find this email expressed uncertainty about whether USMC’s alternate supplier, Herc, could provide the canopy and fan for the Toyota forklifts by the delivery date. 10. In a July 24, 2025 email time-stamped 10:13 am, the Navy CO noted that USMC had executed the contract on July 21, 2025 “affirming their capability to provide the specified equipment” and that both parties were bound to the contract terms (id. at 96). The CO stated, “[f]ollowing confirmation that USMC is no longer able to fulfill the equipment requirements under this contract, a Termination for Cause modification will be issued.” (Id.). 11. At 1:13 p.m., USMC responded stating, “[g]ood afternoon, two 6K Forklifts with Cab and AC that meet specification except for they are gasoline not diesel (sic) is this acceptable” (id. at 95). 12. At 1:40 p.m., the CO responded, “[n]o, the equipment that was originally quoted and had gone through tech review should be the same equipment that is being delivered. In addition, the SOW calls out this being diesel powered, not gasoline powered.” (Id. at 102) 13. At 2:58 p.m., USMC responded, “[W]e can deliver two Toyota 6K Forklifts with Rain Canopy and Fan that meet specification (sic) will this be acceptable” (id. at 109). Based upon the current record, this is the last communication from USMC prior to the Navy’s termination for cause. Termination for Cause and Appeal: 14. At 7:03 a.m. on July 25, 2025, the government emailed USMC a “modification for Termination for Cause” for the contract (id. at 131). Dated July 25, 4 2025, Modification No. P00001 unilaterally terminated for cause the contract pursuant to Clause 52.212-4(m) (R4, tab 4 at 60). The modification cited USMC’s July 23, 2025 email that its supplier “no longer had the forklifts available” and concluded that USMC was “unable to source and provide the agreed upon forklifts in accordance with the Statement of Work” (id.). 15. The Purchase Order incorporated by reference Federal Acquisition Regulation (FAR) 52.212-4, CONTRACT TERMS AND CONDITIONS- COMMERCIAL PRODUCTS AND COMMERCIAL SERVICES (NOV 2023), which states, in pertinent part: (m) Termination for cause. The Government may terminate this contract, or any part hereof, for cause in the event of any default by the Contractor, or if the Contractor fails to comply with any contract terms and conditions, or fails to provide the Government, upon request, with adequate assurances of future performance. 16. On August 7, 2025, USMC submitted a notice of appeal to the Board stating its intent to appeal the Navy’s termination for cause of its contract. The Board docketed the appeal as ASBCA No. 64321. Appellant has not sought monetary damages. 17. On March 13, 2026, the Navy issued its First Discovery Request and Request for Admission to USMC (tab G1 1-2). 6 The Navy sought admission of the following: a. Admit that on July 23, 2025 you told the Government that you could not provide two forklifts with a cab and air conditioning by July 28, 2025. b. Admit that on July 23, 2025 you told the Government that you could not provide two forklifts with a fan and canopy by July 28, 2025. (Id. at 2) 18. Acting pro se, USMC responded on March 29, 2026, with a narrative email in which it restated the substance of its July 23, 2025 emails to the Navy (tab G2 6 These documents were submitted by the government in response to the Board’s Rule 11 Scheduling Order dated February 24, 2026. 5 at 3-5). We do not find USMC’s response to constitute an admission to either of the Navy’s requests. DECISION I. Standard of Review By request of the parties, this appeal is being decided pursuant to Board Rule 11, “Submission Without a Hearing.” Unlike a motion for summary judgment, which must be adjudicated on the basis of a set of undisputed facts, the Board “may make findings of fact on disputed facts” pursuant to Board Rule 11. DG21, LLC, ASBCA No. 57980, 15-1 BCA ¶ 36,016 at 175,909 n.1; aff’d DG21, LLC. V. Mabus, 819 F.3d 1358 (Fed. Cir. 2016). II. The Parties’ Contentions The Navy asserts that the termination for cause was justified because USMC repudiated the contract on July 23, 2025, when it informed the government that it “could not deliver acceptable forklifts by the required date of July 28, 2025” (gov’t br. at 5). The Navy contends that it “began terminating the contract for cause” on July 24, 2025 and that, “[o]nly after the government had begun terminating the contract” did USMC indicate that it could provide two forklifts with a rain canopy and fan (gov’t PFOF ¶¶ 11-12). The Navy asserts that “[c]ommunication from a contractor that it will only deliver substitute products from a previously undisclosed supplier warranted termination for cause” and notes that the forklifts identified in USMC’s July 24, 2025 email were not the same as it had proposed and had not been reviewed for technical acceptability (gov’t br. at 5-6). The Navy contends that USMC’s response to a request for admission constitutes an admission that USMC could not provide any contractually compliant forklifts by the delivery date (id.at 6). Finally, the Navy argues that USMC did not retract its July 23, 2025, repudiation (id. at 6-7). USMC contends that the termination for cause should be converted to one for convenience because it had forklifts that met the specifications available for delivery by July 28, 2025 (app. July 17, 2026 submission). USMC notes that the contract was terminated four days prior to the delivery date and provides invoices for the alternate forklifts (id.). USMC filed an untimely reply which was the subject of a motion to strike filed by the government. 7 7 On August 18, 2026, the Navy filed a Motion to Strike appellant’s August 18, 2026 submission as untimely since the filing deadline was August 14, 2026. In rendering this decision, we did not consider or rely upon any information provided in appellant’s late filing. Therefore, the government’s motion is denied as moot. 6 III. The Navy Purchase Order was an offer which USMC accepted in writing. FAR part 13 governs acquisitions (including purchase orders) under the simplified acquisition threshold of $250,000. When the solicitation is an RFQ, the contractor’s response is a quotation. A quotation is not an offer and cannot be accepted to form a binding contract. See FAR 13.004(a); see also FAR 2.101 (definitions of solicitation and offer). Instead, the offer arises only when the government responds to the quotation through issuance of a purchase order. Thus, a contract only arises when the contractor accepts the government’s offer. Warfighter Def. Inc., ASBCA No. 63924, 25-1 BCA ¶ 38,863 at 189,136 (citing FAR 13.004(a); FAR 2.101 (definition of purchase order)). If requested by the CO, the contractor may indicate acceptance by notifying the government. Furnishing the supplies ordered or “proceeding with the work to the point where substantial performance has occurred” may also demonstrate acceptance. FAR 13.004(b). At any time before acceptance occurs, the government may withdraw or cancel its offer by written notice to the supplier. FAR 13.004(c). Here, the Navy Purchase Order was an offer to lease two 3-ton forklifts which met the specifications to be delivered on or before July 28, 2025. The Purchase Order was not limited to the forklifts identified in USMC’s proposal and could be satisfied through timely delivery of any contract-compliant forklifts (finding 6). We have found that USMC accepted the Navy’s offer in writing when it signed the Purchase Order (id.). IV. The Termination for Cause was not justified. A. Standard of Review for Termination for Cause A default termination is a “drastic sanction . . . which should be imposed (or sustained) only for good grounds and on solid evidence.” Lisbon Contractors, Inc. v. United States, 828 F.2d 759, 765 (Fed. Cir. 1987) (quoting J.D. Hedin Constr. Co. v. United States, 408 F.2d 424, 431 (Ct. Cl. 1969)). Because a termination for default is essentially a government claim, the government bears the burden of proving by a preponderance of the evidence that the termination was justified. See CKC Sys., Inc., ASBCA No. 61025, 19-1 BCA ¶ 37,385 at 181,750 (citing Thunderstruck Signs, ASBCA No. 61027, 17-1 BCA ¶ 36,835 at 179,504). If the government meets that burden, the contractor must show that its default was “caused by an occurrence beyond its control and without its fault or negligence, or that the contracting officer[’s] decision was arbitrary or capricious or an abuse of discretion.” Third Coast Fresh Distrib., L.L.C., ASBCA No. 59696, 16-1 BCA ¶ 36,340 at 177,194. The principles underlying terminations for default under FAR Part 49 apply equally to terminations for cause under FAR 52.212-4(m). See AEY, Inc., ASBCA No. 56470 et al., 7 18-1 BCA ¶ 37,076 at 180,469; Genome-Communications, ASBCA Nos. 57267, 57285, 11-1 BCA ¶ 34,699 at 170,889. “We may sustain a default termination on any proper ground, even if that ground was not the one relied upon by the Government.” Symvionics, Inc., ASBCA Nos. 60335, 60612, 17-1 BCA ¶ 36,790 at 179,322 (quoting Jones Oil Co., ASBCA No. 42651 et al., 98-1 BCA ¶ 29,691 at 147,150). Under FAR 52.212-4, the government has the right to terminate the contract for cause, in whole or in part, “in the event of any default by the Contractor, or if the Contractor fails to comply with any contract terms and conditions, or fails to provide the Government, upon request, with adequate assurances of future performance” (finding 15). One ground to justify a default termination is anticipatory repudiation. Symvionics, Inc., 17-1 BCA ¶ 36,790 at 179,322. To establish anticipatory repudiation, the government must show that appellant “communicated an intent not to perform in a positive, definite, unconditional and unequivocal manner.” Id. (citing James B. Beard, D.O., ASBCA Nos. 42677, 42678, 93-3 BCA ¶ 25,976 at 129,171). Either an express refusal to perform, or a statement of an inability to perform may constitute anticipatory repudiation. JOHN CIBINIC, JR., JAMES F. NAGLE, AND RALPH C. NASH, JR., ADMINISTRATION OF GOVERNMENT CONTRACTS, 837-41 (5th ed. 2016). A contractor’s statement that it is unable to perform unless the government modifies a contract may also constitute anticipatory repudiation. Symvionics, Inc., 17-1 BCA ¶ 36,790 at 179,322; Cascade Pac. Int’l v. United States, 773 F.2d 287, 293 (Fed. Cir. 1985). Because the CO, in this case, terminated the contract for cause for anticipatory repudiation three days before the date the forklifts were to be delivered, we do not entertain any other possible grounds for termination. The sole basis for the Navy’s termination for cause is anticipatory repudiation. We discuss the parties’ efforts to meet their respective burdens below. B. The Navy has not demonstrated that USMC repudiated the contract. The Navy contends that USMC’s July 23, 2025 email constitutes anticipatory repudiation. We disagree. 1. USMC’s July 23, 2025 email was not repudiation. USMC’s July 23, 2025 email states, “the two Fork Lifts with Cab are no longer available” and provides information regarding diesel Toyota forklifts that are available (finding 7). This does not meet the criteria for anticipatory repudiation. It is not a positive, definite, unconditional or unequivocal statement of USMC’s inability to perform. Rather, we have found it to be a statement that the specific forklifts USMC had proposed were no longer available from its supplier (id.). As previously noted, 8 USMC was not bound to provide the specific forklifts it had proposed and could fulfill the contract by providing alternate forklifts that satisfied the requirements (finding 6). USMC’s second email on July 23, 2025 expressed uncertainty about whether the fan and canopy for the proposed alternate forklifts (from Toyota) would be delivered on time (finding 9). Even considered in combination, the emails do not provide an unequivocal statement that USMC could not perform the contract. On July 23-24, 2025, USMC exchanged a series of emails with the Navy in which USMC proposed forklifts from alternate suppliers (findings 9, 11, 13). These communications consistently demonstrate USMC’s intent and effort to perform the contract, not repudiation. 2. USMC’s proposal(s) to provide non-compliant forklifts were not repudiation. The government cites a decision by the United States Court of Federal Claims for the proposition that “[c]ommunication from a contractor that it will only deliver substitute products from a previously undisclosed supplier warranted termination for cause” (gov’t br. at 5-6) (citing Servant Health, LLC v. United States, 161 Fed. Cl. 210, 232 (2022), aff’d, Nos. 2022-2193, 2022-2194, 2024 WL 4342872 (Fed. Cir. Sept. 30, 2024)). In Servant Health, the purchase order was for a specific brand of gloves, and substitution was expressly prohibited. Id. at 220-21. After the delivery deadline passed, Servant’s contract was terminated for cause because it failed to timely deliver the agreed-upon goods. Id. at 231-32 (citations omitted). The Navy’s reliance on Servant Health is in error, and the holding cited is wholly inapplicable to the facts of this case. In the case at bar, the Purchase Order did not specify any brand name, make, or model of forklift to be provided (finding 4). USMC’s contract did not require delivery of the specific forklifts that USMC bid (finding 6). USMC could have fulfilled the requirements by delivering any contract-compliant forklifts by July 28, 2025.8 While at least one of the alternative forklifts proposed by USMC does not appear to meet the specifications, USMC consistently inquired whether the proposed alternate equipment would be acceptable (findings 7, 11, 13). None of USMC’s communications in the record expressed a refusal to perform unless the contract was modified. The emails indicate that USMC was working to identify acceptable forklifts. 8 We also note that decisions by the United States Court of Federal Claims are only binding upon us to the extent that we find them to be persuasive. 9  3. The CO recognized the need to confirm that USMC was unable to perform but failed to obtain such confirmation. Although the Navy argues that repudiation occurred on July 23, 2025, and it “began terminating the contract” after this communication, the Navy’s CO’s email from 10:13 a.m. on July 24, 2025 contradicts the Navy’s current position. The CO’s email stated, “[f]ollowing confirmation that USMC is no longer able to fulfill the equipment requirements under this contract, a Termination for Cause modification will be issued” (finding 10). Thus, as of 10:13 a.m. on July 24, 2025, the CO recognized the need to “confirm” that USMC was unable to perform (id.). After the CO’s 10:13 a.m. email, USMC submitted two emails proposing alternate equipment. The first was for gasoline forklifts which, on its face, did not meet the specifications since the specification required diesel forklifts (findings 11, 13). The second was for “two Toyota 6K forklifts with Rain Canopy and Fan” that purported to meet the specifications (finding 13). Neither of these emails indicated that USMC was no longer willing or able to fulfill the equipment requirements under the contract. Neither email provided the CO “confirmation” that USMC was unable to perform the contract. Rather than address whether the “two Toyota 6K Forklifts with Rain Canopy and Fan” satisfied the specifications, the Navy terminated for cause USMC’s contract. We conclude that this decision was premature since USMC’s last communication indicated that it could deliver two potentially contract-compliant forklifts and three days remained until the delivery deadline.9 4. USMC’s final email on July 24, 2025 affirmed its intent to perform. The Navy argues that “[o]nly after the government had begun terminating the contract” did USMC indicate that it could provide two forklifts with a rain canopy and fan (gov’t PFOF ¶¶ 11-12). This suggests that USMC simply provided the necessary information too late—after the termination had been set in motion. 10 However, the termination modification was not issued until the morning of July 25, 2025— approximately sixteen hours after USMC’s proposal to provide two Toyota 6K Forklifts with Rain Canopy and Fan (findings 13-14). We do not find the Navy’s argument persuasive. USMC’s final communication prior to its termination did not repudiate the contract. Rather it demonstrated UMCS’ continued intent to perform the contract. 9 We do not decide whether the proposed forklifts with rain canopy and fan were contractually compliant. 10 The termination process is not like a runaway train; the Navy simply could have refrained from issuing the termination modification. 10  5. USMC did not admit what the Navy alleges. In its brief, the Navy argues that USMC’s response to the Navy’s request for admissions constitutes an admission that it told the Navy on July 23, 2025 that it “could not provide any contractually compliant forklifts by the delivery date.” (Gov’t br. at 6). We have found that USMC’s response does not admit the information requested by the Navy (finding 18). While we recognize the Navy’s concerns about receiving contract-compliant equipment, the facts do not support anticipatory repudiation at the time the Navy terminated the contract. Therefore, we conclude that the government has not met its initial burden to justify the termination for cause. CONCLUSION The appeal is sustained, and the termination for cause is converted to a termination for the convenience of the government. Dated: September 24, 2026 LAURA J. ARNETT Administrative Judge Armed Services Board of Contract Appeals I concur I concur J. REID PROUTY DAVID D’ALESSANDRIS Administrative Judge Administrative Judge Acting Chairman Vice Chairman Armed Services Board Armed Services Board of Contract Appeals of Contract Appeals 11  I certify that the foregoing is a true copy of the Opinion and Decision of the Armed Services Board of Contract Appeals in ASBCA No. 64321, Appeal of US Military Corp, rendered in conformance with the Board’s Charter. Dated: September 24, 2026 PAULLA K. GATES-LEWIS Recorder, Armed Services Board of Contract Appeals 12