Ashridge, Inc.

ARMED SERVICES BOARD OF CONTRACT APPEALS Appeal of - ) ) Ashridge, Inc. ) ASBCA No. 64446 ) Under Contract No. W912HN-22-C-5004 ) APPEARANCES FOR THE APPELLANT: Casey J. McKinnon, Esq. James A. Sabia, Esq. Cohen Seglias Pallas Greenhall & Furman, PC Washington, DC APPEARANCES FOR THE GOVERNMENT: Michael P. Goodman, Esq. Engineer Chief Trial Attorney Allie E. Vandivier, Esq. Orion D. Ray, Esq. Engineer Trial Attorneys U.S. Army Engineer District, Savannah OPINION BY ADMINISTRATIVE JUDGE SWEET ON THE GOVERNMENT’S MOTION TO DISMISS THE COMPLAINT IN PART This appeal involves the government’s termination for default of a contract with appellant Ashridge, Inc. (Ashridge) to perform a perimeter dike raising and other tasks at Jones-Oysterbed Island in Savannah Harbor, South Carolina. On April 30, 2026 the United States Army Corps of Engineers (government) filed a partial motion to dismiss the complaint for failure to state a claim (Motion). Although styled as a motion to dismiss for failure to state a claim, the Motion also asserts that we do not possess jurisdiction over an excusable delay defense to the default termination raised in the complaint. For the reasons discussed in greater detail below, we grant the partial motion to dismiss the complaint for failure to state a claim because the allegations in support of certain claims do not entitle Ashridge to a legal remedy. We deny the partial motion to dismiss for lack of jurisdiction, but stay the appeal to allow Ashridge to submit its delay claim to the contracting officer (CO). As discussed in greater detail below, while the delay claim is a new claim that Ashridge did not submit to the CO, staying the appeal to allow Ashridge to submit that claim to the CO promotes judicial efficiency because we retain jurisdiction over another well-pled claim.  STATEMENT OF FACTS (SOF) FOR PURPOSES OF THE MOTION 1. On August 10, 2022, the government awarded Ashridge Contract No. W912HN-22-C-5004 (Contract) to perform a perimeter dike raising and other tasks at Jones-Oysterbed Island in Savannah Harbor, South Carolina (the Project) (compl. ¶¶ 10-11). 1 2. On October 20, 2025, the government issued a show cause notice indicating that the government was considering terminating the Contract for default (compl. ¶ 20). On October 31, 2025, the government held a “show cause hearing” (id. at ¶ 30). 3. On November 4, 2025, the government sent Ashridge a notice of termination, and issued Modification No. P00002 terminating the contract for default (compl. ¶ 37). The notice of termination stated that the government was terminating the contract because Ashridge allegedly had failed to follow the completion schedule, the government did not believe that Ashridge was capable of closing out its work under the Contract, Ashridge failed to make progress, and Ashridge had provided deficient work (id. at ¶¶ 40-41, 44). Ashridge alleges that, at the time of the termination, it was 95%, or substantially, complete with the Project (id. at ¶¶ 42, 48). 4. The complaint alleges two counts—Count I (Wrongful Termination) and Count II (Breach of the Implied Covenant of Good Faith and Fair Dealing) (compl. ¶¶ 69-92). Both counts consist of six claims—namely that: (1) the government failed to properly consider the Federal Acquisition Regulation (FAR) § 49.402-3(f) factors (Claim 1 (FAR § 49.402-3(f))) (compl. ¶¶ 72-73, 88); (2) the show cause notice did not adequately disclose the problems with Ashridge’s performance (Claim 2 (Show Cause Notice)) (id. at ¶¶ 74, 90); (3) Ashridge encountered excusable delay, including weather delays (Claim 3 (Excusable Delay)) (id. at ¶¶ 73, 76, 85-86); (4) the work was substantially complete (Claim 4 (Substantial Completion)) (id. at ¶¶ 73, 87); (5) the government failed to properly consider alternatives to termination for default under FAR § 49.402-4 (Claim 5 (FAR § 49.402- 4)) (id. at ¶¶ 80, 89); and (6) the notice of termination improperly referenced outdated and incorrect facts (Claim 6 (Termination Notice)) (id. at ¶¶ 75, 91). Regarding Claim 6 (Termination Notice), the complaint does not identify any FAR provision or other authority that the CO allegedly violated (id.). Nor does it allege that any such provision or authority conferred a right on Ashridge or imposed a burden on the CO (id.). 1 For purposes of this Motion only, we accept all of the factual allegations in the complaint as true. 2  DECISION I. Motion to Dismiss Claim 1 (FAR § 49.402-3(f)), Claim 2 (Show Cause Notice), Claim 5 (FAR § 49.402-4), and Claim 6 (Termination Notice) for Failure to State a Claim The government first moves to dismiss Claim 1 (FAR § 49.402-3(f)), Claim 2 (Show Cause Notice), Claim 5 (FAR § 49.402-4), and Claim 6 (Termination Notice) for failure to state a claim upon which relief can be granted (gov’t mot. at 5-9). 2 “Dismissal for failure to state a claim upon which relief can be granted is appropriate where the facts asserted in the complaint do not entitle the claimant to a legal remedy.” K2 Sols., Inc., ASBCA No. 60907, 17-1 BCA ¶ 36,801 at 179,376. As discussed below, because Claim 1 (FAR § 49.402-3(f)), Claim 2 (Show Cause Notice), Claim 5 (FAR § 49.402-4), and Claim 6 (Termination Notice) do not assert facts that entitle Ashridge to a legal remedy, they fail to state a claim. A. Claim 1 (FAR § 49.402-3(f)) Claim 1 (FAR § 49.402-3(f)) fails to state a claim because it does not assert facts that entitle Ashridge to a legal remedy. Because the Board reviews terminations for default de novo, “the failure to consider one or more of the factors found in FAR 49.402-3 does not require that a default termination be converted into a termination for the convenience of the government, as the regulation does not confer rights on a defaulting contractor, so consideration of those factors is not a prerequisite to a valid termination.” Dep’t of Transp. v. Eagle Peak Rock & Paving, Inc., 69 F.4th 1367, 1378 n.1 (Fed. Cir. 2023) (citation and quotations omitted). Thus, Claim 1 (FAR § 49.402-3(f))’s allegations that the government failed to consider the FAR § 49.402-3(f) factors do not entitle Ashridge to a legal remedy (SOF ¶ 4), such that they fail to state a claim. See K2 Sols, 17-1 BCA ¶ 36,801 at 179,376. 2 To the extent that the government seeks the dismissal of the remainder of Count II (Breach of the Duty of Good Faith and Fair Dealing) (gov’t mot. at 10-11), we deny that motion. Every contract imposes upon each party a covenant of good faith and fair dealing in its performance and enforcement. Metcalf Constr. Co. v. United States, 742 F.3d 984, 990 (Fed. Cir. 2014). That covenant includes “the duty not to interfere with the other party’s performance and not to act so as to destroy the reasonable expectations of the other party regarding the fruits of the contract.” Id. (quoting Centex Corp. v. United States, 395 F.3d 1283, 1304 (Fed. Cir. 2005)). Here, what remains of Count II after we grant the rest of the Motion plausibly alleges that the government interfered with Ashridge’s reasonable expectations by terminating the Contract when the Project was substantially complete (SOF ¶ 4). 3  Ashridge argues that Claim 1 (FAR § 49.402-3(f)) “is relevant to the Board’s determination as to whether the [CO] abused their discretion and acted arbitrarily or capriciously in terminating the contract for default (thus, improperly terminating, as alleged in Count I of the [c]omplaint). DCX, Inc. v. Perry, 79 F.3d 132, 135 (C.A. Fed., 1996)” (app. resp. at 9). However, the Federal Circuit has rejected such a broad reading of DCX, holding that: [A]s long as the termination for default was predicated on contract-related issues, i.e., the government’s default termination was not pretextual or unrelated to Contractors’ alleged inability to fulfil their obligations under the contract, the reasoning of the contracting officer at the time of termination is not the subject of the [Contract Disputes Act] adjudication, which must proceed on the evidence and arguments made in the adjudicatory proceeding, not through arbitrary-and-capricious or abuse-of-discretion review. Eagle Peak Rock, 69 F.4th at 1377 (citation and quotations omitted). In particular, as discussed above, Eagle Peak Rock rejected the use of evidence that the CO failed to comply with FAR § 49.402-3(f) as evidence of wrongful termination. Id. at 1378 n.1. Ashridge also argues that we should not dismiss Claim 1 (FAR § 49.402-3(f)) because it merely is a separate legal theory under Ashridge’s wrongful termination and breach of the duty of good faith and fair dealing claims; and not a separate claim (app. resp. at 9). 3 Whether different theories constitute different claims depends upon whether they “necessitate a focus on a different or unrelated set of operative facts.” Nassar Grp. Int’l, ASBCA No. 58451 et al., 19-1 BCA ¶ 37,405 at 181,831 (quoting Placeway Constr. Corp. v. United States, 920 F.2d 903, 907 (Fed. Cir. 1990)). Here, Claim 1 (FAR § 49.402-3(f)) necessities a focus on what the CO considered prior to the termination (SOF ¶ 4). Those facts are different and unrelated to the operative facts in the two well-pled claims—namely Claim 3 (Excusable Delay) and Claim 4 (Substantial Completion)—because the operative facts in Claim 3 (Excusable Delay) focus on the weather and other delays, and the operative facts in Claim 4 (Substantial Completion) focus on how complete the Project was at the time of termination (SOF ¶ 4). Indeed, Ashridge effectively acknowledges that Claim 1 (FAR § 49.402- 3(f)) is a different claim than Claim 3 (Excusable Delay) by conceding that Claim 3 (Excusable Delay) is a new claim that must be presented to the CO, as discussed 3 For purposes of deciding the Motion, we are assuming without deciding that Ashridge is correct that a tribunal may not dismiss only a part of a claim for failure to state a claim. See Redwind v. Western Union, LLC, No. 3:18-cv- 02094-SB, 2019 WL 3069864, at *4 (D. Or. June 21, 2019). 4 below. Therefore, Claim 1 (FAR § 49.402-3(f)) is a different claim, and subject to dismissal for failure to state a claim. B. Claim 2 (Show Cause Notice) Claim 2 (Show Cause Notice) also fails to state a claim because it does not assert facts that entitle Ashridge to a legal remedy. Ashridge concedes that FAR 49.402-3(e)(1) did not require a show cause notice because it merely stated that “[i]f termination for default appears appropriate, the contracting officer should, if practicable, notify the contractor in writing of the possibility of the termination” (app. resp. at 10-11 (quoting 48 C.F.R. § 49.402-3(e)(1)) (emphasis added)). Rather, Ashridge argues that the CO elected to provide a show cause notice here, and, if the government elects to issue a show cause notice, then FAR 49.402-3 requires that that notice meaningfully request that the contractor show cause why the contract should not be terminated for default (id.). However, we already have rejected that argument, holding that: Since [the government] was under no obligation to furnish [the appellant] with a cure notice, or a show cause notice, any supposed defects in that notice were not legally significant. E.g., Sach Sinha and Assocs., Inc., ASBCA No. 46916, 96-2 BCA ¶ 28,346 at 141,563 (where show cause notice not required by law, contractor “has no basis to complain about quality or quantity of information set forth in . . . notice”). In re B.V. Constr., Inc., ASBCA No. 47766 et. al., 04-1 BCA ¶ 32,604 at 161,363 n.2. Thus, Claim 2 (Show Cause Notice)’s allegations that the show cause notice did not adequately disclose the problems with Ashridge’s performance do not entitle Ashridge to a legal remedy (SOF ¶ 4), such that they fail to state a claim. See K2 Sols, 17-1 BCA ¶ 36,801 at 179,376. C. Claim 5 (FAR § 49.402-4) Claim 5 (FAR § 49.402-4) fails to state a claim because it does not assert facts that entitle Ashridge to a legal remedy. As discussed above, a FAR provision does not provide a legal basis for challenging a termination when it does not confer rights on the defaulting contractor, or it does not impose an obligation upon the CO. Eagle Peak Rock, 69 F.4th at 1378 n.1; In re B.V. Constr., 04-1 BCA ¶ 32,604 at 161,363 n.2. FAR 49.402-4 merely indicates that “[t]he following courses of action, among others, are available to the contracting officer in lieu of termination for default when in the Government’s interest . . . .” 48 C.F.R. § 49.402-4. Because that language does not confer any rights upon a defaulting contractor or impose any obligation upon the 5 CO, FAR 49.402-4 does not provide a legal basis for challenging the CO’s purported failure to consider alternatives in lieu of termination for default. See Jones Oil Co., ASBCA No. 45601 et al., 98-1 BCA ¶ 29,691 at 147,152-53. Thus, Claim 5 (FAR § 49.402-4)’s allegations that the government failed to properly consider alternatives to termination for default under FAR § 49.402-4 do not entitle Ashridge to a legal remedy (SOF ¶ 4), such that they fail to state a claim. See K2 Sols, 17-1 BCA ¶ 36,801 at 179,376. D. Claim 6 (Termination Notice) Claim 6 (Termination Notice) fails to state a claim because it does not assert facts that entitle Ashridge to a legal remedy. Neither the complaint nor Ashridge’s brief identify a FAR provision or other legal authority that prohibited the termination notice from referencing outdated or incorrect facts, let alone allege that any such provision or authority conferred a right on Ashridge or imposed an obligation on the CO (SOF ¶ 4); app. resp. at 9, 11). Moreover, to the extent that Ashridge is arguing that it may bring a claim challenging the CO’s reasoning in a termination notice, that would lack merit. As Eagle Peak Rock held, we conduct de novo review, and “the reasoning of the contracting officer at the time of termination is not the subject of the [Contract Disputes Act] adjudication.” 69 F.4th at 1377. 4 Thus, Claim 6 (Termination Notice)’s allegations that the termination notice improperly referenced outdated and incorrect facts do not entitle Ashridge to a legal remedy (SOF ¶ 4), such that they fail to state a claim. See K2 Sols, 17-1 BCA ¶ 36,801 at 179,376. II. Motion to Dismiss Claim 3 (Excusable Delay) for Lack of Jurisdiction The government also moves to dismiss Claim 3 (Excusable Delay) for lack of jurisdiction (gov’t mot. at 9-10). The submission of a claim is a jurisdictional prerequisite for an appeal to the Board under the Contract Disputes Act, 41 U.S.C. § 7101 et seq.; Reflectone, Inc. v. Dalton, 60 F.3d 1572, 1575 (Fed. Cir. 1995). Thus, 4 As discussed above, Eagle Peak Rock allows consideration of the CO’s reasoning for terminating a contract when a contractor claims that the termination was pretextual or unrelated to the contractor’s alleged inability to fulfil its contractual obligations. 69 F.4th at 1377. However, Ashridge does not argue that the complaint alleges pretext or that the termination was unrelated to Ashridge’s alleged inability to fulfil its contractual obligations (app. resp.). In any event, this decision does not address whether Ashridge may rely upon the termination notice—or any other facts—as evidence of the CO’s reasoning for purposes of establishing any claim of pretext or that the termination was unrelated to Ashridge’s inability to fulfil its contractual obligations. We merely hold that Ashridge has not established an independent legal remedy for any termination notice inadequacy. 6  we do not possess jurisdiction over new claims that a contractor did not submit to the CO. Lockheed Martin Aircraft Ctr., ASBCA No. 55164, 07-1 BCA ¶ 33,472 at 165,934. “[W]hile all possible defenses need not be submitted to a contracting officer for a final decision, a contractor contesting liquidated damages or a default termination due to excusable delay must submit a claim for a time extension before appealing to the Board.” ECC CENTCOM Constructors, LLC, ASBCA No. 60647, 18-1 BCA ¶ 37,133 at 180,713. We treat causes of action as involving new claims “if they either request different remedies (whether monetary or nonmonetary) or assert grounds that are materially different from each other factually or legally.” ECC Int’l LLC, ASBCA No. 60167, 2022 WL 509701 (Jan. 25, 2022) (quoting K-Con Bldg. Sys., Inc., 778 F.3d 1000, 1005 (Fed. Cir. 2015) (emphasis in original)). Here, Ashridge does not dispute that we lack jurisdiction over Claim 3 (Excusable Delay) because it is a new claim that Ashridge has not submitted to the CO (app. resp. at 11-12). Instead, Ashridge indicates that it intends to submit such a claim to the CO (id.). In light of the fact that we are not dismissing the remainder of the complaint in its entirety for failure to state a claim, it is in the interest of judicial economy that we stay this appeal for 30 days to allow Ashridge to submit Claim 3 (Excusable Delay) to the CO. CONCLUSION For the reasons discussed above, we grant the motion to dismiss for failure to state a claim, and dismiss Claim 1 (FAR § 49.402-3(f)), Claim 2 (Show Cause Notice), Claim 5 (FAR § 49.402-4), and Claim 6 (Termination Notice). We stay the remainder of this appeal for 30 days. Within 30 days of the date of this decision, the appellant shall file a status report on the status of Claim 3 (Excusable Delay). Dated: October 7, 2026 JAMES R. SWEET Administrative Judge Armed Services Board of Contract Appeals (Signatures continued) 7  I concur I concur J. REID PROUTY MICHAEL N. O’CONNELL Administrative Judge Administrative Judge Acting Chairman Vice Chairman Armed Services Board Armed Services Board of Contract Appeals of Contract Appeals 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. 64446, Appeal of Ashridge, Inc., rendered in conformance with the Board’s Charter. Dated: October 7, 2026 PAULLA K. GATES-LEWIS Recorder, Armed Services Board of Contract Appeals 8