Wolverine Tube, Inc.

Material Facts

• On May 18, 2021, the Air Force awarded Contract No. FA8534-21-D-0002, an indefinite delivery requirements contract under FAR 16.503, to Wolverine Tube, Inc. for the manufacture and delivery of air cargo pallets with an 18‑month base period followed by multiple options.
• The contract required Wolverine to deliver six first article pallets for government testing within 365 days of award and incorporated FAR 52.209-4, which placed the risk of acquiring production materials before first article approval on the contractor and made such costs not allocable to termination settlements.
• The contract incorporated FAR 52.242-15, STOP-WORK ORDER, FAR 52.233-3, PROTEST AFTER AWARD, and FAR 52.249-2, TERMINATION FOR CONVENIENCE OF THE GOVERNMENT (FIXED-PRICE).
• On June 2, 2021, incumbent contractor AAR Manufacturing, Inc. protested the Wolverine award at GAO, and on June 4, 2021 the contracting officer issued a stop‑work order by email directing Wolverine to cease all work in accordance with FAR 52.242-15.
• On July 1, 2021, the Air Force informed GAO it would take corrective action by reopening discussions and reevaluating proposals, GAO dismissed the protest on July 2, 2021, and on July 7, 2021 the contracting officer incorporated the stop‑work order into the contract via Modification P0001 citing FAR 52.242-15.
• On September 15, 2021, the Air Force notified Wolverine that discussions were reopened with all offerors in the competitive range, requested proposal revisions, and asked Wolverine to extend its proposal validity through March 31, 2022, which Wolverine did.
• Despite no pallet orders being placed and no further Air Force communication about performance, Wolverine after September 2, 2021 placed over $2 million in orders for materials and equipment, including a $1,599,400 order to Modern Forge Companies for 220,000 D‑Rings and $400,961 in dies and equipment from Zarbana Aluminum Extrusions LLC, and incurred $107,987 in operating costs.
• Wolverine needed 132 D‑Rings to produce the six first articles and purchased the remaining 219,868 D‑Rings in anticipation of Air Force orders during the first option period.
• The Air Force’s corrective action resulted in a new award to AAR on April 13, 2022, GAO denied Wolverine’s protest of that award on July 26, 2022, and the Air Force terminated Wolverine’s pallet contract for convenience on March 29, 2023.
• On May 31, 2023, Wolverine submitted a termination settlement proposal seeking $1,242,068, including first article contract price, operating costs, a Modern Forge termination fee, inventoried D‑Rings, pallet dies, profit, and settlement preparation costs.
• The Air Force only agreed to pay Wolverine’s operating costs incurred between May 18 and June 4, 2021 totaling $35,308, leading Wolverine to certify its proposal as a claim and appeal from a deemed denial.
• The Board found that material factual disputes existed regarding the reasonableness and allocability of Wolverine’s disputed post‑stop‑work costs, including its large production‑oriented D‑Ring purchases and supplier settlement fee, in light of FAR 31.201-3 and FAR 52.209-4(h).

Parties

Appellant

Wolverine Tube, Inc.

Respondent Agency

Department of the Air Force

Contracting Agency

Department of the Air Force

Contract Number

FA8534-21-D-0002