January 2, 2008
Appeal of
ABCON ASSOCIATES INC.
Under Contract No. 415046-96-B-0050
PSBCA No. 5291
APPEARANCE FOR APPELLANT:
Louis N. Haas, Esq.
Haas & Najarian, LLP
APPEARANCE FOR RESPONDENT:
Barbara H. Frazier, Esq.
St. Louis Law Office
United States Postal Service
OPINION OF THE BOARD
Respondent, United States Postal Service, awarded Appellant, Abcon Associates Inc., a contract to renovate a portion of a Postal Service facility. Respondent eventually terminated the contract for default. Appellant challenged the termination in the United States Court of Federal Claims, and, after trial, the Court overturned the termination, converting it to one for the convenience of the Postal Service. Appellant submitted a convenience settlement proposal, and the contracting officer issued a final decision granting in part and denying in part Appellant’s claim. Appellant filed this timely appeal from the denial of certain portions of its claim.
At the election of the parties, this appeal
is being decided on the record without an oral hearing in accordance with 39
C.F.R. §955.12.
FINDINGS OF FACT
1. On or about
2. On
3. In July 1997, Appellant submitted requests
for equitable adjustments (“REAs”) numbered 2 through
20, seeking monetary and performance time adjustments for claimed defective
specifications, differing site conditions, changed work and delays caused by
Respondent. Appellant did not
characterize its submission as a claim, did not submit estimates, subcontractor
billings, or any other supporting documentation, and did not request a final
decision. Although a number of the
individual REAs exceeded $100,000, Appellant did not
provide a Contract Disputes Act certification.
The total amount claimed pursuant to the REAs
was $1,046,480.30. Despite several
requests by Respondent, Appellant never provided documentation to support the amounts
claimed in the REAs.
(SAF 2; Affidavit of M. Zenobio, Jr. (“Zenobio Decl.”), Exhibit B;
Respondent’s Exhibit (“Resp. Exh.”)
A; AF 46 (pp. 787, 796, 1013, 1157, 1287-1289, 1317, 1389-1390, 1393,
1450-1452, 1509)).
4. By
letter dated
5. On
6. After the termination, Appellant’s surety,
USF&G, took over responsibility for completion of the work not completed by
Appellant. On
7. Appellant appealed the termination for default
to the United States Court of Federal Claims, filing its Complaint on
8. Appellant’s Complaint asserted 11 counts as
bases for the relief sought. Count VIII
asserted that Respondent had improperly assessed liquidated damages and Count
XI asserted that in its administration of the contract Respondent had breached
its duty to cooperate. In Count X,
Appellant asserted that REAs 2 through 20, which
Appellant had submitted before the termination (Finding 3), demonstrated that
Appellant would have completed the project by the contract completion date,
properly extended as warranted by the REAs and, thus,
was not in default. (AF 25 (pp.
390-392)).
9. On
10. Notwithstanding its decision favoring
Appellant, the Court found “much to criticize in [Abcon’s]
discharge of its responsibilities under the contract,” including problems with
the quality and management of its subcontractors and little regard for its
responsibilities regarding scheduling the work.
The Court noted that Appellant’s subcontractors had caused some delays
that were attributable to Appellant. The
Court did not address the dollar value of any of the REAs
or the amount by which any other actions of Respondent had increased
Appellant’s costs of performance. (AF 46
(p. 1610), AF 47 (p. 610)).
11. Appellant submitted its convenience
settlement proposal, certified by its president, on or about
12. At Respondent’s request, Appellant’s claim
was audited by the Defense Contract Audit Agency (“DCAA”), which issued its
report on
13. The audit confirmed that Appellant incurred and
paid project costs and overhead as follows:
Direct Purchases $2,279,804
Direct General Conditions 164,155
Project Personnel Payroll 351,307
Total $2,795,266
Overhead 450,999
$3,246,265
The audit reflected that Respondent had paid Appellant $2,503,435 as of
the date of the audit. (AF 62 (pp. 679-683)).
14. DCAA concluded that Appellant was not
entitled to recover costs it incurred in performing the REA work that exceeded
the $201,310.24 allowed by the contracting officer in unilateral Modification M03
(AF 9, 10). From the total amount
claimed by Appellant for the proposed modifications, $1,046,480.30 (Finding 3),
the auditor subtracted the amount granted for the REAs
in Modification M03 and the amount claimed by Appellant for two of the REAs (13 and 15), which the auditor concluded were not
performed, to result in the audit questioning the remaining $826,327 of REA-related
costs that Appellant incurred. (AF 62
(pp. 679-681)).
15. The audit also reflected that Appellant had
paid USF&G $1,700,000 under its indemnity agreement with the surety for
costs incurred by the surety (with another $100,000 to be paid if Appellant
received at least that much in its convenience settlement with Respondent). Among the costs incurred by the surety, and
reimbursed by Appellant, were $248,632 paid under its payment bond to
Appellant’s subcontractors for work they had performed before the termination,
and $87,322 for retainages withheld from
subcontractors for pre-termination work.
(AF 62 (pp. 672, 674)).
16. The parties conducted negotiations but were
unable to reach an agreement regarding Appellant’s convenience settlement claim
(Stip. 24).
17. The contract’s Termination for Convenience clause provided for the contracting officer’s unilateral determination of the amount to be paid Appellant in the event the parties were unable to negotiate a convenience settlement:
“e. If the contractor and the contracting officer fail to agree on the amount to be paid to the contractor by reason of the termination, the contracting officer will determine the amount, if any, due the contractor and pay the contractor the contract price for completed and accepted supplies or services not previously paid for (adjusted for any saving of freight and other charges) and, with respect to all other contract work performed before the effective date of termination, the total of
1. The cost of such work;
2. The cost of settling and paying claims arising out of the termination of work under subcontracts;
3. A profit on e.1 above, determined by the contracting officer to be fair and reasonable; but if it appears that the contractor would have sustained a loss on the entire contract had it been completed, no profit will be included, and an appropriate adjustment will be made reducing the amount of the settlement to reflect the indicated rate of loss.
f. The total sum to be paid to the contractor may not exceed the total contract price as reduced by the payments made and as further reduced by the terminated [sic].”
(AF 2, Contract Clause H.5, TERMINATION FOR CONVENIENCE (Clause B-11) (October 1987)).
18. The first sentence of subsection f of the Termination for Convenience clause included in the contract (and quoted in Finding 17, above) differed from the language of the standard Postal Service clause referenced in the clause’s title: B-11 of date October 1987. As included in Respondent’s Procurement Manual, the first sentence of subsection f read, “The total sum to be paid to the contractor may not exceed the total contract price as reduced by the payments made and as further reduced by the contract price of work not terminated.” (Postal Service Procurement Manual, Publication 41, TL-8, July 12, 1995 (“Procurement Manual”), Vol. 2).
19. Respondent’s Procurement Manual, then incorporated by reference at 39 C.F.R. Part 601 (1995), required that clause B-11 be included “in all fixed-price contracts not awarded using simplified procedures.” (Procurement Manual, Appendix B, Section B.2.1.b).[1]
20.
On
a. Denied recovery for Appellant’s incurred
costs because the sum of the amount Appellant had already been paid under the
contract, $2,503,435.30, and the surety’s cost to complete the work not
performed by Appellant exceeded the Termination for Convenience clause’s subsection
f contract price cap on a convenience recovery (Finding 17);
b. Nevertheless,
included in the award the $297,000 in liquidated damages previously withheld in
Modification M03 (Finding 4), plus interest;
c. Denied
Appellant recovery of the $248,632 paid by the surety to Appellant’s
subcontractors for pre-termination work (Finding 15) because Appellant had
already billed and been paid for such work in earlier payments made by
Respondent. He allowed $500 for this
claim for the surety’s cost of obtaining subcontractor ratifications;
d. Allowed as a settlement expense the $87,322 Appellant paid
the surety on account of subcontractor pre-termination retainages
(AF 67 (p. 694));
e. Denied
recovery of profit, concluding that not only had the contract price cap been
exceeded but that Appellant was in a loss position at the time of termination;
and
f. Concluded
that even if the price cap had not been reached, nothing would be due for the incurred
costs associated with the REAs beyond the $201,310.24
the contracting officer had awarded on December 29, 1997 (Finding 4) because
Appellant had not appealed that final decision and because, in his view, the
Court of Federal Claims had determined that Appellant was not entitled to
recovery based on the REAs. (AF 67).
21. Appellant
appealed the final decision to the Board.
In this proceeding, Appellant challenges (1) the contracting officer’s
application of the contract price limitation of the Termination for Convenience
clause to its award; (2) the denial of $826,327 of costs related to the REAs; (3) the denial of profit; and (4) the denial of
recovery of Appellant’s reimbursement of the surety’s payment of $248,132 to
subcontractors for pre-termination work.
22.
Appellant claims $1,315,589, calculated as follows:
Direct Purchases $2,279,804
Direct General conditions $ 164,155
Project Personnel $ 351,307
Subtotal: $2,795,266
Indirect Overhead $ 450,999[3]
Subtotal: $3,246,265
Profit@10% $ 324,627
Total: $3,570,892
Less Amount Paid by Respondent $2,503,435
Costs claimed $1,067,457
Plus amount Appellant paid to USF&G
for subcontractors’ pre-termination
work, which was disallowed by the
contracting officer $ 248,132
Grand Total of Claim $1,315,589
DECISION
Contract Price Limitation on Recovery
In his final decision, the contracting officer determined that subsection f of the Termination for Convenience clause (Findings 17, 18) barred Appellant’s recovery of its claimed costs and profit because the sum of payments made to Appellant and to Arena for the project exceeded the contract price.[4] Appellant argues that subsection f did not authorize the contracting officer to reduce the contract price ceiling by Arena’s cost to complete the project.
Postal Service
regulations (Findings 18, 19) having the force and effect of law required that
the Termination for Convenience clause as set forth in Respondent’s Procurement
Manual be included in Appellant’s contract, and the provisions of the clause
“must be deemed terms of the contract even if not specifically set out therein, knowledge of which is charged to the contractor. G.L. Christian & Associates v. United States, 160 Ct. Cl. 1, 12, 15, 312 F.2d 418, 424, 426, reh. denied, 160 Ct. Cl. 58, 320 F.2d 345, cert. denied, 375 U.S. 954 (1963).”
DeMatteo
Constr. Co. v. United States, 220 Ct. Cl. 579, 591, 600 F.2d 1384, 1391 (1979) (further citations
omitted). Accordingly, the
Respondent argues
that reading subsection f as set forth in the Procurement Manual requires a
downward adjustment to the contract price ceiling to account for the surety’s cost
to complete the project. We disagree. The reference in subsection f to “work not
terminated” contemplates a partial convenience termination, where the
contractor continues performing a portion of the contract work. In a partial convenience termination, the contract
price of the continuing (unterminated) work is the
basis of the contractor’s recovery for its completion. Thus, the reduction in subsection f of the
Termination for Convenience clause necessarily lowers the contract price cap in
a partial termination for convenience by the contract price of the work not
terminated, thereby applying the limitation, properly adjusted, only to the
terminated portion of the contract. The
termination for default of Appellant’s contract became a convenience
termination of the entire contract upon its conversion by the Court of Federal
Claims. Therefore, neither the purpose
of the limitation nor the plain meaning of the language of subsection f permits
reduction of the contract price limit by the amount paid to Arena to complete
the work or any other estimate of the cost to complete the work after the complete
termination for convenience. See Airo Services, Inc. v. General Services
Administration, GSBCA No. 14301, 98-2 BCA ¶ 29,909 at 148,071; Alta Constr. Co., PSBCA Nos. 1463, 2920, 92-2 BCA
¶ 24,824 at 123,834; Precision Specialty Corp. v.
Accordingly, the applicable contract price
limitation is at least:
Original Contract Price
$4,125,628
Modification M01 88,700
Total $4,214,328
Less Payments Made
Before Termination $2,503,435
Less Refunded Liquidated
Damages $ 297,000
Less Contract Price of
Work
Not Terminated 0
Contract Price Cap $1,413,893
Therefore, the contract price cap, which is Appellant’s maximum convenience settlement recovery, does not limit Appellant’s recovery in this appeal as the cap exceeds Appellant’s claim of $1,315,589.[6]
Denial of Incurred Costs Related to the REAs
Respondent
argues that Appellant may not recover the costs associated with the REAs in excess of the $201,310 granted by the contracting
officer in unilateral Modification M03, notwithstanding the Board’s rejection
of its arguments regarding the contract price cap, discussed above.
Respondent
argues, first, that as found by the DCAA auditor, the Court of Federal Claims
considered and denied Appellant’s claims for its REAs. However, a review of Appellant’s Complaint
before the Court reflects that Appellant did not seek a monetary recovery related
to its REAs but, rather, raised Respondent’s alleged
failure to pay Appellant adequately and grant extensions for the changed and
delayed work addressed in the REAs as grounds for
overturning the termination for default (Finding 8). Conversion of the default termination to a
convenience termination was the only relief sought in that proceeding (Finding
7) and was the relief granted by the Court (Finding 9). Although the Court found for Respondent on
the count addressing the REAs (Findings 8, 9), we do
not understand the Court to have made any determination as to Appellant’s
entitlement to recover its costs of performing the work in a termination for
convenience settlement. Therefore, the
decision by the Court of Federal Claims does not preclude Appellant’s recovery
of costs it incurred associated with the REAs.
Next, Respondent argues
that the Board has no jurisdiction to decide Appellant’s entitlement to
equitable adjustments because the REAs were addressed
in the contracting officer’s final decision of
Respondent argues its position as if Appellant were seeking equitable adjustments under an unterminated firm-fixed-price contract. The language of the Termination for Convenience provision in Appellant’s contract simply provides that, except as specifically limited elsewhere in the clause, the contracting officer will pay the contractor for work performed before the effective date of termination, to the extent Respondent has not already paid for the work (Finding 17, Termination for Convenience clause, subsection e.1).
“[T]he general effect of the Termination [for convenience] clause is to convert the terminated portion of the contract into a cost reimbursement contract and to provide for allowance of all costs incurred in performance of the terminated portion of the contract.”
Caskel Forge, Inc. , ASBCA No. 7638, 1962 BCA ¶ 3318.
“Equitable adjustment claims normally are ‘merged’ into the pricing provisions of the termination for convenience clause and determining specific costs attributable to claim events generally is superfluous unless a ‘loss contract’ is alleged or an increase in the contract price is sought.”
Worsham Constr. Co., ASBCA No. 25907, 85-2 BCA ¶ 18,016 at 90,369 (citations omitted).
Once the termination was converted to one
for the convenience of Respondent, Appellant became entitled to recover its
reasonable, allocable, and allowable costs, including costs related to unpriced changes, constructive changes, suspensions of
work, differing site conditions, defective specifications, and even for some
work performed that might not have complied in all respects with the contract. See Alfair
Dev. Co., ASBCA Nos. 53119, 53120, 05-2 BCA ¶ 32,990 at 163,511; Safeco
Ins. Co. of America, ASBCA No. 52107, 03-2 BCA ¶ 32,341 at 160,022; M. E.
Brown, ASBCA No. 40043, 91-1 BCA ¶ 23,293 at 116,818.
Under the
circumstances of this appeal, any absence of compliance with requirements
regarding submission and consideration of the REAs as
CDA claims does not preclude Appellant’s recovery of the costs it incurred in
performing the work, including the work covered by the REAs,
in a termination for convenience settlement.
Pursuant to the DCAA
audit, the costs incurred by Appellant have been established (Finding 13) and
are not in dispute. Therefore, Respondent’s
proposed reduction of the convenience settlement award by the $826,327 it concluded was related to costs
of performing denied REAs (Finding 20f) was not
justified. Appellant is entitled to include
the costs incurred performing the work addressed in the REAs
in its total incurred and recoverable costs.
Profit
Respondent
argues that Appellant would have suffered a loss on the project had it
completed it and that subsection e.3 of the Termination for Convenience clause[7]
precludes including any amount for profit in Appellant’s award. To determine whether Appellant would have
suffered a loss, we compare the contract price to the sum of Appellant’s
pre-termination costs of performance and what it would have cost Appellant to
complete the project. If Appellant’s
total costs for completion of the project would have exceeded the contract
price, it was in a loss position and may not recover profit. See Alfair Development Co., ASBCA
Respondent, relying on McCollum v. United States, 6 Cl. Ct. 373 (1984), argues that the cost of completion to
be used in determining whether Appellant was in a loss position should be the
amount the surety paid to Arena, $2,702,465, notwithstanding Appellant’s
estimate that it could complete for $1,713,245 (Finding 6). While the surety’s use of some form of
competitive bidding to obtain the price lends credibility to the Arena figure,
we have no details about this bidding process and no Postal Service
contemporaneous estimate to confirm the reasonableness of Arena’s price
(Finding 6). This contrasts with the
facts in McCollum, where the government presented substantial evidence
to support the reasonableness of its price to complete the work and to
demonstrate that it had gone to great lengths to reprocure
at the lowest possible cost. Further,
“generally it is more expensive for a new contractor to complete a job started
by another than for the original contractor to finish the work” in view of such
factors as mobilization and the need for a period to familiarize itself with
the work. See Dale Constr. Co. v.
Appellant
argues its contemporaneous estimate is an accurate value for its cost to
complete the work and should be used in determining whether it would have made
a profit. The wide disparity between
Appellant’s estimate and Arena’s actual costs casts some doubt on the estimate,
and we note that in its estimate of its cost to complete the project, Appellant
did not include field supervision or overhead (Finding 6). In its convenience settlement proposal,
Appellant noted overhead accruing at $27,155 per month (Finding 11), which
would have totaled an addition to its cost to complete of approximately
$150,000 over the anticipated 5 1/2 months of the continued project (Finding
6). Finally, considering the record
before the Court of Federal Claims indicating Appellant had some difficulty
managing the project efficiently (Finding 10), we are not
persuaded that Appellant would have been able to produce a completed project
within its estimate. While we believe
the amount paid Arena overstates what would have been Appellant’s cost to
complete, we also believe that Appellant’s estimate of
Appellant correctly argues
that it is Respondent’s burden to demonstrate Appellant was in a loss position
such that it should be denied profit on its termination for convenience
recovery. See Safeco Ins. Co.
of America, ASBCA No. 52107, 03-2 BCA ¶ 32,341 at 160,022; R&B
Bewachungs GmbH, ASBCA No. 42214, 92-3 BCA
¶ 25,105 at 125,158. However,
Respondent has made a prima facie case in this regard by demonstrating that the
sum of Appellant’s incurred direct costs and overhead plus its cost to complete
the project exceeded the contract price.
See Alfair Dev. Co.,
ASBCA
Accordingly, unless there are other adjustments to the
figures used in calculating Appellant’s profit/loss position that demonstrate
Appellant would not have suffered a loss, Appellant would not be entitled to
profit on its convenience recovery. It
is Appellant’s burden to demonstrate entitlement to sufficient upward
adjustments to take it out of an apparent loss position. See Alfair
Dev. Co., ASBCA
While the rigor of
proof in a convenience termination situation may be less than proof of
entitlement to an equitable adjustment to a fixed-price (unterminated)
contract, see Foremost Mechanical Sys., Inc. v. General Services
Administration, GSBCA Nos. 13250-C(12335), et al., 98-1 BCA ¶ 29,652
at 146,921, Appellant must still show liability, causation, and damage to
obtain an adjustment to the contract price.
Alfair Dev. Co., ASBCA Nos.
53119, 53120, 05-2 BCA ¶ 32,990 at 163,512, citing Servidone Constr. Corp.
v. United States, 931 F.2d 860, 861 (Fed. Cir. 1991). Appellant must provide sufficient proof to
permit the Board to determine the amount of any upward adjustment to the
contract price that is based on more than speculation. Alfair
Dev. Co., ASBCA
Before the Court of
Federal Claims, the substance of many of the REAs and
other interferences by Respondent was discussed at length, raised by Appellant
as evidence that Respondent delayed its progress and increased its costs of
performance, in order to support Appellant’s argument that the termination for
default was improper. Appellant did not
seek an increase to the contract price via an equitable adjustment in that
proceeding (Findings 7-9). Accordingly,
there was substantial evidence before the Court addressing liability and
causation, but there was none regarding the extent of damage, i.e., the amount
of any equitable adjustment to which Appellant might be entitled. In this appeal, we have not been provided any
documentation or other support for the figures contained in Appellant’s REAs. All we have
are unsupported numbers listed on the REAs
themselves, and Appellant has argued that these were considered as drafts and
not claims. As a result, we have no
basis on which to calculate an upward adjustment to the contract price.
Appellant points to
decisions holding that profit on a convenience settlement will not be denied
when the Government substantially contributed to the increased costs and it is
not possible to separate the Government portion of the loss from the possible
losses caused by the contractor. E.g.,
Safeco Ins. Co. of America, ASBCA No. 52107, 03-2 BCA ¶ 32,341
at 160,023; Wolfe Constr.
Co., ENG BCA No. 5309, 88-3 BCA
¶ 21,122 at 106,655-56. The
Court of Federal Claims concluded that Respondent had contributed to
Appellant’s financial difficulties (Finding 9), but “also found much to
criticize in [Appellant’s] discharge of its responsibilities under the
contract.” (Finding 10). While it may not be possible to separate precisely
Appellant’s from Respondent’s contributions to the increased costs incurred, even
if we were to conclude that all of the matters addressed in the REAs were sufficient to warrant equitable adjustments in
the amounts claimed by Appellant, which we cannot do on this record, Appellant
would still have experienced a loss had it completed the project.[10]
Appellant’s total costs
on the project, had it completed performance, would have been at least $5,482,219.[11] Its receipts, i.e., the adjusted contract
price, would have been at most, $5,260,808 (Adjusted contract price at
termination of $4,214,328 (which does not include the $201,310 granted in
Modification M03) plus the total amount claimed for the REAs,
$1,046,480.30). Thus, even assuming a
100% recovery for Appellant on the REAs, it still
would have sustained a loss.[12]
Appellant has not
demonstrated a basis for increasing the contract price beyond its costs, and the
evidence in the record is that Appellant was in a loss position and “would have
sustained a loss on the entire contract had it been completed” (Finding 17
(paragraph e.3)). Consequently, Appellant
may not recover profit on its costs.[13]
Subcontractor
Payments Made by Surety
Respondent
correctly points out that payments made by the surety under its payment bond
for pre-termination work by subcontractors ($248,632) are not convenience
settlement expenses. However, such costs
should be considered direct costs and added to that portion of Appellant’s
claim. See Foremost Mechanical Sys., Inc. v. General
Services Administration,
GSBCA Nos. 13250-C(12335), et al., 98-1 BCA ¶ 29,652 at 146,921-922. Respondent asserts
that Appellant had already billed and been paid for the subcontractor work in
question, and that allowing Appellant recovery in this appeal would constitute
double payment.
However, as
discussed above, once the termination was converted to one for Respondent’s
convenience, the contract essentially became a cost reimbursement contract, and
Appellant is entitled to recover its incurred allowable direct costs, subject
only to the contract price cap. See
Astro Dynamics, Inc., ASBCA No. 41825,
91-2 BCA ¶ 23,807 at 119,208. The
audit confirmed that these claimed pre-termination direct costs were incurred by
Appellant and paid by the surety, and in calculating Appellant’s recovery, the
Board has given Respondent credit for all payments it made to Appellant. Accordingly, Appellant may recover as a
direct cost the $248,132 paid to its subcontractors by the surety and
reimbursed by Appellant ($248,632 paid by the surety to subcontractors less the
$500 allowed by the contracting officer (Finding 20c)).
Miscellaneous
In the last
few pages of their lengthy briefs, the parties raise some additional claims for
relief. Respondent argues that as our
review of the contracting officer’s unilateral determination of Appellant’s
convenience settlement award is de novo, see Wilner v.
Given the finding above
that Appellant is not entitled to profit, its added claim is moot. Respondent’s new claims were not raised in
the pleadings or as issues in the parties’ Joint Stipulation of Facts and
Issues, and they are inadequately developed in the record. Accordingly, we decline to address them.
Conclusion
We calculate Appellant’s recovery as
follows:
Costs and Overhead $3,246,265
(Finding 13)
Profit 0
Plus Surety’s subcontractor payments $
248,132 (Finding 15)
Less Amount Paid by Respondent $2,503,435 (Finding 13)
Less Refunded Liquidated Damages[14] $
297,000 (Finding 20b)
Total
$ 693,962
Appellant is entitled to Contract Disputes Act interest on
the above amount from
Norman
D. Menegat
Administrative
Judge
Board
Member
I
concur: I
concur:
William
A. Campbell David
Administrative
Judge Administrative
Judge
Chairman Vice
Chairman
[1] Simplified procedures are available only for
contracts valued at $100,000 or less (Procurement Manual, Section 4.3.1.b).
[2] Respondent paid the amount of the amended award, $2,399,283.59, to
Appellant’s benefit into an interpleader action in
the United States District Court for the Eastern District of New York (AF
67-69).
[3] Appellant contends it incurred overhead expenses of
$526,846. However, it accepted the
auditor’s figure above for purposes of prosecuting this appeal. (Appellant’s Opening Brief, p. 2, fn. 1; see
AF 62 (p. 679)).
[4] Respondent had paid Appellant
$2,503,435 before termination (Finding 13), and the surety paid Arena
$2,702,465 (Finding 6), for a total of $5,205,900. The original contract price was $4,125,628
(Finding 1), and as increased by Modification M01 ($88,700 (Finding 2)) and the
portion of M03 allowing partial recovery for the REAs
($201,310 (Findings 3, 4)) resulted in a total contract price of $4,415,638 as
calculated by the contracting officer.
[5] “The total sum
to be paid to the contractor may not exceed the total contract price as reduced
by the payments made and as further reduced by the contract price of work not
terminated.” (Finding 18)
[6] Adding the $201,310 price adjustment granted by the
contracting officer in Modification M03 would raise the contract price cap
higher, as would giving Appellant credit for the value of REAs
above the amount allowed by the contracting officer.
[7] Subsection e.3
provides, “[I]f it appears that the contractor would have sustained a loss on
the entire contract had it been completed, no profit will be included” in the
contracting officer’s determination of the amount due the contractor after the
termination for convenience. (Finding
17).
[8] Appellant claims its overhead was actually $75,847
higher than the figure found by the auditor and used in this appeal, which
would increase its incurred costs by that amount. (Finding 22, n. 3).
[9] The original contract price of $4,125,628 (Finding 1) was
increased $88,700 by Modification M01 (Finding 2), and $201,310 by Modification
M03 (Finding 4), resulting in a contract price at termination of $4,415,638. Using Appellant’s estimated price of
$1,713,245 with or without adding in the $150,000 for overhead would still
result in total costs exceeding the contract price.
[10] Appellant has identified other instances where it
claims entitlement to a contract price increase because Respondent’s conduct
increased its costs, see Appellant’s Opening Brief, p. 16, n. 22, but it has
provided no support for price adjustments of any particular amount.
[11] Appellant’s costs and overhead incurred prior to
termination totaled $3,246,265 (Finding 13) plus its cost to complete the project of $1,900,000
plus the $248,632 and $87,322 the surety paid to subcontractors for pre-termination
work and retainages (Finding 15) equals $5,482,219.
[12] We note that using Appellant’s claimed cost of
completion, $1,713,245, in this calculation would still produce a total cost
for the project, $5,295,464, that would exceed Appellant’s receipts.
[13] Respondent does not seek to reduce any recovery to which Appellant might be entitled by applying the loss adjustment formula of subsection f of the Termination for Convenience clause. Respondent’s Legal Brief, p. 80.
[14] Respondent is entitled to credit for its refund of
the liquidated damages made pursuant to the contracting officer’s unilateral
award. See White