Appeal seeking costs incurred as a result of a contract modification is denied. On appeal, the contractor submitted five different expert reports, each of which claimed the contractor was entitled to different sum. The board found these reports effectively negated the claim. A contractor seeking incurred costs has the burden of proving the amount with certainty. By submitting five reports with different methodologies and different sums, the contractor had not met that burden.
SRM Group, Inc. had a contract with the Department of Homeland Security (DHS) to provide housing management services—e.g., cleaning, maintenance, and the like—for eight buildings at a law enforcement training center. Shortly after SRM began performance, the parties modified the contract by removing two buildings from the contract.
A few months later, however, DHS informed SRM that it wanted to add the two building back to the contract. But the parties could not agree on a price for the buildings. The contracting officer unliterally modified the contract to add the buildings. SRM submitted a certified request for an equitable adjustment seeking $2.6 million. DHS denied the request, and SRM appealed to the CBCA.
The parties spent the next year or so negotiating the claim. Ultimately, DHS issued a final decision and ended up paying SRM $.2.1 million for the increased cost of adding the two buildings back to the contract.
But shortly thereafter, SRM submitted a new request for equitable adjustment, seeking $6.1 million in additional amounts due on the contract. DHS denied the request, and SRM filed another appeal with CBCA.
On appeal, SRM submitted several expert reports to support the amount of its claim. Each report concluded that SRM was entitled to a different amount. The first expert opined that SRM was due $5.6 million. SRM’s second expert concluded the company was entitled to $4 million, while its third report revised that amount to $3.9 million. In its pre-hearing brief, SRM cited what appeared to be another expert report, which opined that the company was now entitled to $2.2 million. SRM then submitted a fifth expert report, which concluded that SRM was owed $3.3 million. SRM did not explain or account for the inconsistencies in its expert reports.
The board reasoned that the party seeking recovery of incurred costs has the burden of proving the amount with sufficient certainty so that the determination is based on more than speculation. Here, the board found that by providing five different expert reports, with different methods and figures and no explanation for the differences, SRM had not met its burden. The mere fact that SRM submitted five different but failed to present any testimony to disclaim the previous reports was, in the board’s mind, problematic.
SRM is represented by G. Scott Walters of Smith, Currie & Hancock LLP. The government is represented by James C. Caine and Stephanie Kearney-Quilling of the Department of Homeland Security.
