Appeal of the agency’s denial of a claim for additional compensation for out of scope work is denied, where the contract called for maintenance and support services but generally left undefined the exact details of the work required, and where the contractor did not incur additional costs because personnel were required to be at the work site twelve hours per day, and received the same pay even if some out-of-scope work was performed. The board also held that the contractor was not coerced into signing a contract modification, first because there was no evidence the government pressured the contractor into signing. The board found that any financial pressure felt by the contractor was due to its decision to underprice its bid after unreasonably assuming that the number of work hours in the PWS would not be required.
Charles F. Day & Associates LLC appealed the Army’s denial of its claim for additional compensation for work performed outside the scope of its contract for support personnel in Iraq.
The contract called for the contractor to provide field service representatives to provide training, maintenance support, and technical assistance regarding various artillery weapons in Iraq. The contract also provided the FSRs would “deprocess” some artillery, i.e. unpacking weapons received for service and making them operational. The contract anticipated a 90-hour work week per individual FSR when deployed. When questioned, the CO explained the 90-hour work week requirement included on-call time. CFD agreed to these work hours in its proposal and provide a breakdown of the base hourly rate and overtime pay for its employees.
In June 2011, CFD sent an email to the government stating that it had miscalculated the hours it would pay its employees for both a contract modification on a pre-existing contract and for its response to the contract at issue. However, two days later, the company withdrew its statement, indicating that it could perform at the price submitted. When the CO asked for verification, CFD again attested that it could perform at the price submitted.
During performance, the FSRs performed some duties that were outside the scope of the contract, such as occasional light maintenance on the vehicles needed to transport the artillery. Although CFD management was aware of this occasional additional work, the company did not complain about these extra duties until December 2011. While the appellant argued the FSRs had clearly defined duties, the government official in charge stated that the contract required CFD to perform duties as required.
On December 31, 2011, the Status of Forces Agreement between the United State and Iraq expired and CFD withdrew its employees to Kuwait, where they waited to be provided with work and travel visas. Upon receiving them, the FSRs returned to Iraq.
On March 12, 2012, CFD informed the government that it had built its cost estimate for the contract on the belief that the FSRs would not need to work the full 90-hour week called for in the PWS, and that paying the FSRs for their full time was putting the company in financial jeopardy. CFD asked for additional payment to cover about half of the overtime hours, increased payment for Defense Base Act insurance, and to include “G&A” costs for travel as a direct cost.
The government declined the request, but agreed to rescope the contract to reduce the number of FSRs by six, provided there was a corresponding reduction in payments to CFD. CFD agreed and this change was executed via a contract modification. After contract performance concluded, CFD submitted a request for equitable adjustment for $1,583,827, seeking compensation for work on vehicles not included in the SOW and time employees spent waiting in the motor pool to perform maintenance.
The claim also sought reimbursement of the funds not paid to CFD due to the descoping of the number of FSRs implemented by the modification. According to CFD, because the CLINs were firm fixed-price and CFD had completed all the work required of it, it should have been fully compensated, even though the number of FSRs had been cut by six employees. The claim did not allege that CFD employees were required to perform any out of scope work to deprocess howitzers that had arrived in-theater in worse condition than should have been anticipated. The claim was denied and this appeal followed.
As initial matters, the government moved to dismiss two claims for lack of jurisdiction. In its appeal, CFD complained about the condition of the artillery the FSRs were required to deprocess, essentially asserting a superior knowledge claim. The government argued this claim had not been presented to the CO and the board agreed, dismissing this portion of the case. The board also granted the government’s motions to strike appendices to CFD’s opening post-trial brief, because they were not timely submitted and because they address the subject of deprocessing, over which the board already decided it lacked jurisdiction.
In its appeal, CFD argued it should be entitled to relief because the government constructively changed the contract by requiring its employees to perform such out of scope work. The board found it likely that the FSRs performed some out of scope work, even though the PWS included broad terms such as “technical support” and “maintenance support.” The board also found it likely the FSRs and CO knew out of scope work was requested.
However, the board explained that a constructive change must increase a contractor’s costs to be actionable. In this case, the board found it unreasonable for CFD to interpret the contract’s PWS to require little or no overtime, which provided the basis for CFD’s underpricing. To the contrary, the board found it much more reasonable to interpret the contract as requiring CFD to provide the thirteen FSRs for 4,680 hours each.
The board found no support for CFD’s assumption that it could ignore the requirement for 4,680 hours if it could perform more efficiently. During the hearing, CFD argued that the government’s statement that FSRs would be on-call meant that they would not actually work such long hours and that the government should thus be liable for any overtime they incurred working out of scope. However, the board found this argument unavailing.
First, the context of the question was about the sustainability of 90-hour work weeks for personnel, not about how much salary costs would be incurred by the contractor. Moreover, the CO’s response repeated that the work week was 90 hours and never suggested otherwise. Second, given the general work set-up in Iraq, it is not at all clear that anything other than the 12-hour days generally spent at the worksite would have been practicable even if the FSRs were not fully employed performing work strictly within the PWS. These were the hours that CFD’s employees expected to be working when they went to Iraq; it is what they were generally paid for; and it is what CFD promised the government it would provide when it successfully bid on the contract.
Instead, the board found it reasonable to assume that CFD recognized these obligations when it informed the government that it had underbid prior to performance. The board noted CFD did not explain why it had withdrawn its statement.
CFD argued the FSRs could have all come home after the last howitzer was deprocessed, but the board found this contrary to the language of the contract. First, the contract provided that there would be up to two option years with the full complement of FSRs at 4,680 hours per year per FSR. If the contract were to be completed after the delivery and deprocessing of a finite number of howitzers, options for tens of thousands of FSR-hours stretching more than two years past the last delivery of a howitzer would not have been needed. Further, the CO responded to a Q&A on this matter, explaining that after conclusion of the deprocessing, FSRs would “remain on the ground” and support other howitzers. The board found it unreasonable for CFD to assume it could withdraw its employees after the deprocessing mission was complete.
As a practical matter, the board found that routine performance of the contract would have imposed 12-hour days at the worksite even if the FSRs were performing no out of scope work. Because there was no evidence supporting a finding that extra-PWS work performed by CFD’s FSRs increased CFD’s costs beyond its contractual obligations, the board denied this portion of the claims.
ASBCA also rejected CFD’s claim attempting to recoup the funds reduced from its contract price by the modification descoping the number of FSRs required for the effort. CFD argued the modification was signed under duress, as the company was in a precarious financial situation. The appellant also argued it received no consideration for the modification.
However, the board found no evidence of duress, despite CFD’s financial predicament. The board found no evidence the government engaged in bad faith or any wrongful action that pressured the contractor to accept the modification against its will. The appellant’s allegations of contract misinterpretation did not come close to meeting the threshold for bad faith or coercion. At worst, and even if true, the board held that would be a mere error. Finally, the board noted that the economic pressure caused by a company’s own flawed business decision did not support a finding of duress.
In relation to its argument that it received no consideration from the contract modification, CFD argued it had no obligation to provide FSRs after the deprocessing work was completed, and therefore gained nothing from the government’s agreement to descope them. However, the board already concluded this argument rested on a faulty interpretation of the contract, and rejected it.
Charles F. Day & Associates is represented by Jeffrey L. Roth, Allen L. Anderson, and Ryan G. Blount of F&B Law Firm, P.C. The government is represented by Raymond M. Saunders, Army Chief Trial Attorney, and by Major Stephen P. Smith, JA, and Captain Meghan E. Mahaney, JA, Trial Attorneys.
