During the quantum phase of a successful appeal of a claim seeking direct costs, overhead, and profit arising from a change order, the Civilian Board of Contract Appeals denied the majority of the claims, finding that the appellant failed to provide evidence supporting the amount of the claims and failed to link those amounts to the change order or any additional work required.
Industrial Maintenance Services Inc. sought an additional $5633.01 from the Department of Veterans Affairs for a change order under a contract. The Civilian Board of Contract Appeals previously granted the appeal and in this decision considered quantum.
The dispute arose from Industrial Maintenance’s claim for direct costs, overhead, and profit arising from a change in the critical path of performance under a contract to complete an upgrade to a medical center. Specifically, Industrial Maintenance sought to recover impact costs for direct labor and equipment costs, daily clean up, vehicle mileage, and equipment fuel. The government argued that it had already fully compensated Industrial because its calculation of the overhead and fee percentages in the bilateral modification included the impact costs sought. The government also argued that the costs are not separately reimbursable under the Changes clause supplement to the contract.
CBCA found that Industrial Maintenance was entitled to an additional payment because its direct costs were not precluded by the supplement and because the agency failed to apply overhead and fee percentages to the work impacted but unchanged. Overall, the board concluded that the agency’s methodology undervalued the contract modification because the scope of the change was more than the costs for the work added, altered, or deleted.
Of the direct costs, the agency accepted charges of $454.40 for daily cleanup and vehicle mileage, plus overhead, profit, and labor burden on the cleanup, for a total of $602.53. The agency did not dispute paying this amount.
However, the agency disputed charges of $1000 for a forklift rental (twenty hours at $50 per hour) and $100 for fuel ($20 per day for five days), contending that the record does not demonstrate that the forklift or fuel was utilized during or after the contract modification change order work. The board agreed, finding that the contractor had not explained or supported these amounts or linked these charges to the change order or its impact. The appellant submitted a bid from a rental company showing an hourly rate of $28.25 per hour, not the $50 per hour claimed. Further, the appellant did not submit a contract or invoice from the rental company to demonstrate any amounts actually paid. The appellant did submit an invoice of $232.61 for fuel, but this amount was not linked to the forklift, or to the change order or its impact. Because the record lacked explanation and credible support, the board denied payment of $1100 of the direct costs sought, as well as any overhead and profit.
Next, the board considered impact costs. Industrial Maintenance valued the work impacted by the change order at $593,103. Using that figure and maximum values under the declining scale, it calculated overhead and profit as $31,584.06 each. The contractor suggested that it would be entitled to the total, $63,168.12, but only sought the remainder of the $5633.01 in its underlying claim.
According to Industrial Maintenance, onsite supervision and management were required for the added duration of the contract, which showed a compensable impact. In response, the agency acknowledged that the critical path changed by adding five calendar days to the performance period, but asserted the contractor failed to show that any or all of the other work was impacted or resulted in increased costs to the contractor.
The board agreed, finding the contractor’s broad-brush approach, and failure to point to specific tasks or related dollars, rendered its position unsupported. The board explained that impacted work may, not must, result in a change in value. Not all remaining work is necessarily impacted by a change order because non-change order work perhaps is performed as originally scheduled, or is performed earlier or later with no change in value or cost to the contractor.
The board found no evidence in the record to support the contractor’s position, such as its derivation of the $593,103 figure, and an explanation of the days supervision and management were on-site other than anticipated in the pre-change contract, and details of the value of the associated work performed. Because the contractor did not submit any evidence to support its claims, it could not establish the value of its work to accomplish the work required by the change order, and the board denied this portion of the claim.
Industrial Maintenance Services Inc. is represented by Brenda S. Soper. The government is represented by David G. Fagan, Office of General Counsel, Department of Veterans Affairs.
