The agency issued task orders to the contractor during the second option year of an IDIQ contract. The task orders, however, were mostly performed during the contract’s third option year. The contractor argued it was entitled to payment under the rates for the third option year. The ASBCA said, “You’re outta luck.” The contract provided that pricing for each task order was set when the order was placed, not when performance occurred.
Appeal of WSP USA Solutions Inc., ASBCA No. 62674
Background
WSP USA Solutions had an IDIQ contract with the Army Corps of Engineers to provide emergency power services for federal disaster areas. Basically, WSP provided generators in response to a disaster declaration. The IDIQ contract had one base year and four option years. Each option year began on October 22 and ran for the following year until October 21. The contract provided for a three percent increase in price for each successive option year.
In September 2017, Hurricanes Irma and Maria hit the US Virgin Islands and Puerto Rico. The Corps issued three task orders to WSP in September and October 2017 for generator services. The task orders were issued at the end Option Year 2 of the contract, but performance on the task orders continued into Option Year 3.
Because performance occurred during Option Year 3, WSP believed it should have been paid at Option Year 3 rates. WSP submitted a claim to the Corps for $14 million, which represented the difference between Option Year 2 rates WSP had been paid, and the Option Year 3 rates the company wanted. The Corps denied the claim, reasoning the Option Year 2 rates applied because the task orders were executed during Option Year 2.
Analysis
According to WSP, the contract set forth fixed rates for each period of performance, so the rates had to be tied to when performance was completed, not when the task order issued. Because WSP had completed the task order in Option Year 3, it was entitled to rates for that year.
But the board didn’t agree. The contract’s requirements clause stated that the rights and obligations of the parties were established at the time an order is placed, and that those obligations are fixed for the duration or the work required under that order even if the work continued beyond the effective date of the contract. What’s more, the contract’s ordering clause stated that the cost of performance was to be established when an order is placed. Thus, because the orders to WSP were issued during Option Year 2, the rates from Option Year 2 applied.
WSP is represented by David M. Nadler, Scott Arnold, and Carolyn R. Cody-Jones of Blank Rome LLP. The government is represented by Michael P. Goodman, Richard J. Sprunk, Olivia J. Estay, and Thomas X. McHugh of Army Corps of Engineers.
–Case summary by Craig LaChance, Senior Editor
