Appeal of the government’s partial denial of a claim for delay costs is granted, where the government failed to rebut the appellant’s contention that the agency caused the delay, where the government arbitrarily determined that some standby labor and equipment costs were not allocable to the work at issue, and where the government failed to show that claimed consultant costs were not used to perform the work but to pursue the claim. The board also explained that slight differences between the certified claim submitted to the contracting officer and the claim before the board did not deprive it of jurisdiction.
K&K Industries Inc. appealed government’s failure to pay it the full amount claimed resulting from delays that were admittedly the government’s responsibility.
The government awarded K&K a contract to rehabilitate floodgates and guidewalls in Gulf Intracoastal Waterway, Texas. K&K’s claim arose from repair work to the east gate, north sector, lower stationary hinge casting. During work to repair and reinstall the existing casting, K&K discovered cracks in the casting. The agency directed the contractor not to reuse the existing casting but instead to use a spare.
K&K cleaned and painted the spare casting at no additional charge to the government, as the parties agreed that the work needed to prepare and install the spare casting would be essentially the same as the repair and reinstallation of the existing casting. When K&K attempted to replace the casting, some additional problems were discovered, leading to a 21-day delay period from August 23, 2013, through September 13, 2013, while the agency decided how to proceed. During this period, during which K&K performed the work necessary to prepare to install the casting, there was no concurrent ongoing work which was on the critical path for the completion of the project.
On January 7, 2014, K&K submitted a request for equitable adjustment of $69,349.44 for the additional expenses incurred to modify the casting. This amount included equipment and employee costs, as well as costs to a machinist for work on the casting itself. The REA also included costs for a consultant at $200 per hour, which had been approved by the contracting officer. However, in response to the REA, the agency approved only the charges paid to a local machine shop for machining the hinge castings.
On May 26, 2015, K&K submitted an updated REA, and on January 13, 2016, the contractor submitted a certified claim for $131,367.66 and a time extension of 22 calendar days. On September 12, 2016, K&K submitted a revised claim for $150,625.86 and a request for a time extension of 21 calendar days.
On March 6, 2017, the CO issued a final decision approving a monetary adjustment of $87,203.08 plus 21 additional calendar days. K&K timely appealed, seeking $155,847.31, plus interest. The revised amount reflected a deduction in some costs and an increase in other areas. The government did not contend that its prior payment was improper, leaving $68,644.23 in dispute.
The government argued the board lacked jurisdiction to hear the uncertified revisions to K&K’s claim. However, ASBCA explained that claim revisions commonly reflect refinements in analysis as actual cost and pricing information becomes available and developed. Accordingly, the board was not deprived of jurisdiction.
While the government challenged K&K’s quantification of the costs allocable to this portion of the work, the board found it failed to present substantive, persuasive evidence to rebut K&K’s evidence and testimony. The government introduced no witnesses on the Corps’ behalf and conducted little cross-examination of K&K’s witnesses. The board found the Corps provided no convincing reason it should reject the appellant’s credible and unrebutted evidence.
Regarding the 21-day delay claimed by appellant and found by the CO, the board found the record establishes that the hinge work was on the critical path for that entire period and fully compensable. The board found the government’s attempt to allocate portions of appellant’s three laborers on site to work other than completion of the hinge work was purely speculative and unpersuasive. While they may have performed other work, it involved minor tasks related to closing out the job. The critical driver of the delay was final reinstallation of the hinge, and the board held that the employee time claimed by K&K was fully dedicated to this work. The Corps’ reductions of those three employees’ labor costs were based on speculative “guesses” and uncorroborated hearsay. Thus, the board held that K&K was entitled to recover the full $7,959 in labor costs questioned by the government.
Similarly, the board supported full recovery of the equipment costs disallowed by the government in computing the equitable adjustment, finding that K&K had satisfactorily demonstrated that all claimed equipment was on site as of August 23, 2013, and necessary for the work at issue. The board found the government’s reductions for standby time and allocations of a portion of the claimed costs for allegedly non-critical work were arbitrary and insufficiently proven. Consequently, the board found K&K entitled to recover the additional $11,994 in equipment costs claimed and disallowed by the Corps.
Finally, the board held the government was responsible for the full amount K&K sought for its consultant, finding the government’s cut-off date for these costs was incorrect. The board found insufficient proof that the consultant’s hours from October 27, 2015 and January 7, 2016, were incurred in the prosecution of the claim, and therefore awarded K&K these costs. The board also granted K&K’s request for field office overhead. In total, the board awarded K&K $61,092, in addition to that previously awarded by the CO, plus interest.
K&K Industries Inc. is represented by Terrence Brennan and Brian S. Schaps of Deutsch Kerrigan, L.L.P. The government is represented by Michael P. Goodman, Engineer Chief Trial Attorney, and by Clark Bartee, James Purcell, P. Alex Petty, Engineer Trial Attorneys.
