Decisions Of The Boards Of Contract Appeal

Tuesday, August 04, 2009 05:56 pm

Decisions Of The Boards Of Contract Appeal

PREBID AMOUNTS ARE BETTER THAN GUESSES WHEN ESTIMATING COSTS FOR DELETED WORK

Deleted Work—Cost Proposal
Appeal of: States Roofing Corporation
Armed Services Board of Contract Appeals 2009 ASBCA No.55508, LEXIS 29(May 5, 2009)

A contractor did not have to eat the cost of insulation it had already purchased when the government deleted work using that material.

States Roofing Corporation(SRC)contracted with the U.S.Navy to repair roof cells at a naval base in Norfolk, Virginia.During the project, the Navy deleted the work on roof cells D and F.The Navy notified the contractor in writing and requested that SRC submit a cost proposal for the contract change and that it not purchase any more tapered insulation or crickets for the deleted roof cells. However, by the time SRC received the contract modification, those materials had already been delivered.SRC's initial credit proposal amounted to $250,000 for the deleted work.This was approximately $100,000 less than what the Navy estimated was due.

"The reduction to the contract price should reflect the costs SRC reasonably would have incurred to perform the deleted work and the credit to the Navy is to be measured by SRC's net savings,"the Board of Contract Appeals explained, citing FruCon Construction Corp., ASBCA Nos. 55197, 55248, 072 BCA P 33,697 at 166,818. And the burden of proof as to the credit amount was on the Navy.See Nager Electric Co. v. United States, 442 F.2d 936, 946 (Ct. Cl. 1971).

No credit for nonrefundable items

Much of the disparity between the two credit amounts related to direct materials—specifically, the tapered insulation and crickets.The two parties agreed that the total cost of the insulation and crickets to be used on roof cells D and F was $48,000.However, SRC contended the Navy was due no credit for this material, and the Navy believed it was due full credit since it received no benefit from the material.

The tapered insulation was a special order that the contractor could not use on anotherjob or return(along with the crickets)to the supplier.SRC stored the material until Navy personnel instructed the contractor to dispose of it.While there was some contention as to the authority of the person who sent the email instruction, there was no evidence that SRC was ever instructed to turn the material over to the Navy.Thus, the court was persuaded that the Navy should not receive credit for the insulation and crickets.

Credit determined by prebid amounts

The Navy had better luck on the question of material used for installing new [...]