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Duress Claim Doesn't Free Subcontractor From Debt Owed To The Government

Tuesday, March 04, 2008 02:31 pm

Duress Claim Doesn't Free Subcontractor From Debt Owed To The Government

A Board of Contract Appeals rejected an appellant's protest that due to government coercion it was not obligated to pay back the General Services Administration (GSA) for overpayment for work performed at a Missouri courthouse.

DKW Construction, Inc. (DKW) was the subcontractor on a GSA courthouse construction project. When GSA terminated the prime contractor's contract for default, it encouraged the subcontractors to submit price proposals for completion of outstanding work on the project and, because time was of the essence, announced that it would issue letter contracts with stated "not-to-exceed"amounts similar to "price-to-be-determined-later"contracts.

Post-award audit causes dispute over costs billed

In its proposal, DKW offered to complete the remaining painting and wall covering work for the lump sum of $2.1 million, but this exceeded GSA's estimate for such work. GSA advised DKW that an audit was necessary for contracts exceeding $500,000. However, the government was anxious to get work underway, so it awarded DKW a time and materials contract with a not-to-exceed ceiling of $500,000 for the time being. Subsequently, GSA increased the cap to $1 million and again reminded DKW that although there was no time for a pre-award audit, its contract would indeed be audited.

A year later, GSA requested from DKW documentation to supplement information it had provided with its billing for specific item costs incurred over the past year. The eventual audit report recommended a downward contract- [...]

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