Titan Corp. v. West
| Decision Date | 24 November 1997 |
| Docket Number | No. 97-1299,97-1299 |
| Citation | 129 F.3d 1479 |
| Parties | 42 Cont.Cas.Fed. (CCH) P 77,201 TITAN CORPORATION, Appellant, v. Togo D. WEST, Jr., Secretary of the Army, Appellee. |
| Court | U.S. Court of Appeals — Federal Circuit |
William L. Bruckner, Bruckner & Walker, San Diego, California, for appellant.
Reginald T. Blades, Jr., Attorney, Commercial Litigation Branch, Civil Division, Department of Justice, Washington, DC, for appellee. With him on the brief were Frank W. Hunger, Assistant Attorney General, David M. Cohen, Director, and Sharon Y. Eubanks, Deputy Director. Of counsel on the brief was Lewis H. Burke, Trial Attorney, Office of Counsel, Corps of Engineers, Department of the Army, of Vicksburg, Mississippi.
Before RICH, NEWMAN, and SCHALL, Circuit Judges.
Titan Corporation appeals the decision of the Armed Services Board of Contract Appeals, 1 denying its claim for reimbursement of certain costs incurred in performance of a contract with the Department of the Army. The Board denied the claim, based on failure of the subcontractor to comply with the Limitation of Costs provision. We affirm the Board's decision.
California Research & Technology, Inc. (CRT), now a division of Titan, entered into a cost plus fixed fee contract with the Army Corps of Engineers for research and development services related to the behavior of geological materials subject to blast and shock. The estimated cost of the contract was $108,737, and the fee was fixed at $9,678. CRT subcontracted part of the work, also by cost plus fixed fee contract, to Applied Theory, Inc. (ATI). The subcontract stated an estimated cost of $28,920 and a fee of $2,603. Both the CRT contract and the ATI subcontract contained the Limitation of Costs clause, FAR 52.232-20, 48 C.F.R. § 52.232-20, which limits the government's payment to the costs as originally estimated unless the contractor notifies the government of any prospective overrun in advance. The contractor must
notify the Contracting Officer in writing whenever it has reason to believe that--
(1) The costs the Contractor expects to incur under this contract in the next 60 days, when added to all costs previously incurred, will exceed 75 percent of the
estimated cost specified in the Schedule; or
(2) The total cost for the performance of this contract ... will be either greater or substantially less than had been previously estimated.
FAR 52.232-20(b). The contractor is not obligated to continue performance or otherwise to incur costs in excess of the estimated cost unless
the Contracting Officer (i) notifies the Contractor in writing that the estimated cost has been increased and (ii) provides a revised estimated total cost of performing this contract.
FAR 52.232-20(d)(2). The contractor's right to refuse work that will exceed estimated costs extends to work made necessary by changes ordered by the government. FAR 52.232-20(g).
Following completion of the subcontract in February 1989 and the prime contract in May 1990, ATI's costs were audited in 1990 by the Defense Contract Audit Agency (DCAA). The audit report, which was provided to ATI in February 1991, confirmed the rates of indirect costs that ATI now claims. These costs totalled $11,624.82 more than the estimated indirect costs stated in the contract. (In addition, ATI claims $2,025.49 of direct costs due to a change ordered by the government.) ATI requested reimbursement for these sums. This request, which was the first notice to the government of any increased costs of ATI's performance, was made more than a year after completion of the work in which the costs were incurred. The contracting officer denied the claim, holding that ATI should have been monitoring its costs and known of the overrun before it occurred. The Board affirmed, holding that ATI "failed to prove that the overrun was unforeseeable either for the basic contract work or for the alleged changed work." This appeal followed.
The Board's interpretation of a contract is not final, and is subject to de novo review on appeal, although due respect is often warranted by the Board's experience in interpreting the Federal Acquisition Regulations (FAR). See Alvin, Ltd. v. United States Postal Serv., 816 F.2d 1562, 1564 (Fed.Cir.1987). Findings of disputed facts receive deferential review in accordance with the terms of the Contract Disputes Act, 41 U.S.C. § 609(b). In dispute was the question of foreseeability, relevant to ATI's obligations under FAR 52.232-20(d)(2).
Titan states, and the DCAA audit confirmed, that during the period of contract performance ATI's overhead and administrative costs...
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