John Ford on Tuesday,
January 11, 2000 - 11:50 am:
I agree with almost everything
that has been said in the other messages. However, I have some
questions concerning the facts. First, you indicate that a State
requirement concerning recycling is the basis for the
contractor's "claim." Did this change by the State require any
contracting officer approvals in regard to contract performance?
If so, this might be a constructive change. Also, you indicate
this is a fixed price contract, but you did not say firm fixed
price. If it is an FPI, the contractor might be entitled to a
change in billing prices if the State requirement caused its
costs to go. Finally, don't overlook the possibility that the
State requirement may be cause for an excusable delay in
contract performnce, although this would not entitle the
contractor to a price adjustment.
Dee McCombie on
Thursday, January 6, 2000 - 03:29 pm:
I was able to pull the decision and it is helpful in that it
shows that boards will look for what basis, ie., entitlement
under a contract clause, as you indicated in your first message.
At the GSABCA website I plugged in 'woodbridge' which gave me
the decision you referenced as well as the followup decision.
on Thursday, January 6, 2000 - 01:21 pm:
Take a look at Woodbridge Construction Corp., GSBCA No.
14200, November 25, 1997. It is available on the web. Go to
www.wifcon.com, then click on the link to BCA decisions, then
click on the link to the GSBCA. You can search for the decision
by file number. I found it using the search: <"change in state
law" AND entitlement>.
Since I don't know the facts of your problem I don't know if the
facts of this case are similar enough to be persuasive. The case
involved a GSA building lease. A county government assessed the
building owner a fee for constructing water and sewer lines
which the building owner wanted to pass on to GSA. The Board
denied the claim for lack of entitlement. At one point the Judge
writes: "Trying to understand why Woodbridge believes that it is
entitled to recover the front benefit assessment charges has not
been an easy task. In its claim, Woodbridge does not explain why
it believes that GSA should pay the charges."
I did not analyze the case comprehensively, and it was not the
only case that came up in response to my search.
Dee McCombie on
Thursday, January 6, 2000 - 12:35 pm:
Thanks to both Joel & Vern for
your comments. I am in agreement with both of you. Ironically
the contract does provide for some adjustments for taxes -- but
this is not a claim for tax but a recycling requirement. The
contractor has no theory. He just believes he is entitled to an
adjustment. If we could provide the contractor a decision, he
may accept our position a bit better. There may be a way to
settle this in a win-win scenario that would benefit both of us
by adding our own recycling requirements into the contract.
joel hoffman on Wednesday, January 5, 2000 - 11:50 pm:
Dee, can you provide any more
There is a clause entitled "State, Federal and Local Taxes,"
applicable to FFP construction contracts. Without my FAR at
hand, I can't tell you whether it applies to supply or service
contracts but you can look it up.
This clause basically states that the contract price includes
all applicable state, federal and local taxes. It also provides
a mechanism for a price adjustment for after imposition of new
or increases in certain FEDERAL Excise Taxes. I don't have my
FAR at home but I think the clause also specifically clarifies
that new or increased local taxes are the Contractor's risk.
At any rate, I have seen discussion in cases denying adjustment
for after imposed State or local taxes or increases in those
taxes. Nash and Cibinic's "Administration of Government
Contracts" may also include discussion on this topic. Again -
I'm at home - the book is in my office.
Even some Federal excise tax increases do not automatically
merit price adjustments. For example, contractors can obtain an
exemption for fuel excise taxes used in off-road construction
equipment - so the 5 and 10 cents per gallon tax increases of
several years ago weren't compensable. The Contractor was
expected to file for the exemption.
I have dealt with this subject several times over the years -
there is no contract provision for State tax increases that I am
aware of. Contractors don't like it but generally have no legal
basis for an adjustment.
Again, more specifics are required in order to render an
opinion. Happy Sails! Joel
on Wednesday, January 5, 2000 - 07:42 pm:
A claim for a price adjustment under a fixed-price contract must
be based on legal entitlement, which is provided by either a
contract clause or a breach of contract (including so-called
"constructive changes") by the government. I cannot see how an
act of a state government, even a new law, would entitle a
contractor to a price adjustment under a Federal government
fixed-price contract, unless some clause in that contract
provides entitlement in such event.
Every contractor takes the risk that a new law will increase its
performance costs. If that happens, the contractor is out of
luck under its fixed-price contracts.
It is up to the contractor to establish its entitlement to a
price adjustment. What is its theory?
Dee McCombie on
Wednesday, January 5, 2000 - 05:14 pm:
I am in need of a good decision
(Board of Contract Appeals) that addresses allowing/disallowing
a claim submitted for increase in price on a fixed priced
contract because of a new State requirement imposed on a
contractor causing his costs to go up. Appreciate a cite which
can be retrieved electronically from the internet. I've searched
the available BCA websites without luck. Also, any opinions you
might have about a claim like this would be appreciated.