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Guest Vern Edwards

In another thread, a member mentioned a recent Civilian Board of Contract Appeals Decision, Dream Management, Inc. v. Department of Homeland Security, CBCA 5517, 17-1 BCA ¶ 36716, April 10, 2017. It's a very interesting decision and recommended reading.

I think the board committed a very significant error in knowledge and logic in its decision. I would be interested in finding out if anyone else sees it.

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I've re-read the decision and I'll make one more attempt: are you referring to the inconsistency between the CBCA's mathematical calculations to determine which costs DMI was or was not entitled to and the basic principles governing terminations for convenience that the CBCA cites:

Quote

A settlement should compensate the contractor fairly for the work done and the preparations made for the terminated portions of the contract. . . . Fair compensation is a matter of judgment and cannot be measured exactly. . . . The use of business judgment, as distinguished from strict accounting principles, is the heart of a settlement.

In other words, if DMI's subcontract was reasonable (which the CBCA states it was on pg 18), DMI should be entitled to the full amount of subcontract costs incurred.

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I think the T for C recovery calculations are off:

DMI, however, could not know that 4583 or even 3437 hours was far beyond the number of hours of services actually possible.

This statement should have supported recovery of subcontrctor costs

Also the G&A and consequential limitations are off - G&A has not been recovered through the labor and diect damages are allowed

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Guest Vern Edwards

@ Matthew:

Nope.

@ Whynot:

Nope to all that you wrote.

The error involves ignorance of certain elementary contracting facts that caused the judge to use a faulty unspoken premise about a "threshold" issue.

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The board assumed that an IDIQ contract is distinct from a time-and-materials contract. They didn't realize that the terms "IDIQ" and "time-and-materials" describe different aspects of a contract. "IDIQ" describes the contract's delivery/quantity arrangement and "time-and-materials" describes the contract's cost/pricing arrangement. They're doing the equivalent of trying to determine if a baseball is a round object or a white object--not realizing that it's both.

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Guest Vern Edwards

The prize goes to Don. The judge assumed that IDIQ and T&M are mutually exclusive categories. They are not. A real bonehead error.

It would not have made any difference, however, if the judge had decided that the order was IDIQ and that the government had breached the contract by making a negligent estimate. The Federal Circuit has ruled that a negligent estimate cannot be the basis for a breach claim under an IDIQ contract, because the contractor has no grounds for expecting anything other than the minimum. That's the Travel Center v. Barram decision.

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