Offerors Need To Understand The Pricing Scheme And Any Caveats

On April 26, 2007, the Army awarded an indefinite delivery, indefinite quantity, fixed price, job-order contract to Lakeshore Engineering Services, Inc., for repair, maintenance, and construction services at Fort Rucker, Alabama. Lakeshore performed 79 construction delivery orders in the base year and 74 construction delivery orders in the first option year.

On March 10, 2009, Lakeshore filed a claim with the contracting officer seeking $1,996,152.40 for losses it incurred while performing during the base and first option year. Lakeshore claimed that it had lost money as a result of the Army's pricing scheme. The contracting officer issued a final decision denying the claim and Lakeshore took the matter to the Court of Federal Claims.

The pricing scheme was a bit complex. Offerors were told that offers were to be priced using three coefficients – one for work (1) during normal hours on pre-priced items, (2) during overtime work on pre-priced items, and (3) on non-pre-priced items. For the pre-priced items, the coefficient was to be "multiplied by the unit prices listed in a Universal Unit Price Book (UUPB) to price a job or project on individual job orders. According to the Solicitation, the coefficient was "a numerical factor that represents costs (generally indirect costs) not considered to be included in the [uUPB] prices, e.g., general and administrative and other overhead costs, insurance costs, bonding and alternative payment protection costs, protective clothing, equipment rental, and contractor’s profit." The Solicitation said the coefficient should account for a wide variety of risks of doing business, adding at a later point, the coefficient "shall contain all allowable contractor costs, including contingencies and profit." It further stated that the "offeror’s coefficient shall contain all costs other than the pre-priced unit prices, as no allowance will be made after award." The Solicitation, however, allowed for adjustments in the coefficient for the option years, to be based on the Engineering News Record building Cost Index (BCI), in accordance with the Economic Price Adjustment Clause, Army Federal Acquisition Regulation Supplement 5152.237-9000.

The Solicitation designated the Gordian Group Construction Task Catalog (the Gordian Catalog) and PROGEN Online as the UUPB and accompanying software, respectively, to be "used by the contractor in development of price proposals for individual Task Orders." According to the Solicitation’s technical specification, "[t]he UUPB, modified for Fort Rucker, contains pricing information (i.e., Government Estimate) for the description of work to be accomplished and for the units of measure specified." This segment further indicated that the "UUPB consists of Divisions 1 through 16 that are applicable to Divisions 1 through 16 of the Job Order Contract Technical Specifications." It additionally specified that the "UUPB modified for Fort Rucker contains unit pricing data to be used by the Contractor in development of price proposals for each work order," adding that "[t]he pricing data is presented as basic items and as price adjustment modifiers to the basic item."

The pricing information available to offerors also included the caveat that: "[w]hile diligent effort is made to provide accurate and reliable up-to-date pricing, it is the responsibility of the Contractor to verify the unit prices and to modify their Adjustment Factors accordingly."

What happened at the Court of Federal Claims? See Lakeshore Engineering Services, Inc. v. U. S., No. 09-865C, April 3, 2013.