Access Personnel Services, Inc.
ASBCA No. 59900
| A.S.B.C.A. | Sep 7, 2017Background
- Access Personnel Services, Inc. (APS) won a one-year time-and-materials (T&M) Navy contract (CLIN 0001) with specified hourly rates that included wages, indirect costs, fringe benefits and profit.
- APS subcontracted up to 49% of the work to Professional Services of America (PSA); the subcontract contemplated PSA personnel billed to APS at annual fees that equated to the contract hourly rates when divided by 2,000 hours.
- PSA invoiced APS using a 2,080-hour divisor (4% lower hourly rates) and separately invoiced a vacation-pay line item; APS billed the Government using the contract hourly rates and did not pass the separate vacation line item through to the government.
- DCAA disallowed $22,236 (later part of a larger disputed amount) because APS billed the Government at rates higher than PSA actually billed APS; the contracting officer sustained the disallowance.
- APS appealed to the ASBCA (entitlement phase only); the Board found the Payments clause (FAR 52.232-7) governs reimbursement of subcontract costs and concluded the government failed to reimburse APS for subcontract costs it had paid (including vacation pay).
Issues
| Issue | Plaintiff's Argument (APS) | Defendant's Argument (Government) | Held |
|---|---|---|---|
| Whether APS may be reimbursed at the contract hourly rates for work performed by its subcontractor | APS: Payments clause §(a)(1) requires reimbursement by multiplying contract hourly rates by hours performed, so APS can bill contract rates for subcontractor hours | Govt: Payments clause §(b) limits reimbursement to actual subcontractor labor rates paid to the subcontractor | ASBCA: Neither side’s reading is wholly correct; Payments clause reimburses subcontract costs, not merely subcontractor hourly rates, so government failed to reimburse APS for subcontract costs it paid (including vacation pay) |
| Whether APS is limited to reimbursement equal to amounts subcontractor billed APS | APS: Not limited; entitled to contract rates for hours | Govt: Reimbursement limited to what subcontractor actually billed APS | ASBCA: Reimbursement is for subcontract costs paid by contractor; limiting reimbursement solely to subcontractor invoiced hourly rates ignores reimbursing costs contractor actually incurred |
| Whether contractor’s failure to obtain prior written consent to subcontract (or PSA’s invoicing method) bars reimbursement | APS: Contracting officer ratified subcontract; costs otherwise allowable | Govt: Hinted failure to obtain consent could deny costs | ASBCA: Ratification undermines consent argument; parties do not dispute allowance of vacation pay as a subcontract cost |
| Remedy/quantum determination at entitlement stage | APS: Seeks full amounts disallowed | Govt: Seeks dismissal based on plain clause meaning (moved for summary judgment) | ASBCA: Sustained appeal on entitlement; remanded to determine quantum because record lacked all subcontract invoices |
Key Cases Cited
- NVT Techs., Inc. v. United States, 370 F.3d 1153 (Fed. Cir.) (contract interpretation begins with plain language)
- Hercules, Inc. v. United States, 292 F.3d 1378 (Fed. Cir.) (give reasonable meaning to all contract parts)
- Fortec Constructors v. United States, 760 F.2d 1288 (Fed. Cir.) (avoid interpretations that render provisions meaningless)
- United States v. Johnson Controls, Inc., 713 F.2d 1541 (Fed. Cir.) (contract nature determined objectively by plain meaning)
- McHugh v. DLT Solutions, Inc., 618 F.3d 1375 (Fed. Cir.) (plain meaning controls over subjective intent)
- Teg-Paradigm Envtl., Inc. v. United States, 465 F.3d 1329 (Fed. Cir.) (use dictionaries to establish ordinary meaning)
- Vanguard Prods. Corp. v. Parker Hannifin Corp., 234 F.3d 1370 (Fed. Cir.) (interpretive aids in contract disputes)
- Int'l Bus. Mach. Corp. v. United States, 201 F.3d 1367 (Fed. Cir.) (statutory/contract interpretation principles)