Sonoran Technology and Professional Services, LLC
ASBCA No. 61040, 61101
A.S.B.C.A.Jul 3, 2017Background
- Air Force awarded firm-fixed-price contract FA3002-14-D-0005 to Sonoran on 24 April 2014 for F-16 training services with one base period plus four option years; solicitation incorporated an SCA wage determination and a CBA pricing acknowledgment requirement.
- Contract incorporated FAR clauses: 52.222-41 (SCA), 52.222-43 (SCA Price Adjustment), 52.229-3 (Taxes), and 52.243-1 (Changes — Alternate I).
- Sonoran entered a CBA with the IAM effective 1 May 2015; DOL issued Wage Determination CBA-2015-7628 on 23 April 2015 and the government incorporated it for the option period by modification.
- Sonoran claimed the new wage determination increased its New Mexico gross receipts tax liability (an excise-style tax on gross receipts) and sought an equitable price adjustment: initially for direct labor, indirect labor, and gross receipts tax; later pursued only gross receipts tax ($66,579.49 for Option Years 1 & 2).
- Government paid an increase for direct labor but denied recovery for gross receipts tax; Sonoran appealed to the ASBCA (two consolidated appeals), which the board resolved on the written record under expedited procedures.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether FAR 52.222-43 (SCA Price Adjustment) requires reimbursement for increased state gross receipts taxes caused by a new wage determination | Sonoran: gross receipts tax is part of its cost of complying with the wage determination/CBA and thus should be included in the SCA price adjustment | Government: price adjustment limited to wages, fringe benefits, and accompanying social security, unemployment, and workers' compensation costs; gross receipts tax not included | Held: Denied — clause does not cover state gross receipts taxes; express wording and precedent exclude such taxes |
| Whether FAR 52.243-1 (Changes clause) entitles Sonoran to recover gross receipts tax increases resulting from incorporation of the new wage determination | Sonoran: a revised wage determination is a compensable change under the Changes clause, so equitable adjustment should include gross receipts tax | Government: incorporation of wage determination does not create compensable change beyond SCA Price Adjustment mechanism | Held: Denied — even if Changes clause applied, SCA Price Adjustment governs calculation and excludes gross receipts taxes; reading clauses together precludes redundant, conflicting recoveries |
Key Cases Cited
- Lear Siegler Servs., Inc. v. Rumsfeld, 457 F.3d 1262 (Fed. Cir. 2006) (SCA adjustments tied to contractor costs of complying with wage/fringe requirements; case involved fringe benefits recoverable under SCA)
- Lockheed Support Sys., Inc. v. United States, 36 Fed. Cl. 424 (1996) (discusses when wage-determination effects may be compensable under contract changes)
- Bell/Heery, JV. v. United States, 739 F.3d 1324 (Fed. Cir. 2014) (contract must be construed as a whole; give meaning to all provisions to avoid superfluity)
- Hol-Gar Mfg. Corp. v. United States, 351 F.2d 972 (Ct. Cl. 1965) (principles of contract interpretation against superfluous readings)