CBCA 3876

GRANTED IN PART: September 7, 2017 CBCA 3876 CH2M—WG IDAHO, LLC, Appellant, v. DEPARTMENT OF ENERGY, Respondent. Mark J. Meagher and Phillip R. Seckman of Dentons US LLP, Denver, CO, counsel for Appellant. Margaret B. Hinman and Terri L. Ackerman, Office of Chief Counsel, Department of Energy, Idaho Falls, ID, counsel for Respondent. Before Board Judges SOMERS, SHERIDAN, and ZISCHKAU. SHERIDAN, Board Judge. This is an appeal from a Department of Energy (DOE) contracting officer’s final decision on a $41,250,152 claim submitted by appellant CH2M—WG IDAHO, LLC (CWI) on contract DE-AC07-051D14516. The contract, awarded by DOE, involved clean-up of nuclear sites located in and around Idaho, and was referred to as the Idaho Cleanup Project (ICP contract). The ICP contract was a cost-plus-incentive-fee (CPIF) contract which also had provisions that allowed the parties to negotiate extra work on a cost-plus-fixed-fee (CPFF) basis. Early in the contract, consistent with the Cost Accounting Standards (CAS), CWI reallocated some general and administrative (G&A) costs negotiated under the CPIF contract into the CPFF portion of the contract. This, and CWI’s continued allocation of G&A costs CBCA 3876 2 into the CPFF portions of the contract, allowed it to earn greater fees than DOE anticipated. The parties delayed quantifying the impact of the reallocation of costs during the pendency of the contract. At the end of the contract, when the parties were unable to agree on how the reallocation impact should be quantified, DOE unilaterally modified the contract to reallocate the costs earned under the CPFF part of the contract into the CPIF portion of the contract, thereby effecting a reduction in the incentive fees CWI earned and accomplishing what DOE considered to be an equitable result. CWI disagreed with what it characterizes as DOE’s unilateral modification of the contract, arguing that the contract did not allow DOE to unilaterally change the payments provisions of the contract. CWI seeks $27,359,380 for DOE’s unilateral actions and resultant reduction in the incentive fees arising out of the G&A cost allocations. DOE’s action also automatically reduced the payments it owed for safety fees earned to CWI, called safe units, because the amounts earned were dependent on the incentive fees earned. CWI seeks $5,985,811 for safe units. Also, during the contract, in order to reduce the Integrated Waste Treatment Unit (IWTU) construction costs, CWI transferred certain costs originally billed to the IWTU capital project line item into the IWTU and Idaho Nuclear Technology and Engineering Center (INTEC) operating expense line items. DOE originally agreed that the cost transfers were proper, but later changed its mind. By DOE’s later disagreeing to the cost transfers, CWI was unable to recover those costs because its costs had reached a not-to-exceed cost cap that the parties negotiated on the IWTU construction project. CWI seeks $7,904,961 for the cost transfers that were disallowed by DOE. The parties each filed extensive briefs setting forth copious amounts of facts. We fully reviewed the facts each party considered important to its arguments, but found that since we concluded that this matter turned on contract interpretation, and the contract was clear, it was largely unnecessary to recreate an extensive recitation of facts used by the parties in their briefs. Findings of Fact 1. The request for proposals and CWI’s proposal On July 21, 2004, DOE issued a request for proposals (RFP) for what ultimately was designated contract DE-RP07-0314516. The proposal was for a CPIF contract that included cost and schedule performance incentives for performing work described in the statement of work (SOW). The stated purpose of the RFP was to safely accomplish as much of DOE Office of Environmental Management’s (DOE-EM’s) mission as possible within available CBCA 3876 3 funding, and the SOW set forth extensive work to be performed through the contract completion date.