CBCA 7056

THIS OPINION WAS INITIALLY ISSUED UNDER PROTECTIVE ORDER AND IS BEING PUBLICLY RELEASED IN REDACTED FORM ON JULY 19, 2023 GRANTED IN PART: June 28, 2023 CBCA 7056 WASHINGTON RIVER PROTECTION SOLUTIONS LLC, Appellant, v. DEPARTMENT OF ENERGY, Respondent. Scott Arnold, Luke W. Meier, Robyn N. Burrows, and Amanda C. DeLaPerriere of Blank Rome LLP, Washington, DC; and Michael J. Montalbano of Blank Rome LLP, Philadelphia, PA, counsel for Appellant. Andrew J. Unsicker and Paul R. Davis, Office of Chief Counsel, Department of Energy, Richland, WA, counsel for Respondent. Before Board Judges KULLBERG, ZISCHKAU, and SULLIVAN. SULLIVAN, Board Judge. Washington River Protection Solutions LLC (WRPS) appealed the decision of the Department of Energy (DOE) contracting officer that asserted a demand for repayment of purported unreasonable staff augmentation expenses incurred between 2009 and 2018. We find most of the challenged costs reasonable and grant the appeal in part.  REDACTED VERSION CBCA 7056 2 Findings of Fact In May 2008, DOE Office of River Protection awarded to WRPS the Tank Operations Contract (TOC). Exhibit 1 at 1.1 Located at DOE’s Hanford Site, there are 177 tanks containing approximately fifty-three million gallons of radioactive and chemical hazardous waste. Id. at 27. Pursuant to the TOC, WRPS was to conduct “operations and construction activities necessary to store, retrieve and treat Hanford tank waste, store and dispose of treated waste, and begin to close the Tank Farm waste management areas to protect the Columbia River.” Id. at 28. This cleanup of the Hanford Site was part of what DOE described as “the world’s largest environmental cleanup project.” Id. at 27. The contract was a cost-plus-award-fee contract, and the expected contract price was more than $7 billion over ten years of performance, which included a base period of five years and a total of five additional option years. Id. at 5, 10. WRPS was obligated to “provide the personnel, equipment, materials, supplies, and services, and do all things necessary for, or incident to, providing its best efforts to perform all requirements of” the contract. Id. at 5. The focus of this dispute is WRPS’s use of contracted labor resources (CLRs) in its performance of the contract. CLRs are individuals hired through staff augmentation subcontractors to perform a specific scope of work or to fill in for missing personnel on a temporary basis under the direct supervision of a WRPS employee. Transcript, Vol. 1 at 30. WRPS competes different labor categories among staff augmentation contractors and enters into blanket master agreements (BMAs) that contain labor categories and rates.2 Id. at 79-80. Once BMAs are established, CLRs can be hired quickly, and WRPS does not incur the training or separation costs that it would for a full-time employee, costs estimated to be between $28,000 and $38,000. Id. at 78, 80, 188. CLRs also allow WRPS to accomplish tasks when budget funds are available and to downsize quickly without additional cost when budget funds are not available. Id. at 186. It also allowed WRPS to obtain the services of contractors who would not take a full-time position. Exhibit 37 at 20; see also Transcript, Vol. 1 at 189-90. WRPS hired 1224 CLRs in the first ten years of the contract, as compared to the average 4300 full-time WRPS employees. Exhibit 37 at 19; Transcript, Vol. 1 at 183. Very few of these CLRs worked full-time during any given year, and few worked more than five years as a CLR. Exhibit 37 at 16. WRPS spent nine percent of its staffing dollars paying for CLRs. Transcript, Vol. 1 at 183-84. WRPS planned on an annual basis its use of full-time WRPS employees versus CLRs—plans that were shared with DOE. Id. at 186. 1 All exhibits are found in the appeal file, unless otherwise noted. 2 WRPS also used blanket ordering agreements (BOAs), in which individual CLR positions were competed. Transcript, Vol 1 at 256-57.  REDACTED VERSION CBCA 7056 3 Chronology of Dispute In February 2020, DOE issued a notice of intent to disallow costs “related to subcontractor backlog audits” through fiscal year 2018. Exhibit 32. DOE intended to disallow $6 million for “contracted labor time recording (CLTR)” resources. Id. at 2.