ASBCA 61066

ARMED SERVICES BOARD OF CONTRACT APPEALS Appeal of -- ) ) Presentation Products, Inc. dba Spinitar ) ASBCA No. 61066 ) Under Contract No. W912CN-15-P-0174 ) APPEARANCE FOR THE APPELLANT: Mr. Drake Wayson Vice President APPEARANCES FOR THE GOVERNMENT: Raymond M. Saunders, Esq. Army Chief Trial Attorney MAJ Christopher C. Cross, JA Trial Attorney OPINION BY ADMINISTRATIVE JUDGE O'SULLIVAN Appellant Presentation Products, Inc. dba Spinitar (Spinitar) seeks an equitable adjustment of $7,624.14 to its contract with the Army to install a video conferencing system at Fort Shafter Flats, Hawaii. This amount represents general excise tax that Spinitar did not include in its proposed price but was required to pay by the State of Hawaii on its revenues under the contract. Spinitar has elected to proceed under Board Rule 12.2. 1 The government opposes Spinitar's claim and asserts the contract does not obligate it to pay state taxes that were not included in the contract price. We agree with the government and deny the appeal. FINDINGS OF FACT 1. On 2 June 2015, the Army issued Solicitation No. W912CN-15-T-0187 requesting proposals to install a video conferencing system for the 18th Medical Command Operations Center at Fort Shafter Flats, Hawaii. The solicitation included the Federal Acquisition Regulation (FAR) 52.212-4, CONTRACT TERMS AND CONDITIONS-COMMERCIAL ITEMS (MA y 2015) clause, which states in subsection (k): "'Taxes. The contract price includes all applicable Federal, State, and local taxes and duties." (Supp. R4, tab 29 at 1, 15) 2. Spinitar submitted its proposal on 2 July 2015 (R4, tab 2 at I). Its cost proposal contained the following note: "'The above prices do not include any 1 Under Rule 12.2, Small Claims (Expedited) Procedure, written decisions issued by the Board will be short and contain only summary findings of fact and legal conclusions. A decision under Rule 12.2 shall have no value as precedent and, in the absence of fraud, shall be final and conclusive and may not be appealed or set aside. applicable sales taxes. Hawaii's GET [general excise tax] tax reimbursement policy implemented for federal purchases will be utilized." (Id. at 21) 3. Contract No. W912CN-15-P-0174 (the contract) was awarded to Spinitar effective 11 September 2015 in the amount of $165,417.31. The contract was firm-fixed-price and incorporated the Commercial Items clause (FAR 52.212-4 ), including its subsection (k). (R4, tab 1 at 1, 16) 4. On 26 January 2016, Spinitar submitted a change proposal (erroneously dated 26 January 2015) that included the following with respect to Hawaii's GET: We have spoken extensively with Hawaii's Sales/GET tax office. Your indication to my prior email that this is not subject to such taxes is based on the "Goods Only" definition. However, we are informed that "Goods and Installation" is subject to the taxes at a rate of 4.5% for Oahu. This is a total tax of $7,624.14 including the approved Change Proposal 1. You will recall that we excluded taxes in our proposal so these will need to be added to our contract. (R4, tab 4 at 67) The prior communications alluded to above are not included in the record. 5. On 9 August 2016, Spinitar submitted a claim for $7,624.14 which stated, in relevant part: In the pricing section of the proposal (page 21 of the proposal), Spinitar specifically excluded any applicable sales taxes including GET tax which is a sales tax imposed on goods and services when provided together under a single order. After numerous conversations with the State of Hawaii, we determined that the GET tax would not be waived or reimbursed for this project. (R4, tab 4 at 2) 6. On 17 February 2017 the contracting officer issued a final decision denying Spinitar's claim. The final decision stated in relevant part: 2  Per the State of Hawaii's Department of Taxation, GET is a tax on businesses rather than a sales tax on customers. Furthermore, businesses are not required by law to collect GET from their customers.