Government Contracts Contractor Entitled to Increase from Estimated Prices
Monday, August 19, 2019

Contractor Entitled to Increase from Estimated Prices

By Government Contracts Editorial Staff

Appeals for additional compensation were granted because, according to the Armed Services Board of Contract Appeals, the construction contract provided for an increase in estimated prices for supplies and testing. The dispute arose from a contract to construct family housing units and renovate a fitness center at Naval Base Guantanamo Bay. The contract provided that the contractor “will be allowed to request an equitable adjustment to the contract after award to adjust [its estimated] price if the price for concrete, aggregate and concrete testing varies more than 10% as of [December 1, 2010] from the estimated price.”

Price List Applied. The government argued the contractor could not rely on a price list as its “estimated price” to support its request for an equitable adjustment. However, the parties’ concurrent interpretation of contract terms prior to the dispute indicated the government agreed with the contractor that the price list could be used as the estimated price benchmark for purposes of an REA. In particular, the government increased the contract price when the contractor requested a price adjustment to take into account an increase in prices.

Entitled to Full Increase. On appeal, the government also argued the increase in the contract price was “to compensate [the contractor] for concrete price costs increases exceeding 10 percent of the [estimated prices] that [the contractor] cited.” However, the government ignored that when, pre-award, a bidder asked whether the price list still applied, it informed bidders they should use those prices. Moreover, contrary to the government’s assertion, the contractor’s recovery included the first 10 percent of the increase above the estimated price. (BRDC, JV, ASBCA, ¶95,825)

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