Contract and Conduct Supported Cost Claims

A waste removal and disposal contractor was entitled to indirect costs of administering tipping fees paid to landfill owners and a separate haul out price, according to the Armed Services Board of Contract Appeals, because the contractor's claims were consistent with the contract, as well as the parties' intent and contemporaneous construction. The parties generally agreed tipping fees were not included in the pricing of the firm fixed-price, indefinite-delivery indefinite quantity contract for debris removal, reduction, and management awarded after Hurricane Katrina. At issue was the government's deemed denial of the contractor's claim for profit and general and administrative costs for administering tipping fees. In addition, the government contended a modification subsumed the contractor's haul out price in the tipping fee charged by one of the landfills.
Indirect Costs

With regard to the claim for indirect costs, there was no merit to the government's contention indirect costs were included in the contract pricing as "all costs associated" with "final disposal." A contract provision the government would reimburse tipping fees did not necessarily exclude indirect costs from reimbursement because "reimburse" is not a term of art and has no customary meaning with respect to indirect costs. Consistent with the reimbursement provision, the bidding schedule did not list tipping fees or tipping fee administration as bid items constituting final disposal costs. On the other hand, there was logic to the contractor's assertion tipping fees and associated indirect costs were not known and could not be priced when the contractor submitted its proposal. That the parties construed the contract as permitting recovery of indirect costs for tipping fees was demonstrated by the contracting officer's contemporaneous conduct and not contradicted by bilateral modifications. The modifications were executed near the time the contractor made an oral request for payment of administrative costs and did not contain any waivers or releases of claims. Moreover, the government's subsequent interpretation was unreasonable because, in depriving the contractor of means to recover its administrative costs, it was contrary to the assumption of a reasonable contracting party possessing "ordinary commercial intelligence."
Direct Haul Out Costs

The government also denied the contractor's claim for the haul out price for waste disposed at one landfill, contending a modification combined the haul out price and tipping fee in one lower price. The contract provided the fixed haul out price for removal of debris up to 15 miles was "to be used for a minimum basis for negotiations" and, in the event of conflict with a task order, the contract would control. The parties had not negotiated a lower price, and the government drafted the modification based on its erroneous conclusion a lower price in a final disposal plan referred to the total unit disposal price rather than only the tipping fee. In the aftermath of Katrina, contract documents were exchanged rapidly, and the contractor did not notice the error before executing the modification. The contractor subsequently identified the drafting error, but the contracting officer refused to fix it based on the misconception "haul out" required physically leaving the disposal site. The contractor, however, was entitled to the contract haul out price in addition to the tipping fee because the modification was based on the government's unreasonable, erroneous assumptions, did not reflect a meeting of the minds and the parties' intent, and produced a task order that conflicted with the contract's minimum unit price. (AshBritt, Inc., ASBCA, 92,520)

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