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Government, ASBCA Applied Wrong CLIN to Payment Dispute

A ruling by the Armed Services Board of Contract Appeals was reversed by the Court of Appeals for the Federal Circuit because the board relied on an inapplicable contract line item number in rejecting the materiel distribution contractor's claim for additional compensation. The dispute centered on which CLIN applied to billing and payment for a packaging task. The ASBCA ruled the operative contract terms contained a patent ambiguity, which obligated the contractor to inquire into the proper interpretation. Since the contractor did not make this inquiry, the board adopted the government's interpretation that a lower-priced "catch-all" CLIN applied to the task (08-1 BCA ¶33,761). On appeal, the contractor argued there was no ambiguity between the contract terms, and another, higher-priced CLIN covered the task.
Plain Language

The Federal Circuit agreed, finding the contract as a whole was only reasonably susceptible to the contractor's reading, and no ambiguity existed. The contract's pricing provisions stated items must be billed under the lower-priced CLIN, unless they were "noted below" in another CLIN. A subsection of the performance work statement covered the packaging task, and this subsection was specifically listed under the higher-priced CLIN. As the task fell within the subsection, it was "noted below" for purposes of the pricing provisions. Thus, under the plain language of the contract, billing and payment for the packaging task was governed by the higher-priced CLIN. The court remanded the case to the ASBCA for a quantum determination. (LAI Services, Inc. v. Gates, CA-FC, 53 CCF ¶79,142)

(The news featured above is a selection from the news covered in the Government Contracts Report Letter, which is published weekly and distributed to subscribers of the Government Contracts Reporter. )

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