We prevailed on summary judgment, allowing our client to recover $1.7 million in costs incurred under a new CBA.
Our client was awarded a contract for base civil engineering support and operations management at Tinker AFB. The contract contained a two-month transition period and five one-year option periods. During the transition period, the incumbent contractor remained responsible for contract performance. Nearly all the incumbent employees accepted job offers from our client, who began negotiating a new collective bargaining agreement (CBA) with the union. Although the Air Force was aware of these negotiations, the contracting officer did not give our client or the union written notification of the forthcoming option exercise 30 days in advance of the applicable date, as required by FAR 22.1010.
Our client and the union were unable to agree upon the terms of a new CBA before the end of the transition period. When an agreement was reached, our client submitted a request for equitable adjustment for the increased costs payable under the new CBA for the first option year and the remaining options years. The Air Force denied the request, contending that the new CBA was not timely and therefore would not be incorporated into the contract for the first option year.
We appealed the contracting officer’s decision to the Armed Services Board of Contract Appeals, arguing that the agency’s failure to provide the 30-day notification required by FAR 22.1010 excused our client’s late notice. The board agreed that the Air Force’s failure to provide preliminary notice under FAR 52.217-9, which necessitated a bilateral modification, did not absolve the Air Force of its failure to provide the mandatory 30-day notice under FAR 22.1010: “The Air Force cannot use one failure to excuse another.” Accordingly, the board held that our client was entitled to a price adjustment of $1,744,330.37 for the increased labor costs associated with the new CBA executed after the option was exercised.
