After a hiatus in the posting of new decisions on its website dating back to October 2006, the Armed Services Board of Contract Appeals recently posted a series of new decisions.  We will review and comment on the most interesting ones in upcoming articles and we begin today with the decision in Emerson Construction Co. Inc., ASBCA No. 55165, dated December 8, 2006

The government filed a motion for partial summary judgment alleging that the contractor was not entitled to an equitable adjustment under FAR 52.211-18, VARIATION IN ESTIMATED QUANTITY (APR 1984) (VEQ clause), as a matter of law.  According to the government, the VEQ clause was not applicable to firm, fixed-price requirements type construction contracts. The contract required Emerson to provide “All Labor, Equipment and Materials for Miscellaneous Roads, Grounds, Site Repairs and Improvements at Fort Hood, Texas.”  The schedule included 23 pages listing each item of work to be accomplished along with the estimated quantity of each.

The government admitted that it ordered less than 85% of the estimated quantities overall, but argued that the VEQ clause should be applied to each individual delivery order, and not to the overall estimated quantity estimated in the contract.  In other words, unless each individual delivery order provided an estimated quantity of unit-priced items, the VEQ clause shuld not apply. The Board disagreed and held that the VEQ clause was applicable to the overall requirements contract, not just to the individual awarded delivery orders. The VEQ clause stated that it was applicable to “this contract.”  In the Board’s view, “this contract” indisputably referred to the overall requirements contract.  The contractor submitted an affidavit with an item-by-item analysis showing that the government ordered 85% of estimated quantities on only 7 of the 76 line items for the base year and only 6 of the 76 line items for the first option year.  In fact, for a majority of the 76 line items for the base year and first option year, the Government ordered less than 50% of the estimated quantities.

            The Board concluded that under the VEQ clause, a contractor is entitled to an equitable adjustment in the contract price for increased costs due solely to the variation of unit-priced items actually ordered by the Government below 85 percent of the quantities of the unit-priced items estimated to be ordered under the contract. Henry Angelo & Co., ASBCA No. 43669, 94-1 BCA ¶ 26,484 at 131,824. The Board ruled that Emerson had shown, for purposes of entitlement, that there was such a variation.