(Editor’s Note.  The following illustrates the need to critically examine the best vehicle to use for quantifying entitlement for additional cost or price recoveries.)

Admiral’s contract required it to maintain a minimum of mechanics on site at all times to perform elevator maintenance at two Social Security Administration (SSA) buildings.  Before award offerors asked many question to confirm the need to have mechanics on hand and the SSA clearly stated and restated its intent to have mechanics on hand in spite of planned renovations that would indicate maintenance was unnecessary for certain periods. When it turned out that SSA’s estimates were wrong Admiral submitted a claim that would entitle it to the per unit, per-month contracted amounts that were shortfalled and would include whatever labor, material, overhead and profit that Admiral had factored into its pricing. The government asserted that the circumstances for losses suffered from the erroneous estimates should be settled by a partial termination of the contract which precludes Admiral from recovering lost revenue and anticipatory profit. The Board ruled against the government stating the sole purpose of the partial termination was for SSA to unilaterally renegotiate the contract so as to reduce its financial liability. The board cited several cases that were applicable here where the agency was found responsible for losses suffered by a contractor because it had reasonably relied on significant but incorrect agency representations involving pricing (Admiral Elevator v. Social Security Admin., CBCA, No. 470).

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