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Firm client prevails on claims against Army Corps of Engineers.

news | March 23, 2009

Following a three-day trial and extensive post-trial briefing, the Armed Services Board of Contract Appeals handed Firm client AshBritt, Inc. a complete victory on two claims under its large, emergency contract with the Army Corps of Engineers for debris removal services in the State of Mississippi following Hurricane Katrina. Work under the contract totaled hundreds of millions of dollars, and AshBritt ultimately removed, reduced, and disposed of more than 21 million cubic yards of debris. This was a firm fixed price contract under which AshBritt’s indirect costs, overhead, and profit were worked into the negotiated fixed unit price. However, one category of costs amounting to approximately 10% of the total contract price — “tipping fees” paid to the owners of the area landfills utilized in the debris removal process — were not included in the fixed price, but were to be “reimbursed” by the Corps. In the first claim, AshBritt sought its overhead and profit on the tipping fees it paid the landfill owners. The Corps argued that the term “reimburse” entitled AshBritt only to recovery of the direct costs of the tipping fees themselves that AshBritt had paid out of pocket. AshBritt maintained that “reimburse” can and should be construed to include recovery of indirect costs and profit as well, and that based on AshBritt’s accounting methodology under the cost accounting principles set forth in the Federal Acquisition Regulations (FAR), AshBritt would not be made whole unless it were permitted to recover indirect costs and profit on the tipping fees. In the second claim, the Corps denied AshBritt payment even for its direct tipping fees at one particular landfill based on its interpretation of the term “haul out.” At trial, AshBritt presented a number of fact witnesses and one expert witness, and argued that its construction of the contract was the more reasonable and sensible construction. In a 37-page opinion issued on March 3, 2009, the Board accepted in full AshBritt’s factual evidence and adopted in full AshBritt’s construction of the contract.