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LLC v. Mabus

United States Court of Appeals, Federal Circuit

May 6, 2016

DG21, LLC, Appellant
v.
RAYMOND E. MABUS, SECRETARY OF THE NAVY, Appellee

Appeal from the Armed Services Board of Contract Appeals in No. 57980, Administrative Judge John J. Thrasher.

John C. Dulske, Law Offices of Dulske & Gluys, P.C., San Antonio, TX, argued for appellant. Also represented by Joan Kelley Fowler Gluys.

Domenique Grace Kirchner, Commercial Litigation Branch, Civil Division, United States Department of Justice, Washington, DC, argued for appellee. Also represented by Benjamin C. Mizer, Robert E. Kirschman, Jr., Martin F. Hockey, Jr.; Russell Shultis, Office of Litigation, United States Navy, Washington, DC.

Before Prost, Chief Judge, Newman and Lourie, Circuit Judges.

LOURIE, CIRCUIT JUDGE.

DG21, LLC ("DG21") appeals from the decision of the Armed Services Board of Contract Appeals (the "Board") denying an appeal from the final decision of the contracting officer ("CO") denying DG21 an equitable adjustment to account for escalated fuel costs under a government contract. See DG21, LLC, ASBCA No. 57980, 15-1 BCA ¶ 36016 (Mar. 3, 2015); see also Joint App. ("J.A.") 1–26. For the following reasons, we affirm.

Background

The Department of the Navy ("the Navy") maintains a support facility at Diego Garcia, a small atoll in the Indian Ocean. J.A. 36–37. The atoll occupies approximately 10.5 square miles in area, and is located approximately 1, 800 miles east of the coast of Africa and 1, 200 miles south of the southern tip of India. J.A. 36. Access to Diego Garcia is restricted to military personnel, authorized government personnel, and contractors of the United States or United Kingdom, and there is no commercial or civilian infrastructure. J.A. 38.

In September 2005, the Navy issued a solicitation for bids on a firm fixed-price contract to provide base operating support services at Diego Garcia. J.A. 39. The services to be performed by the contractor varied widely, from information technology services to refuse collection and recycling. J.A. 39. In addition to providing the services themselves, the contractor was required to implement a fuel conservation initiative, with a goal of cumulatively reducing fuel use by 10% per year of the contract. J.A. 48–49. Success in the fuel conservation initiative was responsible for 10% of the contractor's award-fee pool each year. J.A. 50.

The solicitation identified two categories of fuel used under the contract. J.A. 115, 116. The first category, "government-furnished fuel, " was provided by the Navy to the contractor without any payment required, and could be used for most of the services in the contract. J.A. 115. The second category, which applied to all contractor base support vehicles and equipment ("BSVE") and labelled as "contractor-furnished fuel, " was in fact also provided by the Navy. Rather than being provided without payment, however, the solicitation required the contractor to reimburse the Navy for that fuel "at the prevailing DoD [Department of Defense] rate at the time of purchase." J.A. 116. The solicitation indicated that the reimbursement program was "to ensure that the fuel conservation program achieves its full impact throughout the life of the contract." J.A. 115. The solicitation also provided historical fuel prices and usage rates for contractors to use in crafting their bids. J.A. 116.

The solicitation incorporated by reference several provisions of the Federal Acquisition Regulations ("FAR"). J.A. 136. One incorporated provision provides that:

(a) The Contracting Officer may, at any time . . . by written order designated or indicated to be a change order, make changes in the work within the general scope of the contract, including chang-es–
. . .
(3) In the Government-furnished facilities, equipment, materials, ...

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