IBI Security Service, Inc. v. United States

35 Cont. Cas. Fed. 75,740, 19 Cl. Ct. 106, 1989 U.S. Claims LEXIS 218, 1989 WL 129393
CourtUnited States Court of Claims
DecidedOctober 27, 1989
DocketNo. 645-88C
StatusPublished
Cited by6 cases

This text of 35 Cont. Cas. Fed. 75,740 (IBI Security Service, Inc. v. United States) is published on Counsel Stack Legal Research, covering United States Court of Claims primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
IBI Security Service, Inc. v. United States, 35 Cont. Cas. Fed. 75,740, 19 Cl. Ct. 106, 1989 U.S. Claims LEXIS 218, 1989 WL 129393 (cc 1989).

Opinion

OPINION

NETTESHEIM, Judge.

This case, before the court after argument on cross-motions for summary judgment, involves a dispute over the appropriateness of an equitable adjustment to com[107]*107pensate a contractor for a government-mandated employee wage and benefit increase.

FACTS

The following facts are undisputed. On March 17, 1986, the National Institute for Environmental Health Sciences (“NIEHS”) issued Invitation for Bids No. 273-86-B-0009 (the “IFB”). The IFB requested bids for providing security service for one “base year” and two additional “option years.” Security service was to be provided to government buildings located at Research Triangle Park, North Carolina. Of the 25 firms that submitted bids on the contract, IBI Security Services, Incorporated (“plaintiff”), was determined to be the second lowest bidder. After NIEHS permitted the original low-bidder to withdraw its proposal, plaintiff was awarded a firm fixed-price service contract on June 20, 1986.

During spring 1987 plaintiff began collective bargaining negotiations with representatives of the Industrial, Technical, and Professional Employees Division of the National Maritime Union of America (the “union”), as agent of the security guards at the Research Triangle Park facility. As a result of those negotiations, plaintiff and the union agreed upon a wages and benefits package of $455,234.60 for 1987. The agreement amounted to an increase of $124,199.76 over the prior year.

Issuing modification number 4 to the contract, the contracting officer exercised the first of the contract options on June 16, 1987. Weeks later, in a letter dated July 14,1987, plaintiff informed NIEHS that the Department of Labor (the “DOL”) would soon be issuing a Wage Determination covering security guards at the facility. The DOL's determination would set the minimum allowable wages and benefits to be offered by employers. In the July 16 letter, plaintiff requested that NIEHS begin negotiations on the amount of a contract adjustment covering the anticipated increases.

On September 25,1987, the DOL issued a Wage Determination providing that plaintiff’s security guards were to be “paid wage rates and fringe benefits set forth in the bargaining agreement(s)” entered into between plaintiff and the union. When plaintiff appealed for an adjustment in the contract price — on the ground that the DOL’s Wage Determination was a compensable increase in plaintiff’s costs — the contracting officer denied plaintiff’s claim. Plaintiff filed suit in this court on November 14, 1988.

DISCUSSION

Plaintiff argues that both Temporary Regulation (“Temp.Reg.”) 76, 49 Fed.Reg. 6,726 (1984), and the Christian doctrine, G.L. Christian & Associates v. United States, 160 Ct.Cl. 1, 312 F.2d 418, rehearing denied, 160 Cl.Ct. 58, 320 F.2d 345, cert. denied, 375 U.S. 954, 84 S.Ct. 444, 11 L.Ed.2d 314 (1963), require inclusion of a price adjustment clause into its contract with the Government. Temp.Reg. 76 had the effect of carrying forward clauses required to be included in government contracts during a transition between two sets of procurement regulations. However, since the price adjustment clause was not included in plaintiff’s contract, plaintiff invokes the Christian doctrine, whereby clauses and requirements that are required to be inserted into government contracts are “read into” the body of the contract by operation of law. The goal served by this action is that “procurement policies set by higher authority [are] not ... avoided or evaded (deliberately or negligently) by lesser officials____” G.L. Christian, 160 Ct.Cl. at 66, 320 F.2d at 351.

Further, plaintiff asserts that it was wrongful for NIEHS not to include a price adjustment clause in the contract and that defendant should be estopped from denying that an adjustment is due. Defendant counters that not including a price adjustment clause in plaintiff’s contract was a proper and lawful action and asks this court to declare, as a matter of law, that plaintiff is not entitled to recover for the increases in its costs.

Summary judgment is appropriate when there is no genuine issue of material fact in dispute and the moving party is entitled to [108]*108judgment as a matter of law. RUSCC 56(c); The case is well suited for summary disposition, as the parties are in accord on all material facts. Both plaintiff and defendant agree that NIEHS’ exercise of the contract option bound both parties to perform under the contract and that as a result of plaintiff’s collective bargaining negotiations, plaintiff suffered increased operation costs during the option year. What remains in this dispute is a question of law — the obligation of NIEHS, if any, under statute, regulation or prior cases to compensate plaintiff for its added expenses.

1. Government obligation to include price adjustment clause

The parties agree that it had been the prior practice of NIEHS officials, under applicable regulations, to include price adjustment clauses in service contracts. Such a clause would have permitted adjustments so as to compensate contractors for employee wage increases. See Federal Procurement Regulation (sometimes referred to as “F.P.R.”) § 1-12.905, 46 Fed. Reg. 62,276 (1982), 41 C.F.R. § 1-12.904-3 (1982).1 The parties further agree that no such clause was included in the instant contract. Moreover, the Federal Acquisition Regulations (“F.A.R.”) 48 C.F.R. §§ 1-4452.239-71 (1984), effective April 1, 1984, did not incorporate this clause.

In arguing that inclusion of a price adjustment clause was warranted under the Federal Procurement Regulations and that critical provisions of the F.P.R. were “not necessarily obliterated in areas without FAR coverage”, Plf’s Br. filed Aug. 4, 1989, at 6, plaintiff appears to concede that the F.A.R. did not direct the contracting officer to include a price adjustment clause in the contract. Instead, plaintiff asserts that an interim provision, Temp.Reg. 76, required government agencies to use the old contract clause during the interval between administering contracts according to the F.P.R. and the date on which the F.A.R. became effective. Plaintiff relies heavily on the “Explanation of Changes” in arguing the effect of Temp.Reg. 76. Introductory paragraphs 5(a) and (b) read:

Pending the publication of permanent revised regulations in FPR Subpart 1-12.9, agencies shall follow the provisions of 29 CFR Part 4, Labor Standards for Federal Service Contracts (48 FR 49736, October 27, 1983). To the extent that FPR Subpart 1-12.9 differs from the DOL regulations after January 27, 1984, the DOL regulations shall apply-
The revised contract clauses required by the DOL regulations for contracts over and under $2,500 are set forth in sections 4.6 and 4.7 of revised 29 CFR Part 4 (see 48 FR 49766, October 27, 1983) are attached. These clauses are applicable only to contracts entered into pursuant to invitations for bids issued or negotiations concluded on or after January 27, 1984 and

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35 Cont. Cas. Fed. 75,740, 19 Cl. Ct. 106, 1989 U.S. Claims LEXIS 218, 1989 WL 129393, Counsel Stack Legal Research, https://law.counselstack.com/opinion/ibi-security-service-inc-v-united-states-cc-1989.