Vectrus Systems Corporation

• Court: Armed Services Board of Contract Appeals
• Decided: March 26, 2025
• Docket: 63444
• Status: Published

Opinion

ARMED SERVICES BOARD OF CONTRACT APPEALS Appeal of - ) ) Vectrus Systems Corporation ) ASBCA No. 63444 ) Under Contract No. FA3002-17-C-0001 )

APPEARANCES FOR THE APPELLANT: Joseph G. Martinez, Esq. Mikaela R. Colvin, Esq. Dentons US LLP Denver, Colorado

APPEARANCES FOR THE GOVERNMENT: Caryl A. Potter, III, Esq. Air Force Deputy Chief Trial Attorney Christian Robertson, II, Esq. Trial Attorney

OPINION BY ADMINISTRATIVE JUDGE SMITH

Appellant Vectrus Systems Corporation (Vectrus) seeks an equitable adjustment to its fixed price contract for laundry services because it cleaned more of a small number of items than were shown in the “workload data” attached to a contract modification (even as it cleaned less of other items included in the “workload data”). We find that the specific workload data numbers were not contractually binding upon either party, the question of negligent estimates does not apply, and the pertinent fixed price CLINs provide no basis for an equitable adjustment. The appeal is denied.

FINDINGS OF FACT

The Contract

The U.S. Air Force (USAF) issued the solicitation for Base Operation Support Services (BOS) Contract No. FA3002-17-C-0001 on August 29, 2016 (JR4, tabs 2 at 1, 3, 18 at 1). 1 Vectrus was required to provide a wide range of services for the operation of Keesler Air Force Base in Biloxi, Mississippi. The contract divided those services into an array of contract line items (CLINs), most of which were firm fixed price (JR4, tab 18 at 3-50). The CLINs were structured by contract years, with a base

1 By Order dated January 18, 2024, the Board directed the parties to coordinate with one another to prepare single group of electronic documents as a Joint Rule 4 file. Those documents will be cited herein as “JR4, tab __ at __.”

1 year (June 2017 through May 2018) and six subsequent option years (JR4, tab 18 at 209-34). To place this dispute into context and perhaps explain why the parties did not choose to go into as much detail about the individual CLINs at issue here as they might have, we note that the value of the first year of the contract was $15,412,400 (JR4, tab 18 at 2), and the Performance Work Statement (PWS) was 775 pages long (see JR4, tab 19).

The contract provisions relevant to this appeal were four types of “dry cleaning, linen exchange and laundry service” (laundry) (JR4, tab 19 at 635). The laundry provisions were brief and, oddly, embedded within the contract’s “munitions” section, as shown here:

Id.

Each of these four provisions had a corresponding CLIN per contract year (JR4, tab 18 at 40-43, 69-71, 9-96, 119-21, 144-46, 169-71, 194-96). Each CLIN was firm fixed price per month, times 12 months per contract year. For example, the APF dry cleaning CLIN 1038 for the first contract year was this:

(JR4, tab 18 at 40).

2 Using this example, between contract section 23.1.2.2.3.1 and CLIN 1038, Vectrus was required to dry clean all APF items for a flat fixed price of $4,929 per month for the first contract year. There was no specified number, range or limit (high or low) of items to be dry cleaned under CLIN 1038. Similarly, CLIN 1038 obligated USAF to pay Vectrus $4,929 per month, for a total of $59,148 that year, regardless of actual volume and even if no APF items were dry cleaned throughout the entire year. This example illustrates the parties’ contractual obligations for the other three laundry services and their corresponding CLINs too.

The “Workload Data”

Attached to the solicitation as Appendix 15B was a chart, described in the table of contents as “workload data,” that listed 34 individual item-types (pillowcases, shop rags, hats, etc.) and tallied a total for each one (JR4, tab 3 at 5, 720). The definition or contractual relevance of the workload data was not defined on the chart itself, in the laundry provisions, in the laundry CLINs, or anywhere else in the contract. 2 And the term “workload data” was not used in either the laundry provisions of the contract or the corresponding CLINs. At the pre-proposal conference, USAF presented a briefing slide that included “workload data” in a list of “additional information” along with “Publications, Maps, Required Reports, Plans, Special Training, GFP, etc.” (R4, tab 4 at 8). 3 Another briefing slide advised contractors to “[u]se Govt provided workload data in RFP” to “build[] [a] solid proposal” (R4, tab 4 at 31).

Vectrus submitted its proposal and was awarded the contract on April 12, 2017 (JR4, tab 18 at 1), so the fixed CLIN prices for each of the four laundry provisions became binding on both parties for the life of the contract.

Revision of the Workload Data with Vectrus’ Records

Early in its performance, Vectrus complained about the volume of laundry it was doing for a small number of the item-types listed in the workload data, primarily from dormitories for students at a school located on base (JR4, tabs 151, pp. 16-17;

2 This includes whether the workload data was truly data, which would seem to be objective information compiled from previous year/s. Or whether it was an imprecise estimate of past work. Or if it was intended as an estimate of future work (i.e. a prediction of workload for (each year?) of the contract). Or if the workload data was something else. The table of contents in contract calls it “workload data” while the chart itself says “workload” (JR4, tab 3 at 5, 720). One of the three versions of the workload data, but not the one at issue here, calls the annual numbers “estimated quantity” and the descriptions of the item- types “workload” (JR4, tab 19 at 656). 3 This document is not paginated so the citations are to the .pdf page. 3 152 at 2 ¶ 10). USAF agreed to revise the workload data and to add CLINs to provide laundry services at a hospital-related building called Fisher House (JR4, tab 38; see also tab 154 ¶¶ 8-11).

USAF also agreed to an equitable adjustment to be definitized later, but the Modification No. A00006 (Mod 6) did not specify whether the equitable adjustment was for doing higher amounts of laundry than shown in the workload data or for previous performance at Fisher House (JR4, tabs 35-36).

The Mod 6 workload data, which Vectrus bases its claim upon, was created, at least in part, with Vectrus’s participation and using records from Vectrus’s own work earlier in the contract and from a collation of data from the prior contractor (JR4, tabs 24, 30-31, 38, 151 at 20-28, 154 ¶¶ 8-11). Mod 6 was issued unilaterally on August 21, 2017, (JR4, tab 35), with the following revised workload data.

4 (JR4, tab 19 at 656-57).

In addition to revising the workload data, Mod 6 gave Vectrus the opportunity to increase its CLIN prices, which were negotiated and bilaterally definitized in Modification Nos.A00015 and A00016 (JR4, tabs 62-63). 4 Important to our decision here, the firm fixed price structure of the CLINs -- which was established first by the solicitation then by the contract -- was not changed in any of the modifications.

Vectrus’ Claim

During the next four years, Vectrus laundered a lower volume of approximately 42 of the 49 item-types listed in the Mod 6 workload data (JR4, tab 121 at 3-5). Vectrus also laundered more of approximately seven of the 49 item-types than listed in the workload data. Id. In sum, with some small and some large variations between the workload data and actual work for individual item-types, Vectrus laundered roughly half of the total volume of the workload data. Id. Regardless of the substantial under- run in work, Vectrus was presumably paid-in-full per the fixed prices in the CLINs.

Not satisfied with this favorable outcome, Vectrus submitted a certified claim seeking a $263,815.26 which was computed using a per-item cost for each instance that it laundered above the workload data in contract option years three and four (JR4, tab 122). As an example, while the workload data depicted 6,532 pillows per year, Vectrus laundered 19,424 pillows in option year three and claimed additional payment of $2.50 per pillow multiplied by the difference of 12,892 between 6,532 and 19,424 (JR4, tab 135 at G-1).

To illustrate the overruns versus underruns, here’s a comparison (from Vectrus’ subcontractor) between actual work and the workload data showing where Vectrus laundered more than the workload data in red, and less than the workload data in yellow (JR4, tab 121).

4 Still another modification (A00018) added laundry at Fisher House, with corresponding CLINs (JR4, tabs 40, 68). 5 Year three (JR4, tab 121 at 3). Year four (JR4, tab 121 at 4).

In sum, USAF calculates that Vectrus only laundered 66% of the workload total in year three and 43% in year four (resp. br. at 20-21). And, using this data, USAF has demonstrated that Vectrus pocketed approximately $40,000 that it would have incurred laundering the higher workload data total (id. at 32). 5

Despite working substantially less overall, Vectrus justified its certified claim by asserting that the workload data was a numerical “limit” to its obligation for each item-type of laundry, so it was entitled to payment above the fixed CLIN prices – without subtracting the savings where it did less work (JR4, tab 122 at 5). Vectrus also asserted a “negligent estimate theory” that, without identifying any purported negligence or error in the Mod 6 workload data, or the process by which it was created, speculated that fluctuations between estimates and actuals “suggests” that “[t]he government must have missed or failed to include key, pivotal data . . . .” Id. at 6. 6

5 We cite these calculations for their relevance to the entitlement issue before us, not as a finding on quantum. 6 In this appeal, but not in the certified claim, Vectrus argues that an increase in students at an on-base school was a “contract change” because it increased the amount of laundry at the dormitories (app. br. at 17, 25). Vectrus does not identify a contract provision or CLIN that was purportedly changed by that increase. 6 USAF denied Vectrus’s certified claim, finding simply that “there is no basis in fact and law to support the claim,” and this appeal followed (JR4, tab 136).

DECISION

A firm-fixed price contract “places upon the contractor maximum risk and full responsibility for all costs and resulting profit or loss,” thus Vectrus assumed the cost risk of its performance here and was not entitled to pass that risk to the government via its claim. Federal Acquisition Regulation (FAR) 16.202-1; Lakeshore Eng’g Servs. v. United States, 748 F.3d 1341, 1347 (Fed. Cir. 2014). 7 Regarding Vectrus’ negligent estimate theory, Vectrus bears the burden of identifying errors and the purported negligence that produced them. Hi-Shear Tech. Corp. v. United States, 53 Fed. Cl. 420, 428–29 (2002) (citing Womack v. United States, 389 F.2d 793, 412 (Ct.Cl. 1968)), aff’d, 356 F.3d 1372 (Fed. Cir. 2004).

As illustrated by the Vectrus’s per-item quantum calculation, described above, Vectrus ignores the fixed-price-per-month structure of each CLIN and asserts that the workload data set numerically exact contract limits on the number of each item-type that could be laundered without additional payment. In doing so, Vectrus mischaracterizes the overages as “additional, out-of-scope work” beyond the contract’s “requirements” (app. br. at 1). And Vectrus ignores the basic question of why exceeding any of the numbers in the workload data created an entitlement, and how that can be reconciled with the clarity of the fixed price CLINs. 8

To restate an obvious, but critical, fact: there is no “stated workload requirement” (app. br. at 24, 28-29) in the contract that defined or limited Vectrus’ obligation. Neither the CLINs nor the workload data made a set order for any finite amount of work or, more important, for the specific numbers in the workload data.

Although duplicative and makeweight, Vectrus’ constructive change and breach of contract arguments fail for the same reasons -- there was no contract change nor any action that could be called a breach. Despite the differing mix and amount of laundry

7 To be clear, this was not a FAR 16.503 requirements contract where the government provides “a realistic estimated total quantity [to be ordered] in the solicitation and resulting contract.” FAR 16.503(a)(1). Similarly, the contract did not include the Variation in Estimated Quantities clause, FAR 52.211-18, which allows either party to seek a revision of unit prices if the actual quantities vary by more than 15% above or below the estimated quantities. 8 Vectrus cites Agility Defense & Government Services, Inc. v. United States, 847 F.3d 1345, 1348-52 (2017), which is strange because that contract expressly provided extra compensation for an increase in workload over the estimates in the contract. 7 between the workload data and actual performance, the contract and its modifications, including Mods 6, 15, 16, and 18, were implemented exactly as written and signed: Vectrus laundered what it was asked to launder during performance, and Vectrus was paid what the parties agreed. This is part and parcel with the risks and benefits that come with firm fixed price contracts in which the parties do not otherwise contractually limit their respective risks: Vectrus had some greater expenses than anticipated but also some lesser expenses.

Vectrus’ negligent estimates argument is even less persuasive because it misses the basic requirement of such a claim, that the government “has total exclusive control over the required information” and failed to use it in the contract’s estimates. Philadelphia Auth. For Indus. Dev. v. United States, 114 Fed. Cl. 519, 531 (2014). Here, the Mod 6 data used Vectrus’s own records and records from the prior contractor which Vectrus assembled. And Vectrus – being the on-site laundry contractor at the time the Mod 6 workload data was assembled, had visibility over all aspects of the laundry situation on base. That an increase in students at the dormitories would increase the amount of laundry is hardly “vital information” that was unavailable to Vectrus. And, as Vectrus correctly acknowledged in its certified claim, “estimated contract requirements do not represent a guarantee or warranty and, normally, significant variances between estimated requirements and actual orders will not result in liability on the part of the government.” (JR4, tab 122 at 5 (citing Hi-Shear Tech. Corp., 53 Fed. Cl. at 428–29)).

Further, Vectrus’ claim is mismatched with negligent estimates law, which considers whether the government’s incorrect estimates duped the contractor into unfairly low bid prices. See, e.g., Rumsfeld v. Applied Cos., 325 F.3d 1328, 1335 (Fed. Cir. 2003); Womack 389 F.2d at 800; Am. Gen. Trading & Contracting, WLL, ASBCA No. 56758, 12-1 BCA ¶ 34,905 at 171,635. Here, the so-called estimates in the Mod 6 workload data were created by both parties during contract performance – circumstances not present in any negligent estimates case cited to us or that we have reviewed ourselves. So Vectrus cannot credibly argue that it was fooled by data that Vectrus itself could observe or verify in real time, especially where the purpose of revising the workload data was to allow Vectrus to increase its CLIN prices.

8 CONCLUSION

Vectrus is not entitled to additional payment on its fixed price contract for the few selectively-chosen item-types where Vectrus’ actual work exceeded the workload data. The appeal is denied.

Dated: March 26, 2025

BRIAN S. SMITH Administrative Judge Armed Services Board of Contract Appeals

I concur I concur

OWEN C. WILSON J. REID PROUTY Administrative Judge Administrative Judge Acting Chairman Vice Chairman Armed Services Board Armed Services Board of Contract Appeals of Contract Appeals

I certify that the foregoing is a true copy of the Opinion and Decision of the Armed Services Board of Contract Appeals in ASBCA No. 63444, Appeal of Vectrus Systems Corporation, rendered in conformance with the Board’s Charter.

PAULLA K. GATES-LEWIS Recorder, Armed Services Board of Contract Appeals