Documentation Sufficient to Allocate Costs to Contract
December 14, 2009
The Armed Services Board of Contract Appeals sustained an appeal of the government's disallowance of labor and transportation costs because the contractor met its burden of proof regarding allocability. The contractor was awarded a cost-plus-fixed-fee, level-of-effort contract to provide "technical assistance for economic recovery, reform and sustained growth in Iraq." The government disallowed labor and ground transportation costs incurred by a subcontractor that provided personal security and support services. The government argued the disputed costs were unallocable for insufficient documentation, contending the costs did not meet the contractual standard requiring contemporaneous documents or other supporting evidence, and the costs were simply unreliable.
"Robust" Support
Although "the concept of allocability [addresses] ... whether a sufficient `nexus' exists between the cost and a government contract," the board found the contract did not require the "nice neat little files" or the contemporaneous records insisted on by the government. Consistent with FAR 31.201-2(d), which refers broadly to a contractor's responsibility to maintain documentation adequate to demonstrate claimed costs are allocable to the contract, the Allowable Cost and Payment clause did not require the contractor to substantiate labor costs with time sheets. Also, the Audit and Records clause (FAR 52.215-2) did not prescribe the form records or other evidence must take, and the Documentation for Payment clause did not describe the requisite level of detail for the contractor's books and records. Three contractor employees testified about a line-by-line review of the subcontractor's costs and this testimony was substantiated by first-hand knowledge of services provided and the resulting disallowance of substantial subcontractor costs. One employee testified about the loss of the subcontractor's time records in what had become a war zone. The testimony, which was credible and supported by contemporaneous documentation and prior declarations, constituted a "robust" prima facie case supporting allocability, which the contracting officer's confused and counterintuitive testimony, the government's dismissive characterizations of the costs, and a successor CO's post-trial analysis did not overcome. (BearingPoint, Inc., ASBCA, ¶92,723)