Law360 recently published an article authored by Culhane Meadows’ Washington, D.C. partner, David P. Hendel, which discusses a recent opinion from Weber Trucking LLC v. U.S. Postal Service having broad implications for government contractors and fixed-price service contracts.
Here are a few excerpts from the article:
Contractors who toil under a fixed-price service contract now have a new claim theory they can use to recover unexpectedly high performance costs.
A recent opinion by the Postal Service Board of Contract Appeals in Weber Trucking LLC v. U.S. Postal Service has breathed new life into the theory of defective specifications, holding that the doctrine applies to service contracts. The case and its application could have broad implications for government contractors.
Weber Trucking held a fixed-price contract with the Postal Service to sort and “carry all mail tendered” along a designated route in Las Vegas, Nevada. The solicitation and resulting contract set out estimated hours and mileage but contained disclaimers as to their accuracy.
The contract stated that the estimated annual miles were given only as information, and instructed the supplier to determine the actual miles. Similarly, the solicitation stated that the estimated annual hours were approximately the hours needed, and that the contractor must determine the actual hours.
No estimate was provided for the amount of mail that would be tendered. The Postal Service tendered far more mail than could be delivered within the time allotted in the contract’s schedule.
To cope with the overflow of mail, the contractor hired an additional carrier and added a second vehicle. When the Postal Service provided only a slight increase based on the contract’s adjustment formula, Weber Trucking filed a claim seeking to recover all of its additional performance costs.
Weber’s claim was sustained, with the three-judge panel splitting on their rationale for the holding. The presiding judge, Peter F. Pontzer, upheld Weber Trucking’s claim based on the legal theories of defective specifications and superior knowledge.
Download PDF of this article HERE
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