CAE USA, Inc.
Docket: ASBCA 58006
Decision date: 2014-01-27

ARMED SERVICES BOARD OF CONTRACT APPEALS 
Appeal of--
CAE USA, Inc. 
Under Contract No. FA8223-10-C-0013 
APPEARANCES FOR THE APPELLANT: 
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APPEARANCES FOR THE GOVERNMENT: 
ASBCA No. 58006 
Joseph P. Hornyak, Esq. 
Alexander B. Ginsberg, Esq. 
Holland & Knight LLP 
Tysons Corner, VA 
Col Jennifer L. Martin, USAF 
Air Force Chief Trial Attorney 
Christopher M. McNulty, Esq. 
Trial Attorney 
OPINION BY ADMINISTRATIVE JUDGE CLARKE 
In a decision issued on 23 May 2013, the Board granted partial summary judgment to 
the Air Force and dismissed the majority of CAE USA, Inc's (CAE) arguments. CAE USA, 
Inc., ASBCA No. 58006, 13 BCA ~ 35,323. However, the Board left the case open for the 
parties to deal with CAE's argument that the Service Contract Act placed an affirmative duty 
on the contracting officer (CO) to provide a complete collective bargaining agreement 
(CBA) to bidders and that the CO failed to discharge that duty. It was undisputed that the 
CBA provided by the CO referred to but did not attach the predecessor contractor's corporate 
benefit program guide that identified fringe benefits not detailed in the CBA. It was also 
clear that CAE was aware that the CBA did not include details of these fringe benefits, that 
CAE failed to inquire about these fringe benefits and instead based its bid on its estimate of 
what those benefits would cost. When CAE realized that the benefits were greater than it 
accounted for in its bid, it paid the increased benefits and filed a claim resulting in this 
appeal. We remanded the appeal to the parties to brief these remaining issues. The parties 
elected to submit the appeal on the record under Board Rule 11. The Board considers 
entitlement only. The Board has jurisdiction pursuant to the Contract Disputes Act of 1978 
(CDA), 41 U.S.C. §§ 7101-7109. While we assume familiarity with our decision on the 
motion for summary judgment (MSJ), its Statement of Facts (SOF) were for purposes of the 
motion only and thus some are repeated herein along with new findings to incorporate 
additional evidence accompanying the Rule 11 submissions. 

FINDINGS OF FACT 
1. On 6 November 2009, the government posted Solicitation No. F A8223-1 0-R-50094, 
entitled "KC-135 Aircrew Training System (ATS) Re-compete" on the Federal Business 
Opportunities website (R4, tab 3). The Request for Proposal (RFP) called for services in 
support ofthe KC-135 ATS at thirteen Air Force bases worldwide (R4, tab 4). The RFP 
contemplated the award of a firm fixed-price contract with a three-month "ramp-up" period, a 
one-year base period and nine one-year option periods for a total often years (R4. tab 4 at 
5-201, 204). 
2. The CO for the RFP, Lance Hardman, was the CO for the incumbent KC-135 
ATS contract, which at the time had been held by FlightSafety Services Corporation 
(FSSC) for approximately 15 years (app. hr., ex. A, Hardman dep. (Hardman dep.), tr. at 
18). 
3. On 1 March and 1 April2010 respectively, FSSC executed new CBAs for the 
three-year period ending in 2013 (R4, tabs 11 at 3, 63) and because the CBAs originally 
posted to the RFP website were expiring, Hardman thereafter 
contacted his counterpart at 
FSS~, Candace Tomlinson, to obtain the updated CBAs to post. Hardman asked 
Tomlinson for the CBAs and for "those things that would have an impact on cost." 
(Hardman dep., tr. at 38-40) 
4. On 26 April2010, by RFP Amendment No. 0006, the relevant FSSC CBAs 
were incorporated into the solicitation (R4, tab 11). The CBAs provided by Air Force 
CO Hardman to CAE included Article XVII which provided that the employees "shall 
continue 
to fully participate in and be entitled to the Employer's Corporate Benefit 
Program including the 401 (k) program applicable to program employees not subject to 
collective 
bargaining agreement" (R4, tab 11 at 33, 93). It also included Article XVIII 
which allowed employees to "buy Purchased Time Off (PTO) to supplement 
Vacation ... through the use of the Flexible Benefits Program with Flex Credit Dollars." 
5. The CBAs did not include details ofthe incumbent contractor's Corporate 
Benefit Program (R4, tab 11; gov't MSJ reply hr., attach. 1, Hardman decl. (Hardman 
decl.) at 3, ~ 7). The CBA's table of contents listed attachments A (seniority dates), B 
(hours of work and pay), C (paid time off), and D (unpaid time off) (R4, tab 11 at 4-5, 42, 
45, 49, 58). The CBA provided to CAE included attachment A, but not attachments B, C, 
and D. 
6. In his deposition, Mr. Hardman testified that when he received the CBA he 
noticed that attachments B through D were not included and asked FSSC for them. 
Ms. Tomlinson stated that attachments B through D were company policies that did not 
affect cost and as such would not be provided. (Hardman dep., tr. at 45-46). Attachments 
B, C, and D did not contain any cost information that would assist a bidder in determining 
2 

how much FSSC was paying for these benefits (Hardman decl. at 4, ~ 8). FSSC's Users' 
Guide to the Benefits Program included details of the fringe benefits paid to employees that 
were not disclosed in the CBA (R4, tab 7 at 1, 5, 1 0). 
7. In an internal email, dated 10 November 2009, Mr. Jim Ward, CAE, wrote: 
Teri attached is a summary of the WRAP Rates for the 
KC-13 5. The [sic] was very little information on benefits 
included in the CBA's. The CBA provides for 11 holidays 
per year and a normal vacation schedule. The CBA's did not 
list the costs of health insurance, disability insurance, 401 K 
contribution, etc. Therefore I used $4.25 per hour as cash in 
lieu, same rate we employ at Little Rock. 
(Gov't MSJ reply hr., attach. 3)1 
8. Appellant's proposal included the following: 
Labor Fringe 
Labor Fringe includes vacation, holiday, sick, jury 
duty, military leave, bereavement, and excused absence for 
direct employees, employee health benefits, FICA, FUTA, 
SUTA, Unemployment Tax, Workmen's Compensation, 
401(k) match, Short Term Disability (STD) and Long Term 
Disability (LTD). Under our DCAA audited accounting 
system, these costs are pooled and allocated to all CAE 
programs/proposals as a percentage factor applied to direct 
labor. 
(R4, tab 6 at 9) 
9. Contract No. FA8223-10-C-0013 for the Aircrew Training System (ATS) 
requirement was awarded to CAE on 31 August 2010 (R4, tab 1 ). 
10. In a 7 January 2011 email to CO Hardman, Ms. Lowe, CAE, wrote: 
I wanted to give you a heads up that we have 
discovered that the CBAs that were provided as part of the 
1 Attachment 3 included protective markings on the email and attached rate data. 
Pursuant to concurrence of appellant in its 16 April 20 13 email, the Board 
removed and shredded the rate data and cancelled the markings on the email. 
3 

(R4, tab 18) 
RFP were not complete (i.e., did not [sic] attachments). 
During our meeting earlier this week with the Union, these 
missing attachments were provided. A quick review indicates 
the attachments contain additional benefits. [21 We are in the 
process of thoroughly assessing the impact. We will provide 
formal notice to you, including the cost delta, no later than 
COB next Thursday (January 13th). 
11. On 28 June 2011, CAE submitted a Request for Equitable Adjustment (REA) 
to the CO for $668,094 3 in additional benefits that were not identified during the RFP 
phase by the government. The REA contains a certification that does not appear to meet 
all the requirements ofthe CDA. (R4, tab 29) On 20 December 2011, the CO denied the 
REA. The CO's letter did not identify itself as a final decision and did not contain any 
appeal rights language. (R4, tab 32) On 19 January 2012, CAE disagreed with the co·s 
20 December letter and requested a meeting to discuss the matter (R4, tab 34 ). On 
30 January 2012, the CO denied CAE's request for a meeting and stated that his denial of 
the REA was final (R4, tab 35). On 17 February 2012, CAE filed a corrected CDA 
certification of the 28 June 2011 REA with the CO (R4, tab 36). On 23 February 2012 
CAE filed a notice of appeal from the CO's 20 December 2011 denial with this Board. 
The appeal was docketed on 24 February 2012. (Bd. corr. file) Neither party has 
questioned our jurisdiction. 
12. The successor contractor provision of the Service Contract Act provides: 
(c) Preservation of wages and benefits due under 
predecessor contracts.-
( 1) In generaL-Under a contract which succeeds a 
contract subject to this chapter, and under which substantially 
the same services are furnished, a contractor or 
subcontractor may not pay a service employee less than 
the wages and fringe benefits the service employee would 
have received under the predecessor contract, including 
accrued wages and fringe benefits and any prospective 
increases in wages and fringe benefits provided for in a 
2 This statement is inaccurate. The missing attachments did not include benefit 
information that was in the Corporate Benefits Program Guide (finding~ 1). 
3 The amount of the REA is apparently contained in attachments to the REA that are not 
in the record. The amount stated in the finding comes from CAE's 17 February 
2012 filing with the CO. 
4 

collective-bargaining agreement as a result of arm's-length 
negotiations. [Bold added] 
41 U.S.C. § 6707(c)(1). 
13. The Federal Acquisition Regulation (FAR) includes the following: 
FAR 22.1008-2 Section 4( c) successorship with 
incumbent contractor collective bargaining agreement. 
(a) Early in the acquisition cycle, the contracting 
officer shall determine whether section 4(ci 41 ofthe Act 
affects the new acquisition. The contracting officer shall 
determine whether there is a predecessor contract covered by 
the Act, and if so, whether the incumbent prime contractor or 
its subcontractors and any of their employees have a 
collective bargaining agreement. 
(d)( 1) If section 4( c) of the Act applies, the 
contracting officer shall obtain a copy of any collective 
bargaining agreement between an incumbent contractor 
or subcontractor and its employees. Obtaining a copy of an 
incumbent contractor's collective bargaining agreement may 
involve coordination with the administrative contracting 
officer responsible for administering the predecessor contract. 
(Paragraph (m) of the clause at 52.222-41, Service 
Contract Act of 1965, requires the incumbent prime 
contractor to furnish the contracting officer a copy of 
each collective bargaining agreement.) 
(2) If the contracting officer has timely received 
the collective bargaining agreement, the contracting officer 
may use the WDOL website to prepare a wage determination 
referencing the agreement and incorporate that wage 
determination, attached to a complete copy of the collective 
bargaining agreement, into the successor contract action. In 
using the WDOL process, it is not necessary to submit a copy 
4 Section 4(c) of the original SCA is the successor contractor provision now at 41 U.S.C. 
§ 6707(c)(1). 
5 

of the collective bargaining agreement to the Department of 
Labor unless requested to do so. 
(3) The contracting officer may also use the e98 
process on WDOL to request that the Department of Labor 
prepare the cover wage determination. The Department of 
Labor's response to the e98 may include a request for the 
contracting officer to submit a complete copy of the 
collective bargaining agreement. Any questions regarding 
the applicability of the Act to a collective bargaining 
agreement should be directed to the agency labor advisor. 
[Bold added] 
The contract incorporated by reference FAR 52.222-41, SERVICE CONTRACT ACT 
OF 1965 (Nov 2007) which provided in part as follows: 
(f) Successor Contracts. Ifthis contract 
succeeds a contract subject to the Act under which 
substantially the same services were furnished in the same 
locality and service employees were paid wages and fringe 
benefits provided for in a collective bargaining agreement, in 
the absence of the minimum wage attachment for this contract 
setting forth such collectively bargained wage rates and fringe 
benefits, neither the Contractor nor any subcontractor 
under this contract shall pay any service employee 
performing any of the contract work (regardless of 
whether or not such employee was employed under the 
predecessor contract), less than the wages and fringe 
benefits provided for in such collective bargaining 
agreement, to which such employee would have been 
entitled if employed under the predecessor contract, 
including accrued wages and fringe benefits and any 
prospective increases in wages and fringe benefits provided 
for under such agreement. ... 
(m) Collective Bargaining Agreements Applicable 
to Service Employees. If wages to be paid or fringe benefits 
to be furnished any service employees employed by the 
Government Prime Contractor or any subcontractor under the 
contract are provided for in a collective bargaining agreement 
which is or will be effective during any period in which the 
6 

contract is being performed, the Government Prime 
Contractor shall report such fact to the Contracting 
Officer, together with full information as to the 
application and accrual of such wages and fringe benefits, 
including any prospective increase, to service employees 
engaged in work on the contract, and a copy of the collective 
bargaining agreement. Such report shall be made upon 
commencing performance of the contract, in the case of 
collective bargaining agreements effective at such time, and 
in the case of such agreements or provisions or amendments 
thereof effective at a later time during the period of contract 
performance such agreements shall be reported promptly after 
negotiation thereof. [Bold added] 
DECISION 
Contention of the Parties 
CAE, using the doctrine of superior knowledge as a template, contends that the 
SCA and implementing regulations (Federal Acquisition Regulations "FAR") imposed 
upon CO Hardman an obligation to supply all offerors "all information regarding the 
amount of wages and fringe benefits that the predecessor contractor had agreed to in the 
subject collective bargaining agreements" (app. br. at 2). CAE argues that the 
remedy for 
the CO's breach of this obligation is compensation for the additional fringe benefit costs 
it incurred but were not included in its bid. 
The Air Force contends that the SCA and FAR do not impose an "affirmative duty 
for a contracting officer to seek out wage or fringe benefit information that may be 
missing from a collective bargaining agreement" (gov't br. at 1 ). To do so, it argues, "is 
simply too great a burden" and "is akin to strict liability" (gov't br. at 5, 6). The 
government also argues that normal law creating a duty to inquire when a patent 
ambiguity exists should apply (gov't br. at 8). 
Analysis 
The facts are undisputed. The CO provided CAE a copy of the relevant CBA, but 
all the details relevant to the existing fringe benefits were not contained in the CBA, 
including its attachments. The CBA stated that employees would participate in FSSC's 
corporate benefit program, but the details of that program were not in the CBA (finding 
~ 5). CAE was aware that it did not possess these details, but did not inquire of the 
government about this matter and instead made its own assumptions and used a cost 
estimate in its bid (finding~ 7). After contract award, during negotiations with unions, 
CAE obtained the missing information on the fringe benefits and realized that the 
7 

estimate used in its bid understated the actual fringe benefits provided in FSSC's 
corporate benefit program (finding~ 1 0). As required by law, CAE paid the higher fringe 
benefits and filed this claim to recover the increased costs. 
We approach our analysis in two parts: (1) does the SCA/FAR impose a duty on 
the government to provide a complete CBA to bidders; and, (2) if so, does CAE's failure 
to advise the government of the CBA's incompleteness and decision to bid on its 
undisclosed assumptions preclude it from recovery? We take these in order. 
Duty to Provide A Complete CBA 
Following the requirements ofFAR 22.1008-2 5 (finding~ 13), the CO obtained 
the relevant CBAs and incorporated them into the solicitation (finding~ 1) to establish 
the wage and fringe benefits necessary for any follow-on contractor to FSSC to pay to 
comply with the SCA, 41 U.S.C. § 6707 (c)(l) (finding~ 12). There can be no 
reasonable doubt that pursuant to FAR, it was the responsibility of the CO to provide a 
complete CBA and that the CBA provided was not complete. 6 Without the details of the 
FSSC fringe benefit program that was referenced in, but not provided with the CBA, 
offerors could not ascertain the amount of the wage and fringe benefits that were required 
by the RFP, pursuant to the SCA and FAR. 
Duty to Inquire 
It is equally without doubt that CAE knew the CBA did not contain the complete 
information necessary to determine what the full wage and fringe benefit amounts 
necessary to comply with the SCA and FAR were (finding~ 7). Its choice, when faced 
with this situation, was either make assumptions to formulate its bid7, or inquire of the 
government for the complete information. Having chosen to submit an offer on the basis 
of its own assumptions, without notice to the government of the incompleteness of the 
CBA or what CAE's assumptions were, it cannot now be heard to complain that its 
assumptions were not correct. We are of the view that this appeal is similar to our line of 
cases dealing not with contract provisions that are difficult to interpret due to an 
ambiguity, but those that have relevant information missing. Cambridge Marine 
Industries, Inc., ASBCA No. 37355,91-2 BCA ~ 23,894, aff'd, 951 F.2d 1266 (Fed. Cir. 
5 We conclude that the FAR's requirement that the CO provide a complete CBA and 
provide it to bidders is intended to benefit contractors. 
6 Since the CBA incorporated the fringe benefit program by reference, we do not 
consider it "complete" without that benefit information. 
7 Of course, neither the SCA nor FAR contain any requirements as to what amounts an 
offeror puts in its offer. They dictate what amounts shall be paid to the employees 
performing the contract work. 
8 

1991) (table). 8 There is nothing in the SCA or the FAR that would require the 
government to become the indemnitor for any difference between appellant's offer with 
respect to wages and fringe benefits and their eventual cost that resulted from the CBA' s 
incompleteness when CAE knew of such incompleteness and failed to notify the 
government, nor is the government the guarantor ofthe correctness ofCAE's 
assumptions when it failed to inquire regarding these assumptions. 9 
CONCLUSION 
In accordance with the foregoing, we deny the appeal. 
Dated: 27 January 2014 
I 
concur 
~44 
Administrative Judge 
Acting Chairman 
Armed Services Board 
of Contract Appeals 
Administrati e Judge 
Armed Services Board 
of Contract Appeals 
I concur 
~KLEFORD 
Administrative Judge 
Acting Vice Chairman 
Armed Services Board 
of Contract Appeals 
8 Moreover, the parties' arguments over whether the missing information amounts to a 
patent or latent ambiguity are not material since CAE had actual knowledge of the 
omission. 
9 The integrity of the bidding process would suffer if it were allowable for one offeror to 
recognize that needed information was omitted from the RFP and fail to advise the 
government and make its own assumptions, relying on the government to make it 
whole if its assumptions were wrong. We have no doubt that if CAE' s 
assumptions resulted in the amounts in its offer exceeding the CBA' s wage and 
fringe benefit amounts, CAE would not be insisting on refunding that amount to 
the government. 
9 

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. 58006, Appeal of CAE USA, 
Inc., rendered in conformance with the Board's Charter. 
Dated: 
10 
JEFFREY D. GARDIN 
Flecorder,Armed Services 
Board of Contract Appeals