RESPONDENT’S MOTION FOR PARTIAL
 
SUMMARY RELIEF GRANTED IN PART: January 14, 2011
 
CBCA 1695
 
SERCO, INC.,
 
Appellant, 
v. 
PENSION BENEFIT GUARANTY CORPORATION, 
Respondent. 
Rebecca E. Pearson and Jeffery M. Chiow of Venable LLP, Washington, DC, and 
J. Scott Hommer, III of Venable LLP, Vienna, VA counsel for Appellant. 
Mark L. Hansen, Kimberly A. Manganello, Scott D. Sadler, and Andrew J. Seff, 
Office of the General Counsel, Pension Benefit Guaranty Corporation, Washington, DC, 
counsel for Respondent. 
Before Board Judges BORWICK , SHERIDAN , and WALTERS . 
BORWICK , Board Judge. 
This appeal involves a claim by the Pension Benefit Guaranty Corporation (PBGC 
or respondent) against Serco, Inc. (Serco or appellant), involving two time and materials 
labor hour contracts for database management services and information technology 
support. The contracting officer issued a decision on May 18, 2009, seeking appellant’s 
reimbursement of $115,773 for alleged improper payments under the two contracts, 
including $84,769 for improperly billed subcontract labor, $24,894 for labor hour charges 
with insufficient time sheet support, and $6110 for charges billed through administrative 
error. 

 
         
           
              
             
           
            
               
              
              
           
      
           
          
               
            
            
               
               
       
         
              
             
              
         
           
           
      
          
             
              
2 CBCA 1695 
The parties have submitted cross-motions for partial summary relief on 
respondent’s claim for repayment of improperly billed subcontract labor. We grant 
respondent’s motion on that issue as to entitlement only. We conclude that appellant, or 
its predecessor contractors, billed respondent at its higher direct labor hourly rate for the 
subcontracted employees’ services, rather than at the lower hourly rate appellant actually 
paid the subcontractors for those services. Appellant’s arguments that it should be 
permitted to bill at the higher hourly rate are not persuasive and not in accordance with 
the plain meaning of the 2000 and 2002 versions of the Payments Under Time and 
Materials Labor Hours Contract clause. There are disputes of fact as to whether the 
1amount owed is $ 75,588.16 , the figure calculated by respondent , or $ 24,813.69 , the 
figure calculated by appellant. 
Background 
The following facts are not disputed. Respondent administers the pension plan 
insurance termination program established by Title IV of the Employee Retirement 
Income Security Act of 1974, as amended, Pub. L. No. 93-406, 88 Stat. 829 (1974). 
Respondent’s Statement of Undisputed Facts ¶ 1. Respondent funds its expenses through 
premiums it charges to employers, from plan assets of terminated plans, and from 
earnings on investment of terminated plan assets. Id. The money used by respondent to 
fund its contractual obligations does not come from the United States Treasury. Id. 
Appellant’s first predecessor, Innerbase Technologies, Inc. (Innerbase), was 
awarded contract PBGC-CT-01-0603 (the “01-0603 contract”) on October 1, 2000. 
Respondent’s Statement of Undisputed Facts ¶ 2. The contract, a labor hour contract for 
database administration and Unix support, was for a one-year base period and four one-
year options. Id. Respondent exercised each of the one-year options and paid Innerbase 
or Serco a total of $28,299,955. Id. 
The payments clause of the 01-0603 contract -- Payments Under Time and 
Materials Labor Hours Contract, 48 CFR 52.232-7 (2000) -- was incorporated by 
reference and provided as follows: 
1 The difference between the contracting officer’s determination of $84,769 over­
billing of subcontract labor and the $75,588.16 identified by respondent in its statement of 
undisputed facts in its motion is $9180.84. That difference is not explained in the record. 

 
           
       
            
           
          
           
             
          
          
          
         
         
             
         
         
            
           
           
          
            
           
      
          
           
             
          
           
             
           
            
    
         
           
           
           
3 CBCA 1695 
The Government will pay the Contractor as follows upon the submission of 
invoices or vouchers approved by the Contracting Officer: 
(a) Hourly rate . (1) The amounts shall be computed by multiplying the 
appropriate hourly rates prescribed in the Schedule by the number of direct 
labor hours performed. The rates shall include wages, indirect costs, 
general and administrative expense, and profit. Fractional parts of an hour 
shall be payable on a prorated basis. Vouchers may be submitted once each 
month (or at more frequent intervals, if approved by the Contracting 
Officer), to the Contracting Officer or designee. The Contractor shall 
substantiate vouchers by evidence of actual payment and by individual daily 
job timecards, or other substantiation approved by the Contracting Officer. 
Promptly after receipt of each substantiated voucher, the Government shall, 
except as otherwise provided in this contract, and subject to the terms of (e) 
below, pay the voucher as approved by the Contracting Officer. 
(2) Unless otherwise prescribed in the Schedule, the Contracting Officer 
shall withhold 5 percent of the amounts due under this paragraph (a), but 
the total amount withheld shall not exceed $50,000. Reimbursable costs in 
connection with subcontracts shall be limited to the amounts paid to the 
subcontractor for items and services purchased directly for the contract only 
when cash, checks, or other form of payment has been made for such 
purchased items or services; however, this requirement shall not apply to a 
Contractor that is a small business concern. 
(3) Unless the Schedule prescribes otherwise, the hourly rates in the 
Schedule shall not be varied by virtue of the Contractor having performed 
work on an overtime basis. If no overtime rates are provided in the 
Schedule and overtime work is approved in advance by the Contracting 
Officer, overtime rates shall be negotiated. Failure to agree upon these 
overtime rates shall be treated as a dispute under the Disputes clause of this 
contract. If the Schedule provides rates for overtime, the premium portion 
of those rates will be reimbursable only to the extent the overtime is 
approved by the Contracting Officer. 
(b) Materials and subcontracts . (1) The Contracting Officer will determine 
allowable costs of direct materials in accordance with Subpart 31.2 of the 
Federal Acquisition Regulation (FAR) in effect on the date of this contract. 
Direct materials, as used in this clause, are those materials that enter 

 
            
       
         
             
           
       
         
       
          
           
           
         
         
           
         
          
            
          
         
   
         
    
           
         
           
    
       
        
        
4 CBCA 1695 
directly into the end product, or that are used or consumed directly in 
connection with the furnishing of the end product. 
(2) The Contractor may include reasonable and allocable material handling 
costs in the charge for material to the extent they are clearly excluded from 
the hourly rate. Material handling costs are comprised of indirect costs, 
including, when appropriate, general and administrative expense allocated 
to direct materials in accordance with the Contractor’s usual accounting 
practices consistent with Subpart 31.2 of the FAR. 
(3) The Government will reimburse the Contractor for items and services 
purchased directly for the contract only when payments of cash, checks, or 
other forms of payment have been made for such purchased items or 
services. 
(4)(i) The Government will reimburse the Contractor for costs of 
subcontracts that are authorized under the subcontracts clause of this 
contract, provided that the costs are consistent with paragraph (b)(5) of this 
clause. 
(ii) The Government will limit reimbursable costs in connection with 
subcontracts to the amounts paid for items and services purchased directly 
for the contract only when the Contractor has made or will make payments 
of cash, checks, or other forms of payment to the subcontractor— 
(A) In accordance with the terms and conditions of a 
subcontract or invoice; and 
(B) Ordinarily prior to the submission of the Contractor’s next 
payment request to the Government. 
(iii) The Government will not reimburse the Contractor for any costs arising 
from the letting, administration, or supervision of performance of the 
subcontract, if the costs are included in the hourly rates payable under 
paragraph (a)(1) of this clause. 
(5) To the extent able, the Contractor shall— 
(i) Obtain materials at the most advantageous prices available 
with due regard to securing prompt delivery of satisfactory 

 
 
        
       
         
        
         
       
          
          
         
           
       
                 
    
            
             
           
            
          
        
        
              
            
            
              
               
           
               
            
          
           
            
             
         
5 CBCA 1695 
materials; and 
(ii) Take all cash and trade discounts, rebates, allowances, 
credits, salvage, commissions, and other benefits. When 
unable to take advantage of the benefits, the Contractor shall 
promptly notify the Contracting Officer and give the reasons. 
The Contractor shall give credit to the Government for cash 
and trade discounts, rebates, scrap, commissions, and other 
amounts that have accrued to the benefit of the Contractor, or 
would have accrued except for the fault or neglect of the 
Contractor. The Contractor shall not deduct from gross costs 
the benefits lost without fault or neglect on the part of the 
Contractor, or lost through fault of the Government. 
Appeal File, Exhibit 1, § I at 39. Subsection (d) of this clause contained a ceiling price 
clause. Id. 
Section B.1(e) of the solicitation for the 01-0603 contract stated that offerors were 
not to include cost of subcontractors or temporary labor in the development of their 
proposed labor rates, as reimbursement under the Payments Under Time and Materials 
Payment Labor Hours Contract clause was limited to the amounts paid to the 
subcontractor. Respondent’s Motion for Summary Relief, Exhibit A. 
Serco’s second predecessor in interest, Resource Consultants Inc. (Resource 
Consultants), was awarded contract PBGC-01-CT-04-0691 (the “04-0691 contract”), also 
a labor hour contract. Respondent’s Statement of Undisputed Facts ¶ 3. This contract 
called for the contractor to provide system engineering services in support of respondent’s 
information technology initiatives. Id. As with the 01-0603 contract, that contract 
contained a one-year base period and four option years. Respondent paid appellant or its 
predecessor a total of $7,085,479 for service performed under that contract. Id. As did 
the 01-0603 contract, the 04-0691 contract incorporated by reference the Payments Under 
Time and Materials Labor Hours Contract clause. Appeal File, Exhibit 55 at 50. The 
version incorporated was the 2002 version, which, for purposes of this appeal, was 
substantively the same as the 2000 version. Id. 
In response to offerors’ questions about the solicitation for the 04-0691 contract, 
respondent stated that subcontractors should be invoiced as other direct costs, with the 
labor rate the subcontractor was paid, plus the addition of a general and administrative 
(G&A) rate. Respondent’s Motion for Summary Relief, Exhibit B. 

 
            
          
              
          
           
          
             
   
          
        
          
           
           
              
             
              
              
             
               
            
                 
                
               
              
          
                
         
              
   
  
             
  
                
                 
6 CBCA 1695 
After a post-payment audit performed on the two contracts by auditors of the 
Defense Contract Audit Administration, the contracting officer issued a final decision 
dated May 18, 2009. Appeal File, Exhibit 162. That decision directed appellant to 
reimburse respondent $115,773 for alleged improper payments under the two contracts, 
including $84,769 for improperly billed subcontract labor, $24,894 for labor hour charges 
containing insufficient time sheet support, and $6110 for charges billed through 
administrative error. Id. Appellant appealed the decision to this Board. 
Alleged improper subcontract billings 
On the two contracts, appellant 
2 used ten identified individuals and two 
unidentified individual, who were employed by subcontractors Application Technologies, 
ICSA, Commerce Funding, and Total Sumparts. Respondent’s Statement of Undisputed 
Facts ¶¶ 19-34. These individuals worked as database administrators, senior database 
administrators, or technical specialists. Id. Appellant billed these individuals to 
respondent at the hourly labor rates appellant had bid for its own direct labor under 
paragraph (a)(1) of the Payments clause as if they were employees of appellant, even 
though the hourly billing rates of the third parties to appellant were less than appellant’s 
direct hourly billing rates to respondent. Id. Consequently, the total amounts paid by 
appellant to the subcontractors for the subcontractor labor was less than the total amount 
appellant billed respondent for that same labor. Id. For example, G.P. 
3 worked as a 
senior database administrator on respondent’s contracts, but was employed by ICSA. Id. 
¶ 19. Appellant paid ICSA $71.71 per hour for 89.25 hours of work, for a total payment 
to ICSA of $6400.12. Id. ¶ 20. However, appellant billed respondent at $96.45 per hour, 
appellant’s hourly rate for one of its own senior data base administrators. Id. The 
difference between the paid cost to appellant and the billed cost to respondent, taking into 
account the allowable general and administrative (G&A) overhead amount of $77.06
4 
allocable to the paid cost, is $2130.98. 5 Id. ¶ 20. As another example, appellant used 
2 References to appellant or Serco include appellant’s predecessor contractors. 
3 The names of the subcontractor employees are in the record, but their names are 
irrelevant to the disposition of this appeal.  To protect their privacy, we use the employees’ 
initials. 
4 The allowable G&A amount is found at Appeal File, Exhibit 136 at PBGC-2009­
002324. 
5 The amount is calculated as follows: $96.45 x 89.25 hours = $8608.16. $71.71 x 
89.25 hours = $6400.12. $6400.12 + $77.06 = $6477.18. $8608.16 - $6477.18 = $2130.98. 

 
              
                
              
              
      
        
        
 
 
 
              
 
              
            
      
7 CBCA 1695 
I.B., who was employed by ICSA, as a database administrator. I.B. worked 159.75 hours 
on Serco’s contract at a cost to Serco of $56.67 per hour, or $9053.03. Appellant billed 
respondent at its direct labor rate under its contract of $78.51, or $12,541.97, a difference 
of $3488.94. Allowing for G&A of $475.28 
6 allocable to that work, the difference is 
$3013.66. Id. ¶ 29. 7 
Respondent identifies fourteen instances of appellant’s overbilling respondent for 
subcontractor labor, as shown in the following table: 
Employee Subcontractor Excess 
amount 
billed to 
respondent 
G.R. ICSA $2,130.98 
M.L. ICSA $1,884.61 
M.L. ICSA $5,429.34 
M.L. ICSA $5,280.18 
R.B. Application 
Technologies 
$1,611.15 
R.B. Application 
Technologies 
$1,892.33 
R.B. Application 
Technologies 
$3,621.44 
I.B. ICSA $3,013.66 
6 The calculation of allowable G&A is found at Appeal File, Exhibit 137 at PBGC­
2009-002365. 
7 Appellant would enter into purchase orders with staffing firms for the services of the 
individuals to work on the contracts with respondent. See Respondent’s Motion for 
Summary Relief, Exhibit Q. 

 
  
      
           
             
              
       
            
               
            
             
           
          
          
             
              
            
8 CBCA 1695 
G.K. Commerce 
Funding 
$15,472.00 
S.P. ICSA $4,278.28 
D.S. Total 
Sumparts 
$3,045.00 
Unidentified Total 
Sumparts 
$2,297.00 
A.D. & A.O. Total 
Sumparts 
$17,062.00 
D.S. Total 
Sumparts 
$7,681.00 
Unidentified ICSA $889.19 
Total $75,588.16 
Respondent’s Statement of Undisputed Facts ¶¶ 19-56. 
In pricing its direct labor for both contracts, appellant proposed fully burdened 
labor rates. Respondent’s Motion for Summary Relief, Exhibit B. Those rates included 
fringe benefits, “C-Pool overhead”, and G&A. Profit was added to the subtotal of the 
fully burdened labor rates. Id. 
Appellant does not dispute the substance of these facts. Appellant says, however, 
that if one takes the actual cost to appellant of the subcontractor employees, and adds to 
that figure allocations to appellant’s overhead pool, its G&A pool, and appellant’s profit, 
the difference between what appellant charged respondent for its direct labor for the same 
contract work and what appellant paid the subcontractor employers, plus the add-ons 
would be $24,813.69. Appellant’s Memorandum in Opposition to Respondent’s Cross-
Motion for Summary Relief (Appellant’s Opposition Memorandum) at 16. 
Discussion 
Appellant has submitted a motion to dismiss, or, in the alternative, a motion for 
summary relief for failure to state a claim on the alleged overcharges that appellant billed 
respondent for the cost of its subcontractor employees. Respondent has submitted a 

 
           
              
      
    
      
      
      
    
   
      
      
     
      
   
    
   
        
           
         
             
              
           
         
    
           
          
          
       
           
       
             
             
9 CBCA 1695 
cross-motion for summary relief or, in the alternative, an opposition to appellant’s 
dispositive motion. Each side has submitted replies to the other’s dispositive motion. 
Standards for considering cross-motions for summary relief 
As the Board recently held: 
Summary relief is appropriate when the moving party is entitled to 
judgment as a matter of law, based on undisputed material facts. The 
moving party bears the burden of demonstrating the absence of genuine 
issues of material fact. All justiciable inferences must be drawn in favor of 
the non-movant. Government Marketing Group v. Department of Justice , 
CBCA 964, 08-2 BCA ¶ 33,955, at 167,990-91 (citing Celotex Corp. v. 
Catrett, 477 U.S. 317 (1986); Anderson v. Liberty Lobby, Inc., 477 U.S. 
242 (1986)). 
When, as here, both parties have moved for summary relief, each party’s 
motion must be evaluated on its own merits and all reasonable inferences 
must be resolved against the party whose motion is under consideration. 
First Commerce Corp. v. United States, 335 F.3d 1373, 1379 (Fed. Cir. 
2003); DeMarini Sports, Inc. v. Worth, Inc., 239 F.3d 1314, 1322 (Fed. 
Cir. 2001); 
Metlakatla Indian Community v. Department of Health and 
Human Services , CBCA 181-ISDA, et al., 09-2 BCA ¶ 34,307, at 169,466; 
Government Marketing Group , 08-2 BCA at 167,991 (citing California v. 
United States , 271 F.3d 1377, 1380 (Fed. Cir. 2001)). The mere fact that 
both parties have moved for summary relief does not impel a grant of one of 
the motions. California , 271 F.3d 1377, 1380; see also Electronic Data 
Systems, LLC v. General Services Administration , CBCA 1552, 10-1 BCA 
¶ 34,316, at 169,505 (2009). 
Pure contract interpretation, however, is a question of law that may be 
resolved on summary relief. Electronic Data Systems , 10-1 BCA at 
169,505 (citing P.J. Maffei Building Wrecking Corp. v. United States , 732 
F.2d 913, 916 (Fed. Cir. 1984)). 
Dick/Morganti, A Joint Venture v. General Services Administration , CBCA 420, et al., 
10-2 BCA ¶ 34,528, at 170,274. 
Based upon a review of the parties’ statement of undisputed facts, and the terms 
and conditions of the contract, the Board concludes that there are no material disputed 

 
         
   
   
    
       
           
         
          
            
       
            
                
             
           
               
             
           
         
            
           
             
            
               
         
 
         
         
          
             
             
            
           
10 CBCA 1695 
facts regarding the alleged overcharges for subcontractor employees and that this issue is 
appropriate for summary resolution, since the matter is one of pure contract 
interpretation. 
Contentions of the parties 
Respondent states that its claim for subcontractor overcharges is based on the 
language of subsection (b)(4)(ii) in the Payments Under Time and Materials Labor Hours 
Contract clause, which provides: “the Government will limit reimbursable costs in 
connection with subcontracts to the amounts paid for items and services purchased 
directly for the contract .” Respondent’s Motion at 13 (emphasis supplied) . Respondent 
argues that appellant, or its predecessors, overbilled respondent $75,588.16, because it 
billed respondent at its own employees’ higher burdened direct labor rates for the 
subcontractor employees identified above. Id. 
Appellant argues that, as the parties had entered a “fixed-price” contract, it had 
every right to bill at the fixed hourly rate of its direct labor hours. Appellant’s Opposition 
Memorandum at 4. Appellant posits that the employees in question, instead of being 
treated as subcontractor employees, they should be treated as “temporary to permanent” 
employees. This is so because appellant intended them to be hired as its own direct 
contract employees at a future time, and because they were performing the same contract 
services under the same supervision as its direct labor employees. Appellant’s 
Memorandum in Support of Appellant’s Motion for Summary Relief (Appellant’s 
Memorandum) at 6. Consequently, appellant argues that it is absolved from the 
prohibition of subsection (b)(4)(ii) of the Payments Under Time and Materials Labor 
Hours Contract clause that payment to subcontractors is limited to the “amounts paid.” 
Finally, appellant relies on the case of Software Research Associates , ASBCA 33578, 88­
3 BCA ¶ 21,046, for the proposition that it can bill subcontractor employees at its direct 
burdened labor rate. Appellant’s Memorandum at 8. 
Entitlement analysis 
Appellant’s arguments are unpersuasive and amount to literary ledgerdemain to 
obscure that which is obvious. As we recently stated: 
In interpreting the language of a contract, reasonable meaning must be 
given all parts of the agreement so as not to render any portion meaningless, 
or to interpret any provision so as to create a conflict with other provisions 
of the contract. Fortec Constructors v. United States , 760 F.2d 1288, 1292 
(Fed. Cir. 1985); United States v. Johnson Controls, Inc ., 713 F.2d 1541, 

 
            
            
       
        
             
            
      
           
        
           
          
             
           
       
      
              
         
          
          
               
            
         
               
               
        
         
            
             
             
              
               
             
11 CBCA 1695 
1555 (Fed. Cir. 1983). In other words, “an interpretation that gives a 
reasonable meaning to all parts will be preferred to one which leaves a 
portion of [the contract] useless, inexplicable, inoperative, void, 
insignificant, meaningless, superfluous, or achieves a weird and whimsical 
result.” Arizona v. United States , 575 F.2d 855, 863 (Ct. Cl. 1978); see 
also, e.g. , Gould, Inc. v. United States , 935 F.2d 1271, 1274 (Fed. Cir. 
1991); Johnson Controls , 713 F.2d at 1555. 
Contract language should be given the plain meaning that would be derived 
by a reasonably intelligent person acquainted with the contemporaneous 
circumstances. Firestone Tire & Rubber Co. v. United States , 444 F.2d 
547, 551 (Ct. Cl. 1971); Hol-Gar Manufacturing Corp. v. United States , 
351 F.2d 972, 975 (Ct. Cl. 1965). The contract must be construed to 
effectuate its spirit and purpose, giving reasonable meaning to all of its 
parts. Gould, Inc ., 935 F.2d at 1274. 
Electronic Data Systems , 10-1 BCA at 169,505. 
Appellant first argument, that it may bill all labor at its direct rate hours specified 
in subsection (a)(1) of the of the 
Payments Under Time and Materials Labor Hours 
Contract clause because the contracts are “fixed price,” would render meaningless the 
later subsection (b)(4)(ii) of that clause which limits appellant’s reimbursement for 
subcontracted work to the “amounts paid . . . for services purchased.” These contracts are 
cost reimbursement contracts with ceiling limitations, not fixed price contracts. See, e.g. , 
CACI, Inc.-Federal v. General Services Administration , GSBCA 15588, 03-1 BCA 
¶ 32,106 (2002). That being the case, the only price component that is fixed under 
subsection (a)(1) of the clause is the hourly rate for “direct labor hours,” i.e., the labor 
rate for hours performed by appellant’s own employees. 
Appellant’s second argument, that the billed employees are not subcontractor 
employees because they were intended to be “temporary to permanent employees,” is also 
specious. Regardless of the clever nomenclature that appellant seeks to apply to the 
individuals, at the times relevant to the appeal, they were employed by subcontractors, not 
appellant. The FAR defines a subcontract as “any contract as defined in sub-part 2.1 
entered into by a subcontractor to furnish . . . services for performance of a prime 
contract.” 48 CFR 44.101; see Respondent’s Motion for Summary Relief, Exhibit O. 

 
         
 
          
            
             
           
              
             
            
        
            
              
             
              
             
            
           
            
             
              
           
             
  
            
           
               
      
 
           
   
     
12 CBCA 1695 
The individuals for whose services appellant overcharged respondent were clearly 
subcontracted employees. 8 
Finally, appellant argues that Software Research Associates supports its position. 
We disagree. The Armed Services Board in Software Research Associates considered a 
1972 version of the Payments clause of the Defense Acquisition Regulation in a contract 
for the provision of engineering services where the contractor hired outside consultants 
and charged the Government for those consultants at the contractor’s direct labor rate. In 
allowing the higher rate, the board found that the contractor paid the consultants more 
than other contractor personnel so that the consultants could fund their own benefits. 
Software Research Associates , 88-3 BCA at 106,309. 
Consequently, the board held that there was “no logical reason to have appellant 
compensated for their work on a basis different from that of its regular employees when 
this does not produce a ‘windfall’ to appellant.” Software Research Associates , 88-3 
BCA at 106,310. The board conducted a “windfall” analysis, 88-3 BCA at 106,308 n.1., 
and concluded that there was no showing of a windfall. Id. at 106,310-11. 
We are not persuaded that Software Research Associates applies here. Unlike that 
case, this one involves a different clause and involves subcontractor employees, not 
consultants. Most significantly, the result in Software Research Associates was based on 
the board’s finding that there was no windfall to the contractor from the Government’s 
being charged direct labor rates for the consultants’ services. This may have been based 
on the board’s conclusion that the Software Research Associates contractor paid its 
consultants more than its other personnel so that the consultants could purchase their own 
benefits. 
In our case, there was a windfall to appellant, of either $75,588.16 (respondent’s 
figure) or $24,813.69 (appellant’s figure). Software Research Associates does not control 
the result here; we are guided by the plain meaning of the Payments Under Time and 
Materials Labor Hours Contract clause. 
Windfall amount 
8 The parties dispute whether the subcontracted employees performed exactly the same 
duties as appellant’s direct labor employees.  This dispute is not relevant to the employees’ 
status as subcontracted employees. 

 
             
          
                
           
            
                
            
            
            
             
           
            
              
              
           
             
  
 
           
       
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13 CBCA 1695 
Appellant says that the amount of the overpayment, if any, should be calculated at 
$24,813.69 , using the methodology of Software Research Associates . Appellant’s Motion 
for Summary Relief at 16. Appellant seeks to retain the cost it paid to the subcontractors 
plus percentage amounts for G&A, overhead, and profit. Appellant’s Opposition, Exhibit 
A. Appellant argues that “appellant used its temp-to-permanent employees in the same 
way as its own labor force; it in fact incurred indirect costs in managing and training such 
labor.” Appellant’s Opposition at 20. In contrast, respondent states that because 
appellant did not incur labor burden for subcontract labor, Serco may not charge 
respondent fully burdened labor rates. Respondent’s Memorandum at 13. There are 
disputes of fact as to whether appellant incurred any costs arising from the letting, 
administration, or supervision of performance of the subcontracts. We read sub-part 
(b)(iii) of the Payments Under Time and Materials Labor Hours Contract clause as 
prohibiting such add-ons only if they had already been included in the direct labor hours 
charged to respondent. In other words, appellant must also show that its existing direct 
labor contract rate had not already captured subcontractor add-ons such as G&A, 
overhead, and profit. Resolution of these matters must await further development of the 
record. 
Decision 
Respondent’s motion for partial summary relief is GRANTED IN PART as to 
entitlement to repayment of improperly billed subcontractor labor. 
ANTHONY S. BORWICK 
Board Judge 
We concur: 
_______________________________ __________________________________ 
PATRICIA J. SHERIDAN RICHARD C. WALTERS 
Board Judge Board Judge 

 14 CBCA 1695