THIS OPINION WAS INITIALLY ISSUED UNDER PROTECTIVE ORDER AND
IS BEING PUBLICLY RELEASED IN ITS ENTIRETY ON OCTOBER 7, 2024
GRANTED: October 3, 2024
CBCA 7859
FRAMACO INTERNATIONAL INC.,
Appellant,
v.
DEPARTMENT OF STATE,
Respondent.
Douglas L. Patin and Erik M. Coon of Bradley Arant Boult Cummings LLP,
Washington, DC; and Sam Z. Gdanski and Abraham S. Gdanski of Gdanski Law PC,
Teaneck, NJ, counsel for Appellant.
Thomas D. Dinackus, Matthew S. Tilghman, and Alexandra N. Wilson, Office of the
Legal Adviser, Buildings and Acquisitions, Department of State, Washington, DC, counsel
for Respondent.
Before Board Judges BEARDSLEY (Chair), RUSSELL, and O’ROURKE.
RUSSELL, Board Judge.
Appellant, Framaco International Inc. (Framaco), has filed 131 cases with the Board
(certain of which are consolidated) based on its contract with respondent, Department of
State (State or agency), Bureau of Overseas Building Operations (OBO), to construct an
embassy compound in Port Moresby, Papua New Guinea (PNG).


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This decision is being issued in accordance with the Board’s order on further
proceedings of October 19, 2023 (Order), which largely adopted the parties’ proposal to
resolve approximately 100 of appellant’s non-consolidated appeals brought pursuant to
Board Rule 53 (48 CFR 6101.53 (2023)), along with certain claims in four of its consolidated
appeals that were not based on Government-caused delay. See Rule 53 (governing
accelerated procedures, which are available at an appellant’s election but limited to appeals
involving amounts in dispute of $100,000 or less);see also Rule 1(a) (“The Board may alter
[its] procedures on its own initiative or on request of a party to promote the just, informal,
expeditious, and inexpensive resolution of a case.”). The Order states that “[t]he presiding
judge with the two members of the panel . . . will decide the following appeals for which the
parties will submit briefing: CBCA 7508, 7512, 7513, 7549, 7561, 7572, 7573, 7625, 7695,
7712, 7847, and 7859 (‘Selected Appeals’).” The Order additionally states, “Decisions
rendered by the panel will be in summary form either in writing or orally, if a hearing is held;
will be final and conclusive; will not be set aside, except for fraud; and will not be
precedential.”
As agreed to by the parties, quantum in the non-consolidated appeals and certain
claims in four of Framaco’s consolidated appeals to which the Order applies will be decided
based on a formula derived from any damage amounts awarded to Framaco in the Selected
Appeals. In a subsequent joint response filed with the Board on March 19, 2024, the parties
confirmed that the Order applies to the appeals described above.
In this appeal (CBCA 7859), Framaco seeks costs for customs fees that it paid on
imported Controlled Access Area (CAA) construction materials procured for the New
Embassy Compound (NEC) construction project. For the reasons stated below, the appeal
is granted as to entitlement.
Background
I. The Contract
In September 2015, State awarded Framaco a firm-fixed-price contract, initially
valued at approximately $97 million, to construct the NEC in Port Moresby. Appeal File,
Exhibit 1 at DOS-PTMO-00982321. 1 The project was originally designed in 2010 as a
“Standard Secure mini-Compound” (SSmC) with a scope that included a lock-and-leave new
office building, a perimeter security wall and fence, a main compound entry pavilion
(MCAP), a service entry/utility building, and a support annex. Exhibit 2 at
1 All exhibits are found in the appeal file, unless otherwise noted.

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DOS-PTMO-00982414. Construction of the SSmC facility began in 2012, but in 2013, after
forty percent of the project was completed, a future marine detachment was planned for Port
Moresby and the embassy staffing requirement was increased.Id. State therefore descoped
the work under the 2012 contract and closed out that contract. The project was redesigned
under an expanded NEC, incorporating the completed portions of the SSmC project as well
as surplus equipment and materials, where appropriate.Id. The redesigned project included
the perimeter security wall and fence, the MCAP, a new service compound entry pavilion,
a new four-story office building and annex, a marine service guard residence, a service
entry/utility building, an enlarged support annex, and a new recreation facility. Id.
The contract included the following provisions on reimbursement to the contractor for
imposed customs duties:
G.10 TAX RELIEF PROCEDURES . . .
(a) General. This clause supplements [Federal Acquisition Regulation
(FAR)] 52.229-6, Taxes – Foreign Fixed-Priced Contracts. . . . The prices set
forth in this contract are exclusive of all taxes and duties from which the U.S.
Government is exempt by virtue of agreement between the U.S. Government
and the host country.
. . . .
(b)(1) Procedures. . . . The diplomatic tax privilege belongs to the U.S.
Government, and applies to taxes and duties payable to the host country that
are directly attributable to contract costs identified . . . as subject to exemption,
e.g., taxes or duties levied by the host country on labor and materials that are
applied to or utilized in performance of this contract . . . .
(2) The procedures in paragraph (c) are based on the current tax relief
agreement between the Government and the host country and are subject to
change. The Government shall reimburse the Contractor for anyafter-imposed
tax or for any tax or duty specifically excluded from the contract price that the
Contractor is required to pay or bear, including any interest or penalty paid,
provided that the Contractor received written authorization from the
Contracting Officer before making such payment.
. . . .

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(c) The following procedures are included in, or are derived from, the
agreement negotiated with the host country and are hereby incorporated into
this clause:
All purchases made in Papua New Guinea are subject to goods and services
tax (GST) and must be paid by the Contractor. . . . Notwithstanding any other
provisions of this contract, it is the responsibility of the contractor to comply
with all Papua New Guinea laws, regulations, rules, and requirements
governing GST and exemptions. The contractor agrees to indemnify the U.S.
Government in the event that the U.S. Government is unable to obtain GST
reimbursement to which it otherwise would be entitled due to a failure by the
contractor to follow all Papua New Guinea laws, regulations, rules, and
requirements.
In the event the Government of Papua New Guinea revises the existing tax-
relief requirements, which are described in this section, the Contractor shall
follow the new requirements as soon as the Contractor is notified by the
Project Director of the new requirements by an amendment to the contract.
Exhibit 1 at DOS-PTMO-00982349-50.
The contract also included the following at section H.20:
In the interest of expediting the project, the Government may, in its sole
discretion, undertake to provide additional services for or on behalf of the
Contractor which are not required of the Government under this contract, such
as assisting the Contractor in obtaining customs clearances other than those for
which the Government is responsible, tax exemptions, licenses, permits and
approvals from local governmental authorities. However, the Government
shall be under no obligation to do so, and neither the provision nor the failure
to provide such services nor the manner in which such services are provided
shall relieve the Contractor of or excuse the Contractor from any of its
responsibilities under the contract.
Exhibit 1 at DOS-PTMO-00982373.
The contract, at section H.40.1, titled “Costs to be borne by Contractor,” provided that
“[t]he Contractor is responsible for paying all charges, whatsoever,except customs dutiesas
provided herein, incurred in obtaining materials that must be imported for the project and in

CBCA 7859 5
transporting the materials from their place or origin to the construction site.” Exhibit 1 at
DOS-PTMO-00982386 (emphasis added).
The contract additionally stated at section H.40.2, “Duty Free Clearance:”
The Contractor shall follow the instructions of the Contracting Officer . . . as
to the manner of labeling the shipping containers or otherwise processing
shipments of imported materials in order to obtain, or continue to receive, duty
free clearance through customs. The Contractor shall be responsible for the
payment of customs duties, if any, which (1) are imposed on items which are
not labeled and processed in accordance with the Contracting Officer’s
instructions, (2) are imposed on the Contractor’s tools, construction equipment
and machinery imported for use on the project, or (3) are otherwise ineligible
for duty-free entry.
Exhibit 1 at DOS-PTMO-00982387.
Finally, pertinent here, the contract incorporated by reference FAR 52.229-6, Taxes-
Foreign Fixed-Price Contracts (Feb 2013), Exhibit 1 at DOS-PTMO-00982320, which states,
in part, that “[t]he Contractor shall take all reasonable action to obtain exemption from or
refund of any taxes or duties . . . from which the United States Government . . . [is] exempt
under the laws of the country concerned.” 48 CFR 52.229-6(i) (FAR 52.229-6(i)).
II. Facts Related to Customs Duties
In the document, Initial Planning Survey, Port Moresby, Papua New Guinea (June 19,
2009), prepared for State by an architectural firm, the PNG customs procedures were
described as follows:
All cargo arriving into Papua New Guinea must be declared through PNG
Customs. The owner of the cargo or its appointed Customs Agent or Customs
Broker is required to prepare papers (known as customs entry) describing
nature of[,] quantity, value, supplier[,] and country of origin of the goods
imported. This process begins as soon as the cargo departs origin (called pre
clearances process). Actual import clearance and cargo released is after the
cargo is received at port of disembarkation.
Exhibit 56 at DOS-PTMO-01452631.

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Although neither the “owner” of the imported CAA construction materials nor the
Government’s customs agent or customs broker, Framaco was nevertheless initially
processing the customs duties exemption documents for the construction materials imported
to PNG for the NEC project. Such documents included a Customs Clearance Request (CCR)
used to secure tax and duty waivers from the PNG Government. See, e.g., Exhibit 80.
In early 2021, after regularly approving the customs duties exemption documents
Framaco had been submitting, the PNG Government stopped doing so. Exhibit 76;see also
Appellant’s Opening Brief at 7.2 Without such approval, Framaco could not receive refunds
on the duties it paid on behalf of the United States. Around the same time, the PNG
Government also changed its procedures for customs duties exemptions, specifically the time
frame for submission of applications to obtain a refund on duties paid. In an email dated
April 28, 2021, Framaco’s project manager stated the following about his communication
with the PNG Government:
Originally, in 2020, we were told by IRC,[3] that we could apply for all of these
refunds on the original spreadsheet [listing imported materials] by paying an
application fee for each application submitted with the letter from OBO
confirming that Framaco is working for the US Embassy (which we already
obtained).
We prepared the applications and attempted to apply for the refunds.
Recently, Customs authorities verbally told us that Framaco could only apply
for refunds dated 2020 and 2021. This is a new restriction in 2021 and has
never been communicated prior to the IRC office reopening this year after a
long shutdown and moving office spaces, when they would not accept
applications.
2 Although Framaco, in its opening brief, states that the PNG Government
stopped providing customs duties exemptions in April 2021, Appellant’s Opening Brief at 7,
Framaco had expressed concern about this issue prior to this date. See Exhibit 12 (In a
June 12, 2020, email to State’s contracting officer, among others, Framaco’s project engineer
stated, “One of the issues [with the customs exemptions duty documentation] is [that] the
Embassy is the consignee, Framaco paid the [duties], and the [PNG] Government won’t
reimburse to anyone other than the Consignee.”).
3 Presumably, the acronym refers to PNG’s Internal Revenue Commission.

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Although we have proper exemption documents from OBO for these
shipments, local IRC authorities now say that Framaco can only apply for
refund for duties paid within the preceding 30 days. We have been trying to
get these refunds for over 2 years and have been pushed off by the local
authorities, but now, we can only apply for 30 days, which means the majority
of these duties paid are in jeopardy of never being refunded, despite being
imported under the Embassy’s exemption for the benefit of [the United States
Government].
Exhibit 72 at FRAM-1798334.
In a May 23, 2021, email to State department officials, the Contracting Officer’s
Representative (COR) explained:
To give you a bit more background on this issue, since early April, [4] the
[PNG] Department of Foreign Affairs had not returned customs exemption
forms to us. After repeated emails and in-person visits over more than a
month, they finally returned the forms but marked “not approved” and
indicated the customs exemption can only be granted to the [United States
Government] not Framaco. The forms show the [United States Government]
as the consignee, importer, bill to and ship to. We haven’t changed anything
about the process we’ve been using for the last 5 years. There has been a
change in management at the Department which I think may be the cause of
the issues.
Exhibit 76 at DOS-PTMO-03256159.5
4 The panel assumes that the COR is referencing early April 2021.
5 Framaco’s claim covers the period April 2019 to August 2022. Appellant’s
Opening Brief at 3. The record suggests that Framaco’s difficulty in receiving duties refunds
from the PNG Government prior to the time frame when the PNG Government stopped
approving customs duties exemption documents submitted by Framaco (i.e., prior to around
April 2021) may have been due to a number of factors including its failure timely to submit
duty rebate or refund applications to the PNG customs service, in addition to the fact that it
was not the owner or the consignee of the imported construction materials.See, e.g., Exhibit
10 (November 29, 2019, PNG customs service document reflecting PNG’s denial of
Framaco’srequest for a duty rebate or refund because Framaco failed to submit the required
application within thirty days after the goods were released from PNG’scustoms control);
Exhibit 12.

CBCA 7859 8
In a May 25, 2021, letter responding to Framaco’s concern on this issue, the
contracting officer (CO) stated that PNG’s Department of Foreign Affairs “informed the U.S.
Government that customs duties exemptions [would] not be approved for material Framaco
ships to [PNG]” and that, given this guidance from PNG, “material brought into the country
by Framaco is not eligible for duty-free entry.” Exhibit 25 at DOS-PTMO-02772944-45.
The CO added that “[i]n the best interest of the project, the Government is continuing
discussions on the topic with the Department of Foreign Affairs but in the meantime
Framaco must proceed with shipping materials to site to avoid delays .”Id. at
DOS-PTMO-02772945 (emphasis added).
In July 2021, the United States Embassy attempted to assist with this issue sending
a communication to PNG’s Department of Foreign Affairs (identified as Note No. 288/2021).
Exhibit 28. The communication acknowledged PNG’s concern regarding exemptions on
materials and equipment accorded the Embassy being impermissibly passed along to
Framaco, the contractor engaged by the Embassy for the NEC construction project. Id. at
DOS-PTMO-03278035-36. The PNG Government’s understanding, as quoted in Note No.
288/2021, was “that exemptions should not be passed on or extended to third parties.”Id.
at DOS-PTMO-03278036. Id. In the Note, the Embassy responded to PNG’s concern
stating:
While it is correct that Framaco International is purchasing the material, it is
doing so on behalf of the U.S. Government through its contractual obligation
to execute the construction of the new U.S. Embassy. The exemptions are not
granted to Framaco but rather to the U.S. Embassy and we are requesting the
Department honor its agreements with the U.S. Government on this critical
matter. This material is being used exclusively for the construction of the new
U.S. Embassy. The U.S. Government is the consignee and the importer, and
is directly paying Framaco for this material. This issue is severely delaying
our ability to complete the new U.S. Embassy and we would like to promptly
address any concerns you may have.
Id.
Apparently, the issue with the PNG Government over the processing of customs
duties exemptions was not resolved.
III. The Parties’ Dispute
On May 30, 2023, Framaco submitted a claim to the CO for reimbursement of paid
custom duties in the amount of $78,126. Exhibit 53. Framaco asserted that, from April 23,

CBCA 7859 9
2019, through August 11, 2022, it was forced to pay these duties for CAA construction
materials imported to PNG for the NEC construction project. Id. at DOS-PTMO-03715454;
Appellant’sOpening Brief at 7. Framaco stated that the claim “was for the additional costs
incurred due to the Government’sfailure to provide [CCRs] for the project materials which
are eligible for duty-free entry under Contract Section H.40 and constructive changes
directed by the Government directingFramaco to continue shipping the project materials and
paying related customs duties.” Exhibit 53 at DOS-PTMO-03715454.
The CO denied the claim, concluding that Framaco did not comply with PNG law
because it failed timely to submit its refund requests to the PNG Government, thus making
the imported construction materials “ineligiblefor duty-free entry”and, accordingly,making
the cost of the duties Framaco’sresponsibility per section H.40.2 of the contract. Exhibit 54
at DOS-PTMO-03718636; see also Exhibit 10 at DOS-PTMO-03103266. This appeal
followed.
A. Framaco’s Arguments
Framaco states that it air-shipped CAA construction materials to the project from
April 2019 through August 2022 and paid the customs fees for the materials but has yet to
receive reimbursement for the payments. Appellant’s Opening Brief at 3. Framaco notes
that the customs “[e]xemptionsstopped being provided in early April 2021 because the PNG
government decided it would no longer issue them to Framaco, only [to] the [United States
Government].”Id. at 7.
Framaco argues that, under section H.20 of the contract, the Government was
obligated to provide assistance with obtaining customs clearance exemptions for which the
Government was responsible. Appellant’s Opening Brief at 2. It further argues that, under
section H.40.2 of the contract, it was only responsible for following the CO’s“instructions
as to the manner of labeling the shipping containers or otherwise processing shipments of
imported materials”through customs. Id. (quoting Exhibit 1 at DOS-PTMO-00982387
(section H.40.2)). Framaco asserts that OBO breached its warranty to ensure duty-free
clearance of imported materials as required under sections H.40.1 and H.40.2 of the contract.
Id. at 7-8. It additionally argues that, under the Foreign Taxes Clause, FAR 52.229-6, the
United States Government was obligated to pay the customs fees due to PNG’s failure to
honor its agreement with the United States Government under which PNG had been granting
customs exemptions to Framaco. Id. Framaco asserts that section G.10(b)(2) of the contract
“requiredthe government to reimburse the contractor for ‘any. . . duty specifically excluded
from the contract price that the Contractor is required to pay or bear.’”Id. at 9 (quoting
Exhibit 1 at DOS-PTMO-00982350).

CBCA 7859 10
Framaco disputes State’sargument that the duties were not reimbursable because of
Framaco’sfailure to follow PNG law requiring submission of customs duties exemption
requests within PNG’s prescribedtime periods. Appellant’s Opening Brief at 8. Framaco
asserts that PNG exemptions were either not issued (due to PNG no longer approving
customs exemptions for NEC construction materials shipped by Framaco) or PNG issued
exemptions in an untimely manner, either way precluding Framaco from recovering the paid
customs duties through no fault of its own. Id.; see also Framaco’sReply Brief at 6.
Framaco adds that “contraryto OBO’sassertions, . . . [the United States Government was]
the only authority able to obtain the exemptions.” Appellant’s Opening Brief at 8.
B. State’s Arguments
State reiterates its position that Framaco incurred costs related to customs duties
“becauseit failed to comply with the procedures for obtaining exemptions for the shipments
at issue, and then failed to submit timely requests for reimbursement to the PNG
Government.”Respondent’s Initial Brief at 1. In arguing that Framaco is not entitled to
reimbursement for the customs fees, State relies on section H.40 of the contract setting forth
the contractor’s responsibility to pay all charges incurred on importing materials for the
contract except customs duties as explained in the section. Id. at 2. State goes on to argue:
There was no documentation that was an attachment to the contract, or
incorporated by reference, that addressed any agreement between the United
States and the PNG Government concerning customs duties. The contract did
not state that the PNG Government would refrain from collecting any customs
duties with regard to this project or would refund any such duties it collected.
Thus, the contract did not warrant that the PNG Government would not assess
customs duties on the construction materials imported into Papua New Guinea
for the project.
. . . .
The contract did not place any responsibilities upon [the Department of State]
with regard to Framaco’s efforts to obtain customs exemptions.
Id. at 2-3; see also Respondent’s Reply Brief at 3 (noting that no agreement between the
United States and PNG “is attached to, or incorporated by reference into, the contract” and
that, “[a]s a result, it is completely unclear what the terms of any such agreements might have
been, and what the rights and obligations of the PNG Government and [the United States
Government] were pursuant to such agreements.”).

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Relying on a final shipping log listing CAA shipments, State also argues that Framaco
never applied for customs exemptions for the shipments at issue in this appeal. Respondent’s
Initial Brief at 4. State notes that “[a]ll of the shipments in this appeal have a CCR number
that includes an ‘F’[,]” but “[n]one of the shipments in the final shipping log include an ‘F’
in their CCR number and only one of the shipments listed in the claim is listed in the final
shipping log.”Id. at 4-5. Framaco disputes State’s argument, noting that the customs
documents at issue (the CCRs) related to shipments intended for a classified area and, thus,
were not listed in the shipping log. Appellant’s Reply Brief at 7-8.
Discussion
The issue that we must decide in this appeal is whether Framaco is entitled to
reimbursement for the customs duties that it paid on behalf of the United States. Based on
the record, we find that (1) State, not Framaco, was responsible for processing the customs
duties exemption documentation; (2) State’s argument raising the possibility that there was
no agreement between the United States and PNG on customs duties exemption procedures
is sufficiently rebutted by the contract and documents in the record discussing PNG customs
exemption procedures and the United States’ responsibility relating to those procedures;
(3) contrary to State’s argument, the contract contains no language supporting or evidencing
that Framaco should not receive reimbursement for duties that it paid on the United States’
behalf; and (4) Framaco is, in fact, entitled to reimbursement for the customs duties that it
paid on behalf of the United States.
I. State Was Responsible for the Customs Duties Exemption Process
We agree with Framaco that the United States, not Framaco, was the only entity
authorized to obtain the customs exemptions, especially after the PNG Government stopped
processing customs duties exemption documentation submitted by Framaco. Although
Framaco was initially processing the documentation to obtain the exemptions for the
construction materials imported to PNG for the NEC project, and apparently did so for a
number of years, the contract and other relevant documents in the record show that the
United States was responsible for this task.
We note that, before the construction of the initial NEC project in 2012, State had an
architectural firm prepare an initial planning survey. That document, dated June 19, 2009,
discussed PNG customs procedures, stating that “[a]ll cargo arriving into Papua New Guinea
must be declared through PNG Customs. The owner of the cargo or its appointed Customs
Agent or Customs Brokeris required to prepare papers (known as customs entry) describing
nature of[,] quantity, value, supplier[,] and country of origin of the goods imported.”
Exhibit 56 at DOS-PTMO-01452631 (emphasis added). This pre-contract document

CBCA 7859 12
suggests that, pursuant to PNG customs procedures, the United States (or its agent or broker),
not its contractor, was responsible for preparing customs papers for construction materials
being imported to PNG for the NEC project.
During contract performance, the United States Embassy also recognized the United
States’ role in the duties exemption process. As conveyed in an Embassy Note, the PNG
Government’s position was “that exemptions should not be passed on or extended to third
parties.” Exhibit 28 at DOS-PTMO-03278035-36. In this same note, the Embassy urged the
PNG Government to resume processing the customs exemption documentation for the
imported construction materials submitted by Framaco but recognized that the customs
“exemptions [were] not granted to Framaco but rather to the U.S. Embassy” and that the
“U.S. Government [was] the consignee and the importer.”Id. at DOS-PTMO-03278036.
In this appeal, State does not directly dispute the Embassy’s characterization of the United
States’ role as the “consignee” and “importer” of the imported construction materials. State
also takes no issue with the PNG Government’s position that the customs exemptions were
not granted to Framaco, but to the United States, and that exemptions should not be passed
on to third parties. Thus, the record indicates that the United States (or its broker or agent),
not Framaco, should have arranged for duties reimbursement.
II. The Record Sufficiently Shows State’s Obligations Under PNG Customs Procedures
State argues that the contract does not include any agreement setting forth the
obligations of the PNG Government and the United States as to customs exemptions either
as an attachment to the contract or incorporated by reference into the contract. Respondent’s
Reply Brief at 3. However, there was sufficient documentation in the record describing the
United States’ role as it relates to PNG customs procedures. The United States was
characterized as the “owner,” “consignee,” and “importer” of the imported construction
materials. Exhibit 28 at DOS-PTMO-03278036. Further, the United States Embassy
recognized that customs exemptions were not granted to Framaco, but to the United States.
Id. State does not reference any PNG law, rule, or procedure rebutting or contradicting the
description of PNG’s rule, as presented in the Embassy’s communication, that duties
“exemptions should not be passed on or extended to third parties,” and, thus, the United
States, as the owner of the imported construction materials (or perhaps an assigned agent or
broker), was the party responsible for processing the required customs duties exemption
documentation. See id.
The contract states that “[t]he prices set forth in this contract are exclusive of all taxes
and duties from which the U.S. Government is exempt by virtue of agreement between the
U.S. Government and the host county .” Exhibit 1 at DOS-PTMO-00982349 (emphasis
added). The contract also states that certain procedures for GST and exemptions “are

CBCA 7859 13
included in, or are derived from, the agreement negotiated with the host country.”Id. at
DOS-PTMO-00982350. These contract provisions, along with the United States’ and the
PNG Government’s recognition that the United States was exempt from customs duties,
strongly evidence some type of an agreement between the two countries. Accordingly,
notwithstanding State’s argument to the contrary, the record sufficiently shows the United
States’ obligations under the PNG Government’s customs rules and procedures.
Further, under State’s argument, if certain contract terms are based on the existence
of an agreement between the United States and PNG (as so stated in the contract), and, in
fact, no such agreement exists, this would be a latent ambiguity in the contract and, thus, the
rule ofcontra proferentemwould apply. See, e.g., ACM Construction & Marine Group, Inc.
v. Department of Transportation , CBCA 2245, et al., 14-1 BCA ¶ 35,537, at 174,151
(discussing the rule of contra proferentem, which courts use to construe ambiguities in the
contract against the drafter). Under this rule, we would find that, based on the contract
language, an agreement between the United States and PNG exists and that, pursuant to this
agreement, the United States is responsible for customs duties exemption requests. See
Exhibit 28 at DOS-PTMO-03278036.
III. The Contract Does Not Negate Framaco’s Entitlement to Reimbursement
State relies on section H.40 of the contract and FAR 52.229-6 to support its argument
that Framaco should not receive reimbursement for duties Framaco paid outside the time
frame established by PNG rules for submitting duty refund or rebate requests. Respondent’s
Initial Brief at 1-2. State also argues that Framaco should not receive reimbursement for
duties where Framaco failed to “deliver the CCR paperwork to [State] in time for [State] and
the PNG Government to play their roles in the process so that the completed CCR packet
could be returned to Framaco by the time air shipment [of construction materials] arrived in
PNG.”Id. at 6. State adds that it should not be responsible for “the costs that resulted from
Framaco’s failure to ‘take all reasonable action’ to obtain reimbursement of . . . duties.”Id.
We find that neither section H.40 of the contract nor FAR 52.229-6 supports State’s
argument.
Section H.40.1 generally states that the contractor is responsible for paying all charges
except customs duties as provided in the contract. Exhibit 1 at DOS-PTMO-00982386.
However, the section does not indicate that the contractor would not receive reimbursement
for customs duties that it paid on behalf of the United States if the contractor failed to follow
host country rules or procedures for receipt of duties reimbursement or otherwise slowed
down that process while working with State and the host country.

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Section H.40.2 of the contract states that “[t]he Contractor shall be responsible for the
payment of customs duties, if any, which (1) are imposed on items which are not labeled and
processed in accordance with the Contracting Officer’s instructions, (2) are imposed on the
Contractor’s tools, construction equipment and machinery imported for use on the project,
or (3) are otherwise ineligible for duty-free entry.” Exhibit 1 at DOS-PTMO-00982387.
There is no indication that Framaco failed to label and process items in accordance with the
CO’s instruction or that Framaco is seeking cost reimbursement for duties imposed on its
own construction materials. See, e.g., Exhibit 27 at DOS-PTMO-02772285 (In a June 3,
2021 letter with the subject, Customs Clearance Certificate Delays from OBO, Notification
of Change, Framaco notes that “pertinent [p]roject materials were shipped andlabelled in
accordance with Section C of the Contract and the Contracting Officer’s instructions.”).
As for subsection (3) of section H.40.2, the record is confusing because it seems that
both the United States and PNG construed their agreement as placing responsibility for the
customs duties exemption process squarely with the United States. This position is
confirmed in the Embassy’s July 2021 communication discussed above.See Exhibit 28.
Yet, around this same time, there was also an indication that PNG would nevertheless allow
Framaco to continue to process customs duties exemptions on behalf of the United States if
Framaco complied with recently-imposed filing deadlines. Exhibit 72 at FRAM-1798333.
State’s argument under subsection (3) of section H.40.2 seems to be that Framaco failed to
comply with PNG deadlines for certain material shipments making the materials “ineligible
for duty-free entry.” Respondent’s Initial Brief at 1;see also Exhibit 54 at DOS-PTMO-
03718636.
However, if during contract performance, the responsibility for customs exemptions
was, in fact, to be shifted to Framaco from the United States and new requirements for the
timely filing of customs documentation were to be imposed by PNG, such changes should
have been incorporated into a contract modification. Exhibit 1 at DOS-PTMO-00982350
(section G.10(c)). Without such a modification, we return to the premise (or contract intent),
to which both the United States and PNG agree – that the United States was responsible for
customs duties exemptions under PNG’s customs procedures. Thus, under these procedures,
the United States, not Framaco, was responsible for timely submitting customs duties
exemption documentation necessary for duties reimbursement from PNG as evidenced by
PNG refusing to accept such documentation directly from Framaco. Exhibits 1 at
DOS-PTMO-00982349, 76. Framaco, having paid duties on behalf of the United States,
should not be barred from seeking reimbursement for this incurred cost.
FAR 52.229-6(f) states, “The contract price shall be decreased by the amount of any
. . . duty, other than an excepted tax, that was included in the contract and that the Contractor
is required to pay or bear, or does not obtain a refund of, through the Contractor’s fault,

CBCA 7859 15
negligence, or failure to follow instructions of the Contracting Officer or to comply with the
provisions of paragraph (i) [of this clause].” (emphasis added). FAR 52.229-6(i) states in
relevant part, “[t]he Contractor shall take all reasonable action to obtain exemption from or
refund of any taxes or duties, including interest or penalty, from which the United States
Government, the Contractor, any subcontractor, or the transactions or property covered by
[a] contract are exempt under the laws of the country concerned.” Under FAR 52.229-6(f),
State’s remedy for Framaco’s alleged failures timely to process, or timely to assist with the
processing of, customs duties exemption documentation would have been to reduce the
contract price, not refuse reimbursement of the duties that Framaco paid, a cost exclusive of
the contract price.6
Finally, we note that both Framaco and State assert arguments based on section H.20
of the contract. State argues that, under the section, it was not required to assist Framaco
in dealing with the PNG Government on the customs duties matter but did so at its discretion.
Respondent’s Initial Brief at 3. Framaco, on the other hand, argues that State was required
to provide such assistance. Appellant’s Opening Brief at 2. We find the arguments based
on section H.20 inapposite. The section only applies to customs procedures for which the
Government has no responsibility under the contract. See Exhibit 1 at
DOS-PTMO-00982373 (“In the interest of expediting the project, the Government may, in
its sole discretion, undertake to provide additional services for or on behalf of the Contractor
which are not required of the Government under this contract, such as assisting the
Contractor in obtaining customs clearances other than those for which the Government is
responsible.” (emphasis added)). Here, the record evidences that the Government was
responsible for processing the customs duties exemption documentation, so, in this matter,
section H.20 does not apply.
6 Notably, section G.10(c) of the contract requires that Framaco indemnify the
United States in the event that the United States is unable to obtain GST reimbursement to
which it would otherwise be entitled due to Framaco’s failure to follow PNG laws,
regulations, rules, and requirements. Exhibit 1 at DOS-PTMO-00982350 (“The contractor
agrees to indemnify the U.S. Government in the event that the U.S. Government is unable
to obtain GST reimbursement to which it otherwise would be entitled due to a failure by the
contractor to follow all Papua New Guinea laws, regulations, rules, and requirements.”)
(emphasis in original). Under the plain language of this provision, the indemnification
requirement does not seem to apply or extend to situations in which Framaco was at fault for
the United States’ inability to obtain a duties exemption.Id.

CBCA 7859 16
IV. Framaco Is Entitled to Reimbursement of Its Costs
The contract states, “The Government shall reimburse the Contractor for any . . . duty
specifically excluded from the contract price that the Contractor is required to pay or bear.”
Exhibit 1 at DOS-PTMO-00982349. We find that the United States was responsible for
coordinating the customs duties exemption with the PNG Government. Framaco incurred
costs paying the duties on imported materials because State, as the responsible party, did not
obtain the necessary customs duties exemptions, notably after the PNG Government stopped
processing the documentation submitted by Framaco for this purpose. Indeed, in May 2021,
the CO informed Framaco that it must proceed with shipping materials to the NEC project
site to avoid delays. Exhibit 25 at DOS-PTMO-0277945. Framaco could not have done so
without paying the customs duties on the imported CAA materials. State cannot now avoid
reimbursing Framaco for costs incurred paying these duties. Accordingly, Framaco is
entitled to recover its proven costs related to customs duties that it paid on behalf of the
United States and for which it has yet to receive reimbursement.
Decision
The appeal is GRANTED.
Beverly M. Russell
BEVERLY M. RUSSELL
Board Judge
We concur:
Erica S. Beardsley Kathleen J. O’Rourke
ERICA S. BEARDSLEY KATHLEEN J. O’ROURKE
Board Judge Board Judge