DENIED:  September 16, 2025
CBCA 8422
CADUCEUS HEALTHCARE, INC.,
Appellant,
v.
DEPARTMENT OF HEALTH AND HUMAN SERVICES,
Respondent.
Veronica Beuther, Vice President of Caduceus Healthcare, Inc., Marietta, GA,
appearing for Appellant.
Jared C. Bruff and Jorge I. Correa, Office of the General Counsel, Department of
Health and Human Services, Atlanta, GA, counsel for Respondent.
BEARDSLEY, Board Judge (Chair).
Appellant, Caduceus Healthcare, Inc. (Caduceus), appeals the contracting officer’s
(CO) final decision to deny payment in the amount of $146,583.14 for services rendered
because Caduceus exceeded the contract’s ceiling price without giving advance notice to the
Government.  Caduceus has elected expedited, non-precedential disposition of this appeal
by a single board judge under the small claims procedure in Board Rule 52 (48 CFR 6101.52
(2024)).  The parties have agreed to a decision on the written record, without a hearing,
pursuant to Board Rule 19.  For the foregoing reasons, the Board denies the appeal.


CBCA 8422 2
Background
On September 10, 2020, the Department of Health and Human Services (HHS)
established a multiple-award blanket purchase agreement (BPA) under the General Services
Administration (GSA) Services Schedule for the Centers for Disease Control and Prevention
(CDC) Division of Global Migration and Quarantine (DGMQ).  Exhibit 2.1  The CDC sought
out contractors to “provide programmatic support for preparedness and entry screening
operation” during emergency response operational activities.  Id. at 4.
In 2022, the CDC issued task order 75D30122F15065 under the BPA for DGMQ
Surge Support Emergency Response Operations to Caduceus.  Exhibit 7 at 1, 29.  The task
order listed the contract line item number (CLIN) for each service provided along with a
ceiling price and description.  Id. at 2-18.  CLINs were listed for the base period as well as
the option periods and delineated the services provided under each CLIN.  Id.  Below each
CLIN’s extended price were the words “NOT-TO-EXCEED,” denoting the ceiling price for
that CLIN.  Id. at 2-11.  At issue here is the payment of services covered by CLIN 2001,
which had a ceiling price of $1,429,428.67.  Id. at 14.
The task order was a time-and-materials contract (“contract”) that included Federal
Acquisition Regulation (FAR) 52.232-7, Payments Under Time-and-Materials and
Labor-Hour Contracts (AUG 2012) (48 CFR 52.232-7 (2021)) (Payments clause), and FAR
52.243-3, Changes-Time-and-Materials or Labor-Hours (SEPT 2000) (Changes clause). 
Exhibit 7 at 19.  FAR 52.232-7(d) states:
Total cost. It is estimated that the total cost to the Government for the
performance of this contract shall not exceed the ceiling price set forth in the
Schedule, and the Contractor agrees to use its best efforts to perform the work
specified in the Schedule and all obligations under this contract within such
ceiling price.  If at any time the Contractor has reason to believe that the hourly
rate payments and material costs that will accrue in performing this contract
in the next succeeding 30 days, if added to all other payments and costs
previously accrued, will exceed 85 percent of the ceiling price in the Schedule,
the Contractor shall notify the Contracting Officer giving a revised estimate
of the total price to the Government for performing this contract with
supporting reasons and documentation.  If at any time during performing this
contract, the Contractor has reason to believe that the total price to the
1 All exhibit references are to respondent’s appeal file exhibits, unless otherwise
noted.

CBCA 8422 3
Government for performing this contract will be substantially greater or less
than the then stated ceiling price, the Contractor shall so notify the Contracting
Officer, giving a revised estimate of the total price for performing this
contract, with supporting reasons and documentation.  If at any time during
performing this contract, the Government has reason to believe that the work
to be required in performing this contract will be substantially greater or less
than the stated ceiling price, the Contracting Officer will so advise the
Contractor, giving the then revised estimate of the total amount of effort to be
required under the contract.
If a contractor does not give the Government notice that it may reach the ceiling price,
the Payments clause provides:
Ceiling price.  The Government will not be obligated to pay the Contractor any
amount in excess of the ceiling price in the Schedule, and the Contractor shall
not be obligated to continue performance if to do so would exceed the ceiling
price set forth in the Schedule, unless and until the Contracting Officer notifies
the Contractor in writing that the ceiling price has been increased and specifies
in the notice a revised ceiling that shall constitute the ceiling price for
performance under this contract.
FAR 52.232-7(e).  
Under the contract’s Changes clause, adjusting the ceiling price for CLIN 2001
required the CO to issue a written modification.  FAR 52.243-3(b)(1).  The CO issued a total
of five modifications to the task order during the performance of the contract, none of which
increased the ceiling price for the contract as a whole or any individual CLIN.  See Exhibits
8-12.  Modifications were used to allocate funds to specific CLINs and exercise option
periods.  Exhibits 8-11.  Modification 00005 “exercise[d] CLIN 2001 in the amount of
$1,429,428.67 with a period of performance of [August 21, 2023, to August 20, 2024, and]
fully fund[ed] CLIN 2001 in the amount of $1,429,428.67.”  Exhibit 12 at 1.  The CDC did
not exercise the remaining option periods, effectively ending the task order on August 20,
2024.  Exhibit 1 at 1.
On August 7, 2024, Caduceus submitted its invoice for time worked under the contract
in July 2024, totaling $146,583.14.  Exhibit 25.  On September 10, 2024, the CDC refused
to pay the invoice because payment of the invoice would have exceeded CLIN 2001’s ceiling
price.  Exhibit 30.  Thereafter, Caduceus submitted a certified claim to the CO for payment
of the July 2024 invoiced amount.  Exhibit 34.  Caduceus alleged that it “consistently raised
concerns about budget constraints with multiple contracting representatives and CDC Points

CBCA 8422 4
of Contact (POCs), including in our June 4, 2024, correspondence and during a meeting
attended by the current Contracting Officer in May 2024” and that, “[d]espite these warnings,
Caduceus was directed to maintain near-perfect shift coverage.”  Id. at 2.  Caduceus stated
further that “[w]hile we understand FAR 52.232-7 limits payment beyond the contract ceiling
unless formally adjusted, we acted in good faith based on the presumption that funding
adjustments would follow.”  Id. at 3.  The CO issued his final decision denying Caduceus’s
claim for payment because Caduceus had not notified the CO that its performance was
expected to exceed the ceiling price and the CO “never provided a written notification that
the ceiling price would be increased.” Exhibit 1 at 2.  Caduceus timely appealed to the Board
the CO’s final decision denying its claim.
Caduceus tracked its CLINs by hours of service performed and the amount billed to
the CDC.  Exhibit 35 at 2.  The spreadsheet that tracked this data also included a projected
monthly budget that Caduceus would need to meet in order to stay within CLIN 2001’s
ceiling price for option period two.  Id.  Caduceus’s actual expenses were consistent with its
projected budget for CLIN 2001 from the beginning of the option period until May and June
2024, when the costs incurred were higher than projected.  Id.  Therefore, by May 2024,
Caduceus knew that it would exceed the ceiling price for CLIN 2001.  There is no indication
as to when this document was shared with the CDC.
Caduceus asserts that “[a]s labor costs approached the ceiling in early February 2024,
Caduceus began reducing shift coverage.  Instead of authorizing a reduction, the CO
escalated the matter to Caduceus’s CEO and explicitly instructed the company to maintain
full staffing due to urgent public health needs.”  Appellant’s Response Brief at 2.  Caduceus
asserts that in a May 21, 2024, call with the CO, Caduceus raised concerns about nearing the
labor-hour ceiling.  Id.  According to Caduceus, the CO dismissed these concerns, stating that
“‘Caduceus should be managing by hours,’ and questioned why funding was even being
raised.”  Id.  Caduceus asserts that “[n]o follow-up action or modification ensued.”  Id. 
Caduceus, however, provides no documents (emails or affidavits) to support these assertions.
Around this same time, the CDC expressed concerns with the competency of
Caduceus’s staff and the frequent lack of staffing coverage at various locations as required
by the task order.  On June 4, 2024, Caduceus replied in writing to the CDC’s concerns,
stating that “[d]espite our requests to add more PRN2 staff, we have been informed that this
2 In the medical field, PRN stands for “pro re neta,” which translates to “as the
need arises.”  PRN refers to nurses who do not work on a set schedule but work whenever
they are needed.  

CBCA 8422 5
is not possible due to budget constraints.”  Exhibit 16 at 3.3  In this same performance
document, Caduceus concluded, “While we prefer to expand our PRN staff to provide 100%
coverage, we work within the CDC’s budget constraints to ensure compliance.  It is
important to note that despite maintaining a small PRN group, we achieved over a 95% fill
rate, which is in line with previous CDC contracts.  This is a significant accomplishment for
a staffing contract.”  Id. at 5.  This document does not mention exceeding the ceiling price
but simply responds to performance matters raised by the CDC, such as staff absences, dress
code violations, unreliable schedules, poor work, onboarding issues, and difficulties
forecasting coverage.
In a September 2024 email exchange between Caduceus and the CO, Caduceus stated:
After a thorough review of our email correspondence, we did not locate any
specific communications indicating that we were over budget or at risk of
exceeding our funding.  However, during our initial meeting on May 21, 2024,
I explained that the primary reason we were unable to cover all shifts was due
to budget constraints.  Covering all shifts required an average of 2,080 hours
per person, while our contract only allocated 1,786 hours per person.  We
maintained an average of only one PRN staff member for each position and
station to stay within budget limits.
Additionally, our employees are entitled to approved time off, which was
factored into the contract.  This issue was also addressed in the meeting as well
as in our response submitted June 4, 2024, addressing CDC concerns.  Given
the requirement to cover all shifts, it was evident that exceeding the budget
was highly likely under these circumstances.
Exhibit 29 at 1-2.  Caduceus stated further that it assumed that “the likelihood of exceeding
the budget was understood following our initial call on May 21, 2024.”  Id. at 2.  The CDC
responded, stating:
I was on the 5/21/2024 call and there was no confusion of the “likelihood of
exceeding the budget was understood following our initial call on May 21,
2024” as you wrote.  It was never indicated. . . . Also, the Contractor is to
3 This document is not dated and indicates that it is a draft response.  Nothing
on this exhibit indicates to whom at the CDC the document was sent, and there are no
contemporaneous emails in the record showing to whom it was sent. 

CBCA 8422 6
notify the Government when it reaches 85% of the Not-To-Exceed amount in
the Schedule.  I have no record of receipt.
Id. at 1.
Discussion
The CLIN 2001 Ceiling Price
All work described in CLIN 2001 had to be done within the limits of its ceiling price. 
Exhibit 7 at 5; FAR 52.232-7(d)-(e).  Caduceus was required to notify the CO, if at any time,
it had “reason to believe that the hourly rate payments and material costs that [would have]
accrue[d] in performing [the] contract in the next succeeding 30 days, if added to all other
payments and costs previously accrued, [would have] exceed[ed] 85 percent of the ceiling
price.”  FAR 52.232-7(d).  A contractor’s timely notice to the CO of potentially exceeding
the ceiling price “provide[s] an option to the Government, i.e., it may decide to add more
money to the contract if it appears that more will be needed or it can stop the work when the
funds have been exhausted regardless of the status of the completion of the work.”  OST, Inc.
v. Department of Homeland Security, CBCA 7077, et al., 23-1 BCA ¶ 38,414, at 186,66-67
(quoting Consulting Services Corp., ASBCA 20288, 76-2 BCA ¶ 12,124, at 58,249).
[T]he Government is generally under no obligation to fund an overrun,
although the contracting officer may always exercise his or her discretion to
do so.  See, e.g., General Electric Co. v. United States, 412 F.2d 1215, 1220
(Ct. Cl. 1969); JJM Systems, Inc., ASBCA 51152, et al., 03-1 BCA ¶ 32,192;
PB Farradyne, Inc., DOTCAB 4063, 00-1 BCA ¶ 30,683 (1999); Arbiter
Systems, Inc., ASBCA 47403, et al., 97-2 BCA ¶ 29,183, aff’d, 178 F.3d 1311
(Fed. Cir. 1998) (table), cert denied, 527 U.S. 1003 (1999).  At the same time,
“a heavy burden of self-protection against cost overruns” is placed upon the
contractor and cost limitation clauses may be invoked to bar recovery of
overruns against a contractor that fails to protect itself either by providing the
requisite notice of overrun or by stopping work when funds run out.  Falcon
Research & Development Co., ASBCA 26853, 87-1 BCA ¶ 19,458, aff’d
mem., 831 F.2d 1056 (1987).
Ray Communications, Inc. v. Department of State, GSBCA 15509-ST, 06-1 BCA ¶ 33,273,
at 164,916 (footnotes omitted).
Caduceus cannot recover the costs for the services provided in July 2024 because
Caduceus failed to notify the CDC that it was at risk of exceeding the ceiling price for CLIN

CBCA 8422 7
2001.  Caduceus also failed to provide “a revised estimate of the total price to the
Government for performing this contract with supporting reasons and documentation.”  FAR
52.232-7(d).  Caduceus asserts that references to its staffing issues due to budget constraints
should have alerted the CO to the likelihood that Caduceus would exceed the ceiling price. 
However, not only is it unclear if and when these references to “budget constraints” were
made, but some of the statements – that Caduceus was working “within the CDC’s budget
constraints to ensure compliance” and that Caduceus had achieved “a 95% fill rate” – seem
to suggest that Caduceus understood and was able to meet the contract’s staffing
requirements, despite the budget constraints, in accordance with the task order’s terms and
conditions.  To the extent that Caduceus made general references to working within budget
constraints, such references did not provide the requisite notice to the CO that Caduceus may
exceed the ceiling price.  Noma Corp., AGBCA 78-168-4, 81-1 BCA ¶ 15,139, at 74,889 
(citing Forge Aerospace Inc., ASBCA 22157, 79-1 BCA ¶ 13,746, aff’d on reconsideration,
79-2 BCA ¶ 13,922) (finding that general statements of the possibility of an overrun do not
constitute sufficient notice).
Moreover, Caduceus continued to perform and incur costs in excess of the ceiling
price for CLIN 2001 without express authorization from the CO.  “A contractor cannot create
an obligation on the part of the Government to reimburse it for a cost overrun by voluntarily
continuing performance and incurring costs after the cost limit has been reached.”  North
American Rockwell Corp., ASBCA 14329, 72-1 BCA ¶ 9207, at 42,722 (1971).  Caduceus
admits that it assumed, based on the May 21 meeting, that the CO understood that Caduceus
would exceed the ceiling price.  The CO, however, was not made aware that Caduceus would
exceed the ceiling price and did not authorize Caduceus to continue to perform and incur
costs in excess of the ceiling price for CLIN 2001.
[A] contractor that performs work in excess of the applicable cost ceiling
without obtaining express authorization from the contracting officer [to
continue] does so at its own risk, unless it can demonstrate the applicability of
an exception to the rule, or that the contracting officer has abused the
discretion not to fund the overrun.  These exceptions include the following: 
(1) a change in the contract work; (2) the contractor had no reason to know of
and could not have known of, an imminent overrun[;] or (3) some conduct on
the part of the Government entitles the contractor to recover the overruns. 
Ray Communications, 06-1 BCA at 164,916 (citing OAO Corp., DOTCAB 1280, 83-1 BCA
¶ 16,379, at 81,440-41).
Caduceus does not demonstrate that an exception applies.  The CDC did not change
the contract work, constructively or otherwise.  Caduceus contends that the Government’s

CBCA 8422 8
direction to perform near-perfect shift coverage caused Caduceus to exceed the ceiling price
and constituted a constructive change to the contract work.  A constructive change to a
contract occurs when “a contractor performs work beyond the contract requirements without
a formal order, either by an informal order or due to the fault of the Government.”  Agility
Public Warehousing Co. KSCP v. Mattis, 852 F.3d 1370, 1385 (Fed. Cir. 2017) (quoting
International Data Products Corp. v. United States, 492 F.3d 1317, 1325 (Fed. Cir. 2007)). 
“That the [G]overnment continued to expect the contract’s prescribed performance from
[Caduceus] at the agreed upon price is not an order to perform additional work.”  Ace
Electronics Defense Systems, ASBCA 63224, 22-1 BCA ¶ 38,213, at 185,569.  There was
no constructive change to the contract that allowed Caduceus to perform work that exceeded
the ceiling price without the express authorization of the CO.
As for the second exception in Ray Communications regarding a contractor’s
pre-existing knowledge of an overrun, Caduceus foresaw in May 2024 that it would likely
exceed its ceiling price, yet it continued to perform without express authorization from the
CO that the CDC would fund the cost overruns.  “If the overrun is foreseeable, notice must
be given.” Noma Corp., 81-1 BCA at 74,889.
Lastly, in order for the CDC’s conduct – ordering full staffing or near-perfect shift
coverage – to entitle Caduceus to recover the overrun, the CDC had to know that the work
would cause Caduceus to exceed the ceiling price of CLIN 2001 and still direct Caduceus
to do it anyway.  There is nothing in the record that supports Caduceus’s assertion that the
CDC knew or should have known that Caduceus was approaching and might exceed the
ceiling price for CLIN 2001.  Caduceus contends that “[f]rom the contract’s inception,
Caduceus submitted detailed monthly invoices and timesheets via the Invoice Processing
Platform (“IPP”), showing actual labor costs, CLIN status, and running totals.  These
provided the [CDC] and CO with continuous visibility into budget usage. (Exhibits 13, 17,
20, & 28 Invoices).”  Appellant’s Response Brief at 1-2.  These invoices and time sheets,
however, did not provide running totals or CLIN status, and there is no indication that the
tracking spreadsheet showing the cost overrun was provided to the CDC during contract
performance.  Nonetheless, Caduceus, not the CDC, has the burden of determining the
existence of an overrun situation.  See Consulting Services, 76-2 BCA at 58,250 (“Appellant
cannot shift its burden to the Government by contending that the Government could have
deduced the facts from what had been submitted.”).  Neither the contract nor case law
required the Government to monitor Caduceus’s performance and invoices to determine if
it was going to exceed the ceiling price.  Ray Communications, 06-1 BCA at 164,919; see
Consulting Services, 76-2 BCA at 58,249 (finding that monthly vouchers submitted for
purposes of reimbursement did not excuse the appellant’s failure to give the required notice). 
The Government’s conduct, therefore, does not entitle Caduceus to recover the costs it
incurred in July 2024 in excess of the ceiling price.

CBCA 8422 9
Unjust Enrichment and Quantum Meruit
Caduceus argues that it is entitled to payment of the July 2024 invoice because the
Government has been unjustly enriched.  “The doctrine of unjust enrichment, for which
quantum meruit is the remedy, is an equitable one, applied to those situations where the
rights and remedies of the parties are not defined in a valid contract.”  Arcadis U.S., Inc. v.
Department of the Interior, CBCA 918, 08-1 BCA ¶ 33,807, at 167,353-54; see John
Douglas Burke v. Department of Health & Human Services, CBCA 7492, 23-1 BCA
¶ 38,304, at 185,976 (a valid contract precludes an unjust enrichment award), aff’d, No.
2024-1019, 2024 WL 4579346 (Fed. Cir. Oct. 26, 2024).  “The essence of an unjust
enrichment claim is that, although no valid contract, either express or implied in fact, exists
between the parties, justice requires that we create an obligation of a contractual nature for
the sake of providing a remedy.”  Arcadis, 08-1 BCA at 167,354.  Here, Caduceus performed
under a valid contract that defined the rights and remedies of Caduceus and the CDC. 
Caduceus, therefore, may not recover quantum meruit under a theory of unjust enrichment.
Waiver and Estoppel
Caduceus argues that the Government waived its right to strictly implement the ceiling
price for CLIN 2001 because it benefitted from the services received and is, therefore, able
to exceed the ceiling price to pay the July 2024 invoice.  Waiver is an intentional
relinquishment or abandonment of a known right.  Supreme Foodservice GmbH v. Director
of the Defense Logistics Agency, 54 F.4th 1362, 1368 (Fed. Cir. 2022).  Caduceus provides
no evidence that the CDC intentionally relinquished its right to enforce a ceiling price for the
task order or the individual CLINs.  See Decision Science Consortium, Inc., IBCA
1651-2-83, 85-3 BCA ¶ 18,350, at 92,015 (When the contracting officer knew of no cost
overrun and neither encouraged nor directed the contractor to continue work after exhaustion
of contract funding, the cost limitation clause was not waived.).
Estoppel can preclude a party from asserting a right to which it otherwise would have
been entitled.  Carter v. United States, 98 Fed. Cl. 632 (2011).  
Four elements must be present to establish an estoppel:  (1) the party to be
estopped must know the facts, i.e., the government must know of the overrun;
(2) the government must intend that the conduct alleged to have induced
continued performance will be acted on, or the contractor must have a right to
believe the conduct in question was intended to induce continued performance;
(3) the contractor must not be aware of the true facts, i.e., that no implied
funding of the overrun was intended; and (4) the contractor must rely on the
government’s conduct to its detriment. Hughes Aircraft Corporation, [ASBCA

CBCA 8422 10
24601,] 83-1 BCA [¶ 16,396,] at 81,516; see United States v. Georgia-Pacific
Co., 421 F.2d 92, 96 (9th Cir. 1970); Emeco Industries, Inc. v. United States,
485 F.2d 652, 657, 202 Ct. Cl. 1006 (1973).
American Electronic Laboratories, Inc. v. United States, 774 F.2d 1110, 1113 (Fed. Cir.
1985).  Caduceus’s argument of estoppel fails.  Again, Caduceus did not demonstrate that
the CDC knew of the possible overrun.  There is no evidence that the CO, with knowledge
of a potential overrun, induced Caduceus to work at staffing levels that would cause it to
exceed the ceiling price.  There is also no evidence that the CDC represented to Caduceus
that it would fund a cost overrun.  Finally, Caduceus failed “to prove that it reasonably
interpreted and relied on any [CDC] conduct” to its detriment.  Hughes, 83-1 BCA at 81,518. 
Thus, the estoppel exception does not apply to the strict application of the cost limitation
provision.
The Board has considered all other arguments made by Caduceus and deems them to
be without merit.  The Board is unable to conclude that the CO (1) had notice of the
likelihood of an overrun; (2) knowingly induced Caduceus to continue to perform work
despite the likelihood of an overrun; or (3) should have known that its conduct was inducing
Caduceus to incur an overrun with the expectation of being paid.  Because Caduceus opted
to continue performance despite its own awareness that it would exceed the ceiling price of
CLIN 2001 and without notice to the CO of the possibility it would exceed the CLIN 2001
ceiling price or express authorization from the CO to fund the overrun, Caduceus accepted
the risk and liability of the costs incurred.
Decision
The appeal is DENIED.
    Erica S. Beardsley    
ERICA S. BEARDSLEY
Board Judge