ARMED SERVICES BOARD OF CONTRACT APPEALS Appeals of

--
CACI International, Inc. &

CACI Technologies, Inc.

Under Contract No. Wl5P7T-06-D-E402

APPEARANCES FORTHE APPELLANT:

APPEARANCES FORTHE GOVERNMENT: ) ) ) ASBCANo. 60171 ) ) )

J. William Koegel, Jr., Esq. General Counsel Elizabeth M. Gill, Esq.

Deputy General Counsel Raymond M. Saunders, Esq.

Army ChiefTrial Attorney Kyle E. Chadwick, Esq.

Trial Attorney

OPINION BYADMINISTRATIVE JUDGE PROUTY ONTHE GOVERNMENT'S MOTION FOR SUMMARY JUDGMENT AND APPELLANTS' CROSS-MOTION FOR SUMMARY JUDGMENT

This appeal comes down to the interpretation ofa contractprovision permitting appellants, CACI International, Inc. & CACI Technologies, Inc. (CACI, collectively, unless otherwise specified) 1to be reimbursed by the government for hazardous duty pay made to its employees assigned to work overseas under task orders upon the above-captioned contract (the contract). The pay at issue was 35% ofthe "basic compensation" made by CACI to its employees. In its pending motion for summary judgment, the government contends that this "basic compensation" is what the CACI employees are paid for non-overtime hours (gov'tbr. at 6-7). Afterthe employees were paid for the first 40 hours that they workedperweek, the government argues, any additional hours that they worked should be consideredto be overtime and not subject to the 35%pay supplement (id.). This interpretation, the government argues, is required by
ourprevious case of

### BearingPoint, Inc., ASBCA Nos. 55354, 55555, 09-2 BCA

### ii 34,289 (id. at 6).

1The contract was awarded to CACI Technologies, Inc., butthe contracting officer's letter demanding paymentwas sent to CACI, Inc., Federal. CACI International, Inc. is the parent company to both entities, and we allowed appellant to file the appeal initially as CACI International, Inc. and then add CACI Technologies, Inc. to the caption.CACI urges the Board to recognize that the "normal hours" that its employees
were expectedto work by the government (depending on the governmenttask order at issue), were either 84 or 72 hours per week, without such hours being considered overtime (app. opp'n at 1).2 Thus, as CACI would have it, since 84 or 72 hours perweek
were the employees' expected hours, pay for the entirety ofthose hours was the employees' basic compensationto which the 35%pay supplement should apply (id.). Forthe reasons stated below, CACI prevails.

STATEMENT OF FACTS FORPURPOSES OF MOTIONS

On 3 March 2006, the government awarded to CACI ContractNo. W15P7T-06-D-E402 (the contract) (see gov't br., Statement ofUndisputed Material Facts (SUMF) 

### ii 1 ). The contract was an indefinite-delivery/indefinite-quantity contract and CLIN 0001 was under the Strategic Services Sourcing (S3) Program for the provision ofsupport services to the government in various locations, including overseas (see id.). This portion ofthe contract was cost-reimbursable, meaning that the government wouldpay CACI for the costs incurred in performing the task order issued under the S3 Program, plus a fee.

The performance work statement (PWS) for the S3 program (which was applicable to the contract) provided that, with the approval ofthe contracting officer (CO), contractors could pay employees hazardous duty "compensation at rates set in accordance with State Department Guidelines" (SUMF 

### ii 4; R4, tab 5 at 32). More on these "State Department Guidelines" will follow shortly.

2 Initially, only the government filed a motion for summaryjudgment, with no cross-motion being filed by appellants. Because we recognized that the analysis necessary to resolve the government's motion would tendto support summary judgment in favor ofappellants ifit were denied to the government, we deemed appellants' opposition to the government's motion to constitute a cross-motion for judgmentin their favor, while providingthe governmentthe opportunity to provide a full response to the cross-motion ifit so desired (see Bd. order dtd. 30 March 2016). The government did file an additional briefin partial opposition to the granting ofsummaryjudgment in favor ofappellants, arguing that disputed facts would prevent the Board from granting summaryjudgment in favor of appellants ifthe basis for granting the motion rested upon a finding that the contract was ambiguous, requiring parol evidence ofthe parties' interpretation of the contract (see gov'tresp. dtd. 12 April 2016). Appellants also filed a separate motion for summaryjudgment subsequentto the additional briefing detailed above, arguing much the same as before (see app. mot. dtd. 29 April 2016). Although we permitted a governmentresponse to this motion, we concluded that further briefing from appellants was unnecessary because the salient arguments had already beenpresented multiple times. 2On 20 September2010, the government awarded to CACI Task OrderNo. 0096 (TO 0096) on the contract (SUMF**~** 5; R4, tab 9). TO 0096 was for engineering and technical assistance worldwide (id.). The task order's PWS specified, in paragraph 8.3, that "[t]he normal workday, when deployed, will be 12 hours per day, seven days per week [i.e., 84 hours perweek], or other durations depending on the operational needs" (SUMF**~** 5; R4, tab 13 at 81). This PWS also addressed premium pay, providing in the immediately-following paragraph, 8.4, that:

To accommodate the additional cost and inherent risk associated with deployment status, additional premiums for hardship and hazardous duty are authorized, to be billed as 'otherdirect costs' on a perhourbasis. The differentials paid will be IAW the Department ofState guidelines for countries within the requested geographical areas. (R4, tab 13 at 81)

Almost a year later, on 16 September 2011, the government awarded to CACI Task OrderNo. 0127 (TO 0127) on the contract (SUMF**~** 6; R4, tab 17). TO 0127 had an associated PWS, butthatPWS made no mention ofhazardous duty pay (see SUMF**~** 6; R4, tab 14). The government concedes, however, that, under TO 0127, CACI employees
were expected to work 72 hours perweek (see SUMF**~** 6). 3

The "State Department Guidelines" referenced in the S3 PWS and the TO 0096 PWS are agreed bythe parties to be those contained in the Department ofState Standardized Regulations (DSSR) Chapter 650 relating to "dangerpay"4 

### (e.g., gov'tbr. at 6-7; app. opp'n at 6-7). Because they are critical to the case, we beg the reader's indulgence as we quote the applicable portions ofthe regulation, below. Under Section 651, "Definitions," the DSSR5 provides:

a. "DangerPay Allowance" means the additional compensation ofup to 35 percent overbasic compensation granted to employees (Section 031 and 040i) for service at designated dangerpay posts, pursuantto Section 5928,

3 This concession is based upon CACl's complaintbefore the Board, but CACl's complaint does notprovide a supporting citationto the record. Under our rules,
we will accept the allegation ofthe expected hours because the government conceded it, but are not exactlypleased at its lack ofsupport from CACI. 4 Although the contract specified "hazardous duty pay" (see R4, tab 5 at 32), the DSSR does not include a "hazardous duty pay"provision. The parties reference the "dangerpay"provision ofthe DSSRinterchangeably with hazardous duty pay, and we considerthe two slightly different terms to refer to one and the same thing. 5 The DSSRmay be found at https://aoprals.state.gov/content.asp?content_id=286&menu_id=78. 3Title 5, United States Code (Section 2311, Foreign Service Act of 1980) and the provisions ofthis chapter.

DSSR 

### § 65 l(a).

Some elaboration may be found under Section 652 ofthe DSSR, "Scope." In relevant part, it provides that:

DSSR 

### § 652. a. The danger pay allowance is designed to provide additional compensation above basic compensation to all U.S. Government civilian employees, including Chiefs of Mission, for service at places in foreign areas where there exist conditions ofcivil insurrection, civil war, terrorism,
or wartime conditions which threaten physical harm or imminent danger to the health or well-being ofan employee. These conditions do not include acts characterized chiefly as economic crime.

e. The amount ofthe danger pay cannot exceed 35 percent ofbasic compensation.

The DSSRthus unambiguously (and repeatedly) ties the amount ofdangerpay to "basic compensation." "Basic compensation" is defined in the "Definitions" section of the DSSR, Chapter40, paragraph k, and its subheadings. Again, we quote it in full:

k. "Basic compensation" means the rate ofcompensation fixed: (1) by statute for the position held by an employee; or (2) by administrative action pursuant to law; or (3) administratively in conformity with rates paidby the Government for work ofa comparable level ofdifficulty and responsibility in the continental United States, before any deduction is made and without taking into consideration any additional compensation such as overtime pay, night pay differential, hazard differential, extrapay for work on holidays, post differential, and allowances; exceptthat for teachers defined in subsection n, hereof, basic compensation
means the rate ofcompensation fixed by the military 4departments ofthe Department ofDefense for the position heldby an individual (including any appropriate increments for having completed a higher level ofacademic preparation) before any deduction is made and exclusive ofall allowances, differentials, or other additional compensation.

DSSR 

### §40(k). Relatedly, DSSR Chapter40, paragraph 1provides that '"[s]alary' means the basic compensation ofan employee

...but exclusive ofall allowances, differentials or other additional compensation."

Because "overtime pay" is noted as being excluded from basic compensation by its definition, above, we examine those references to overtime pay that are contained in the contract.6 Clause H-25, entitled "HOURS OF WORK AND OVERTIME,"provides in relevant partthat:

1. Work within the Continental limits ofthe United States and its possessions shall not normally exceed eight (8) hours per day or forty (40) hours pernormal workweek. Work hours OCONUS [outside the Continental United States] shall correspondto hours worked by comparable Governmentpersonnel, provided a maximum offorty hours perweek is not exceeded.

2. All overtime must be approved in advance by the issuing Contracting Officer. Overtime will be paid at one and a halftimes the base laborrates on contract for such overtime worked:

(R4, tab 1at41) a. In excess offorty (40) hours perweek b. Emergency overtime in case ofextreme emergency, where delay would endanger accomplishment of essential theatre missions, the contracting officer may authorize overtime.

The contract incorporates a tailored version ofstandard FARclause 52.222-2, PAYMENTFOR OVERTIME PREMIUMS (JUL 1990) into contract clause I-21. The introductory paragraph provides that: "The use ofovertime is authorized under this contract ifthe overtime premium cost does not exceed ZERO orthe overtime premium is paid for work [in four specified circumstances that are either ofan emergency nature or not amenable to being performed efficiently without overtime]." (R4, tab 1at 65)

6 The DSSRdoes not define "overtime," except for use in Chapter 800, which deals with compensatorytime offfor government employees. See DSSR 

### § 81 l(b). 5CACI in fact, paid no overtime premium to its employees who worked on TOs 0096 and 0127, but did pay them danger pay based upon their salaries, which reflected the actual hours worked by those employees, 

### i.e., the 72 and 84-hour workweeks required by the two TOs (SUMF 

### iii! 8, 9). CACI included these costs in its invoices to the government (id.), and the CO appears to have compensated CACI for this expense, without apparent objection, until challenged by the Special Inspector General for Afghanistan Reconstruction (SIGAR) (see SUMF 

### iii! 10, 11). SIGAR's challenge to the payment was not that there was a question ofentitlementto dangerpay, but that the portion ofCACI employee salaries that could be attributable to hours greater than 40 per week constituted overtime for which no hazardous duty pay could be paid (R4, tab 28 at 22). The amount that SIGARdetermined thatthe government overpaid to CACI as a result ofthe danger pay calculations thatwere different than what SIGARbelieved it to be entitled was $14,637 for TO 0096 and $25,095 for TO 0127, totaling $39,732, altogether (SUMF 

### ii 10; R4, tab 28 at 22).

Consistent with SIGAR's recommendations, on 31 July 2015, the CO demanded repayment for the costs questioned by the SIGAR audit report, which included both the alleged dangerpay overpayment and other costs questioned by SIGARthat are not relevant to this appeal (see SUMF 

### ii 11; R4, tabs 30, 31). On 26 August 2015, the CO emailed to CACI a "final determination" that CACI must pay the governmentthe $39,732 in challenged dangerpay and also directed CACI to modify its payroll and billingpractices to avoid paying dangerpay on hours greater than 40 worked per week (SUMF 

### ii 12; R4, tab 34). CACI deemed that CO final determination to be a final decision and on 11 September 2015, timely appealed it to the Board.

DISCUSSION

This case may be crystallizedthus: under the terms ofthe contract, (which includes the DSSR), the government may not require CACI employees to work 72 or 84-hour weeks as a matter ofcourse, not subjectto overtime pay, and then assert that the proportionate amount oftheir salary for hours greaterthan 40 perweek should be considered "additional compensation," for which dangerpay was inapplicable. In accordance with the terms ofthe contract, the traditional 40-hour week was an illusory figure with no meaning

- it cannot be used tojustify an arbitrary reduction ofthe CACI employees' entitlementto dangerpay.
I. The Standards for Summary Judgment

The standards for summaryjudgmentbefore the Board are well established7 and need little elaboration here. Summaryjudgment should be granted ifit has been shown that there are no genuine issues ofmaterial fact and the moving party is entitled to

7 Board Rule 7(c)(2) provides that the Board looks to FED. R. CIV. P. 56 for guidance in deciding motions for summaryjudgment. 6

### judgment as a matter oflaw. Celotex Corp. v. Catrett, 

### 477 U.S. 317, 322 (1986). A non-movant seeking to defeat summaryjudgmentby suggesting conflicting facts "must set forth specific facts showing that there is a genuine issue for trial." Anderson v. LibertyLobby, Inc., 

### 477 U.S. 242, 248 (1986) (quoting FirstNationalBankof Arizona v. Cities Service Co., 

### 391 U.S. 253, 288-89 (1968)).

II. The ContractRequires the Payment ofDanger Pay on TOs 0096 and 0127 to be Computed Based on an Employee's "Basic Pay"

Some terms ofthe contract are relatively clear. The S3 PWS and the PWS for TO 0096 both address dangerpay. The S3 PWS allowed that, with the approval ofthe CO, contractors couldpay employees hazardous duty "compensation at rates set in accordance with State Department Guidelines." Andthe TO 0096 PWS explicitly determined that dangerpay was permissible under its provisions, effectively constituting the CO's approval ofCACl'smaking such apaymentto its employees.

CACI's entitlement to make hazardous duty payments to its employees under TO 0127 is somewhat less straightforward, inasmuch as such pay is not specifically mentioned by TO 0127. Nevertheless, it is uncontroverted that CACI, with the government's knowledge, made such payments to its employees under TO 0127, and that the government's later challenge to the practice was that CACI was overpaying its employees, not that they lacked entitlement to some 

### hazardous duty pay (see generally 

### SUMF 

### if 10; R4, tab 29 at 3-4). We view this series ofevents as manifesting the CO's assent to CACI's making such dangerpay, in accordance with the S3 PWS, for work performed on TO 0127. Indeed, the government makes no challenge to the propriety of there being an entitlementto hazardous duty pay for workperformed on TO 0127.

Since the contract incorporates the DSSR, which limits payment ofdanger pay to a percentage of"basic compensation," the salient question remaining, then, is what constitutes basic compensation underthe contract.

III. An Employee's Basic Compensation under the Contract is its Pay for Normal Work Hours

We conclude that an employee's pay for his orher normal orusual work hours underthe contract constitutes its basic compensation. We arrive at this conclusion for two independentreasons: first, those portions ofthe DSSRthat exclude "overtime pay"
are not applicable to the contract; second, despite working significant hours in excess of 40 hours per week, CACI employees were paid no overtime premium.

7A. The Contract does not Exclude Hazardous Duty Pay on "Overtime" Hours

The DSSR's definition of"basic compensation" is problematic for application to contractor employees: it is simply inapplicable. 8 As defined in section 40(k), the DSSR provides three alternative definitions ofbasic compensation; none are helpful. The first alternative is a pay rate set by statute for the employee's position, which is plainly inapplicable here, because no statute setthe salary that CACI paid its employees. The second alternative is a rate set "by administrative action pursuantto law," which is inapplicable for the same reason. Byprocess ofelimination, it appears, the parties have turned to the third, and final, alternative definition ofbasic compensation (see tr. 99 (gov't attorney); gov'tbr. at 7; compl.**~** 33; butsee tr. 30-31, 38-39 (CACI's counsel arguing that DSSR § 40(k) is inapplicable)), which fares no better on close analysis.

This third alternative defines basic pay as: "administratively in conformity with rates paid by the Government for work ofa comparable level ofdifficulty and responsibility in the continental United States, before any deduction is made and without taking into consideration any additional compensation such as overtime pay." But there is nothing "administratively in conformity with rates paid by the Government for work of
a comparable level ofdifficulty and responsibility in the continental United States," about the pay that CACI made to its employees, and neitherparty has made any effort to explain how it could be so. Thus, the third alternative (and with it, its explicit exclusion ofovertime pay) is inapplicable to the circumstances presentedby the contract as well. Having determined that, by its language, the DSSR's definitions ofbasic pay are inapplicable to the circumstances presented here, we consider alternate arguments for reading the DSSR as prohibiting overtime pay, and find them unpersuasive.

The governmentprimarily relies upon ourprior case ofBearingPoint, Inc., 09-2 BCA**~** 34,289, to foreclose probing analysis ofthe meaning ofthe DSSRand to support leaping to the result that the pro-rated amount ofsalary over40 hours perweek is not subjectto hazardous duty pay (gov'thr. at 6-7). BearingPoint, however, does not provide all that the government wishes.

Tobe sure, BearingPointpresents a superficially similar set offacts to those here: it held that, in a contract for work in Iraq, dangerpay was only to be paid on the basis of
a 40 hour week. See BearingPoint, 09-2 BCA**~** 34,289 at 169,400. The contract in BearingPoint also referenced the DSSRfor its calculation ofdanger pay. Id. Butthe contract in BearingPointhad a provision, not to be found in the contracthere, that

8 We viewthis as less a flaw in the DSSR, which was drafted to apply to government employees, than a flaw in the contract, which simply importedthe DSSRwithout apparently contemplating how it would apply to civilian contractor employees. 9 "Tr._"refers to a page ofthe transcript ofthe oral argument held onthis motion on 29March 2016. 8changes everything: the "differentials and allowances clause" in the BearingPoint contractprovided for dangerpay "notto exceedthatpaid USAID employees in the cooperating country." Id. at 169,396. Andthis is the clause, we held inBearingPoint, which effectivelytied the contractor's employees' salaries to the same 40-hour construct under which federal employees labor. Id. at 169,400. The contract here, by contrast, only statedthat the pay rates would be "in accordance with State Department Guidelines," but did not limit the pay in any otherway.
The government might argue that, by applying "State Department Guidelines," the contract necessarily requires CACI's employees to be treated the same way that State Department employees are treated, butthis would be too much a stretch. In BearingPoint, we lookedto the limits offederal employee compensation under the DSSRonly because we were required to do so by the terms ofthe applicable contract, which demanded a comparison to USAID employees, see BearingPoint, 09-2 BCA**~** 34,289 at 169,400; here, there is simply no reason to tether CACI employees' base pay to any ofthe three alternatives proposed in DSSR § 40(k).

In the absence ofany applicable definition contained in the DSSR, we take "basic pay" at its common meaning: the salary given to CACI employees before being subject to any multipliers or additions. This tracks well with DSSR 

### § 40(1), which equates salary to basic compensation "exclusive ofall allowances, differentials or other additional compensation." Interestingly enough, our definition is conceptually closestto the first definition contained in DSSR § 40(k), in which a salary set by an outside body (in DSSR 

### § 40(k), a statute; here, by CACI) is notparsed in any way before being deemed to be the basic pay ofan individual. As far as the evidence presentedto us goes, that means that CACI employees' salaries for whatevernumber ofhours per week that they worked (for which they received nopremiumpay) is the only proper amount that could be considered basicpay.

B. Work Weeks in Excess of40 Hours are not Overtime under the Contract

Even ifwe were to read the contract and DSSRtogether to preclude payment of "overtime," we would, nevertheless, conclude that the CACI employees working under TOs 0096 and 0127 were not working overtime because the contract treated them as if they were not. In clause H-25, the contract requires all overtime work to be paid at a 50% premium overregular time, and then, in clause 1-21, unhelpfully, allows overtime so long as the premium is zero or it fits within one four specified instances ofa sort ofwork that is in the government'sparticular interestto have completedby overtime work. We reconcile these two seemingly-contradictory clauses by reading the zeropremium alternative in clause 1-21 as one that would never happen in the event ofauthorized overtime: that is, pursuantto clause 1-21, the only waythat overtime could be authorizedby the CO is in those four clause-specified instances in which overtime was in the government's interest, in which case it would be compensated at the traditional time-and-a-halfrate required by clause H-25. Underthis reading, the reason that the
9contract included the meaningless "zero premium" language in clause I-21 is that the FAR-provided language ofclause I-21 left a blank before the word "premium," and the only way that the government drafter ofthe contract could make the standard language of clause I-21 reflect the intent ofstrictly delimited authority for use ofovertime was to insert "ZERO" in that blank spot.

Because the parties agree that CACI employees were not paid the 50% premium required by the contract for overtime, it is apparent that the parties did not considerthe work over40 hours a weekto constitute overtime for whichpaymentwas required. To be sure, section H-25, paragraph 1ofthe contractprovides that contractor employees
are not expected to work greaterthan 40 hours perweek, but this is overcome bythe later-executed task orders, directing 84 and 72-hour work weeks for the relevant CACI employees as a matter ofcourse. Ifthese 84 and 72-hour work weeks did not trigger a requirement to pay the employees any kind ofpremium, despite the contract's requirements that "overtime"bepaid at a premium, and the task orders imposing such workweeks did not characterizethem as a type ofovertime that is excused from premium pay (as they did not), the contract cannot, nevertheless, be interpreted to deem such work to be overtime for the sole, yet unexpressed, purpose ofarbitrarily limiting dangerpay to CACI's employees.

We note, in further support ofthis contract interpretation, that it is absolutely consistent with that analytical framework ofPart 22 ofthe FAR, governing the application oflabor law to government acquisitions. This portion ofthe FAR specifies that, even when government contractor employees workmore than 40 hours perweek, ifthey are overseas, the hours are customary for the area, andthey are notpaid a premium for the work greater than 40 hours, these long hours are consideredto be a "normal workweek." FAR22.103-1. "Overtime" is defined in the FARas "timeworked by a contractor's employee in excess ofthe employee's normal workweek." FAR2.101. Thus, the FAR does not considerwork in excess of40 hours to be overtime ifit is part ofthe employee's "normal workweek." The hours worked here, were part ofthe CACI employees' normal workweeks, and thus not consideredto be overtime under the FARdefinition.

Ofcourse, we must address BearingPoint on this topic as well: the government argues thatBearingPoint interprets hours in excess of40 to be overtime under the DSSR and that the meaning ofthe DSSR cannot changejustby virtue ofits being applied to a different contract (gov'treply br. at 1 ). On its face, this argument is appealing, and we are in complete agreement withthe government that the meaning ofa regulation should not vary from case to case. Nevertheless, it is not the meaning ofthe DSSRthat is at issue here, but the meaning ofthe contract. As we discussed above, the conclusion of BearingPointwas driven by the contract terms tying contractorpay to the limits imposed upon government employees, not by the DSSRalone. Accordingly, we come to a different conclusion concerningthe hours subjectto danger pay here without doing any violence to our interpretation ofthe DSSRin BearingPoint.

10CONCLUSION

Forthe reasons stated herein, we grant summaryjudgmentin favor ofappellants, sustaining the appeal, and deny the government's motion for summaryjudgment.

Dated: 18 July 2016

Administrative Judge Acting Chairman Armed Services Board ofContractAppeals Administrative Judge Armed Services Board ofContract Appeals

Administrative Judge Vice Chairman Armed Services Board ofContractAppeals

I certify that the foregoing is a true copy ofthe Opinion and Decision ofthe Armed Services Board ofContract Appeals in ASBCA No. 60171, Appeal ofCACI International, Inc. & CACI Technologies, Inc., rendered in conformance with the Board's Charter.

Dated:

11 JEFFREY D. GARDIN Recorder, Armed Services Board ofContractAppeals