ARMED SERVICES BOARD OF CONTRACTAPPEALS Appeal of

-- ) ) Edinburgh International ) ) Under Contract No. W91B4K-09-D-0002 ) APPEARANCE FORTHE APPELLANT:

APPEARANCE FORTHE GOVERNMENT: ASBCA No. 58864

Armani Vadiee, Esq.

Smith PachterMcWhorter PLC Tysons Comer, VA E. Michael Chiaparas, Esq.

DCMA ChiefTrial Attorney OPINION BYADMINISTRATIVE JUDGE THRASHER This appeal concerns a task order underthe parties' indefinite-delivery, indefinite-quantity (IDIQ) contract for provision ofsecurity services at various facilities throughoutAfghanistan. Appellant seeks an upwardprice adjustment of $164,485 for the cost ofbilleting securitypersonnel duringperformance ofthe task order. We havejurisdiction over this matterpursuant to the Contract Disputes Act of 1978 (CDA), 41 U.S.C. 

### §§ 7101-7109. The parties elected to waive a hearing and submittheir cases onthe record underBoard Rule 11. FINDINGS OF FACT 1. On 22 May 2009, Edinburgh International (EI) 1was awarded Contract No. W91B4K-09-D-0002 (IDIQ contract), an IDIQ commercial contract to perform base security functions at Forward Operating Bases (FOBs) and facilities, which were to be specified in individual task orders, throughoutthe Task Force Duke Area of Operations located in the provinces ofNangarhar, Nuristan, Kunar, and Laghman (N2KL) provinces ofAfghanistan (R4, tab 1 at G-42). A total ofthree contracts were awarded as a result ofthe solicitation for these services (R4, tab 1 at G-3, tab 65). The IDIQ contract was for a base yearbeginning 1July 2009 through 30 June 2010 and included four option years (R4, tab 1 ). 2. The IDIQ contractprovides that the "[c]ontractor shall provide all labor, weapons, ammunition

...and other operational equipmentto perform facility protective services as defined in each individual task order" (R4, tab 1 at G-6). The statement of work also provides that the contractor shall "utiliz[e] indigenous personnel from the

1 Edinburgh International is the trading name ofthe ERSMLimited group of companies (R4, tab 12).area surrounding the performance location [to] provide internal security for each location as specified in individual task orders" (R4, tab 1 at G-43). 3. On 25 July 2010, SolicitationNo. W91B4L-10-R-0230 was released seeking quotes for a contractorto provide "all labor, tools, materials, equipment, personnel and all other services requiredtoprovide

...: PRIVATE SECURITY CONTRACTOR (PSC) SERVICES" at COB BlackhawkVehicle Holding Area (VHABlackhawk) in Kandahar Province, Spin Boldak, Afghanistan (R4, tab 61 at G-415, tab 62). The solicitation notice provided: This is [a] firm-fixed priceprocurement and will be procured using commercial itemprocedures and award selection will be made based on lowestprice, technically acceptable. (R4, tab 61 at G-415) Quotes were due no later than 2 August 2010 (R4, tab 63 at G-504). 4. On 13 August 2010, U.S. CENTCOM Contracting Command, sent an email withthe subject line, "Requestfor Quote" to the three contractors underthe IDIQ contract (R4, tab 65; app. reply br., ex. 1, (Smith decl.)**~** 3). The email stated, in part: This will be awardedto the LPTA vendor under their IDIQ award. So it will be a TO offyour IDIQ ifawarded. Closing for this RFQ is 19 1200 AUG 10. Please ensure that your quote is broken down into CLINS. Belowis the minimumthat I need, you may break it down more ifyou wantto. 0001 ASG Guards 0002 DBA Insurance 0003 CompoundEstablishment/Mobilization Costs I also needto know the mobilizationtime for this requirement. We require services to be in place NLT 15 SEP 10. (R4, tab 65) The email included an attachment entitled "STATEMENT OF WORK (COB Blackhawk)." The statement ofwork document was not included in the appeal record. The parties bothreference the language ofSolicitationNo. W91B4L-10-R-0230 in theirbriefs when discussing the clauses ofthe RFQ. However, EI did notrespond to the solicitation (Smith decl.**~** 3), and appellant'spersonnel's declarations stated that the statement ofwork emailedto the IDIQ contractors did not include any ofthe typical clauses found in solicitations such as the site visit clause (Smith decl.**~** 3; app. reply br., ex. 2, (Donohue decl.)**~** 4). The solicitation released on 25 July 2010 did include FAR

2clauses (R4, tab 62). We find that the statement ofwork emailed to the IDIQ contractors was notthe same as the solicitation. 5. By email dated 17 August 2010, EI submitted a request for clarification with respect to a few task order solicitations. The email stated, in part:

(R4, tab 7) 1. Camp Nathan Smith, COB Blackhawk: The SOWs state that there will be no life supportrequirements on either contract. Please confirm that ASG [Afghan Security Guards] are expected to travel from theirhomes to the site for each work shift?

6. The contracting officer (CO) responded by email on 18 August 2010. He stated:

(R4, tab 7) Yes, ASG are expected to travel from their homes to the site for each work shift. Only the Site Coordinator and Site Commander will be provide[d] life support onthe FOB. (Governmentbilleting and DFAC)

7. EI submitted a proposal in response to the emailedrequest for quote. The technical proposal stated, in pertinentpart: BILLETING The Off eror notes thatbilleting will be providedbythe Government for the Expatriate Security Coordinator and Site Commander. The Offeror works to the assumption that daily travel is possible for the Afghan Guards. Should the security system deteriorate to apointwhere daily travel is notpossible, Offerorwould seek a modification to provide for billeting. (R4, tab 68 at G-528) 8. EI was awarded Task OrderNo. 3D01, on 8 September 2010 (R4, tab 9). The front sheet ofthe task order award marks Box 28, whichprovides:

3(R4, tab 9) CONTRACTOR IS REQUIRED TO SIGN THIS DOCUMENTAND RETURN 

### l COPIES TO ISSUING OFFICE. CONTRACTORAGREES TOFURNISH AND DELIVERALL ITEMS SETFORTH OR OTHERWISE IDENTIFIED ABOVE AND ONANYADDITIONAL SHEETS SUBJECT TO THE TERMS AND CONDITIONS SPECIFIED HEREIN. REF: Quote provided on 19 Aug 10[.]

9. The task orderrequires EI to provide 68 total personnel, including 1 security coordinator, 1 site commander, 3 shift commanders, 3 communication specialists and 60 security guards for 12 months plus one 6-month option (R4, tab 9 at G-93-94, 99). The contract line item numbers (CLINs) for private security contract services and mobilization costs are firm-fixed-price CLINs. Onlythe CLINs for DBA insurance are marked as cost CLINs with the actual amount to be determined based upon the amount of the Rutherford invoice. (R4, tab 9 at G-93-95) 10. Ofparticular importance to this dispute, the task order includes terms addressing the recruitment and maintenance ofsecurity personnel. The task orderprovides: 11. ACCOMODATION AND MEALS: 11.1. The Government will notprovide a billeting area at the VHA. There will be no billetingrequirements for this contract for any security personnel. 11.2. The Governmentwill provide an RLB in the VHA for office space for command and control during the length ofthe contract. Contractor will be responsible for maintaining the office buildings

.... 11.3. The Government will notprovide meals for security personnel. The Contractor is responsible for providing all meals to the security personnel.

... 11.4. The government will provide bottled water. 11.5. The government will provide adequate latrine service.

416.3 RECRUITING, HIRING AND STAFFING PROCEDURES The Contractor should maximize the employment ofcurrent guards at each location. To do so, the Contractor shall give the right offirst refusal to at least 75% ofthe current local PSC workforce. In addition, the Contractoris encouraged to hire a minimum 75% ofits guard force from within a 50 kilometer radius ofthe location requiring security. (R4, tab 9 at G-105, -107) LTC Mote was the CO for the Kandahar region and was responsible for reviewing El'sproposal (gov'tbr., ex. 1, (Mote decl.) 

### ,-i,-r 2-3). However, he did not sign the contractbecause the contract exceeded his warrant (Mote decl. 

### ,-r 4). According tothe declaration ofLTC Mote, "the parties tothe contract understood that Edinburgh would hire guards from the local population, with the exception ofsupervisory personnel" and that EI's guards "would travel to and from the worksite each day" (Mote decl. 

### ,-i,-r 5-6). This is consistent with the assumptionprovided inEI'sproposal (finding 7). Accordingly, we find that atthe time ofcontract award, the parties thought that security personnel would be able to travel from their homes to work. 11. Duringthe beginningphase ofcontract performance, EI experienced difficulties in recruiting local Afghanis to serve as security personnel. EI determined that local personnel could not be recruited unless EI bribedthe local leader ofthe Afghan National Border Police (ANBP), a colonel, who policed local roads. Hiring of local guards withoutthe colonel's approval would have placedpersonnel in danger of extortion orphysical harm from the ANBP. (R4, tab 78; Smith decl.**,-r~** 7-8) EI determined that working with the community leaders wouldputEI in breach ofother terms ofthe task order and U.S. law (R4, tab 78). 12. Apparently, due to concerns about the colonel's actions, EI chose to pursue the billeting ofsecurity personnel on base (Smith decl.**~~** 11, 13; Donohue decl.**~** 11). In October 2010, EI began discussions with the CORand the Force Protection Officer, CPT McMorris, aboutpotential areas where EI could house the guard force it was hiring from outside the local population (gov'tbr., ex. 3, (McMorris decl.)**~** 6). By email dated 25 October 2010, CPT McMorris requested a status update regarding how EI intended to proceed with staffing the task order. He stated: What is EI doing regarding housing for guards for VHA? Are you renting some land offVHA? Here is the Course ofActions that we see: COA 1

- EI renting lodging area somewhere in vicinity

5COA 2

- EI buys tents and puts in VHA COA 3

- EI buys generator, AC unit and US Gov finds a tent (we have discuss[ed] this and see ifit is even possible). I am going to run this by contracting and SJA. Ideas? Lets pick a COA and get it done. COA 3 is notpromised, it is an option we can look at with legal and contracting if everyone wants that option. EI responded:

(R4, tab 76) As per our initial meeting when we discuss[ed] setting up the man camp for the ASG. I believe I inform[ed] you then that it wasn't included in the contract but I agreed it was a good ideathat we keep most ofthe ASG on site to ensure they are they [sic] for work. I informed our international office in Dubai ofchange and receivedthis reply[:] "Ifguards are to stay on the FOBNHA, that definitely requires a contract mod. The SOW specifically required that the guard force could not stay on the site

- this is very unusual, butwe clarified it withthe contracting officer and they stuckto it so ifthis changes we have to have a chance to price it in

..." I informed David Bernier ofthis to inform the CORand he said that the Army wasn't willing to modify the contract. We are willing to do this, however, there is a cost involved that we have to add to the contract.

13. EI recruited security personnel from outside the local population to work at VHABlackhawk (Donohue decl.**~** 11; Ramirez decl.**~** 4). EI was also able to recruit some local residents to work as security personnel (Smith decl.**~** 13). EI set up tents in VHA Blackhawkto house its security personnel (gov'tbr., ex. 2 (Deering decl.)**~** 6). All security personnel, whether local ornot, were billeted at VHABlackhawk in the tents set up by EI (Smith decl.**~** 13).

614. EI submitted a modification proposal to the CO on 28 December 2010 stating "As you know, the rollout ofthe services at VHA Blackhawkhas been very challenging for a number ofreasons.... We have developed the attached proposal to address these problems." (R4, tab 79) The proposalprovided, in pertinentpart: Since [the task order] award, a number ofplanning factors have changed that have rendered the Government's original concept ofoperations, as expressed in the Statement ofWork, untenable. Edinburgh International seeks a modification to the task order, to take into account factors that were not accounted for in the original Statement ofWork (SOW).



### 2. Local labor monopoly and corrupt hiringpractices for local staff. The undue influence ofcertain Afghan security forces personnel in Spin Boldakmeans there is an effective monopoly on local labor

....

4. 

### EI proposed solution: Addrecruits from outside the immediate site area to reduce undue influence on the guard force, while also paying higherrates to attract reliable labor force.



### 7. Requirementto provide a Life SupportArea (LSA) for guards on the VHA site. The SOW (section 11.1) specifically stated that no billeting would be required or allowed onthe VHA site. Due to the employment of guards from outside ofthe local area, it is clearthat the concept ofsecurity guards returningto theirhomes while offduty is notworkable at this site. The distance to travel would significantly detract from the ability to reinforce the guards on duty and repel a determined attack on the site. Therefore a secure LSA must be provided, meeting the standards ofthe US Army Sandbook and the other standards contained within the SOW. Such a facility will require a full suite ofliving and eating quarters, storage, and laundry and ablution facilities.

7Note: Due to the urgency of the requirement Elhas already begunprocuring life support facilities and equipment. Elhas undertaken this 'at risk'since the existingcontractdoes notprovidefor such facilities.

14

....The changes proposed in this modification will enhance the security ofthe site by reducing the negative influence ofexternal personnel andproviding an independent, committed and capable guard force with expatriate supervision to ensure the highest standards. (R4, tab 12 at G-158-60) 15. Byemail dated 20 July 2011 the administrative contracting officer (ACO) requested background and documentation concerningEl's alleged out-of-scope work (R4, tab 29). EI responded by email dated 21July2011. El'sresponse was largely a reiteration ofits earlier accounts but added that upon realizing that "having guards live offsite was totally unworkable[, the COR] insisted that the contractor was to provide a life support area." (R4, tab 30) 16. Earlier, Command decidedto close VHA Blackhawk. EI was notified of the decision by email dated 9 July 2011. (R4, tab 24) Accordingly, the CO determined that he would not exercise the option ofEl'stask order (R4, tabs 24, 26). 17. EI submitted a "request for an adjustment upon the closeout ofthe VHA Blackhawk contract" to the ACO by email dated 27 September 2011. The request sought the following closedownprice adjustments: Item Cost Mobilization $ 4,447.94 Life SupportEquipment $131,741.46 Life Support $ 14,936.78 Material Resupply $ 13,359.67 Total $164,485.85 Mobilization Costs include the costs ofmobilizing the additional necessary Life Support items that were not included in the original priceproposal. Life SupportEquipmentincludes items such as tents, bedding, showers and latrines, HV AC, generator, and other costs incurred in the establishment ofthe life support area. 8Life Support Costs are the daily operational costs incurred to provide life supportto the guard force and includes costs such as food and fuel for cooking, potable and non-potable water supply. Material Resupply Costs include costs such as maintenance ofthe generator, black and grey water removal, and septic services. (R4, tab 39 at G-316, -328) 18. The government denied El's request by letter dated 23 December 2011 (R4, tab 45). 19. EI resubmitted its request as a certified claim in the amount of$164,485.85 by letter dated 22 March 2012 (R4, tab 47). The CO acknowledged receipt ofthe claimthe same day (R4, tab 102). 20. EI filed a notice ofappeal from the deemed denial ofits claim with the Board on 6 September 2013. DECISION Appellant argues that EI had a "contractualright to a price adjustment in the event that guards provided underthe contract could not reside at their private homes and commute to VHA Blackhawk on a daily basis" (app. reply br. at 1), and that, therefore, the government's failure to provide a contract modification to adjust the contract price constituted a breach ofthe contractby the government (app. br. at 9-11). The government argues that the language ofthe contract "does notreflect a Government agreement to compensate [EI] for any future billeting costs [it] might incur" (gov'treply br. at 2). To recover on a breach ofcontract theory, appellant must show (1) that the government owed appellant a contract duty, (2) that the government breachedthat duty and caused damage to appellant, and (3) that the damage was reasonably foreseeable at the time ofcontract award. 

### TRSResearch, ASBCANo. 51712, 01-1BCAif31,149 at 153,874. "Appellant bears the burden ofproving its claims by a preponderance ofthe evidence." 

### MA. Mortenson Co., ASBCANo. 53105 

### etal., 04-2 BCA

### if 32,713 at 161,845. Atthe core ofthe parties' dispute is a question ofcontract interpretation concerning whether the government owed appellant a contract duty to provide a price adjustment for billeting costs. "Contract interpretation begins with the plain language of the written agreement." 

### Hercules Inc. v. UnitedStates, 292 F.3d 1378, 1380 (Fed. Cir. 92002). "When interpreting the contract, the document must be considered as a whole and interpreted so as to harmonize and give reasonable meaning to all ofits parts." NVT Techs., Inc. v. UnitedStates, 370 F.3d 1153, 1159 (Fed. Cir. 2004). "In determining the rights and obligations ofthe parties, we look to the entire contract and, ifnecessary, to evidence extrinsic to the contract itself, including the facts and circumstances surrounding the formation and performance ofthe contract." TRW, Inc., ASBCA Nos. 27299, 27602, 87-3 BCA

### if 19,964 at 101,071. We accord considerable weight to the parties' contemporaneous mutual understanding ofhow the contract was to work. C!2, Inc., ASBCA Nos. 56257, 56337, 14-1BCAiI35,698 at 174,781. Examining the plain language ofthe task order, we conclude thatthe billeting of securitypersonnel was outside the scope ofwork ofthe task order. The task orderprovides: 11.1 The Government will not provide a billeting area at the VHA. There will be no billetingrequirements for this contract for any security personnel. (Finding 10) The first sentence concerns only the government and provides that the government will notprovide space at VHA Blackhawkto set up billeting for security personnel. The second sentence states simplythat there is no billetingrequirement. This is reasonably read to provide that neitherthe government nor appellant is required to provide billeting for security personnel. Further examination ofthe pertinent language inthe context ofthe task order as a whole, and the parties' discussions during contract formation, supports our interpretation that billeting was outside the task order's scope ofwork. Billeting is addressed in section 11 ofthe task order, entitled Accommodation and Meals (finding 10). This section establishes which party to the contract will beresponsible for various aspects ofsupport for security personnel. Save for the second sentence of clause 11.1, quoted above, each sentence ofsection 11 specifically identifies one party orthe other (see, e.g., finding 10 ("The Government will notprovide meals for securitypersonnel. The Contractor is responsible for providing all meals to the securitypersonnel.")). The unique construction ofthe second sentence ofclause 11.1, in the context ofthe rest ofsection 11, further supports our interpretation thatthe "no billeting requirements" language applies to both contractingparties. This interpretation is also consistent with the parties' exchange during contract formation, describing that "ASG are expected to travel from their homes to the site for each work shift" (findings 5-6). In this full context, the only reasonable interpretation ofclause 11.1 is that billeting ofsecurity personnel by either contractingparty was not contemplatedbythe task order. During contractperformance, however, EI encountered interference ofa third party, the colonel who ledthe ANBP (finding 11). Due to the influence ofthe colonel over the local population, EI was unable toperformthe contract in the manner it had 10originally anticipated 

### (see findings 10-11). EI recruited security personnel from outside the local population, which meantthat personnel could not return to their homes while offduty (findings 11, 13). Accordingly, despite the contract terms, EI set up tents within VHABlackhawkwhere all security personnel were billeted (finding 13). This action was taken by EI without a contract modification, and there is no evidence thatthe CO directed EI to billet its security personnel at VHABlackhawk 

### (see findings 12, 14-15). The question now before the Board is how did the contract allocate the risk of performance ofthe out-of-scope billeting services.2 There is no question that the task order is a fixed-price contract (findings 4, 9). It is well settled that "therisk ofincreased performance costs in a firm-fixed-price contract, absent a clause stating otherwise, are on the contractor." 

### Chevron U.S.A., Inc., ASBCANo. 32323, 90-1BCA,-r22,602 at 113,426; 

### see also United States v. 

### Spearin, 248 U.S. 132, 136 (1918) ("Where one agrees to do, for a fixed sum, a thing possible to be performed, he will not be excused orbecome entitled to additional compensation, because unforeseen difficulties are encountered."). Everything points to appellant bearing the risk ofthese increased performance costs unless some other language in the contract shifted the risk ofbilleting to the government. The task order incorporates, byreference, appellant's proposal (finding 8). Appellant argues that the language ofits proposal did shiftthe risk ofbilleting costs from appellantto the government (app. br. at 10-11). Appellant's proposal provides:

(Finding 7) BILLETING The Offeror notes that billeting will be provided by the Government for the Expatriate Security Coordinator and Site Commander. The Offeror works to the assumption that daily travel is possible for the Afghan Guards. Should the security system deteriorate to apoint where daily travel is notpossible, Offerorwould seek a modification to provide for billeting.

We do not find that this language canreasonably be read to shift the risk of increasedperformance costs for billeting from appellant to the government. Notably the language does not state that EI is entitled to a price adjustment ifbilleting is required. Rather it states that appellant would seek a modification ifthe circumstances on the ground were different than appellant had anticipated. Contractors are always entitled to seek a modification. Declaring an intention to seek a modification is not the

2 There is no evidence that EI ever declared the contract impossible ofperformance and ofcourse the government did not terminate the contract for default. 11same as establishing that the government will be liable for additional costs ofbilleting should the parties' assumption about how the contract is to be performedbe incorrect. The language, written by appellant, does not establishthatthe government is liable for additional performance costs incurredby EI's billeting ofsecurity personnel. Appellant entered into a fixed-price task order with the government, where recruitment and maintenance ofsecurity personnel was EI's responsibility and it bore the risk ofincreased performance costs resulting from the performance ofthese contractual responsibilities. There is nothing in the contract that convinces us that this risk was shifted to the government.

CONCLUSION The government did not owe appellant a contractual duty to pay for the cost of billeting security personnel at VHA Blackhawk under the task order. Therefore, the government did notbreach the contractby not agreeing to a price adjustment for the additional costs ofbilleting security personnel. Accordingly, the appeal is denied. Dated: 11 January 2016

I concur

12 I concur

RICHARD SHACKLEFORD Administrative Judge Vice Chairman Armed Services Board ofContract AppealsI certify that the foregoing is a true copy ofthe Opinion and Decision ofthe Armed Services Board ofContract Appeals in ASBCANo. 58864, Appeal ofERSM Limited, d/b/aEdinburgh International, rendered in conformance with the Board's Charter. Dated:

13 JEFFREY D. GARDIN Recorder, Armed Services Board ofContract Appeals