Opinion ID: 779643
Heading Depth: 2
Heading Rank: 3

Heading: Insurance Costs.

Text: 66 JMG argues that the liability insurance it purchased was a reimbursable item under the REAM contract which the Board should have included in the amounts it determined were owed under the contract. In its initial decision, the Board noted that Section H-1 of the contract, pertaining to insurance, stated that [t]he premium costs of Insurance required by this contract and other forms of insurance that may be purchased by the Contractor for its protection ... shall be borne by the contractor and will not be reimbursed by HUD. Johnson I, 99-2 BCA at 150,708. Additionally, the Board noted that Proposed Modification No. 8, which would have amended the contract to provide for the reimbursement of insurance costs by HUD, was never agreed to by JMG. Id. As a result, the Board concluded that the contract did not provide for reimbursement of JMG's insurance costs. Id. 67 JMG argued in its motion for reconsideration that the record evidence established an oral agreement between itself and the first contracting officer to the effect that HUD would reimburse it for liability insurance if it would purchase it. See Johnson II, 00-2 BCA at 153,681. The contracting officer testified that she had agreed to add a provision to the contract that would have provided for JMG to be reimbursed for any subcontractor insurance costs that it incurred. However, the contracting officer did not draft such a provision until four months after JMG had purchased the insurance. Id. at 153,682. That provision was introduced, along with a number of other contract amendments, in proposed Modification No. 8, see id., which JMG never signed. The Board concluded that the evidence of record was insufficient to prove that an enforceable oral modification existed. Id. at 153,683. JMG now challenges that determination. 68 JMG does not contest the general rule, upon which the Board relied, that an oral contract may not modify a written contract which is required by regulation to be in writing. 5 See Mil-Spec Contractors, Inc. v. United States, 835 F.2d 865, 869 (Fed. Cir.1987). Instead, JMG argues that the Board failed to apply an exception to that general rule created by J.S. Alberici Construction Co., Inc. v. GSA, GSBCA No. 12,386, 94-2 BCA ¶ 26,776, at 133,169, 1994 WL 65100 (1994). In that case, the General Services Administration Board of Contract Appeals ruled that where the standard form modification, SF-30, was only a mere formality and not a condition precedent to agreement, the failure to complete the written modification did not prevent the court from finding that an enforceable modification was created. Id. at 133,173. Aside from the fact that we are not bound by Alberici, its holding is limited to a narrow set of circumstances and cannot be broadly read, as JMG would have it, to cover all situations in which a contractor and a contracting officer agree generally to a modification but fail to reduce it to writing. As the Board pointed out in its reconsideration decision, the record suggests that details of the reimbursement remained to be worked out after the oral agreement was allegedly reached, including details as to whether JMG was to be reimbursed for general and administrative expenses associated with the insurance. Johnson II, 00-2 BCA at 153,682. The Board stated that 69 there is not sufficient evidence in the record, such as memoranda or other writings which set forth the specific terms of the agreement, or demonstrate a complete consideration of the issues, indicating that the parties viewed the written modification as a mere formality. Furthermore, there was not a sufficient meeting of the minds on the terms of the agreement to definitize it orally. 70 Id. On appeal, JMG does not point to evidence which would suggest that the oral agreement was anything other than a preliminary understanding that the government would, on terms to be decided, reimburse JMG for its insurance costs. Under these circumstances, we are not inclined to view the contemplated written modification agreement as a mere formality. We affirm the Board's decision to exclude JMG's insurance costs from the amount owed it under the contract. 71