Opinion ID: 2513995
Heading Depth: 4
Heading Rank: 2

Heading: Quality's separate demobilization theory

Text: Despite Quality's standard practice of charging demobilization costs for one job to its next job as mobilization costs, [7] Quality argues that in this case it should receive $161,581 (before markups) for demobilization as part of a $767,067 award for mobilization and demobilization costs. Quality claims that its normal policy regarding demobilization was inapplicable to the Chena project because the termination left Quality without a new job to which to charge $166,027 in demobilization costs. The state responds that it is beyond dispute that: (1) [Quality] charges demobilization costs from one project as a mobilization cost to its next project, and (2) [Quality] did not follow this policy in preparing its claim for the Chena project. The state further argues that federal cost accounting principles support the hearing officer's application of Quality's stated demobilization policy. [8] The hearing officer relied on the state auditor's report, which states that it is common in the highway construction industry to charge [d]emobilization costs ... as mobilization costs of the next project. This finding is consistent with Quality's stated policy about how it treats demobilization costs. Although the termination was unexpected, it was a foreseeable possibility when Quality bid on the state's project. Quality had an opportunity when it submitted its bid to make allowance for the risk that the state would terminate the project, and the consequences to Quality. We hold that the industry standard and Quality's own policy regarding demobilization costs constitute substantial evidence supporting the hearing officer's decision to deny Quality additional demobilization costs.