Opinion ID: 2766848
Heading Depth: 4
Heading Rank: 2

Heading: Reimbursed.

Text: 48 C.F.R. § 52.229-3 (emphasis added).2 But the Subcontract also incorporates FAR 52.229-1, which states: State and Local Taxes (APR 1984) Notwithstanding the terms of the Federal, State, and Local Taxes clause, the contract price excludes all State and local taxes levied on or measured by the contract or sales price of the services or completed supplies furnished under this contract. The Contractor shall state separately on its invoices taxes excluded from the contract price, and the Government 1 The Subcontract actually lists Government Acquisition Regulation 52.229-6, but the district court and both parties agree this is a scrivener’s error, and that the correct provision on Federal, State and Local Taxes is 52.229-3. We therefore include provision 52.229-3, rather than 52.229-6 in our description of the Subcontract. 2 The omitted language from 52.229-3 defines various terms, excludes trivial tax increases, and addresses federal taxes that may be imposed after the parties have agreed to the contract, excise taxes, and the consequences of failing to provide notice. -5- agrees either to pay the amount of the taxes to the Contractor or provide evidence necessary to sustain an exemption. Id. § 52.229-1 (emphasis added). In summary, neither the Subcontract itself nor Exhibit C, the Pricing Proposal, expressly discusses sales tax. Instead, they both identify a specific dollar amount as the amount proposed to perform the Subcontract and the amount allocated to the Subcontract. The Subcontract further provides that Low Voltage “shall not be obligated to reimburse the Subcontractor for any costs in excess of the total amount then allotted to the Subcontract . . . .” J.A. 301–302. But the Subcontract also incorporates Exhibit A, the Fort Meade Statement of Work, which in three places states the contract price is exclusive of sales taxes and the amount of any sales tax paid or to be collected by Diebold will be paid by the “Customer.” Finally, the Subcontract incorporates by reference two FAR provisions: FAR 52.229-3, which states the contract price is inclusive of sales tax, and in apparent contrast, FAR 52.229-1, which provides that “notwithstanding” FAR 52.229-3, the contract price is exclusive of sales tax. 2. Request for Equitable Adjustment and Pass-Through Agreement Upon completion of its work under the Subcontract, Diebold asked Low Voltage to submit a Request for Equitable Adjustment (REA) to the Government, requesting that the Government reimburse Diebold for additional costs incurred on the project. Low Voltage agreed to submit a Revised REA, pursuant to a Pass-Through Agreement between Low Voltage and Diebold. The Pass-Through Agreement includes two -6- paragraphs relevant to the issues on appeal. The first is found in paragraph 5 of the PassThrough Agreement and contains Diebold’s release of all claims against Low Voltage except for those made in the contemporaneous REA and any then-outstanding invoices: 5. Except for the instant REA and any outstanding invoices and as otherwise provided in this Agreement, Diebold releases, discharges and agrees to hold [Low Voltage] harmless from any and all REAs, demands, charges or claims of any kind or nature whatsoever, from any and all damages, actions or causes of action, either in law or in equity, which it may now have, which are known or unknown by Diebold at the time of execution of this Agreement, that relate to the Project. J.A. 129. Paragraph 6 of the Pass-Through Agreement states that upon resolution of the REA and the payment of Diebold’s outstanding invoices, the release contained in paragraph 5 shall become absolute and final as to all of Diebold’s claims against Low Voltage: 6. It is the purpose of this [Pass-Through] Agreement, except for the conditions set forth above, forever to settle, adjust, and discharge all REAs or claims of whatever kind or nature that Diebold may have accrued against [Low Voltage] which relate to the Project. Upon resolution of Diebold’s REA and final [Low Voltage] payment of Diebold’s outstanding invoices, the release described in Paragraph 5 shall thereupon become absolute and final as to all of Diebold’s claims against [Low Voltage]. Id. Low Voltage submitted the REA on behalf of Diebold, but the Government rejected it. The REA did not include any amounts for sales tax. All the invoices Diebold submitted to Low Voltage as of the time of the Pass-Through Agreement have been paid. -7- 3. Final Release After the Government denied the REA, Diebold submitted final Invoice #082830 to Low Voltage on May 18, 2012 (the Invoice). The Invoice requested a final installment payment of $930,995.43, which, when added to the installment payments previously paid, would total the cumulative total sum of $7,889,051.49 allotted to the Subcontract. In addition, the Invoice sought $470,646.15 in sales taxes Diebold claimed it had paid to the State of Maryland in connection with the project. A few days later, on May 21, 2012, Diebold and Low Voltage executed a Final Release of Claims. Low Voltage then paid $830,995.43 to Diebold—the $930,995.43 installment payment requested in the Invoice minus $100,000 related to warranty issues not at issue in this case—but did not pay the amount invoiced for sales tax. Low Voltage eventually paid the $100,000 it had withheld from the final contract installment, but it refused to pay the $470,646.15 Diebold had requested for reimbursement of sales tax.