DG21, LLC v. Mabus

The Navy's Diego Garcia facility, a 10.5-square-acre Indian Ocean atoll, 1,800 miles east of Africa and 1,200 miles south of India, had no commercial or civilian infrastructure. In 2005, the Navy sought bids on a firm fixed-price contract for Diego Garcia support services, ranging from information technology to refuse collection. For contractor vehicles and equipment, “contractor-furnished fuel,” was to be provided by the Navy at the prevailing Department of Defense rate. DG21 submitted a bid and, for contractor-furnished fuel, arrived at “a significantly lower number of gallons than” reflected in the solicitation. DG21 indicated that if fuel rates varied from historical rates by 10% or more, it would request an equitable adjustment. The Navy clarified that the solicitation was fixed-price, “DG21 assumes the full risk of consumption and/or rate changes. Please price ... accordingly.” The Navy questioned the lack of an escalation clause. DG21 did not change its estimate or pricing, but removed the equitable adjustment reference. DG21’s $455,292,490 proposal was accepted. During the contract term, fuel prices rose dramatically, reaching a maximum of more than double the historical rate indicated in the solicitation. In 2011, DG21 requested an equitable adjustment, characterizing the fuel cost as a $1,171,475.90 contract “change” under FAR 52.243-4. The contracting officer and the Board of Contract Appeals rejected the request. The Federal Circuit affirmed. The cost increase was not a change to the contract triggering FAR 52.243-4; the contract allocated that risk to DG21. View "DG21, LLC v. Mabus" on Justia Law