The US Civilian Board of Contract Appeals (CBCA) held that, notwithstanding an Incremental Funding/Limitation of Liability clause in a GSA contract for information technology systems support services, the agency was required to reimburse the contractor for invoiced services exceeding the total authorized funding under the contract. DSS Services, Inc. v. General Services Administration, CBCA No. 1093, Apr. 16, 2009. Although the contract was primarily for services, the GSA modified the contract to require the contractor also to provide equipment. Significantly, however, this modification did not add a contract line item (CLIN) against which to charge the equipment costs; the GSA instead simply increased funding at various times in response to requests for equipment. The contractor ultimately submitted invoices totaling $2.65 million for services rendered under the contract’s four CLINs, which was less than $2.96 million in total funding authorized under the contract, as amended. When equipment costs were added, however, the total costs invoiced under the contract exceeded the total authorized funding. As a result, the GSA refused to pay $691,048 of the invoiced services, the amount in excess of the funding ceiling. The GSA asserted that, pursuant to the contract’s Incremental Funding/Limitation of Liability clause, the contractor should have stopped work once the total amount payable by the GSA under contract, including for both services and equipment, reached the total authorized funding. However, the CBCA determined that, had the GSA not used contract funds to pay for equipment that had not been allocated to a specific CLIN, the total funding under the contract would have been sufficient to cover all of the invoices for services rendered under the CLINs. “The fact that the Government failed to properly charge equipment against a CLIN cannot be the basis for refusing to pay [the contractor] for services properly rendered under the contract.” The CBCA therefore held that the contractor was entitled to payment of the $691,048 in invoiced services which the GSA refused to pay, plus interest.
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