               ARMED SERVICES BOARD OF CONTRACT APPEALS

Appeal of--                                  )
                                             )
CAE USA, Inc.                                )      ASBCA No. 58006
                                             )
Under Contract No. FA8223-10-C-0013          )

APPEARANCES FOR THE APPELLANT:                      Joseph P. Hornyak, Esq.
                                                    Alexander B. Ginsberg, Esq.
                                                     Holland & Knight LLP
                                                     Tysons Corner, VA

APPEARANCES FOR THE GOVERNMENT:                     Col Jennifer L. Martin, USAF
                                                     Air Force Chief Trial Attorney
                                                    Christopher M. McNulty, Esq.
                                                     Trial Attorney

                 OPINION BY ADMINISTRATIVE JUDGE CLARKE

        In a decision issued on 23 May 2013, the Board granted partial summary judgment to
the Air Force and dismissed the majority of CAE USA, Inc's (CAE) arguments. CAE USA,
Inc., ASBCA No. 58006, 13 BCA ~ 35,323. However, the Board left the case open for the
parties to deal with CAE's argument that the Service Contract Act placed an affirmative duty
on the contracting officer (CO) to provide a complete collective bargaining agreement
(CBA) to bidders and that the CO failed to discharge that duty. It was undisputed that the
CBA provided by the CO referred to but did not attach the predecessor contractor's corporate
benefit program guide that identified fringe benefits not detailed in the CBA. It was also
clear that CAE was aware that the CBA did not include details of these fringe benefits, that
CAE failed to inquire about these fringe benefits and instead based its bid on its estimate of
what those benefits would cost. When CAE realized that the benefits were greater than it
accounted for in its bid, it paid the increased benefits and filed a claim resulting in this
appeal. We remanded the appeal to the parties to brief these remaining issues. The parties
elected to submit the appeal on the record under Board Rule 11. The Board considers
entitlement only. The Board has jurisdiction pursuant to the Contract Disputes Act of 1978
(CDA), 41 U.S.C. §§ 7101-7109. While we assume familiarity with our decision on the
motion for summary judgment (MSJ), its Statement of Facts (SOF) were for purposes of the
motion only and thus some are repeated herein along with new findings to incorporate
additional evidence accompanying the Rule 11 submissions.
                                  FINDINGS OF FACT

        1. On 6 November 2009, the government posted Solicitation No. FA8223-1 0-R-50094,
entitled "KC-135 Aircrew Training System (ATS) Re-compete" on the Federal Business
Opportunities website (R4, tab 3). The Request for Proposal (RFP) called for services in
support ofthe KC-135 ATS at thirteen Air Force bases worldwide (R4, tab 4). The RFP
contemplated the award of a firm fixed-price contract with a three-month "ramp-up" period, a
one-year base period and nine one-year option periods for a total often years (R4. tab 4 at
5-201, 204).

     2. The CO for the RFP, Lance Hardman, was the CO for the incumbent KC-135
ATS contract, which at the time had been held by FlightSafety Services Corporation
(FSSC) for approximately 15 years (app. hr., ex. A, Hardman dep. (Hardman dep.), tr. at
18).

       3. On 1 March and 1 April2010 respectively, FSSC executed new CBAs for the
three-year period ending in 2013 (R4, tabs 11 at 3, 63) and because the CBAs originally
posted to the RFP website were expiring, Hardman thereafter contacted his counterpart at
FSS~, Candace Tomlinson, to obtain the updated CBAs to post. Hardman asked
Tomlinson for the CBAs and for "those things that would have an impact on cost."
(Hardman dep., tr. at 38-40)

       4. On 26 April2010, by RFP Amendment No. 0006, the relevant FSSC CBAs
were incorporated into the solicitation (R4, tab 11). The CBAs provided by Air Force
CO Hardman to CAE included Article XVII which provided that the employees "shall
continue to fully participate in and be entitled to the Employer's Corporate Benefit
Program including the 401 (k) program applicable to program employees not subject to
collective bargaining agreement" (R4, tab 11 at 33, 93). It also included Article XVIII
which allowed employees to "buy Purchased Time Off (PTO) to supplement
Vacation ... through the use of the Flexible Benefits Program with Flex Credit Dollars."

        5. The CBAs did not include details ofthe incumbent contractor's Corporate
Benefit Program (R4, tab 11; gov't MSJ reply hr., attach. 1, Hardman decl. (Hardman
decl.) at 3, ~ 7). The CBA's table of contents listed attachments A (seniority dates), B
(hours of work and pay), C (paid time off), and D (unpaid time off) (R4, tab 11 at 4-5, 42,
45, 49, 58). The CBA provided to CAE included attachment A, but not attachments B, C,
and D.

        6. In his deposition, Mr. Hardman testified that when he received the CBA he
noticed that attachments B through D were not included and asked FSSC for them.
Ms. Tomlinson stated that attachments B through D were company policies that did not
affect cost and as such would not be provided. (Hardman dep., tr. at 45-46). Attachments
B, C, and D did not contain any cost information that would assist a bidder in determining


                                            2
how much FSSC was paying for these benefits (Hardman decl. at 4, ~ 8). FSSC's Users'
Guide to the Benefits Program included details of the fringe benefits paid to employees that
were not disclosed in the CBA (R4, tab 7 at 1, 5, 10).

         7. In an internal email, dated 10 November 2009, Mr. Jim Ward, CAE, wrote:

               Teri attached is a summary of the WRAP Rates for the
               KC-13 5. The [sic] was very little information on benefits
               included in the CBA's. The CBA provides for 11 holidays
               per year and a normal vacation schedule. The CBA's did not
               list the costs of health insurance, disability insurance, 401 K
               contribution, etc. Therefore I used $4.25 per hour as cash in
               lieu, same rate we employ at Little Rock.

(Gov't MSJ reply hr., attach. 3) 1

         8. Appellant's proposal included the following:

                      Labor Fringe

                       Labor Fringe includes vacation, holiday, sick, jury
               duty, military leave, bereavement, and excused absence for
               direct employees, employee health benefits, FICA, FUTA,
               SUTA, Unemployment Tax, Workmen's Compensation,
               401(k) match, Short Term Disability (STD) and Long Term
               Disability (LTD). Under our DCAA audited accounting
               system, these costs are pooled and allocated to all CAE
               programs/proposals as a percentage factor applied to direct
               labor.

(R4, tab 6 at 9)

       9. Contract No. FA8223-10-C-0013 for the Aircrew Training System (ATS)
requirement was awarded to CAE on 31 August 2010 (R4, tab 1).

        10. In a 7 January 2011 email to CO Hardman, Ms. Lowe, CAE, wrote:

                     I wanted to give you a heads up that we have
               discovered that the CBAs that were provided as part of the

1
    Attachment 3 included protective markings on the email and attached rate data.
        Pursuant to concurrence of appellant in its 16 April 20 13 email, the Board
        removed and shredded the rate data and cancelled the markings on the email.

                                              3
               RFP were not complete (i.e., did not [sic] attachments).
               During our meeting earlier this week with the Union, these
               missing attachments were provided. A quick review indicates
               the attachments contain additional benefits. [21 We are in the
               process of thoroughly assessing the impact. We will provide
               formal notice to you, including the cost delta, no later than
               COB next Thursday (January 13th).

(R4, tab 18)

        11. On 28 June 2011, CAE submitted a Request for Equitable Adjustment (REA)
to the CO for $668,094 3 in additional benefits that were not identified during the RFP
phase by the government. The REA contains a certification that does not appear to meet
all the requirements ofthe CDA. (R4, tab 29) On 20 December 2011, the CO denied the
REA. The CO's letter did not identify itself as a final decision and did not contain any
appeal rights language. (R4, tab 32) On 19 January 2012, CAE disagreed with the co·s
20 December letter and requested a meeting to discuss the matter (R4, tab 34). On
30 January 2012, the CO denied CAE's request for a meeting and stated that his denial of
the REA was final (R4, tab 35). On 17 February 2012, CAE filed a corrected CDA
certification of the 28 June 2011 REA with the CO (R4, tab 36). On 23 February 2012
CAE filed a notice of appeal from the CO's 20 December 2011 denial with this Board.
The appeal was docketed on 24 February 2012. (Bd. corr. file) Neither party has
questioned our jurisdiction.

         12. The successor contractor provision of the Service Contract Act provides:

                     (c) Preservation of wages and benefits due under
               predecessor contracts.-

                      ( 1) In generaL-Under a contract which succeeds a
               contract subject to this chapter, and under which substantially
               the same services are furnished, a contractor or
               subcontractor may not pay a service employee less than
               the wages and fringe benefits the service employee would
               have received under the predecessor contract, including
               accrued wages and fringe benefits and any prospective
               increases in wages and fringe benefits provided for in a

2
    This statement is inaccurate. The missing attachments did not include benefit
         information that was in the Corporate Benefits Program Guide (finding~ 1).
3
    The amount of the REA is apparently contained in attachments to the REA that are not
         in the record. The amount stated in the finding comes from CAE's 17 February
         2012 filing with the CO.

                                              4
                collective-bargaining agreement as a result of arm's-length
                negotiations. [Bold added]

41 U.S.C. § 6707(c)(1).

         13. The Federal Acquisition Regulation (FAR) includes the following:

                      FAR 22.1008-2 Section 4( c) successorship with
                incumbent contractor collective bargaining agreement.

                          (a) Early in the acquisition cycle, the contracting
               officer shall determine whether section 4(ci41 ofthe Act
               affects the new acquisition. The contracting officer shall
               determine whether there is a predecessor contract covered by
               the Act, and if so, whether the incumbent prime contractor or
               its subcontractors and any of their employees have a
               collective bargaining agreement.



                          (d)( 1) If section 4( c) of the Act applies, the
               contracting officer shall obtain a copy of any collective
               bargaining agreement between an incumbent contractor
               or subcontractor and its employees. Obtaining a copy of an
               incumbent contractor's collective bargaining agreement may
               involve coordination with the administrative contracting
               officer responsible for administering the predecessor contract.
               (Paragraph (m) of the clause at 52.222-41, Service
               Contract Act of 1965, requires the incumbent prime
               contractor to furnish the contracting officer a copy of
               each collective bargaining agreement.)

                          (2) If the contracting officer has timely received
               the collective bargaining agreement, the contracting officer
               may use the WDOL website to prepare a wage determination
               referencing the agreement and incorporate that wage
               determination, attached to a complete copy of the collective
               bargaining agreement, into the successor contract action. In
               using the WDOL process, it is not necessary to submit a copy


4
    Section 4(c) of the original SCA is the successor contractor provision now at 41 U.S.C.
         § 6707(c)(1).

                                              5
            of the collective bargaining agreement to the Department of
            Labor unless requested to do so.

                      (3) The contracting officer may also use the e98
            process on WDOL to request that the Department of Labor
            prepare the cover wage determination. The Department of
            Labor's response to the e98 may include a request for the
            contracting officer to submit a complete copy of the
            collective bargaining agreement. Any questions regarding
            the applicability of the Act to a collective bargaining
            agreement should be directed to the agency labor advisor.
            [Bold added]

      The contract incorporated by reference FAR 52.222-41, SERVICE CONTRACT ACT
OF 1965 (Nov 2007) which provided in part as follows:

                           (f) Successor Contracts. Ifthis contract
            succeeds a contract subject to the Act under which
            substantially the same services were furnished in the same
            locality and service employees were paid wages and fringe
            benefits provided for in a collective bargaining agreement, in
            the absence of the minimum wage attachment for this contract
            setting forth such collectively bargained wage rates and fringe
            benefits, neither the Contractor nor any subcontractor
            under this contract shall pay any service employee
            performing any of the contract work (regardless of
            whether or not such employee was employed under the
            predecessor contract), less than the wages and fringe
            benefits provided for in such collective bargaining
            agreement, to which such employee would have been
            entitled if employed under the predecessor contract,
            including accrued wages and fringe benefits and any
            prospective increases in wages and fringe benefits provided
            for under such agreement. ...



                      (m) Collective Bargaining Agreements Applicable
            to Service Employees. If wages to be paid or fringe benefits
            to be furnished any service employees employed by the
            Government Prime Contractor or any subcontractor under the
            contract are provided for in a collective bargaining agreement
            which is or will be effective during any period in which the


                                          6
              contract is being performed, the Government Prime
              Contractor shall report such fact to the Contracting
              Officer, together with full information as to the
              application and accrual of such wages and fringe benefits,
              including any prospective increase, to service employees
              engaged in work on the contract, and a copy of the collective
              bargaining agreement. Such report shall be made upon
              commencing performance of the contract, in the case of
              collective bargaining agreements effective at such time, and
              in the case of such agreements or provisions or amendments
              thereof effective at a later time during the period of contract
              performance such agreements shall be reported promptly after
              negotiation thereof. [Bold added]

                                       DECISION

Contention of the Parties

        CAE, using the doctrine of superior knowledge as a template, contends that the
SCA and implementing regulations (Federal Acquisition Regulations "FAR") imposed
upon CO Hardman an obligation to supply all offerors "all information regarding the
amount of wages and fringe benefits that the predecessor contractor had agreed to in the
subject collective bargaining agreements" (app. br. at 2). CAE argues that the remedy for
the CO's breach of this obligation is compensation for the additional fringe benefit costs
it incurred but were not included in its bid.

       The Air Force contends that the SCA and FAR do not impose an "affirmative duty
for a contracting officer to seek out wage or fringe benefit information that may be
missing from a collective bargaining agreement" (gov't br. at 1). To do so, it argues, "is
simply too great a burden" and "is akin to strict liability" (gov't br. at 5, 6). The
government also argues that normal law creating a duty to inquire when a patent
ambiguity exists should apply (gov't br. at 8).

Analysis

        The facts are undisputed. The CO provided CAE a copy of the relevant CBA, but
all the details relevant to the existing fringe benefits were not contained in the CBA,
including its attachments. The CBA stated that employees would participate in FSSC's
corporate benefit program, but the details of that program were not in the CBA (finding
~ 5). CAE was aware that it did not possess these details, but did not inquire of the
government about this matter and instead made its own assumptions and used a cost
estimate in its bid (finding~ 7). After contract award, during negotiations with unions,
CAE obtained the missing information on the fringe benefits and realized that the


                                            7
estimate used in its bid understated the actual fringe benefits provided in FSSC's
corporate benefit program (finding~ 10). As required by law, CAE paid the higher fringe
benefits and filed this claim to recover the increased costs.

       We approach our analysis in two parts: (1) does the SCA/FAR impose a duty on
the government to provide a complete CBA to bidders; and, (2) if so, does CAE's failure
to advise the government of the CBA's incompleteness and decision to bid on its
undisclosed assumptions preclude it from recovery? We take these in order.

Duty to Provide A Complete CBA

        Following the requirements ofFAR 22.1008-2 5 (finding~ 13), the CO obtained
the relevant CBAs and incorporated them into the solicitation (finding~ 1) to establish
the wage and fringe benefits necessary for any follow-on contractor to FSSC to pay to
comply with the SCA, 41 U.S.C. § 6707 (c)(l) (finding~ 12). There can be no
reasonable doubt that pursuant to FAR, it was the responsibility of the CO to provide a
complete CBA and that the CBA provided was not complete. 6 Without the details of the
FSSC fringe benefit program that was referenced in, but not provided with the CBA,
offerors could not ascertain the amount of the wage and fringe benefits that were required
by the RFP, pursuant to the SCA and FAR.

Duty to Inquire

        It is equally without doubt that CAE knew the CBA did not contain the complete
information necessary to determine what the full wage and fringe benefit amounts
necessary to comply with the SCA and FAR were (finding~ 7). Its choice, when faced
with this situation, was either make assumptions to formulate its bid 7, or inquire of the
government for the complete information. Having chosen to submit an offer on the basis
of its own assumptions, without notice to the government of the incompleteness of the
CBA or what CAE's assumptions were, it cannot now be heard to complain that its
assumptions were not correct. We are of the view that this appeal is similar to our line of
cases dealing not with contract provisions that are difficult to interpret due to an
ambiguity, but those that have relevant information missing. Cambridge Marine
Industries, Inc., ASBCA No. 37355,91-2 BCA ~ 23,894, aff'd, 951 F.2d 1266 (Fed. Cir.


5
    We conclude that the FAR's requirement that the CO provide a complete CBA and
        provide it to bidders is intended to benefit contractors.
6
    Since the CBA incorporated the fringe benefit program by reference, we do not
        consider it "complete" without that benefit information.
7
    Of course, neither the SCA nor FAR contain any requirements as to what amounts an
        offeror puts in its offer. They dictate what amounts shall be paid to the employees
        performing the contract work.

                                              8
1991) (table). 8 There is nothing in the SCA or the FAR that would require the
government to become the indemnitor for any difference between appellant's offer with
respect to wages and fringe benefits and their eventual cost that resulted from the CBA' s
incompleteness when CAE knew of such incompleteness and failed to notify the
government, nor is the government the guarantor ofthe correctness ofCAE's
assumptions when it failed to inquire regarding these assumptions. 9

                                       CONCLUSION

         In accordance with the foregoing, we deny the appeal.

         Dated: 27 January 2014




                                                   Administrati e Judge
                                                   Armed Services Board
                                                   of Contract Appeals

I concur                                           I concur



~44 ~KLEFORD
Administrative Judge                               Administrative Judge
Acting Chairman                                    Acting Vice Chairman
Armed Services Board                               Armed Services Board
of Contract Appeals                                of Contract Appeals



8
    Moreover, the parties' arguments over whether the missing information amounts to a
        patent or latent ambiguity are not material since CAE had actual knowledge of the
        omission.
9
    The integrity of the bidding process would suffer if it were allowable for one offeror to
        recognize that needed information was omitted from the RFP and fail to advise the
        government and make its own assumptions, relying on the government to make it
        whole if its assumptions were wrong. We have no doubt that if CAE' s
        assumptions resulted in the amounts in its offer exceeding the CBA' s wage and
        fringe benefit amounts, CAE would not be insisting on refunding that amount to
        the government.

                                               9
        I certify that the foregoing is a true copy of the Opinion and Decision of the
Armed Services Board of Contract Appeals in ASBCA No. 58006, Appeal of CAE USA,
Inc., rendered in conformance with the Board's Charter.

      Dated:



                                               JEFFREY D. GARDIN
                                               Flecorder,Armed Services
                                               Board of Contract Appeals




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