                ARMED SERVICES BOARD OF CONTRACT APPEALS

Appeal of--                                   )
                                              )
L&M Technologies, Inc.                        )      ASBCA No. 61397
                                              )
Under Contract No. NNJ08JA01C                 )

APPEARANCE FOR THE APPELLANT:                        Ms. Antonette Montoya
                                                      Chief Executive Officer

APPEARANCES FOR THE GOVERNMENT:                      Scott W. Barber, Esq.
                                                      NASA Chief Trial Attorney
                                                     Wendy L. Bateman, Esq.
                                                      Trial Attorney
                                                      NASA Johnson Space Center
                                                      Houston, TX
                                                     Brian M. Stanford, Esq.
                                                     Lisette S. Washington, Esq.
                                                      Trial Attorneys
                                                      NASA Headquarters
                                                      Washington, DC

                  OPINION BY ADMINISTRATIVE JUDGE CLARKE

       This appeal arises out of a contract for logistics operations services for the
NASA Johnson Space Center (JSC), Houston, Texas. The parties dispute the proper
interpretation of a clause dealing with unallowable costs. L&M Technologies, Inc.
(L&M), claims $683,739.31 to account for Defense Contract Management Agency's
(DCMA' s) 2009 final indirect rates. The parties decided to submit this case on the
record pursuant to Board Rule 11. We decide entitlement only. We have jurisdiction
pursuant to the Contract Disputes Act of 1978 (CDA), 41 U.S.C. §§ 7101-7109. We
sustain the appeal.

                                  FINDINGS OF FACT

         1. On December 21, 2007, NASA awarded L&M Contract No. NNJ08JA01C
for logistics operations services for JSC in Houston, Texas, including those facilities at
JSC, Ellington Field, and the Sonny Carter Training Facility (R4, tab Oat 1, 5). The
contract included a 54-day, phase-in period and up to 10 contract years (CYs) 1 of
performance with a combination of cost-plus-fixed-fee, cost-plus-award-fee, and award

1
    To avoid confusion, "CY" stands for "contract year" that runs from March to
         February, not calendar year.
term options (id. at 6). The period of performance for each CY was from March to
February 2 with CY 1 being from March 1, 2008 to February 28, 2009 (id. at 6-8). The
contract year at issue in this appeal, CY 2, accordingly, is March 1, 2009 through
February 28, 2010.

Indirect Rates and Invoices

      2. By letter dated April 28, 2008, the Defense Contract Audit Agency (DCAA)
approved provisional billing rates for L&M' s fiscal year ending December 31, 2008 3 as:

                         Description                  Indirect Rates
               Total FringeC4l                           39.24%
               Overhead                                   9.56%
               G&A                                        5.29%

(R4, tab 6)

       3. On May 4, 2009, L&M submitted its 2009 estimated provisional rates to
DCAA for approval (R4, tab 10 at 2; app. supp. R4, tab 19 at 2). L&M's 2009
estimated provisional rates were: Total Fringe at 41.95%, Overhead at 13.24%, and
G&A at 5.32% (app. supp. R4, tab 15 at 1).

         4. By letter dated May 13, 2009, to contracting officer (CO) Rubio, L&M
documented a telephone conversation between CO Rubio and Mr. Silva, L&M controller,
held on the same day, concerning L&M's indirect rate adjustments for the periods
"CY-2008 (03/01/08-12/31/08) and CY-2009 (Ol/01/09-04/24/09)" 5 (app. supp. R4,
tab 15). Mr. Silva wrote, "After addressing your concerns, I was delighted to hear that you
have given us approval to process the rate adjustment invoices" (id. at 1). L&M billed
2008 provisional rates for both periods: 39.24% Total Fringe, 9.56% Overhead, and 5.29%
G&A. The adjustment invoice for the first period was for the increase in 2008 actual
rates. 6 The adjustment invoice for the second period was for the increase in 2009 estimated
provisional rates of 41.95% Total Fringe, 13.24% Overhead, and 5.32% G&A. (Id.)
Mr. Silva also wrote, "Effective April 25, 2009, the CY-2009 estimated provisional rates
(Fringe 41.95%, 0/H 13.24%, and G&A 5.32%) are incorporated into the invoice and also
into the 533M reporting and will remain in effect until December 31, 2009" (id. at 2).

2
  There seems to be an error in CY 2 that indicates it ends September 30, 2009 (R4, tab Oat 8).
3
  DCAA approved rates for a fiscal year which is different than this contract's CY.
4
  Total fringe is the sum of "statutory fringe" and "full fringe" (R4, tab 6).
5
  In this quote from the letter it appears that L&M's use of "CY-2009" refers to
        calendar year because January and February 2009 are in CY 1.
6
  Although the letter refers to "CY-2008 actual rates" we doubt this is accurate because
        DCAA's approval of actual rates, as opposed to provisional rates, typically is
        not done in the same year.
                                            2
       5. On May 15, 2009, L&M submitted Invoice No. 67 in the amount of $56,820.68
which was the difference between the 2008 provisional rates billed and L&M's 2009
estimated provisional billing rates of 41.95% Total Fringe, 13.24% Overhead and 5.32%
G&A for the period of January 1, 2009 to April 24, 2009 7 (R4, tab 7R at 1-2). On May 28,
2009, CO Rubio rejected Invoice No. 67 because the 2009 provisional rates had not been
approved by DCAA (R4, tab 7S at 1).

       6. In a series of emails to L&M on June 1-2, 2009, DCAA confirmed that
L&M could bill at its 2009 estimated provisional rates before they were formally
approved by DCAA (R4, tab 10 at 2-3). On June 3, 2009, L&M sent DCAA's emails
to CO Rubio and informed him that DCAA had agreed that L&M could submit
invoices using L&M's 2009 estimated provisional rates (id. at 1).

        7. By letter dated July 15, 2009, 8 DCAA approved L&M's provisional billing
rates for the fiscal year ending December 31, 2009 as:

                         Description                  Indirect Rates
               Total Fringe                              41.95%
               Overhead                                  13.24%
               G&A                                        5.32%

(R4, tab lB at 1)

NASA Form 533

       8. L&M submitted monthly NASA Contractor Financial Management reports
on NASA Form (NF) 533. The forms were addressed to "NASA JSC ATTN:
Contracting Officer." The NF 533s for calendar year 2009 document that for each
month except May 2009, L&M billed at the 2008 provisional rates of 39.24% Total
Fringe, 9.56% Overhead and 5.29% G&A. (R4, tab 7Q Jan-Dec 09) For May 2009
L&M billed at the 2009 estimated provisional rates of 41.95% Total Fringe, 13.24%
Overhead, and 5.29% 9 G&A (R4, tab 7Q May 09). The May 2009 NF 533
corresponds with Invoice No. 67 that CO Rubio rejected because DCAA had not
approved L&M' s provisional rates (R4, tab 7S at 1). 10


7
  L&M had billed at the DCAA 2008 provisional rates of 39.24% Fringe, 9.56%
         Overhead and 5 .29% G&A (R4, tab 6).
8
  DCAA's rate decision was based on L&M's May 4, 2009 indirect rate forecast (R4,
         tab lB at 1).
9
  This should have been 5.32% G&A.
10
   It is unclear from the record which rate was actually paid since Invoice No. 67 was
         rejected (R4, 7S at 1), but the NF 533 lists the 41.95%, 13.24% and 5.29% (R4,
         tab 7Q May 09).
                                            3
The May 2010 Correspondence

      9. By email dated May 6, 2010, to L&M "Subject: Logistics Contract:
Actuals - Need response," CO Rubio requested the following:

                (1) Is L&M reporting their provisional billing rates (as
                approved by DCAA around July/August '09) in their 533s?
                (2) Is L&M reporting their provisional billing rates (as
                approved by DCAA around July/August '09) in their
                monthly invoices?
                (3) If the answer is "No" to #2 above when do you plan to
                submit those invoices and approximately how much in
                costs will it be?

                As I have mentioned to L&M corporate folks since a year
                ago, the provisional billing rate increase(s) are L&M's
                actuals and will be measured against the cost gate. Unless,
                L&M chooses to not ever bill those rates against the
                contract.

                Please let me know of the above as soon as you can.

(App. supp. R4, tab 25 at 6)

         10. L&M responded by letter on May 10, 2010:

               Subject: 05/06/10 email Logistics Contract: Actuals - Need
               response

               Dear Kelly,[lll

               This is L&M's response to the subject matter email. Based
               on NASA's direction, L&M is not utilizing 2009
               provisional billing rates in either the 53 3' s or invoices. The
               difference between 2009 costs at '09 vs. '08 provisional
               billing rates is approximately $176,203. L&M is willing to
               submit an invoice to NASA after a formal request outlining
               your desired timeframe and method of 533 handling is
               received.

               L&M attempted to invoice and report on our 533's using
               2009 provisional rates immediately after they were

11
     CO Rubio's first name.
                                               4
             submitted to DCAA on May 4, 2009. It was discussed in
             April, and our May 15, 2009 invoice was based on 2009
             provisional rates. This invoice was rejected on May 29th.
             In a 533 meeting on June 18th and in a subsequent meeting
             with you in Houston on June 30th, we were directed to
             remove 2009 rate true-ups from our 533. Since then we
             understood from a number of conversations that the rate
             adjustments would be dealt with after the REA was
             resolved. We are happy to finally address these
             provisional rates and costs.

             Sincerely,
             Antonette Montoya
             CFO

(App. supp. R4, tab 25 at 7)

       11. CO Rubio responded by email on the same day, May 10, 2010:

              Subject: RE: L&M Technologies response .... RE: Logistics
              Contract: Actuals - Need response

              Antonette-

              I am reviewing your letter and have to say there is a
              miscommunication I'd like for you to clear up for all of us.

              L&M 533's are reporting the following rates (which are
              not the original contract rates) as well as L&M's invoices
              to date:

                  • Fringe at 39.45%
                  • Overhead at 9 .56%
                  • G&A at Sc,129%
              Are these L&M's CY 08 provisional rates? Please
              confirm.

              L&M' s 2009 provisional rates were not even approved by
              DCAA at the time of May 2009 (Invoice 67 dated 5/14/09
              and 70 dated 5/18/09) yet L&M attempted to bill them and
              include them in the REA and I took exception to that.




                                             5
              So do you concur that you are reporting on the 533 and
              invoicing for provisional rates ('08) just not '09 rates?
              What are L&M's '09 provisional rates?

(App. supp. R4, tab 25 at 8) The other emails in this tab do not clearly seem to be L&M's
response to CO Rubio's question about 2008 rates (id. at 9-11). On May 12, 2010,
CO Rubio sent L&M a draft copy of Modification No. 49 for REA definitization (id. at 9).
However, none of NASA's emails challenge the statements in L&M's May 10, 2010 letter
in particular, that the CO had directed L&M not to submit the provisional 2009 rates in the
invoices/NF 533's (id. at 9-11).

Invoice No. 200

       12. On September 14, 2010, L&M submitted Invoice No. 200 a "contract-to-date
adjusting invoice for the period of 03/01/2008 - 08/27/2010" in the amount of
$433,839.01 (R4, tabs 7T, 7U at 2). The invoice amount was comprised of $155,750.44
for 2008, $176,396.17 for 2009 and $101,692.40 for 2010. The cover letter explained that
L&M had previously billed for these years at the 2008 indirect rates of 39.24% Total
Fringe, 9.56% Overhead and 5.29% G&A. (R4, tab 7T) The increase was the result of
L&M asking for 2009 DCAA approved provisional rates of 41.95% Total Fringe, 13.24%
Overhead, and 5.32% G&A. 12 Invoice No. 200 was approved for payment by CO Rubio 13
on September 30, 2010. (R4, tab 7U at 2)

Clause B.8

        13. On February 1, 2012, L&M met with the CO and requested that NASA
establish an indirect rate ceiling on the contract (R4, tab lC at 1). In a May 11, 2012
meeting with NASA, L&M explained that DCAA's rates were higher than L&M's due
to a disagreement over the allocation base (id. ). 14

        14. By email dated January 25, 2013, to L&M, NASA rejected L&M's request
for a rate ceiling and submitted a draft of Clause B.8 allowing L&M to bill NASA at
"rates less than what DCAA has established as acceptable" (R4, tab 9Y).




12
   These are the DCM-approved provisional rates for 2009 and the rates listed in
        Clause B.8 (findings 10, 15).
13
   Although CO Rubio's name is not printed on the voucher, we compared her
        distinctive signature with that on her declaration and they are the same.
14
   For reasons that we need not go into here involving "cost gates," it was to L&M's
        benefit to keep its rates under certain amounts.
                                             6
        15. On or before March 21, 2013, the parties agreed to Clause B.8 which reads
as follows:

             B.8    Agreement on Unallowable Costs

             Without otherwise affecting the applicability of the cost
             principles set forth in Part 31 of the Federal Acquisition
             Regulation, which are a part of this contract pursuant to the
             clause entitled: "Allowable Cost and Payment," the
             following agreements are made as to the reporting and
             billing terms for this contract:

             Provisional and Actual Billing Rates

             For contract years 1 through 5 that the Contractor invoiced
             at indirect rates below the provisional billing rates
             approved by the DCAA, the Contractor shall assume all
             costs in excess of the indirect rates in the table below. Any
             costs incurred above these amounts shall be unallowable
             costs and shall not be billed to the Government under this
             or any other Government contract.

               Contract Year       Full Fringe (FF)    Overhead ( 0 H)        G&A
              Contract Year 1           39.24%             9.56%              5.29%
              Contract Year 2          41.95%             13.24%              5.32%
              Contract Year 3          45.56%             13.24%              6.50%
              Contract Year 4          45.56%             13.24%              6.50%
              Contract Year 5          45.56%             13.24%              6.50%

             Beginning with Contract year 6, at the start of each
             contract year, the Contractor may request to bill the
             Government using indirect rates that are below the
             provisional billing rates approved by the DCAA. The
             Contractor shall inform the Contracting Officer of the
             decision whether to use the provisional billing rates or an
             amount less than the provisional rates. At no time during
             the period of performance of this contract may the
             contractor request to bill the Government at a rate higher
             than the most current provisional billing rates approved by
             theDCAA.

             For contract years 6 through 10 that the Contractor
             invoices at indirect rates below the provisional billing rates
             approved by the DCAA, the Contractor shall assume all


                                             7
              costs in excess of those billed. Any costs incurred above
              amounts invoiced shall be unallowable costs and shall not
              be billed to the Government under this or any other
              Government contract. In no instance shall the contractor
              retroactively request payment for costs incurred in any
              prior contract year as a result of unbilled costs to the
              Government in which billing rates lower than those
              approved by the DCAA were implemented.

              This clause does not, in any way, guarantee that the
              Contractor will meet its future cost gate requirements.

(R4, tab 1Cat 3)

       16. In a March 21, 2013 "MEMORANDUM TO FILE," CO Marquez
discussed Clause B.8:

              The contractor's request was reviewed and it was
              determined that while an indirect ceiling would not be
              imposed on the contract, an agreement to allow the
              contractor to bill the Government at less than the DCAA' s
              approved provisional billing rates would be established.
              Under this agreement, the contractor may propose their
              own rates to bill the Government; any costs invoiced above
              the established rates shall be considered unallowable.

(R4, tab IC at 1)

Modification No. 155

       17. Bilateral Modification No. 155, dated May 31, 2013, incorporated Clause
B.8, "Agreement on Unallowable Costs," into the contract (R4, tab IE). Modification
No. 155 included release language:

             In consideration of the modification agreed to herein as
             complete equitable adjustments for the Contractor's
             "provisional indirect billing rate proposal for adjustment,"
             the Contractor hereby releases the Government from any
             and all liability under this contract for further equitable
             adjustments attributable to such facts or circumstances
             giving rise to the proposal for adjustment.

(Id.)


                                             8
Invoice Nos. 613 and 616

         18. On December 21, 2016, L&M and the DCMA entered into an "INDIRECT
COST RATEIALLOCATION AGREEMENT ... FOR FISCAL YEAR ENDED
December 31, 2009" (R4, tab 2F at 3). The final rates agreed to were 50.30% Total
Fringe, 19.09% Overhead, and 9.15% G&A (id. at 5). L&M was instructed to "adjust
its interim billings on all affected contracts to reflect these agreed upon final indirect
cost rates" (id. at 3). The agreement provided that if it conflicted with the contract, the
contract would take precedence (id.).

       19. On January 26, 2017, L&M submitted Indirect Rate Adjustment Invoice
No. 613 in the amount of$511,448.85. The invoice covered the period ofOl/01/2009
to 09/30/2009 (mostly during CY 2). A table showing the final rates and the
provisional rates billed was included:

     DESCRIPTION                 TOTAL              OVERHEAD                  G&A
                                 FRINGE
  Final agreed upon rate          50.30%                19.09%               9.15%
 Provisionally billed rate       41.95%                 13.24%               5.32%

(R4, tab 2F at 2) On the same day L&M submitted Indirect Rate Adjustment Invoice
No. 616 in the amount of$172,290.46. The invoice covered the period of 10/01/2009
to 12/31/2009 ( completely during CY 2) and included the same rate information in
Invoice No. 613 shown above. (Id. at 161)

        20. On January 31 and February 3, 2017, NASA rejected Invoice Nos. 613 and
616 based on Clause B.8 which NASA felt established the rates for the subject year in
its table (R4, tab 5 at 1, 4). By email dated January 31, 2017, to CO Procknow, L&M
argued that the rate table in Clause B.8 did not apply because L&M billed at the
DCM-approved provisional billing rates. L&M wrote:

              The test for whether the ceiling rates apply depends on
              whether the billing rates used were lower than DCAA
              approved provisional billing rates. For 2009 DCAA
              approved provisional billing rates were utilized; therefore,
              ceiling rates would not apply.

(R4, tab 2H at 3-4)

       21. CO Procknow responded on February 1, 2017, stating that she respectfully
disagreed quoting from Clause B.8 and stating:

              The clause is not an "If," "then" statement. To paraphrase
              from your email below, "(If) 2009 DCAA approved
                                              9
                 provisional billing rates were utilized, (then) ceiling rates
                 would not apply." That is not the intent of the clause.

(R4, tab 2H at 2-3)

          22. L&M responded to CO Procknow arguing:
                You have highlighted the second portion of the sentence
                but not the beginning which is where the crux of the matter
                lies. Page 2 of his letter contains the same language as
               below in the section titled "Provisional and Actual Billing
               Rates". This is to explain when the ceiling would apply.
               The contractor would use either DCAA provisional rates or
               something lower. IfDCAA's provisional rates are used,
               no ceiling applies. If something lower than DCAA's
               billing rates are used, then the ceilings apply. The
               underlined green portion of the sentence was not true for
               2009 therefore the yellow area does not apply nor do the
               ceilings.

(R4, tab 2H at 2) CO Procknow responded stating she submitted the matter to JSC
legal office (id. at 1).

L&M's Claim

       23. On June 20, 2017, 15 L&M submitted a certified claim for the payment of
Invoice Nos. 613 and 616 in the total amount of$683,739.31 (R4, tab 2F at 1). On
August 9, 2017, CO Procknow issued her final decision denying the claim (R4, tabs 3I-J).
On November 1, 2017, L&M appealed the final decision to the Armed Services Board of
Contract Appeals (ASBCA). On 2 November 2017, the ASBCA docketed the appeal as
ASBCA No. 61397.

Declarations

       24. Both parties submitted declarations with their Rule 11 reply briefs. L&M
submitted a declaration by Ms. Antonette Montoya, CEO L&M Technologies, Inc., and
included it in L&M's reply brief (app. supp. R4, tab 30). In her declaration,
Ms. Montoya testified about the critical time after CO Rubio rejected Invoice No. 67.
Shortly after NASA rejected Invoice No. 67, L&M met with NASA and NASA directed
L&M to use the DCAA-approved 2008 provisional rates in its 2009 invoices and NF
533s because DCAA had not yet approved L&M's 2009 indirect rates. L&M complied
with NASA's direction. (Id. at 2) In May 2009, L&M submitted its 2009 provisional

15
     The claim letter in the Rule 4 is undated, however, the June 20, 2017 date is in the
         CO's final decision (R4, tab 3I at 1).
                                                10
rates to DCAA for approval. In June 2009, DCAA informed L&M it would approve
billings that used L&M's 2009 estimated provisional rates until DCAA approved the
2009 rates. L&M informed NASA of this DCAA guidance. L&M's 2009 rates were
approved by DCAA on July 15, 2009. Ms. Montoya stated that L&M still had to wait
for NASA's approval to submit invoices and NF 533s using the 2009 DCAA-approved
provisional rates, rather than the 2008 provisional rates. Until that point, L&M was
required to bill under the contract using its 2008 DCAA-approved provisional rates.
(Id.) Despite DCAA's approval of L&M's 2009 provisional rates in July 2009, NASA
did not approve L&M's use of its 2009 DCAA-approved provisional rates for costs
incurred during 2009 until September 2010. Accordingly, L&M's initial invoices and
NF 533s submitted under the contract during fiscal year 2009 reflected L&M's 2008
DCAA-approved provisional rates, per NASA's direction. The only initial invoice and
NF 533 which was submitted during 2009 with L&M's 2009 estimated provisional rates
was in May 2009, just after L&M established its 2009 provisional rates. However,
NASA rejected the May invoice (Invoice No. 67) because L&M's 2009 provisional rates
had not yet been approved by DCAA. Even after DCAA approved L&M's 2009
provisional rates, L&M did not receive authorization from NASA to revise its billings
that occurred during fiscal year 2009 to reflect the 2009 DCAA-approved provisional
rates until September 2010. (Id.)

       25. NASA submitted a declaration from CO Rubio. CO Rubio rejected Invoice
No. 67 because L&M "improperly" used L&M's 2009 estimated provisional rates that
had not been approved by DCAA. CO Rubio requested that L&M resubmit Invoice
No. 67 using the DCAA-approved 2008 rates. (Gov't reply br., attach. B, Rubio decl.
,i 5) CO Rubio did not indicate to L&M that her rejection of Invoice No. 67 "should
be construed as a blanket rejection of any future invoices submitted with rate above the
2008 billing rates" (id. ,i 6). CO Rubio did not direct L&M "to bill below the
established billing rates" (id. ,i 7). CO Rubio did not direct L&M "to suspend its
application of the [2009] billing rates established on July 15, 2009 until it received my
concurrence to utilize those rates" (id. ,i 8).

                                      DECISION

Positions of the Parties

        L&M argues that the unambiguous language of Clause B.8 only imposes the
rate limitation listed therein if L&M invoiced at rates less than DCAA's approved
provisional rates. L&M then contends that in 2009 NASA directed it to invoice using
the 2008 DCAA-approved rates and it wasn't until September 2010 that NASA
allowed L&M to invoice for the DCAA-approved 2009 rates. L&M did so with
Invoice No. 200 that was paid. L&M contends that since NASA approved and paid
Invoice No. 200, L&M did not bill below the 2009 DCAA-approved rates. L&M also
contends that because its failure to invoice using its 2009 DCAA-approved rate during


                                            11
2009 was directed by NASA, it should not be subject to the limitations in Clause B.8.
(App. br. at 7-9; app. reply br. at 3-5)

        NASA defends with three arguments. Recognizing that Modification No. 155,
dated May 31, 2013, incorporated Clause B.8 into the contract after L&M had billed for
CYs 1-5, NASA argues that since the rates billed were known at the time of Modification
No. 155, the rate limitations in B.8 must have been intended to apply to CYs 1-5. (Gov't
br. at 17-19) Second, NASA argues that since in 2009 L&M billed at the 2008
provisional rates, it billed below the 2009 provisional rates and the rate caps in Clause
B.8 apply (id. at 20-24). NASA does not believe that the fact it approved and paid
Invoice No. 200 changes the fact that during CY 2 L&M billed below 2009
DCAA-approved rates. NASA "vehemently rejects" the contention that it directed L&M
not to use 2009 provisional rates in 2009. (Gov't reply br. at 6-7) Finally, NASA relies
on the defenses of accord and satisfaction, waiver and release (gov't br. at 24-29).

The Release and Other Affirmative Defenses

        In interpreting a release, general principles of contract interpretation apply.
Bell BC! Co. v. United States, 570 F.3d 1337, 1341 (Fed. Cir. 2009). Contract
interpretation is a question oflaw. States Roofing Corp. v. Winter, 587 F.3d 1364, 1368
(Fed. Cir. 2009). If the language of the release is clear and unambiguous it must be given
its plain and ordinary meaning. Id. We need not go further into the law of contract
interpretation because we find that the release in Modification No. 155 is clear and
unambiguous.

        Modification No. 155, dated May 31, 2013, incorporated Clause B.8 into the
contract and contained a release. The release refers to a "provisional indirect billing rate
proposal for adjustment." (Finding 17) NASA identifies the proposal for adjustment as
L&M's April 22, 2013 rate cap proposal (gov't br. at 10, 29). L&M releases the
"Government from any and all liability under this contract for further equitable
adjustments attributable to such facts or circumstances giving rise to the proposal for
adjustment" (finding 17) (emphasis added). In its brief NASA recognizes that this is the
critical language in the release (gov't br. at 29). The language "facts and circumstances
giving rise to the proposal" can only be interpreted to limit the release to "facts an.d
circumstances" existing before the date of the "proposal for adjustment" or April 22,
2013. Any other interpretation effectively reads "giving rise to the proposal" out of the
release. NASA has not identified specific "facts and circumstances" before April 22,
2013, that would prevent L&M from asserting its interpretation of Clause B.8. Indeed,
the dispute over the proper interpretation ofB.8 arose in 2017 when NASA rejected
Invoice Nos. 613 and 616 based on its interpretation of Clause B.8 (finding 20). We do
not see how this release could possibly preclude L&M from urging the Board to adopt
its interpretation of Clause B.8. NASA's contention that the release somehow prevents
L&M from litigating its interpretation of B.8, a question oflaw, is denied.


                                             12
       NASA's accord and satisfaction argument fails because we do not agree that
Modification No. 155 "met the essential elements of an accord and satisfaction" (gov't br.
at 25). Modification No. 155 did not settle a claim as argued by NASA. NASA's waiver
argument fails because it relies on its interpretation of the release in Modification No. 155
that we found unpersuasive.

Interpretation of Clause B. 8

        The interpretation issue with Clause B.8 comes down to the proper interpretation
of one sentence, "For contract years 1 through 5 that the Contractor invoiced at indirect
rates below the provisional billing rates approved by the DCAA, the Contractor shall
assume all costs in excess of the indirect rates in the table below" (finding 15) ( emphasis
added). L&M interprets this sentence to mean that the rate limitations listed in B.8 only
apply ifL&M invoiced indirect rates lower than DCAA's approved provisional rates
(app. br. at 7-9). NASA interprets this sentence to mean that for CYs 1-5 L&M 16 may
bill up to the rates listed in Clause B.8 and no more because the billing had already
occurred before the date ofModification No. 155 (gov't br. at 16-17). NASA states, "To
accept Appellant's position is to believe that it either did not know its own 2009 invoice
rates in 2013 or knowingly negotiated the Clause with the intention of disregarding it"
(id.). However, both parties knew that when they signed Modification No. 155 in 2013
the billing rates for 2009 were ascertainable. Even so they agreed to, "For contract years
1 through 5 that the Contractor invoiced at indirect rates below the provisional billing
rates approved by the DCAA" (finding 15). For some reason both parties chose to put
off resolution of the matter, perhaps because the final rates were not agreed to until
December 21, 2016. Who knows?

        We agree with L&M's interpretation of Clause B.8. 17 "An interpretation that
gives meaning to all parts of the contract is to be preferred over one that leaves a
portion of the contract useless, inexplicable, void, or superfluous." NVT Technologies,
Inc. v. United States, 370 F.3d 1153, 1159 (Fed. Cir. 2004) (citing Gould, Inc. v.
United States, 935 F.2d 1271, 1274 (Fed. Cir. 1991)). NASA's interpretation leaves
the first sentence, second paragraph, particularly the word "that," inexplicable, or
superfluous. The language gives L&M the discretion to bill at the DCM-approved

16 On July 13, 2018, the Board issued an order directing clarification requiring the
       parties to answer four questions. In response to the second question, both
       parties agreed that CY 2 included January and February 2010.
17
   Neither party discussed the fact that DCAA approval ofL&M's 2009 provisional
       rates did not occur until July 15, 2009 (finding 7) and how that might affect the
       interpretation of Clause B.8. Since this made it impossible for L&M to invoice
       at the approved rates in the early part of the year, it is consistent with our view
       of Clause B.8, that the referenced invoicing by L&M was not limited to the
       initial invoices submitted by the company, but included all invoices submitted
       prior to the execution of B.8.
                                             13
provisional rates or lower rates. L&M is only limited to the rates listed in B.8 if it
chose to bill at rates lower than the DCAA-approved provisional rates. We consider
this language to be clear and unambiguous. Resorting to extrinsic evidence to interpret
clear and unambiguous language is precluded by the parole evidence rule which
requires that a "clear written agreement. .. be interpreted to mean what it says,
notwithstanding contrary extrinsic evidence." Keco Indus., Inc., ASBCA No. 50524,
00-1 BCA 130,857 at 152,332-33 (quoting Bradley Constr., Inc., ASBCA Nos. 43891,
43892, 95-2 BCA 127,647 at 137,814). Contrary to CO Procknow's interpretation,
Clause B.8 is an "If," "then" statement (finding 21).

CY 2 Billing Rates

        Our decision comes down to what seems would be a straightforward factual
question of what rates did L&M bill for CY 2. It turns out not to be straightforward at
all, but we conclude that, after L&M submitted invoices less than the DCAA-approved
rates at the government's direction, it submitted later invoices bringing the total sought to
the DCAA-approved rate.

        On May 4, 2009, L&M submitted its 2009 estimated provisional rates to DCAA
for approval (finding 3). On May 15, 2009, L&M submitted Invoice No. 67 in an
attempt to recover the difference between the 2008 provisional rates it had billed for
January 1, 2009 to April 24, 2009 and L&M' s 2009 estimated provisional rates for that
period. L&M's 2009 estimated provisional rates were $41.95% Total Fringe, 13.24%
Overhead, and 5.32% G&A. On May 28, 2009, NASA rejected Invoice No. 67
because DCAA had not approved the 2009 provisional rates. (Finding 5) This seems
to be in conflict with the May 13, 2009 conversation between CO Rubio and Mr. Silva
where it appeared that CO Rubio agreed that L&M could start invoicing using its 2009
estimated provisional rates (finding 4).

       On June 3, 2009, L&M notified NASA that DCAA had agreed that L&M could
invoice at its 2009 estimated provisional rates before DCAA issued its final approval
(finding 6). However, the monthly NF 533s illustrate that for June and July 2009
L&M continued to bill at the 2008 DCAA-approved rates (finding 8).

        On July 15, 2009, DCAA approved L&M's 2009 provisional rates as 41.95%
Total Fringe, 13.24% Overhead, and 5.32% G&A (finding 7). These were the same
rates as L&M's 2009 estimated provisional rates. However, the monthly NF 533s
show that L&M continued to bill at the 2008 DCAA-approved rates for the remainder
of CY 2. (Finding 8)

         We know that CO Rubio would not allow L&M to bill using its 2009 estimated
provisional rates because CO Rubio rejected Invoice No. 67, which attempted to do just that
(finding 5). Therefore, for CY 2 months March to June CO Rubio would not allow L&M to
bill at its estimated provisional rates. L&M billed at the 2008 DCAA-approved rates for

                                             14
March to June. This is below the 2009 DCAA-approved rates. The focus shifts to the months
of July 2009 to March 2010, the remaining months of CY 2. During these months there were
2009 DCAA-approved provisional rates, but L&M continued to bill using the 2008 rates.
That means, for those months, L&M also billed below DCAA-approved provisional rates
subjecting itself to the Clause B.8 caps. It would seem that L&M billed below 2009
DCAA-approved rates during the entirety of CY 2.

Why L&M Billed Below the DCAA-approved Rates During CY 2 18

        Both parties submitted a declaration. Ms. Montoya, CEO L&M, stated in her
declaration that the reason L&M invoiced using the 2008 DCAA-approved provisional
rates in CY 2, was because NASA, CO Rubio, directed L&M to do so (finding 24).
CO Rubio stated in her declaration that she rejected Invoice No. 67 because L&M
"improperly" used L&M's 2009 estimated provisional rates that had not been approved
by DCAA, and she directed L&M to resubmit using the 2008 DCAA-approved rates.
She stated that she did not, however, direct L&M not to use the 2009 DCAA-approved
rates after they were approved on July 15, 2009. (Finding 25)

        We have two declarations presenting diametrically opposed testimony on the
material facts of this case. Since this is a record submission there was no hearing and
no transcript presenting direct and cross-examination to assist the Board in deciding
which declaration is more credible. This is a difficult task because each declaration is
plausible. We agree with NASA's statement, "It is difficult to believe that such a
critical directive would not have been formally captured by the Parties" (gov't reply
br. at 8). While the alleged direction is not captured directly, there are
contemporaneous documents that shed light on this question.

        We found above that L&M invoiced using 2008 DCAA-approved rates in CY 2.
We resolve the conflicting declarations using contemporaneous documents. On May 6,
2010, CO Rubio emailed L&M asking questions about provisional rates (finding 9).
NASA refers to this email in its reply brief as evidence that "the NASA CO was
unaware of which rates Appellant was using" (gov't reply br. at 8). This argument
ignores the fact that L&M was submitting monthly NF 533s to NASA, attention
contracting officer, with the 2008 provisional rates clearly listed (finding 8). NASA
fails to discuss two additional documents in the email chain, L&M's response and
NASA's reply. L&M, Ms. Montoya, responded by letter dated May 10, 2010, and stated

18
     Under our interpretation of Clause B.8, it does not matter when L&M invoiced for
        CY 2 so long as it was before the execution ofB.8. Thus, why L&M initially
        billed below the DCAA-approved rates is not strictly material, either.
        Nevertheless, we discuss it here because it adds context to the parties' positions
        while they were negotiating Clause B.8. and it underscores the impossible
        position that L&M would have been in if we accepted the government's
        proffered interpretation of that clause.
                                               15
    that it was not using its 2009 rates in its invoices or NF 533s based on NASA's
    direction. Ms. Montoya stated that the direction was given in April 2009 and meetings
    on June 18th and 30th and "[s]ince then we understood from a number of conversations
    that the rate adjustments would be dealt with after the REA was resolved." (Finding 10)
    CO Rubio responded immediately but significantly did not take issue with L&M's
    statements that NASA directed it not to use its 2009 rates in CY 2 (finding 11). The
    most important statement in L&M' s May 10, 2010 letter is the reference to the REA.
    The REA is not in the record and neither party discussed it so we know little about it
    except that NASA sent L&M a draft of the REA modification on May 12, 2010 (id.).
    This means the REA remained unresolved well past July 2009 when DCAA approved
    L&M's provisional rates. The other meetings cited occurred before DCAA approved
    L&M's 2009 provisional rates so L&M's statement about the REA is particularly
    important.

            lfL&M's statements in its May 10, 2010 letter were not correct we would expect
    CO Rubio to say something. We expect that CO Rubio would object to L&M's assertions
    and respond saying she did not direct L&M to invoice using 2008 DCAA-approved rates
    during CY 2 as she did in her declaration. All CO Rubio did in her reply was ask L&M to
    "concur that you are reporting on the 533 and invoicing for provisional rates ('08) just not
    '09 rates?" (Finding 11) This request is consistent with L&M's letter. CO Rubio's failure
    to object or otherwise challenge L&M's contention that on two specific dates and at other
    times CO Rubio directed it not to invoice using 2009 rates tips the scale in L&M's favor.
    These May 2010 documents are the only contemporaneous evidence in the record we can
    find that allows us to select the more credible declaration.

           We find that the May 2010 contemporaneous documents corroborate Ms. Montoya's
    declaration. Therefore, we find Ms. Montoya's declaration is the more credible. We
    conclude that on this record, L&M did not invoice using 2009 DCAA-approved rates
    because NASA directed it not to. Apparently the first opportunity for L&M to bill using the


I
    2009 rates was on September 14, 2010, when it submitted Invoice No. 200 correcting the
    under billing for 2008, 2009 and 2010 (finding 12). Invoice No. 200 covered all of CY 2
    which ran from March 2009 to February 2010 (finding 1). This was over two years before

I   Modification No. 155 incorporated Clause B.8 into the contract (finding 17).

            Clause B.8 is silent about when the contractor's invoice must be submitted, "For
    contract years 1 through 5 that the Contractor invoiced at indirect rates below the
    provisional billing rates approved by the DCAA" (finding 15). Nothing in the clause directs
    us to consider the invoices itemized in the NF 533s (finding 8) to take precedence over
    Invoice No. 200 that bills at the higher 2009 rates and was paid by NASA (finding 12).
    Taking into consideration that it was NASA's direction that prevented L&M from invoicing
    at the 2009 rates earlier, we hold that Invoice No. 200 satisfies the B.8 requirement that
    L&M invoice at the approved provisional rated listed in the clause in order to receive any
    increase in rates when DCAA approves the final indirect rates. For that reason we conclude


                                                16
that the rate cap in Clause B.8 does not apply and L&M may recover any increase in its
final rates over approved provisional rates.

                                   CONCLUSION

        In accordance with the above, L&M' s appeal is sustained. The matter is remanded
to the parties to determine quantum.

       Dated: November 20, 2018




                                                 Administ ative Judge
                                                 Armed Services Board
                                                 of Contract Appeals


 I concur                                         I concur




 RICHARD SHACKLEFORD                             J. REID PROUTY
 Administrative Judge                            Administrative Judge
 Acting Chairman                                 Vice Chairman
 Armed Services Board                            Armed Services Board
 of Contract Appeals                             of Contract Appeals



      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. 61397, Appeal ofL&M
Technologies, Inc., rendered in conformance with the Board's Charter.

       Dated:



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



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