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Contract Management | December 2008
Cost Ceilings and Price Limit Notice
By roBert d. witte
On October 1, 1997,
the General Services
Administration (GSA)
awarded to Abacus
Technology Corporation a
contract for commercial
IT equipment, software,
and services. The
contract was for 10 years,
ending in September
2007, and called for
individual task orders to
prompt contract activity.
It included a Federal Acquisition Regulation
clause effective for time-and-materials
(T&M) contracts to the effect that if the
ceiling price is forecasted to be exceeded
within the next 30 days, the contractor is re-
quired to give written notice thereof to the
contracting officer (CO). There was to be no
liability for excess costs unless the ceiling
price was increased; nor was the contractor
obligated to continue with performance to
incur costs in excess of the ceiling.
In December 2002, the U.S. Air Force (USAF)
placed a task order under the contract for
its computer-tracking “Golf Project,” with
a ceiling price that became, with addi-
tions, $478,845. Prior to October 7, 2003,
Abacus’s costs of performance of the task
order equaled the ceiling price. A year later,
on September 20, 2004, Abacus submit-
ted to the CO an invoice dated September
15, 2004, for $18,300 for costs incurred
in excess of the ceiling price. The amount
was determined by subtracting the ceiling
price from the total costs booked on the
task order. On September 30, 2004, Abacus
submitted a claim under the contract as
requested by the CO.
Responsive to CO queries, Abacus alleged that
the additional work was performed between
October 15 and 31, 2003, and consisted of
server upgrades, recovery after hard-drive
crashes, software upgrades, nightly and
weekend data backup, computer installations,
and monitoring the network and servers. It
also alleged that USAF and GSA personnel had
authorized additional funding.
On March 17, 2005, the CO denied the claim.
The GSA Board of Contract Appeals (GSBCA)
reported its decision on