Cost-Reimbursable Contract

CB&I Areva Mox Servs., LLC v. United States, 2018 U.S. Claims Lexis 1549 (November 9, 2018)

Nearly two decades ago, the Department of Energy, National Nuclear Security Administration (“NNSA”) awarded a contract for the design, construction and operation of a Facility at the Savannah River Nuclear Site (‘the Contract”) to Mox Services’ (“Mox’s”) predecessor in interest, Duke, Cogema, Stone & Webster, LLC.  Mox has no employees and subcontracts out the entirety of its work under the Contract to subcontractors.  CB&I Project Services Group (“CPSG”), Mox’s parent company, was the principal subcontractor.  The Contract followed a “cost reimbursement” model whereby NNSA would pay Mox for certain allowable costs that Mox incurred in performing the Contract.

In 2015, CPSG began an employee “re-slotting” process where CPSG changed its employees titles and, in some cases, their compensation.  During this process, CPSG put nearly all of its non-craft workforce (roughly 863 employees) into new positions.  Of the 863 employees, 55 received salary increases.  CPSG increased its billing rate for these 55 employees.  Mox did not specifically notify NNSA about this re-slotting and increase, but instead provided the increased billing rates to NNSA as part of its pay requisitions.  In April 2016, upon realizing the increase, NNSA notified Mox that the information it provided to justify the salary increase was insufficient and requested additional information, and warned it would take “appropriate action” to protect itself.  The NNSA later withheld 2% of the total direct non-craft labor expenses –$1,142,112.00.
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