The U.S. Civilian Board of Contract Appeals has ruled the Department of Energy was wrong to disallow $16.6 million in costs incurred over several years by parent companies of Mission Support Alliance.
In a ruling dated Dec. 17, the appeals board held the agreement between DOE and the Leidos-led infrastructure services contractor team at the Hanford Site in Washington state lacked any clause specifying Mission Support Alliance (MSA) has the “unusual burden to audit and document the indirect or direct costs” behind the parent companies authorized services.
The Civilian Board of Contract Appeals granted MSA summary judgment on its argument that DOE lacked the legal authority to disallow $11.4 million in “parent office support plan” costs for the 2009 through 2012 fiscal years, as well as a subsequent $5.2 million disallowance for fiscal years 2013 through 2018.
Mission Support Alliance, today composed of Leidos and Centerra, signed a contract in April 2009 originally valued at $3 billion and now $4.9-billion following various extensions. MSA provides a variety of landlord services that include security, road upkeep, recordkeeping and information technology. Its contract ends Jan. 24 and it will be replaced by another Leidos-led entity.
Originally, the MSA parents included Lockheed Martin, Jacobs and Wackenhut Services. This changed over the years as Lockheed Martin became Leidos, Wackenhut became first G4S and eventually Centerra, the appeals board said in a footnote. Jacobs would eventually divest its stake in the contractor team.
A provision in the DOE contract allows Mission Support Alliance to use services from parent organizations to do contract work under some circumstances. During the relevant periods, MSA filed the necessary parent organization support plan with DOE and it tapped the corporate parents’ executives to form a “members committee” to provide advice and oversight to MSA.
Mission Support Alliance argued because it does not control the parent companies any audit of the costs should have been requested by DOE, rather than initiated by MSA. The Department of Energy contends that regulatory and contract provisions show the onus is on MSA to establish that bills submitted by its parent firms are “at cost” and do not include any unallowable profit or fee.
“We see no such requirement set forth in the language cited by DOE,” the contract appeals board said in the ruling.
