AECOM Government Services, Inc.

October 13, 2010Judge Tunks

Denied / Government PrevailedContract InterpretationEquitable Adjustment (REA)Mistake / Reformation

AECOM Government Services, Inc. sought an equitable adjustment for F.I.C.A. taxes imposed after award on its wholly owned offshore subsidiary. On cross-motions for summary judgment, the Board granted the government's motion as to the implied duty of good faith and fair dealing and denied AECOM's cross-motion.

Material Facts

The contract was an indefinite quantity contract for establishment of initial operating capability and training of an Iraqi workforce at Taji, Iraq.
The contract had an initial ordering period from 1 January 2008 to 31 December 2009 and two six-month option periods.
Performance was conducted by AECOM GSS, Ltd., a wholly owned offshore subsidiary of AECOM.
The contract's only tax-related clause was FAR 52.229-6, which excepted social security or other employment taxes from the definition of after-imposed taxes.
At contract award, offshore subsidiaries of United States corporations doing business with the federal government were not required to pay F.I.C.A. taxes.
AECOM did not include F.I.C.A. taxes in its labor rate at award.
The HEART Act eliminated the F.I.C.A. tax exemption for offshore subsidiaries.
AECOM began paying F.I.C.A. taxes on 1 August 2008, the effective date of the Act.
AECOM's contract was silent regarding the tax status of offshore subsidiaries.

Parties

Appellant: AECOM Government Services, Inc.
Contracting Agency: Joint Contracting Command—Iraq/Afghanistan
Contract Number: W91GY0-08-D-0001

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