PAE Applied Technologies LLC

Material Facts

• PAE and the Navy executed a cost reimbursement Contract No. N66604-05-C-1277 for maintenance and operations at the Atlantic Undersea Test & Evaluation Center.
• The contract incorporated FAR 52.216-7, ALLOWABLE COST AND PAYMENT (DEC 2002) and FAR 52.233-1, DISPUTES (JUL 2002).
• Beginning in March 2021, the Navy and PAE exchanged correspondence concerning the applicability of the CARES Act, fees charged on COVID-related costs, and the allowability of those costs.
• The contracting officer's March 2, 2022, letter was entitled “DEMAND FOR PAYMENT FOR UNALLOWABLE COVID COSTS.”
• The letter stated that the government had determined that PAE invoiced, and the government paid, unallowable COVID costs on the contract.
• The letter included a breakdown of the alleged unallowable COVID charges paid to date by contract price line item and sub-line item.
• The letter advised that interest would accrue on amounts not paid within 30 days and that the payment office could initiate offset procedures.
• The contracting officer stated that she issued the demand letter to “break the stalemate that had arisen between me and PAE about the backup for its COVID-19 costs.”
• The contracting officer later withdrew the demand letter but stated that she still intended to pursue the Navy's questions about the costs and had initiated an audit with the Defense Contract Audit Agency.
• PAE timely appealed the demand letter to the Board.

Parties

Appellant

PAE Applied Technologies LLC

Respondent Agency

United States Department of the Navy

Contracting Agency

United States Department of the Navy

Contract Number

N66604-05-C-1277