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Better to Ask Permission than Forgiveness: ASBCA Denies Subcontract Payments

Client Alert | 1 min read | 01.18.19

On November 19, 2018, the ASBCA denied KBR’s claim for reimbursement of REA payments made to KBR’s subcontractor supplying trailers to the Army in Iraq. The cost-reimbursement task order permitted payment of “reasonable” allowable costs. KBR alleged that the government failed to perform the prime contract or, alternatively, was obligated to change the period of performance, and, thus, was responsible for the subcontractor’s delays and additional costs sought by the subcontractor’s REA and paid by KBR. The Board held that KBR was not entitled to reimbursement because the terms of the fixed-price subcontract did not obligate it to reimburse the additional costs, the decision to pay the subcontractor was a business decision KBR made, and the government did not object to any performance period extensions KBR granted to the subcontractor. The Board also found that the subcontractor’s REA costs were not substantiated, because they were not based on actual costs (although the subcontractor had this information), but on market estimates and delay models (which the Board found to be unreasonable). The Board rejected KBR’s argument that actual costs were not required because the subcontract was for commercial items, finding that the subcontract did not state it was for commercial items or contain commercial item clauses.


Insights

Client Alert | 7 min read | 01.30.26

CMS Proposes CY 2027 Growth Rate and Changes to Risk Adjustment for Medicare Parts C and D

On January 26, 2026, the Centers for Medicare and Medicaid Services (CMS) circulated the Calendar Year (CY) 2027 Advance Notice to communicate proposed changes to Medicare Advantage (MA) capitation rates and Parts C and D payment policies.  The changes are expected to be finalized in April 2026 but may be delayed. The following is a summary of the most significant proposals, with further details below:...