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Noncompliance with Planning "Directive" Renders Subcontract Costs Unreasonable

Client Alert | 1 min read | 05.02.18

In the long-running case of Kellogg Brown & Root Services, Inc. (ASBCA No. 58175), the Board disallowed as unreasonable certain subcontract headcount-based dining facility costs under FAR Part 31 and the Allowable Cost and Payment clause (FAR 52.216-7(a)). The Board found KBR’s costs unreasonable because they “exceeded the amounts that should have been billed” if KBR had adjusted the subcontractor’s pricing to reflect a government-issued Letter of Technical Direction (LOTD). The LOTD told KBR to expect a lower headcount at a dining facility. KBR argued that the LOTD was issued by a government official who lacked authority to do so, and was a “planning document[], not [a] binding contract modification[],” that did not require KBR to reprice the subcontract to reflect the new anticipated headcount. The Board disagreed, finding that KBR’s disregard of a valid directive – and its failure to adjust prices to reflect the lower anticipated headcount – rendered its excess subcontract costs unreasonable (and therefore unallowable). The Board also found probative KBR’s contemporaneous treatment of the LOTD as binding and KBR’s initial issuance of a credit to the government to repay the excess dining facility costs.

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Client Alert | 5 min read | 10.20.25

What’s new for Belgian Construction Contracts under the New Book 7 of the Civil Code

In recent years, there has been a wave of new legislation impacting contracts and contractual terms. The Belgian legislator is gradually adopting the different Books of the Belgian Civil Code, and the Belgian Code of Economic Law has been updated several times. These changes affect the way contract terms need to be drafted, not only between companies but also with consumers....