DENIED: February 26, 1993 GSBCA 11173 CRC SYSTEMS INCORPORATED, Appellant, v. GENERAL SERVICES ADMINISTRATION, Respondent. Richard A. Cooter and Jeffrey A. Scharf, Alexandria, VA, counsel for Appellant. Wendy Nevett Bazil, Office of General Counsel, General Services Administration, Washington, DC, counsel for Respondent. Before Board Judges LaBELLA, DEVINE, and GOODMAN. GOODMAN, Board Judge. CRC Systems Incorporated (CRC or appellant), on March 28, 1991, appealed a General Services Administration (GSA or respondent) contracting officer's denial of a monetary claim. The contract in question was an indefinite delivery, indefinite quantity, cost-plus-award-fee contract for systems development and programming services for GSA's Information Resources Management Service. Appellant submitted a certified claim to the contracting officer pursuant to the Contract Disputes Act seeking $77,753.51 in alleged allowable, incurred, indirect costs. The contracting officer denied the claim. Respondent has filed a motion for summary relief pursuant to Board Rule 8(g), and appellant has filed an opposition to respondent's motion and its own cross-motion for summary relief. Respondent has also filed an opposition to appellant's cross- motion and a reply to appellant's opposition to respondent's motion. The Board finds the contract clearly and unambiguously contains a cost ceiling, and appellant is, therefore, not entitled to the costs sought in its claim. There are no issues of material fact in dispute, and the Board, therefore, grants respondent's motion for summary relief and denies appellant's cross-motion for summary relief. Findings of Fact 1. Contract No. GS-OOK-88-AFD1100 (the contract) was awarded by the GSA to CRC on September 15, 1988, pursuant to Solicitation No. KECP-88-002 (the solicitation). The contract was an indefinite delivery, indefinite quantity, cost-plus-award- fee contract for systems development and programming services for GSA's Information Resources Management Service. The contract term was for twelve months from award with three successive twelve-month renewal options. The contract also provided that firm fixed-price task orders could be issued. Appeal File, Exhibits 1, 2. 2. Section B of the solicitation required offerors to submit both "bid rates" and "maximum reimbursable ceiling rates" for work to be performed at the contractor and Government sites for each of nine skilled labor categories. These categories did not include the program manager and group managers. Appeal File, Exhibit 1 at B-2-B-10. 3. On page B-2 of Section B of the solicitation, after the list of nine labor categories, the following language appears: "Note: This excludes Program and Group Managers who are included in overhead." Appeal File, Exhibit 1 at B-2. 4. To reiterate the requirement that program and group managers were included in overhead, the solicitation stated in Section C: "The contractor shall not be compensated directly for the Program Manager or Group Managers as an hourly rate contract line item." Appeal File, Exhibit 1 at C-11. 5. In response to a direct inquiry from a vendor, offerors received additional clarification, and were instructed to include billing of the program manager and the group managers in overhead: 11. QUESTION: Please clarify the requirement in Section C that the Program Manager and the Group Managers be "available for full-time assignment under this contract" and "the Program Manager shall be available to manage contract performance full time and shall not serve in any other capacity under the contract." Shouldn't the Program Manager and the Group Manager be included in the Section B tables and considered billable to the contract when work was directed to a specific task? ANSWER: As stated in Section B of the RFP, the Program and Group Manager are to be included in overhead. Appeal File, Exhibit 1, Amendment 2 at 5. 6. There were eight schedules included in Section B of the solicitation. Four were for "BID RATES" for the twelve-month contract period and the three twelve-month renewal options. The other four were clearly designated "MAXIMUM REIMBURSABLE CEILING RATES" for the twelve-month contract period and the three twelve- month renewal options. Appeal File, Exhibit 1 at B-3-B-10. 7. In Amendment 2 to the solicitation, GSA responded to a vendor's question concerning the bid rates and maximum reimbursable ceiling rates listed in Section B of the solicitation. Question 12 and its response read as follows: 12. QUESTION: The solicitation contains two Section B schedules for prices -- Bid Rates and Maximum Reimbursable Rates. Please explain how the Offeror's prices per hour are intended to differ between these two schedules. And, at what point will one schedule be used in lieu of the other? ANSWER: The Bid Rate is the anticipated actual cost that the Government will pay for services and the maximum reimbursable rate is the maximum amount that the Government will pay. The rate the Government will pay will be based on the actual salary the contractor currently pays the employees. Question 14 and its response read as follows: 14. QUESTION: Schedule B requires Offerors to supply fixed hourly prices, however, Section L.4. specifies that the "Government contemplates award of a [sic] Indefinite Delivery/Indefinite Quantity cost-plus Award Fee Contract . . ." Fixed hourly prices are not allowable by FAR under cost plus contracts. Please clarify the type of contract the government intends to award. ANSWER: Prices in Section B are not fixed. The type of contract is cost plus, however fixed price task orders may be issued against the contract resulting from this solicitation. See answer to question 12. Appeal File, Exhibit 1, Amendment 2 at 5-6. 8. Section L of the solicitation stated in pertinent part: 3. Price Proposal Instructions. a. Price Proposal by Level. To be considered for award, the offeror must enter a bid (average) hourly rate and a maximum rate for each skill level listed in Section B. The rates for any level covered by the Department of Labor Wage Determination should consider the specified minimum wage and fringe benefits. The offeror is expected to establish a reasonable price relationship among the positions listed. Appeal File, Exhibit 1 at L-7. 9. Section C of the solicitation contained a provision that cost plus task orders could be issued under the contract. It stated: 3. Task Order. . . . The following types of tasks may be issued: . . . . b. Cost Plus Task. A task that requires a tangible product but for which the performance requirement or deliverable product is relatively ill- defined or is of a relatively short duration and occurs periodically. Systems or applications software maintenance tasks are examples. These may be issued on a labor hour, not-to-exceed a ceiling price basis. Appeal File, Exhibit 1 at C-8. 10. In Section L.3.b.(1), (3), and (9) of the solicitation, GSA required the offerors to submit detailed cost and pricing data regarding overhead. 3. Price Proposal Instructions. . . . . b. Cost and Pricing Data. The offeror shall be required to support the proposed loaded hourly rates by supplying the following information on an SF-1411: (1) Percent overhead used and how derived. . . . . (3) Percent G&A used and how derived. . . . . (9) A detailed cost breakdown of the applicable overhead, fringe, and G&A expense accounts. Appeal File, Exhibit 1 at L-7-L-8. 11. In response to a vendor's inquiry, with regard to the cost and pricing data required from the offerors, GSA explicitly stated that this requirement could not be waived for offerors having an indirect rate structure already accepted by Government audit agencies such as the Defense Contract Audit Agency (DCAA). 10. QUESTION: Will GSA waive the submission in the cost proposal of the detailed back-up data called for in Section L 3b(1), (3) and particularly (9), for those offerors having a recognized indirect rate structure already accepted by Government Audit Agencies such as DCAA where GSA can obtain easy verification of the rate proposed? ANSWER: No, GSA will not waive the submission in the cost proposal for the detailed back-up data called for in Section L, 3, b, items 1,3 and 9. Appeal File, Exhibit 1, Amendment 2 at 5. 12. Appellant proposed bid rates and maximum reimbursable ceiling rates for each skill category in the schedules in Section B of its Best and Final Offer (BAFO) and submitted cost and pricing data in support. The schedules containing the bid rates and maximum reimbursable ceiling rates were incorporated into and became part of the contract. Appeal File, Exhibit 2. 13. The sum of each of the maximum reimbursable ceiling rates for each of the skill categories comprised a total ceiling rate for each proposed year. Based upon the maximum reimbursable ceiling rate schedules and the supporting cost and pricing data submitted by appellant in its BAFO, overhead and unbillable labor, including the program and group managers, were factored into the maximum reimbursable ceiling rate for each skill category. The total of the maximum reimbursable ceiling rates submitted by appellant exceeded $1.5 million for the initial contract period and each of the three optional twelve-month renewal periods. Appeal File, Exhibit 2. 14. Appellant's own cost and pricing data pages, where it calculates its overhead adjustment, are marked "Maximum Rates." Appeal File, Exhibit 2. 15. An unnumbered modification to the contract deleted the following sentence from Section C.3.6. with regard to cost plus tasks: "These may be issued on a labor hour, not-to-exceed a ceiling price basis." Appeal File, Exhibit 2 at 2. 16. The same unnumbered modification amended Section C of the specifications dealing with subcontract rates: Section C, Part II, Contractor Responsibilities, Paragraph E., Subcontracting (page C-15) - Delete the last sentence in its entirety 1 and insert the following in lieu thereof: Subcontract rates may not be proposed or billed higher than the prime contractor's rates for both Fixed Rates (for fixed price task orders) and Maximum Reimbursable Ceiling Rates (for cost plus task orders). Appeal File, Exhibit 2 at 2. 17. The Federal Acquisition Regulation (FAR) Order of Precedence clause (JAN 1986), 52.215-33, is included in the contract and provides that the contract schedules take precedence over representations and other instructions; contract clauses; other documents, exhibits, and attachments; and the specifications. Appeal File, Exhibit 1 at I-4. 18. The clause included in FAR 52.216-7, Allowable Cost and Payment (APR 1984), was incorporated by reference into the contract. Appeal File, Exhibit 1 at I-26. Also, the clause included in FAR 52.232-20, Limitation of Cost (APR 1984), was incorporated by reference into the contract. Id. at I-27. 19. On September 15, 1989, appellant requested that respondent increase the maximum reimbursable ceiling rate in Section B of the contract to reflect appellant's Fiscal Year 1989 provisional indirect rates. Appeal File, Exhibit 3. 20. On February 6, 1990, the contracting officer notified appellant that no adjustment would be allowed. Appeal File, Exhibit 5. 21. On April 16, 1990, appellant submitted a certified claim for its alleged actual costs in performing the contract. The claim included costs based on both Fiscal Year 1989 and Fiscal Year 1990 indirect rates as ascertained by DCAA. Appellant attached an opinion letter from an attorney as an exhibit to the claim which stated, in part, that "[a] cost-type contract cannot provide for a 'maximum cost reimbursement amount' for the performance of work." Appeal File, Exhibit 7. 22. Appellant's certified claim read in pertinent part: [T]he invoices show adjusted overhead rates to reflect the Program Manager and Group Manager costs which GSA indicated in paragraph 1.a. on page C-11 it would not reimburse directly as an hourly rate contract line item ____________________ 1 The sentence which was deleted read as follows: "Subcontract rates may not be proposed or billed higher than the maximum rates in Schedule I." Appeal File, Exhibit 1 at C-15. of the contract. In its proposal, CRC identified that these unbillable direct labor costs would be recovered as an increment to the overhead. CRC has consistently relied on oral assurances from the GSA Contracting Officer that this is a cost reimbursement contract and that CRC would be reimbursed for its actual costs based on DCAA-approved rates. CRC also believes that it should be reimbursed for its management costs since GSA required a specified level of fulltime on-site management support which CRC has consistently provided. CRC, therefore, believes that in accordance with the Allowable Cost and Payment Clause, FAR 52.216.7, CRC should be reimbursed in full for the amount of this claim. Appeal File, Exhibit 7. 23. On December 21, 1990, the contracting officer issued a final decision denying appellant's claim, because, inter alia, "the maximum reimbursable rates were established at the time of contract award and the RFP clearly stated that Group Manager and Program Manager were to be included in overhead." 2 Appeal File, Exhibit 14. 24. On March 21, 1991, CRC filed a timely notice of appeal from the contracting officer's final decision. The Board docketed the appeal as GSBCA 11173. Appeal File, Exhibits 15, 16. Discussion ____________________ 2 The contracting officer made additional findings with regard to the fulfillment of appellant's management obligations in response to the request for "management costs." 6. In addition, the contract requirement specified in Section L.4.c.1 that "The Program Manager initially assigned is required to work at the site for at least six months.", was not fulfilled. The Program Manager remained at the CRC headquarters site in Virginia for the majority of the time, and attendance at meetings with minor on-site presence was the level of support that GSA received. 7. Regarding Group Manager support, CRC initially provided two Group Managers: one, . . ., remained on- site for six months, December, 1988 through June, 1989, and the other, . . ., remained on-site from December, 1988 through June, 1990, and was never replaced. Appeal File, Exhibit 14 at 2. Appellant claims it is entitled to an upward adjustment for costs incurred for providing a program manager and group managers for the performance of the contract. The basis of appellant's claim is that the solicitation stated that GSA would not reimburse the contractor directly for these costs as an hourly rate contract line item, and that CRC identified that these unbillable direct labor costs would be recovered as an increment to overhead. Finding 22. In its claim, appellant relied upon an attached opinion letter from an attorney which states that "[a] cost-type contract cannot provide for a 'maximum cost reimbursement amount' for the performance of work." Finding 21. Accordingly, appellant alleges that to deny its claim for an upward adjustment in overhead rates is an unauthorized deviation from the FAR which prohibits ceilings on such rates. Appellant's Motion for Summary Relief at 6-7, 14. Respondent filed a motion for summary relief, arguing that the overhead rates for which appellant seeks an upward adjustment were clearly designated "maximum reimbursable ceiling rates," that such ceilings are clearly allowed in cost reimbursement contracts, and that disallowing appellant's claim is not a deviation from the FAR. Respondent contends that both the FAR and relevant case law allow ceilings in cost reimbursement contracts. Accordingly, respondent argues, since the contract included a maximum reimbursable ceiling, and such ceilings are permissible as a matter of law, appellant is not entitled to the relief requested in its appeal. 3 Appellant filed an opposition to respondent's motion together with its own motion for summary relief. In its motion, appellant alleges this is a cost reimbursement contract, and that "a cost type contract, by its very nature relieves the risk that ____________________ 3 Respondent's motion contains an additional argument that assuming arguendo that the cost ceiling in the contract is found to be unenforceable, appellant failed to comply with the Limitation of Cost clause (APR 1984), FAR 52.232-20, incorporated into the contract, which required the contractor to notify the contracting officer if it believed that it would exceed 75% of the estimated cost specified in the schedule. As the Board finds that the inclusion of "maximum reimbursable ceiling rates" in the solicitation and the contract resulted in a clear and unambiguous cost ceiling which is enforceable, we do not reach the issue of the application of the Limitation of Cost clause. It should be noted that appellant, in its motion for summary relief, stated that "[i]n this contract for the period in question, appellant did not believe it would exceed the estimated costs, and in fact did not do so. The contractual limitation of cost for that period were [sic] not exceeded." Appellant's Motion for Summary Relief at 9. the actual costs will exceed the costs estimated." Appellant's Motion for Summary Relief at 4. Appellant argues further that even though there were certain "maximum rates" which the RFP required offerors to quote, the reasons for these maximum rates were neither defined nor explained by the RFP nor during the bidding process. Appellant's Motion for Summary Relief at 6-7. Appellant asserts that while a ceiling may be permitted to be incorporated into a cost contract, any such ceiling must be precisely drafted and carefully drawn. 4 Appellant argues that the contract was ambiguous, and therefore "[t]he contractor bid on this cost-plus contract as if it were just that, a cost-plus contract. It fully expected to recover its allowable allocable costs. There was no agreement or contractual provision which provided otherwise." Appellant's Motion for Summary Relief at 8. Respondent's reply is simply that the contract contained a clear and unambiguous ceiling for the overhead rates for which appellant seeks an increase. We agree with respondent, grant respondent's motion for summary relief, deny appellant's motion, and deny the appeal. 1. Monetary Ceilings Are Allowable In Cost-Plus Contracts Monetary ceilings are clearly allowed in the type of contract at issue in this appeal. FAR 16.404-2 defines a cost- plus-award-fee contract as a cost reimbursement contract that provides for a fee. 48 CFR 16.404-2 (1988) (FAR 16.404-2). Part 16.301-1 of the FAR defines cost reimbursement contracts as follows: Cost-reimbursement types of contracts provide for payment of allowable incurred costs to the extent prescribed in the contract. These contracts establish an estimate of total cost for the purpose of obligating funds and establishing a ceiling that the contractor may not exceed (except at its own risk) without the approval of the contracting officer. FAR 16.301-1. According to FAR 52.216-7(d)(3)(v), monetary ceilings and contract obligations are not changed by any agreements between DCAA and appellant. The relevant portion of this regulation reads as follows: ____________________ 4 In its motion, appellant no longer makes the assertion previously made in the opinion letter attached to the claim that a cost contract cannot contain a cost ceiling. The Contractor and the appropriate Government representative shall execute a written understanding setting forth the final indirect cost rates. The understanding shall specify . . . (v) the affected contract and/or subcontract, identifying any with advance agreements or special terms and the applicable rates. The understanding shall not change any monetary ceiling, contract obligation or specific cost allowance or disallowance provided for in this contract" (emphasis added). FAR 52.216-7(a) provides that payment to contractors be in accordance with FAR Subpart 31.2, which provides: 31.201-2 Determining allowability (a) The factors to be considered in determining whether cost is allowable include the following: . . . . (4) Terms of the contract. 5 Thus, according to the FAR that was applicable at the time of the contract, cost ceilings are allowable in cost reimbursement contracts and allowability of costs is to be determined by the terms of the contract. In addition to the FAR, there is ample case law at this Board, other boards of contract appeals, and the Claims Court that monetary ceilings are enforceable in cost reimbursement contracts. This Board has expressly held that contractual ceilings are not per se unenforceable in a cost-type contract. Kleen-Rite Corp., GSBCA 5893, et al., 83-2 BCA 16,582. In that case, there were several cost type contracts at issue with either award fees or incentive fees. The Board stated, in support of the ceiling: As a general matter, cost ceilings are enforceable. . . . Most of the time, when the Government uses a cost reimbursement contract it does so because it cannot accurately estimate the ultimate cost of what it is ____________________ 5 The Limitation of Cost clause incorporated into the contract, Finding 18, limits the costs to be paid by the Government in excess of the costs estimated in the schedule unless the contractor gives timely notice to the contracting officer. The inclusion of this clause in and of itself vitiates the argument asserted in appellant's claim that cost type contracts cannot contain cost ceilings. purchasing. . . . Appellant must have thought it could do the work for the costs it agreed to; otherwise it was singularly foolish in signing the contract." Id. at 82,466. The Board has also implicitly upheld the validity of cost ceilings in cost reimbursement contracts in Nash Janitorial Service, Inc., GSBCA 6390, 84-1 BCA 17,135, at 85,370. The Board followed the holding of the Court of Claims in National Civil Service League v. United States, 226 Ct. Cl. 478, 485, 643 F.2d 768, 772 (1981), that if a contract contains an absolute ceiling on allocable and allowable costs, the contractor assumes the risk of overruns. As indicated by the Board in Nash, the Court of Claims has held that cost ceiling provisions are allowable in cost type contracts. "It is well settled that the Government may place a limit on its total liability under a cost-reimbursement contract . . . ." Id. at 485, 643 F.2d at 773; see also LSi Service Corp. v. United States, 191 Ct. Cl. 185, 422 F.2d 1334 (1970). The Armed Services Board has held that a ceiling on a cost-reimbursement contract is applicable to indirect costs as well as direct, so that a contractor may not recover cost overruns created by the negotiation of indirect cost rates higher than the provisional rate. United Shoe Machinery Corp., ASBCA 11936, 68-2 BCA 7328. In United Shoe, the contractor had proposed a tentative overhead rate pending negotiation of a final overhead rate based upon actual costs. However, the contract also provided for a maximum rate set forth in the schedule, for both direct and indirect costs (i.e., "all obligations under this contract"). Thus, the Armed Services Board held that although the indirect rate was to be negotiated, the negotiated rate could not cause the total cost to the Government to go above the ceiling set in the schedule. The board stated that the negotiated indirect rates were "on a par with all other allowable costs in the contract, reimbursable only up to the cost ceiling." Id. at 34,092. In addition, in Urban Management Consultants of San Francisco, HUD BCA 75-28, 76-2 BCA 12,000, the Housing and Urban Development Board of Contract Appeals also held that a cost ceiling in a cost contract effectively limited the Government's liability to the amount of the cost ceiling. Accordingly, cost ceilings in cost reimbursement contracts are clearly allowed by regulation and case law, and are enforceable. 2. The Contract Contains A Clear And Unambiguous Ceiling Appellant appears to have abandoned the argument in its claim that a cost reimbursement contract cannot include a ceiling, and asserts in its motion for summary relief that there was no ceiling, or alternatively, if there was a ceiling, the ceiling was unclear and ambiguous, and therefore the contract should be construed against the drafter. In interpreting a contract, words are to be given their plain meaning. Blake Construction Co., GSBCA 3675, 73-2 BCA 10,221. Appellant alleges that the contract spoke of "bid rates" and "maximum rates." Appellant's Motion for Summary Relief at 2. Appellant creates its own ambiguity by characterizing the rates as "maximum rates," and not "maximum reimbursable ceiling rates" as clearly designated in the solicitation and the contract, Finding 6, thereby ignoring the plain meaning of the words "reimbursable ceiling." Thus, for this reason, and those discussed below, the solicitation and the contract clearly and unambiguously contain maximum reimbursable ceiling rates which result in a cost ceiling. Appellant argues that it believed the contract did not have a ceiling, or alternatively that the ceiling provisions were unclear and ambiguous, and the contract should therefore be construed against the drafter. However, appellant provides no alternative for what it thought the term "maximum reimbursable ceiling rate" meant in light of the explanation provided in Amendment 2, Question 12, which clearly stated that this rate "is the maximum amount the Government will pay." Finding 7. Appellant's failure to provide any alternative understanding or interpretation of the term is itself an unreasonable interpretation. In Broyles & Broyles, Inc., GSBCA 5694, 81-1 BCA 14,969, this Board stated that the proper inquiry in a case where ambiguity is alleged is the reasonableness of appellant's interpretation. Only after an inquiry into the reasonableness of interpretation is it appropriate to apply contra proferentem, and then, as a last resort. As appellant's interpretation is unreasonable, and the solicitation and the contract clearly contain a cost ceiling, the application of the rule concerning construction against the drafter is not reached. To adopt appellant's interpretation would render the maximum reimbursable ceiling rates superfluous and inexplicable. Under such circumstances, an interpretation of this nature is rejected. Blake Construction Co., GSBCA 2477, 71-1 BCA 8870. The maximum reimbursable ceiling rate requirement in Section B of the contract is not ambiguous. The schedules in Section B were incorporated into and became part of the contract, Finding 12. The Order of Precedence clause in the contract states that the schedules control over other parts of the contract. 6 Finding 17. It is a well-settled principle that, in interpreting a solicitation, one reads the solicitation as a whole. Alliant Computer Systems Corp., GSBCA 9635-P, 89-1 BCA 21,221, at 107,059, 1988 BPD 215, at 7; Hughes Advanced Systems Co., GSBCA 9601-P, 88-3 BCA 21,115, at 106,602, 1988 BPD 185, at 8; Control Data Corp., GSBCA 9279-P, 88-1 BCA 20,466, at 103,495, 1988 BPD 8, at 8. Similarly, issues of contract interpretation are resolved by examining the language of the contract itself, reading it as a whole, and giving every provision significance. Griffin Services, Inc., GSBCA 11171, 92-1 BCA 24,556; W.M. Schlosser Co., Inc., GSBCA 11079, 91-3 BCA 24,258; ITT Communications Services, Inc., GSBCA 9072, 91-3 BCA 24,337. When the solicitation and resulting contract in this appeal are read as a whole, it is clear throughout that respondent intended a ceiling on reimbursed costs, and hence the requirement for submission of maximum reimbursable ceiling rates. GSA made the ceiling provision clear in Amendment 2 to the solicitation, in response to vendor questions 11 and 12, where it clarified that the costs for the individuals for which it now seeks reimbursement (the program manager and group managers) would be included in overhead, and the maximum reimbursable rates would be the maximum amount the Government will pay. Findings 5, 7. Appellant and respondent negotiated and contracted for maximum reimbursable ceiling rates, taking into account all indirect costs. Detailed cost and pricing data was submitted by appellant as required by the solicitation. Finding 12. Included in its overhead were the costs of the program manager and group managers. Finding 13. Reading the solicitation and contract as a whole, appellant's costs after contract award, including increased indirect costs, were to be reimbursable only up to the amount of the maximum reimbursable ceiling rates. Contrary to appellant's argument that disallowance of the increased costs was a deviation from the FAR, allowance of the ____________________ 6 Appellant has suggested that the omission of a sentence dealing with the issuance of cost plus tasks in Section C - Description/Specification/Work Statement - of the solicitation deleted the necessity of two different rates, i.e., bid rates and maximum reimbursable ceiling rates. Finding 15; Appellant's Motion for Summary Relief at 7. However, the obvious references to maximum reimbursable ceiling rates in the Section B schedules, and in the subcontracting provision, Finding 16, refute this argument. The Order of Precedence clause dictates that the schedule takes precedence over representations and other instructions; contract clauses; other documents, exhibits and attachments; and the specifications. Thus, the elimination of this language in Section C does not govern the schedule. increase would have deviated from the terms of the FAR and the contract, and defeated the very purpose of the ceiling. Appellant also included in its claim a request for management costs "since GSA required a specified level of fulltime on-site management support which CRC has consistently provided. CRC, therefore, believes that in accordance with the Allowable Cost and Payment Clause, FAR 52.216.7, CRC should be reimbursed in full for the amount of this claim." Finding 22. Respondent denied the claim for these costs, because such costs were to be included as overhead, and respondent also issued factual findings stating that such management requirements were not fulfilled. Finding 23. These findings were neither addressed by appellant nor rebutted, but as they deal with reimbursement for the program and group managers, such claims are subsumed under those to which the motions for summary relief were addressed. 3. Appellant Failed To Clarify That Which It Believed Was A Patent Ambiguity In The Solicitation And The Contract Appellant argues in its motion that "[n]either the solicitation or [sic] the resulting contract described what the purpose of each rate was, or when one of the rates would be used rather than the other." Appellant's Motion for Summary Relief at 2. This is contrary to the response to vendor question 12 in Amendment 2 which describes the purpose of the rates. Finding 7. This argument also fails, as appellant submitted cost and pricing data to support both the bid rates and the maximum reimbursable ceiling rates for this multi-million dollar procurement. Finding 13. If appellant had no idea what the purpose of each rate was, it should have sought clarification of that which it considered to be an obvious, patent ambiguity in the solicitation and the contract. Appellant's failure to clarify that which by its own characterization is a patent ambiguity places the risk of loss on appellant. In Eslin Co., GSBCA 8790, 90-2 BCA 22,810, this Board explained the rationale behind requiring the bidder or offeror to clarify a patent ambiguity: In S.O.G. of Arkansas v. United States, 212 Ct.Cl. 125, 546 F.2d 367 (1976), our appellate court stated: The rule that a contractor, before bidding, should attempt to have the Government resolve a patent ambiguity in the contract terms is a major device of preventive hygiene; it is designed to avoid just such post-award disputes as this by encouraging contractors to seek clarification before anyone is legally bound. . . . [This] principle advances the goal of informed bidding and works toward putting all the bidders on an equal plane of understanding so that the bids are more likely to be truly comparable. Conversely, the principle also tends to deter a bidder who knows (or should know) of a serious problem in interpretation, from consciously taking the award with a lower bid (based on the less costly reading) with the expectation that he will then be able to cry 'change' or 'extra' if the procuring officials take the other view after the contract is made. In the instant case we are driven to the conclusion that the appellant either knew or should have known that its interpretation of the window painting requirements was highly questionable in light of the language appellant relied upon and the incongruous result that would obtain with such an interpretation. Id. at 114,547-48. In the instant appeal, we believe there was no patent ambiguity, as the solicitation and the contract clearly contained a cost ceiling. Appellant either knew or should have known that its interpretation of, or more specifically, its alleged belief that there was no explanation for, the maximum reimbursable ceiling rates was a serious pre-bid consideration and should have been clarified before submitting its BAFO. In fact, at least one other offeror did request clarification which appellant chose to ignore. Finding 7. A contractor with knowledge or reason to know that a contractual provision might have a conflicting interpretation is being unreasonable in assuming that its own interpretation will prevail, especially in light of its own failure to seek clarification. Broyles & Broyles, Inc., 81-1 BCA 14,969. 4. Conclusion In summary, the solicitation and contract clearly and unambiguously contained a cost ceiling. Appellant's interpretation of the contract is unreasonable and contrary to the express terms and plain meaning of the contract it negotiated and entered into freely. Appellant agreed to a cost-plus-award- fee contract with maximum reimbursable ceiling rates. To adopt appellant's interpretation would render the maximum reimbursable ceiling rates meaningless and superfluous. There is no legal prohibition against the inclusion of a ceiling in a contract such as this. The costs for program and group managers which appellant seeks were required by the contract to be included in overhead, and overhead was factored into the maximum reimbursable ceiling rates proposed by appellant. If appellant did not know the reason for the bid rates and maximum reimbursable ceiling rates, it should have sought clarification prior to submitting its proposal and BAFO, rather than assuming its own interpretation of that which it considered an ambiguity would prevail. Accordingly, as a matter of law, appellant is not entitled to recover the additional overhead it seeks in this appeal. Decision For the foregoing reasons, there being no material facts in dispute, respondent's motion for summary relief is granted, appellant's cross-motion for summary relief is denied, and appellant's appeal is DENIED. ________________________ ALLAN H. GOODMAN Board Judge We concur: ________________________ ________________________ VINCENT A. LaBELLA DONALD W. DEVINE Board Judge Board Judge