Case Study: Intermark

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Cherry Bekaert Assists a Contractor in Recovering Disputed Price Adjustments under the Service Contract Act.

Situation:

Intermark Managed Food Services, Inc., a small, women-owned business, held a firm fixed price dining facility contract with the Army. The contract was subject to the Service Contract Act and required Intermark to pay its employees wages and fringe benefits called for by the collective bargaining agreement (CBA) between Intermark and a union representing its employees. When the RFP for the contract was issued, it contained the wrong version of the CBA with lower wages and fringe benefits than Intermark was required to pay under the correct CBA. In addition, when the Army made annual adjustments to contract prices for increases in wages and fringe benefits called for by the CBA, the Army used an incorrect procedure to calculate the price adjustments. For over three years, the Army refused to correct these errors and pay the price adjustments Intermark was due under the contract.

Cherry Bekaert’s Guidance:

Cherry Bekaert helped Intermark find an attorney who would argue its position in this dispute, and worked with this attorney in developing arguments to be advanced in this matter. Ultimately, it was necessary to file a claim under the Contract Disputes Act, with a subsequent appeal to the Armed Services Board of Contract Appeals. Cherry Bekaert was intimately involved in both these actions.

Result:

With substantial support from Cherry Bekaert, Intermark was able to negotiate a settlement with the Army in this case. As a result, Intermark recovered over $1 million on its claim. This was significant because the issues presented in this case had never been addressed by a Contract Appeals Board or a court. Thus, they were issues of first impression and required great imagination and “thinking out of the box” by Cherry Bekaert and the attorneys to reach this satisfactory conclusion.