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    Government Contracting Database

    Internal Equipment Rates

    Use of the internal rates in calculating a contractor’s extended equipment may be proper. Peter Kiewit Sons, Co. v. Summit Constr. Co., 422 F.2d 242 (8th Cir. 1969) (upholding jury determination that equipment rates utilized in calculating contractor’s claim were reasonable). The use of rental rates to calculate extended equipment has been specifically approved for the very reason that it is often difficult to verify actual costs for such equipment. Servidone Constr. Co. v. United States, 19 Cl. Ct. 346, 388 (1990) aff’d 931 F.2d 860 (Fed. Cir. 1991). Thus, a contractors use of internal rates to generate an estimate of its extended equipment costs is a permissible methodology. See, e.g., Delco Electronics Corp. v. United States, 17 Cl. Ct. 302, 321 (1989) (use of estimates appropriate where actual costs data is not available).

    As discussed by the court in Servidone Constr. Co. v. United States, 19 C1. Ct. at 388, the failure of the government’s expert to contradict the reliability of equipment rates or to offer a reasonable alternative calculation effectively concede their reasonableness:

    [The government’s expert] did not directly address the reliability of the Dataquest rates, and did not offer a clear alternative. Once again, the court is left with the impression that the DCAA audit could have challenged more effectively the necessity of relying upon Dataquest rates. It did not do so, however, and the court has no basis for concluding that the Dataquest approach is unreasonable. . . . In conclusion, with respect to direct costs for equipment within the embankment claim, the court finds that the costs claimed were reasonable.

    Updated: August 2, 2018

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