[Comments on Whether NMFS Contract Violated Cost Provisions]

The Department of Commerce requested a decision on whether: (1) a National Marines Fisheries Service (NMFS) contract violated a legislative prohibition against cost-plus-a-percentage-of-cost contracts; and (2) the contractor may be reimbursed on a quantum meruit basis if the contract violated the prohibition. GAO held that the: (1) NMFS contract did violate the prohibition against cost-plus-a-percentage-of-cost contracts, since it contained a fixed predetermined overhead rate and had no ceiling on indirect costs, and the contractor's entitlement was uncertain at the time of award and increased with its direct costs; (2) contractor provided all the required services to the government and others; and (3) contractor should be reimbursed on a quantum meruit basis for the value of its services.