Government Claims for Excess Reprocurement Costs
In U.S.I.A. Underwater Equipment Sales Corp, CBCA 2579 (January 27, 2014), the Civilian Board of Contract Appeals ruled that the Government had not perfected it claim for excess reprocurement costs. The Board noted that the Government must prove the following to recover such costs:
- The reprocured supplies or services are the same as or similar to those involved in the termination;
- The Government actually incurred excess costs; and
- The Government acted reasonably to minimize excess costs.
Even though the Government was able to prove each of the above facts, the Board denied the claim because a Contracting Officer’s final decision had not been rendered. This is a jurisdictional prerequisite under the under the Contract Disputes Act (CDA), 41 U.S.C. §§ 7101-7109 (Supp. IV 201).
Tip: If faced with a Government Bill of Collection, ask for a Contracting Officer’s final decision. This will give you the right to contest the Government’s claim and appeal to the Board or Court of Federal Claims.
Field Supervision Costs Not Subject to Eichleay Formula Requirements
Boards and Courts use the Eichleay Formula to test whether a contractor is entitled to home office overhead costs. This formula comes with several assumptions that must be proven in order to recover, which may be difficult. Visit our site at manfredonialaw.com for information on the elements of the Eichleay formula.
In the Appeal of TROMEL CONSTRUCTION CORP, PSBCA Nos. 6303, et al. (June 27, 2013) the Board of Contract Appeals held that the contractor is still entitled to extended field supervision costs even though unable to satisfy the Eichleay formula. The Board held that supervisions costs are direct costs of performance rather than home office overhead:
However, the Eichleay formula applies only to home office overhead, not
to field overhead. See K.L. Conwell Corp., ASBCA Nos. 35489, 35490, 90-1 BCA P 22,487. Therefore, the salary for Appellant's site superintendent, all of whose work was dedicated to this project during the relevant period, and who was at the construction site every day, is compensable as field overhead.
It is imperative that you understand the distinction between direct and indirect costs when seeking delay damages. When performing a Government contract, document all your costs directly to the job as best you can. If a supervisor is working on multiple projects, make sure he or she keeps daily timesheets to record hours spent at each. The same goes for anyone else working at the project. This way, if you are delayed, you can recover these costs as directs costs on the project. Note that persons identified as direct costs for a project can not also be included in the home office overhead pool.
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