Art Anderson Associates
Docket: ASBCA 60034, ASBCA 60035
Decision date: 2015-11-04

ARMED SERVICES BOARD OF CONTRACT APPEALS 
Appeals of --
Art Anderson Associates 
Under Contract No. N00033-14-D-8019 
APPEARANCES FOR THE APPELLANT: 
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APPEARANCES FOR THE GOVERNMENT: 
ASBCA Nos. 60034, 60035 
Mr. Nikolas Anderson 
President/CEO 
Mr. Simon Ngu 
Chief Financial Officer 
Ronald J. Borro, Esq. 
Navy Chief Trial Attorney 
Robert M. Elwell, Esq. 
Trial Attorney 
OPINION BY ADMINISTRATIVE JUDGE DELMAN 
These appeals involve a dispute as to the amounts due and owing Art Anderson 
Associates (AAA or appellant) related to the convenience termination of its commercial 
services contract. Appellant elected to prosecute these appeals under Board Rule 12.2 
and Rule 11. In accordance with Rule 12.2( c ), summary findings of fact and conclusions 
relevant to quantum are provided below. 1 
Summary of Background Facts 
1. The Request for Proposals (RFP), a small business set-aside, was issued on or 
about 18 April 2013 (R4, tab 1). According to the Performance Work Statement (PWS), 
the scope of work was stated as follows: "In support of the [USS Mount Whitney] this 
contract will provide non-personal services to the 
Engineering Directorate of Military 
Sealift Command (MSC) in the areas of marine engineering, naval architecture, electrical 
and electronics engineering, maintenance engineering, shipboard testing and inspections 
and failure analysis" (R4, tab 1 at 7, PWS ii 2). 
2. On 7 January 2014, the Military Sealift Command (MSC or government) 
notified AAA it was the low bidder and that the contract would be awarded to AAA on or 
about 14 January 2014 absent a challenge to appellant's business size status (Anderson 
decl., ex. 1). On 10 January 2014, Tridentis, LLC (Tridentis), filed a business size protest 
1 Pursuant to Board Rule 12.2(d), this decision shall have no value as precedent, and 
absent fraud, shall be final and 
conclusive and not subject to appeal. 

with the Small Business Administration (SBA). On 13 February 2014, SBA denied the 
protest. (Anderson and Ngu decls. ~~ 7, 9) 
3. On or about 25 February 2014, the government awarded this contract to AAA 
(R4, tab 1). As stated in paragraph 7 of the contract, it is "a firm fixed-price, indefinite 
delivery-indefinite quantity type Contract with reimbursable elements for actual travel 
expenses. Under this type of Contract, no work may be performed until directed by Task 
Order." (R4, tab 1 at 10) The contract also provided a minimum guarantee of $50,000 
for supplies or services (id. at 6). 
4. The contract contained FAR 52.212-4, CONTRACT TERMS AND CONDITIONS­
COMMERCIAL ITEMS (FEB 2012). Section (I) in the contract provided as follows: 
(I) Termination for the Government's convenience. The 
Government reserves the right to terminate this contract, or 
any part hereof, for its sole convenience. In the event of 
such termination, the Contractor shall immediately stop all 
work hereunder and shall immediately cause any 
and all of 
its suppliers and subcontractors to cease work. Subject to 
the terms of this contract, the Contractor shall be paid a 
percentage of the contract price reflecting the percentage 
of the work performed prior to the notice of termination, 
plus reasonable charges the Contractor can 
demonstrate to the satisfaction of the Government 
using its standard record keeping system, have resulted 
from the termination. The Contractor shall not be 
required to comply with the cost accounting standards or 
contract cost principles for this purpose. This paragraph 
does not give the Government any right to audit the 
Contractor's records. The Contractor shall not be paid for 
any work performed or costs incurred which reasonably 
could have been avoided. [Emphasis added] 
(R4, tab 1 at 37) 
5. The contracting officer (CO) issued Delivery Order 0001 on 25 February 2014, 
to fund the government's minimum guarantee of $50,000. The delivery order stated that 
it provided 
funding only and was "not an order for services." (R4, tab 2 at 50) The 
government did not issue any other delivery orders under the contract. 
6. The contract required a kick-off meeting to be held within two business days 
of award (R4, tab 1at10). This meeting was scheduled for 4-5 March 2014 (Anderson 
and Ngu decls. ~ 11). 
2 

7. On 3 March, 2014, Tridentis submitted an agency protest of the award to AAA, 
alleging, inter alia, that the CO had improperly awarded the contract because AAA did 
not meet the key personnel submission requirements (R4, tab 33). On 4 
March 2014, the 
CO notified AAA of the agency level protest, and issued a stop work order. The kick-off 
meeting was cancelled. (R4, tab 3 at 51) 
8. In an email dated 7 March 2014, the government notified the RFP offerors that 
it was taking corrective action in response to the agency protest, making certain 
solicitation changes, re-opening the solicitation and inviting prior offerors to submit 
revised offers (R4, tabs 30, 31 ). AAA did not file a protest over this government action. 
Rather, on 14 March 2014, AAA submitted a revised offer to the government (Anderson 
decl. ii 16, Ngu decl. ii 17). 
9. By email dated 17 April 2014, MSC provided notice to appellant and the other 
offerors that the government had awarded the contract to Tridentis (R4, tab 5). AAA did 
not file a protest over this award. On 20 May 2014, the CO terminated appellant's 
contract for the government's convenience, and requested that AAA prepare a 
termination settlement proposal (R4, tab 6). 
Summary of Termination Proposals and Claims 
10. After receipt of the notice of termination dated 20 May 2014, appellant 
submitted a termination proposal to the government on 23 May 2014, updated on 27 June 
2014, seeking $71,334.51 (R4, tabs 7, 9). The CO denied appellant's termination proposal 
on 8 August 2014, except for the amount of $1,297.27 (R4, tab 10). In response to 
appellant's objections, the CO reiterated the government's position in writing on 
3 September 2014 (R4, tab 12). The parties were at an "impasse," thereby allowing 
appellant to file a claim. 
11. By letter to the CO dated 17 September 2014, appellant submitted a 
termination claim to the CO and requested a final decision. There was some initial 
uncertainty as to the amount of this claim. Appellant referenced its "initial proposal," 
presumably its proposal for $71,334.51, but at 
the same time reduced the amount claimed 
in this letter to $44,594.21, reserving the right to file a further claim if this claim was not 
resolved to its satisfaction. Appellant further confused matters by characterizing its 
requested settlement amount as an offer "pursuant to F.R.E. 408." (R4, tab 13) Per 
emails to appellant dated 1 and 3 October 2014, the government characterized appellant's 
claim amount to be $44,594.21 (R4, tabs 14, 17). Per email dated 3 October 2014, 
appellant agreed with this characterization, stating: "Sorry for the misunderstanding. 
After further review we are ok with your letter dated 010CT14." (R4, tab 17) Hence, 
the claim as submitted for decision to the CO on 17 September 2014 was in the sum 
certain amount of $44,594.21. 
3 

12. As of24 November 2014, it appears that appellant was willing to accept 
$34, 118.29 as a termination settlement (R4, tab 19); the government offered $10,000 (R4, 
tab 24). Appellant rejected the counter-offer. Appellant then proposed a lump-sum 
settlement of $30,000 (R4, tab 25), which was rejected by the government. The 
government issued a CO final decision (COFD) on 31 March 2015, unilaterally 
determining the value of the termination claim in the amount of $8,090.38 (R4, tab 26). 
13. By letter to the CO dated 14 April 2015, appellant submitted a second 
termination claim to the CO for decision, in the amount of $71,334.51. This "claim" 
added additional cost 
categories and amounts to the termination claim of 17 September 
2014. (R4, tab 28) By letter dated 7 May 2015, the government returned the second 
termination claim to appellant "without action," stating that the matter "has already been 
fully adjudicated" by the COFD of 31 March 2015 (R4, tab 29). 
14. Appellant timely appealed the CO letters of 7 May 2015 and 31 March 2015 
to the Board. The Board docketed the appeals as ASBCA Nos. 60034 and 60035. 
Jurisdiction 
The government contends that appellant's claim for $71,334.51, per its letter dated 
14 April 2015, did not constitute a valid claim, and hence ASBCA No. 60034 must be 
dismissed for lack of jurisdiction (answer, affirmative defense no. 1). Appellant contends 
we should retain jurisdiction of ASBCA No. 60034 but should dismiss ASBCA No. 60035, 
alleging, inter alia, that the parties' subsequent discussion of quantum after appellant's 
filing of its claim rendered the original sum requested "uncertain" (app. br. at 1). 
While appellant identified its letter dated 14 April 2015 as a "claim," 
appellant's characterization is not controlling as a matter of law. In fact, appellant's 
"claim" of 14 April 2015 is the same basic claim as the one submitted to the CO for 
decision on 17 September 2014, i.e., it is a termination claim arising out of the 
termination of this contract, and only differs in the costs claimed. As such, the 
Board's conclusion in Policy Research, Inc., ASBCA No. 27168, 83-2 BCA i! 16,911 
at 84,163 applies here: 
We conclude that appellant's instant claim is the 
same as that which was previously submitted except for the 
specific damages sought. Both claims are based upon the 
same operative facts.... The fact that the specific item of 
damage that appears in the latter claim was not contained 
in the former is simply an insufficient basis to warrant 
treatment of the latter as a different claim. 
4 

Because appellant's 14 April 2015 letter was not a different claim the CO was not 
obligated to issue a final decision, and there was no basis for an appeal. Accordingly, 
ASBCA No. 60034 is dismissed. 
On the other hand, appellant timely appealed the COFD dated 31March2015, 
which denied appellant's original termination claim, in sum certain, dated 
17 September 2014. This appeal was docketed as ASBCA No. 60035. "It is well 
settled that after a claim is filed, the contractor may provide additional data in support 
of increased damages." DSP, Inc., ASBCA No. 32869, 87-1BCAii19,452 at 98,291. 
In essence, this is what appellant has done here, and as it reserved the right to do in its 
17 September claim letter (finding 11).2 Accordingly, we retain jurisdiction of 
appellant's termination claim as updated under ASBCA No. 60035. 
Contract Labor Rates 
The CO used "Contract labor rates" to compensate appellant for the reasonable 
hours expended related to the termination (R4, tab 26 at 210). However, the relevant 
portion of the termination for convenience clause does not refer to "contract" or to 
"bid" labor rates,3 but to "reasonable charges" using the contractor's "standard record 
keeping system." Such language supports use of appellant's actual, reasonable hourly 
pay rates contained in its time sheets, and said rates are used herein to fairly 
compensate appellant for this convenience termination settlement. 
Summary of Compensation for Appellant's Termination Claim 
Initial Proposal Costs (0) 
Appellant has not shown that these costs are recoverable in a termination 
settlement. No costs are allowed. 
2 The "reservation" in appellant's 17 September 2014 claim did not obviate the sum 
certain that appellant asserted. See Zafer Taahhut lnsaat ve Ticaret A.S., 
ASBCA No. 56770, 12-1BCAii34,951. Nor did subsequent negotiations 
between the parties obviate that sum certain. 
3 FAR12.403(d), Termination forthe Government's convenience, specifically paragraph 
(l)(i)(B), does refer to a convenience termination payout based upon "hourly rate(s) 
in the Schedule," but that regulatory language was added to implement 
the Services 
Acquisition Reform Act (SARA) of 2003, which expressly authorized the use of 
"time and materials" and "labor-hour" contracts for commercial services under 
certain conditions. See FAC No. 2005-15, 71 Fed. Reg. 74667 (12 December 2006). 
It has not been shown that such a contract was terminated here. 
5 

SBA Size Protest (0) 
This protest was filed by Tridentis prior to the award of appellant's contract. 
Appellant has not shown that any costs incurred related to such a protest are 
recoverable in a termination settlement. No costs are allowed. 
Labor: Review Contract ($778.83) 
Appellant is entitled to recover reasonable costs related to the review of the 
contract prior to the termination. The CO allowed $530, using contract labor rates (see 
above). Appellant seeks $778.83, based upon its time sheets. Appellant has persuaded 
the Board that its costs are reasonable. Appellant is entitled to recover $778.83. 
Labor: Recruit, Hire and Train ($442. 09) 
Appellant is entitled to recover reasonable costs in these categories prior to the 
termination. Based upon review of appellant's time sheets, and with due consideration 
to the stop work order issued 4 March 2014, appellant is entitled to recover the 
following reasonable costs: Hull - $417.34 (14 hours x 29.81); Gatzke - $24.75 
(1.5 hours x 16.50), for a total of $442.09. 
Labor: Work Plan, Travel Arrangement, Meeting Preparation ($1, 160. 76) 
The CO agreed that appellant was entitled to recover the number of hours 
claimed by appellant in this category for the employees involved. Using appellant's 
actual hourly pay 
costs as referenced on its time sheets, it is determined that these 
reasonable costs are allowable in the amount of $1,160.76 (R4, tab 9 at 71). 
Re-Bid Cost (0) 
Appellant has not shown that re-bid costs are recoverable in a termination 
settlement. No costs are allowed. 
Termination Settlement Proposal ($3, 045. 66) 
The undersigned agrees with the government that these costs should not predate 
17 April 2014, the date the government advised appellant of the award to Tri den tis 
(finding 9). The government's assessment of hours is reasonable and is accepted as 
follows: Anderson - 27.5 hours; Ngu - 33.5 hours; Hutchinson - 7.5 hours. Using 
appellant's actual hourly pay rates, appellant is entitled to recover the following 
reasonable costs: Anderson $1,322.20 (27.5 hours x 48.08); Ngu $1,558.76 
(33.5 hours x 46.53); Hutchinson $164.70 (7.5 hours x 21.96), for a total of$3,045.66. 
6 

Legal Expense Related to Termination Proposal ($1, 718.11) 
Appellant furnished invoices from counsel for legal expense related to the 
termination proposal in the amount of $1, 718.11 (R4, tab 19 at 192-93 ). This charge is 
reasonable. Appellant is entitled to recover $1, 718.11. 
Other Costs, Kick-Off Meeting Expense ($687. 89) 
The parties agree on the reasonable amounts that appellant incurred for mileage 
($104.72); tolls ($4.25); parking ($38.30); and hotel ($540.62). Appellant is entitled to 
recover $687.89. 
Other Costs, Subcontract ($2,462.65) 
Appellant was billed by its subcontractor, BMT Designers and Planners, Inc., for 
initial contract start-up action and for its preparation for the kick-off meeting during the 
period 7 January 2014 through 17 January 2014 (R4, tab 9 at 145). As of7 January 2014, 
the government advised appellant that it would be awarded the contract on or about 
14 January 2014 absent a challenge to appellant's business size status (finding 2). These 
subcontract costs were reasonably incurred in anticipation of award and performance, and 
are allowable. FAR 31.205-32. Appellant is entitled to recover $2,462.65. 
Cost Center Overhead and G&A 
Appellant asserts that it is entitled to Cost Center Overhead (72 .11 % ) and G&A 
(56.23%) on its termination claim. In support, appellant provides a DCAA memorandum 
dated 31October2012, related to appellant's FY 2011 incurred cost proposal which 
included the above rates and on which DCAA concluded: "Based on the results of our 
adequacy evaluation, we consider AAA's FY 2011 incurred cost proposal adequate in 
accordance with the requirements in FAR 52.216-7" (R4, tab 9 at 146). 
Although the DCAA review could support 
a finding of reasonableness for 
appellant's FY 2011 rates, it does not follow that this review supports a finding of 
reasonableness for appellant's rates for FY 2014, the period in which this contract was 
awarded and terminated. Appellant has provided no data for FY 2014, nor has it 
provided 
any evidence to illustrate the relative stability of its overhead and G&A rates in 
recent years. As a small business, appellant's rates may vary significantly from year to 
year based upon the nature of, and the amount of work performed. 
Appellant is entitled to overhead and G&A but appellant has not proven the 
amounts claimed. Employing a jury verdict, the undersigned reduces appellant's claimed 
rates by 50%. Cost Center Overhead is allowed in the amount of 36.06%. G&A is 
allowed in the amount of 28.12%. 
7 

Profit 
Appellant seeks 15% profit on its costs, excluding its settlement expenses. Appellant 
provides no data to support this 15% figure, nor any evidence supporting the reasonableness 
of such a profit rate on any related contracts. Appellant is entitled to profit, but appellant 
has not proven the amount claimed. Employing a jury verdict, the undersigned reduces 
appellant's claimed rate by 50%. Profit is allowable in the amount of 7.5%. 
CONCLUSION 
Based upon the foregoing, ASBCA No. 60034 is dismissed. Under ASBCA 
No. 60035, appellant is entitled to recover $17,877.49, plus CDA interest from the date 
the CO received appellant's claim of 17 September 2014 to the date of payment. See 
Summary of Costs in the Table attached to this opinion. 4 
Dated: 4 November 2015 
Administrative Judge 
Armed Services Board 
of Contract Appeals 
I certify that the foregoing is a true copy of the Opinion and Decision of the 
Armed Services Board of Contract Appeals in ASBCA Nos. 60034, 60035, Appeals of 
Art Anderson Associates, rendered in conformance with the Board's Charter. 
Dated: 
JEFFREY D. GARDIN 
Recorder, Armed Services 
Board of Contract Appeals 
4 In the Table, discrepancies of a penny are attributable to rounding. 
8 

Table: Summary of Costs 
Cost Center G&A 
Contract Charges Direct Cost Overhead Overhead Total Cost Profit Total 
Labor 2381.68 858.83 911.23 4151.75 311.38 4463.13 
Expenses (kick-off) 687.89 248.05 263.19 1199.13 89.93 1289.07 
Subcontract 2462.65 888.03 942.21 4292.89 321.97 4614.86 
Subtotal 5532.22 1994.92 2116.63 9643.77 723.28 10367.05 
Settlement Ex~enses 
Proposal Preparation 3045.66 1098.26 1165.27 5309.20 0.00 5309.20 
Legal & Consulting 1718.11 0.00 483.13 2201.24 0.00 2201.24 
SubTotal Settlement Expenses 4763.77 1098.26 1648.40 7510.44 0.00 7510.44 
TOTAL ALL COST 10295.99 3093.18 3765.04 17154.21 723.28 17877.49