Derian, Inc.
Docket: ASBCA 62957
Decision date: 2024-08-26

ARMED SERVICES BOARD OF CONTRACT APPEALS 
 
OPINION BY ADMINISTRATIVE JUDGE TAYLOR ON APPELLANT’S EQUAL 
ACCESS TO JUSTICE APPLICATION 
 
 Appellant, Derian, Inc. (Derian), submitted an Application for Award of 
Attorney’s Fees and Other Fees & Expenses under the Equal Access to Justice Act 
(EAJA), 5 U.S.C. § 504, as amended.  The underlying appeal arose from Derian’s 
claims for delay, constructive changes, a deductive credit determination, and the 
government’s assessment of liquidated damages, all arising from a contract for the 
construction of oil water separator systems and the installation of new turbine pit sump 
pumps inside the powerhouse at Lower Monumental Dam in Washington state.  
Derian, Inc., ASBCA No. 62957, 23-1 BCA ¶ 38,425, motion for reconsideration 
denied, 24-1 BCA ¶ 38,499.  Familiarity with those decisions is presumed.  We find 
Derian is an eligible prevailing party on its split pump plate modification claim, its 
deductive credit claim, and the government’s claim for liquidated damages.  We 
further determine, however, that the government’s position on those claims was 
substantially justified.  As such, we deny Derian’s EAJA application. 
 
BACKGROUND 
 
 In 2019, the United States Army Corps of Engineers (USACE or the 
government) awarded Derian a contract to construct oil water separator systems and 
install new turbine pit sump pumps inside the powerhouse at Lower Monumental Dam 
in Washington state.  Derian, Inc., 23-1 BCA ¶ 38,425 at 186,744.  The government 
partially terminated the contract for convenience, including removing the requirement 
to install the remaining turbine pit sump pumps (id. at 186,748).  Derian submitted a 
Application Under the Equal Access )  
  to Justice Act of 
 
) 
) 
 
Derian, Inc. ) ASBCA No. 62957-EAJA 
 )  
Under Contract No. W912EF-19-C-0006 )  
   
APPEARANCE FOR THE APPELLANT: Mr. Mark Jensen 
President 
  
 
APPEARANCES FOR THE GOVERNMENT: Michael P. Goodman, Esq. 
    Engineer Chief Trial Attorney 
 Michaela M. Murdock, Esq. 
    Engineer Trial Attorney 
    U.S. Army Engineer District, Walla Walla 

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certified claim asserting a “Request for Equitable Adjustment” (REA) listing 11 
USACE actions Derian alleged created contract changes and delays resulting in 
increased costs (id.).  Derian also asserted a claim for “termination settlement costs” 
and disputed the government’s liquidated damage assessment (id. at 186,749).  The 
government issued a contracting officer’s final decision (COFD) in response to 
Derian’s claims finding merit or partial merit to four of the 11 REA claims, 
determining a government credit for the terminated work, and asserting a government 
claim for liquidated damages (id. at 186,749-50).  Derian appealed that COFD to the 
Board. 
 
 In its complaint, Derian sought increased costs resulting from four of its REA 
claims (id. at 186,750).  Derian also challenged the government’s credit for the 
terminated work and appealed the government’s liquidated damages assessment (id.).  
The parties elected a written disposition under Board Rule 11. 
 
 In our decision on the merits, we denied three of Derian’s equitable adjustment 
claims but partially granted Derian’s claim for increased costs due to the changed 
requirement for split as opposed to monolithic pump plates (id. at 186,757-58).  Our 
decision also determined the correct deductive credit amount for the terminated work 
(id. at 186,751-55).  Finally, our decision found the government was not entitled to 
recover liquidated damages (id. at 186,759-60).  We subsequently denied the 
government’s reconsideration motion on our denial of its liquidated damages 
assessment.  Derian, Inc., 24-1 BCA ¶ 38,499 at 187,134. 
 
 In its EAJA application, Derian seeks fees and expenses for “Claim Preparation 
Expenses”, “Legal Fees”, and “Claim Award Interest” (app. EAJA application, at 2).  
In its reply, Derian withdrew its claim for interest acknowledging the Board had 
already ordered the payment of the Contract Disputes Act interest in its original 
decision (app. reply at 3). 
 
DECISION 
 
 To recover under the EAJA, an applicant must timely file its application, 
establish it is an eligible party, and prove that it was a prevailing party in the underlying 
action.  Rex Sys., Inc., ASBCA No. 52247, 02-1 BCA ¶ 31,760 at 156,854.  The Board 
may also deny an award if the government’s position is determined to have been 
substantially justified, or when special circumstances make an award unjust.  Equal 
Access to Justice Act, 5 U.S.C. § 504(a)(1); Alderman Bldg. Co., ASBCA No. 58082-
EAJA, 22-1 BCA ¶ 38,126 at 185,211.  As a partial waiver of sovereign immunity, the 
EAJA is to be strictly construed in favor of the United States.  Ardestanti v. I.N.S.,  
502 U.S. 129, 137 (1991).  
 

3 
 
 The government does not oppose Derian’s EAJA application based on Derian’s 
status as a prevailing party, that its application was timely filed, or Derian is an 
eligible party under the EAJA (gov’t resp. at 10).  Rather, the government contends 
Derian is not eligible for EAJA fees because the government’s litigation position was 
substantially justified (gov’t resp. at 10-16).  The government also challenges Derian’s 
EAJA application on the basis that it includes fees and other expenses that are not 
allowable, reasonable, or properly documented (gov’t resp. at 16-22). 
 
 “The Government’s position is substantially justified if it is ‘justified to a 
degree that could satisfy a reasonable person’ and has a ‘reasonable basis in both law 
and fact.’” Int’l Custom Prods., Inc. v. United States, 843 F.3d 1355, 1358 (Fed. Cir. 
2016) (quoting Pierce v. Underwood, 487 U.S. 552, 565-66 (1988).  “[T]he 
government is not required to prove that it had a substantial likelihood of victory in the 
litigation.”  Buck Town Contractors & Co., ASBCA No. 60939-EAJA, 20-1 BCA  
¶ 37,705 at 183,048.  “Substantial justification applies to the entirety of the litigation 
position and not just the posture on individual issues.”  K&K Indus., Inc., ASBCA 
No. 61189, 19-1 BCA ¶ 37,353 at 181,628.  Finally, the government bears the burden 
of proof to show its position was substantially justified.  Id. (citing Amaratek, ASBCA 
Nos. 59149, 59395, 15-1 BCA ¶ 35,866 at 175,348). 
 
 The government contends its litigation position was substantially justified on 
each of the three issues on which the Board found for appellant (gov’t resp. at 13-16).  
With regards to Derian’s REA claims, the government first points out that it prevailed 
on three of the four claims (gov’t resp. at 13).  On the “split pump plates” claim, the 
government contends the final decision found partial merit to Derian’s claim and 
awarded Derian additional labor costs to adjust the pump plates due to the existing 
field conditions (id. at 13-14).  The government, however, denied Derian’s remaining 
claimed costs on that claim since Derian chose to use split instead of monolithic plates 
and indicated that choice would not have a cost impact (id. at 13).  In its Rule 11 brief, 
the government further argued it was Derian’s responsibility to verify the pump plate 
dimensions in the drawings, and Derian failed to supply supporting documentation for 
its alleged increased labor costs to install the split plates (Derian, Inc., 23-1 BCA  
¶ 38,425 at 186,758). 
 
 In our decision, we partially granted Derian’s claim by awarding it an 
additional $2,883 for the increased material costs incurred by a subcontractor to 
provide split as opposed to monolithic plates (id.).  We agreed with the government 
that it was Derian’s responsibility to verify the pump plate dimensions in the contract 
drawings and choose the installation method (id.).  However, we found that the plate’s 
design in the drawings and not its size caused the problems (id.).  The government 
agreed to allow Derian to use the split pump design (id.).  As such, we determined 
Derian was entitled to an equitable adjustment for the increased costs resulting from 
this change to the contract requirements (id.).  However, we agreed with the 

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government that Derian failed to provide adequate support for its alleged increased 
labor costs in installing the split pump plates (id.). 
 
 We based our decision to partially grant Derian’s split pump plates claim on an 
interpretation of the contract drawings that differed from the government’s.  We find 
the government’s litigation position, however, in denying the bulk of Derian’s claim 
was substantially justified and had a reasonable basis in both law and fact since Derian 
proposed using the split pumps and assured the government the change would result in 
no increased costs.  See Military Aircraft Parts, ASBCA No. 59978, 15-1 BCA  
¶ 36,175 at 176,513 (government’s position was substantially justified when its 
interpretation of the contract drawings was reasonable, albeit wrong). 
 
 The government next contends its litigation position on the deductive credit was 
substantially correct since the Board adopted the government’s estimated costs as the 
starting point for its analysis and then proceeded to make several adjustments based 
upon the evidence presented during the appeal (gov’t resp. at 14-15).  The government 
is correct that we adopted the government’s estimated costs to complete the deleted 
work as the correct starting point and not Derian’s originally proposed prices.  Derian, 
Inc., 23-1 BCA ¶ 38,425 at 186,752.  During the appeal, Derian presented additional 
evidence and identified numerous errors in the government’s deductive credit 
calculation (id.).  We considered Derian’s arguments and weighed the available 
evidence, ultimately deciding partly in favor of the appellant and partly for the 
government on those adjustments (id. at 186,752-55).  Since we accepted the 
government’s position as the starting point for the deductive change impact analysis 
and made various adjustments based upon the parties’ additional arguments and 
evidence presented during the appeal, we determine the government’s litigation 
position was substantially justified.  See Job Options, Inc., ASBCA No. 56698, 11-1 
BCA ¶ 34,663 at 170,761 (noting the Board has often denied the contractor’s EAJA 
recovery when evidence supporting the contractor’s position was primarily developed 
and established at a hearing). 
 
 Finally, the government alleges its decision to assess liquidated damages was 
based upon a reasonable legal interpretation considering Derian failed to meet the 
contract completion date (gov’t resp. at 15-16).  Derian responds that the government’s 
position was not substantially justified because the Board ruled in favor of Derian’s 
claim, and the government withheld liquidated damages after terminating the contract 
for convenience (app. reply at 2). 
 
 In our decision, we found the government was not entitled to recover liquidated 
damages since the original contract completion date was based, in part, on Derian’s 
completion of the terminated work, and the government failed to establish a new 
contract completion date for the remaining work following the partial termination 

5 
 
(Derian, Inc., 23-1 BCA ¶ 38,425 at 186,759-60).1  Following the discovery of the 
pump design defect, the government informed Derian that it should limit its activities 
on the contract until the government could develop a solution to the water leakage 
problem.  Derian, Inc., 24-1 BCA ¶ 38,499 at 187,133.  The government subsequently 
partially terminated the contract for convenience by removing the requirement for 
Derian to install the remaining headcover pumps (id. at 186,759-60).  Despite 
removing this requirement, the government did not establish a new contract 
completion date even though that date was based, in part, upon the installation of the 
pumps (id. at 186,759-60). 
 
 The government’s partial termination of a contract will not necessarily preclude 
the government from assessing liquidated damages.  See Herbert R. Button / Winfield 
& Frances Beesley, JV, ASBCA No. 17281, 73-1 BCA ¶ 9,780 at 45,690 (liquidated 
damages assessed in partial termination for convenience case).  Here, however, the 
government based the contract completion date partly on the deleted work.  Under 
these unique and unusual facts, we found it inappropriate for the government to 
impose liquidated damages upon Derian even though Derian did not complete the 
contract until February 20, 2020 – 32 days past the original contract completion date 
(Derian, Inc., 23-1 BCA ¶ 38,425 at 186,748). 
 
 We are unaware of any precedent addressing the government’s assessment of 
liquidated damages when the government terminated the work forming the basis for 
the contract completion date.  This appeal arose in a unique factual background with 
unclear existing law.  The government’s litigation position is more likely to be 
substantially justified “when there is a novel issue, there is no clear contrary precedent 
on point, or an issue of first impression was presented to the tribunal.” Rex Sys., Inc., 
02-1 BCA ¶ 31,760 at 156,854 (citing Sun Eagle Corp., ASBCA Nos. 45985, 45986, 
94-2 BCA ¶ 26,870 at 133,698).  Moreover, the government’s position is “more likely 
to be substantially justified when greater ‘legal uncertainty’ is presented.”  SST 
(Supply & Serv. Team) GmbH, ASBCA No. 59630, 18-1 BCA ¶ 36,932 at 179,932 
(citing Rex Sys., Inc., ASBCA No. 52247, 02-1 BCA ¶ 31,760 at 156,855).  “[T]he 
clarity of the governing law is an important factor to consider in determining whether 
the Government’s position was substantially justified.”  JANA, Inc., ASBCA 
 
1 In our decision on the government’s motion for reconsideration of the liquidated 
damages assessment, we further noted that due to the government’s design 
defect on the head cover pumps, the government directed Derian to limit its 
activities on the contract.  Derian, Inc., 24-1 BCA ¶ 38,499 at 187,133.  The 
parties subsequently signed a modification adding the variable frequency drives 
(VFDs) to the contract to fix the design defect (id.).  The modification included 
language indicating the parties would later negotiate the additional time impact 
resulting from this work (id.).  The parties never negotiated that additional time 
since the government subsequently terminated the VFD work (id.).   

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No. 32447, 89-2 BCA ¶ 21,638 at 108,866 (citing Mattson v. Bowen, 824 F.2d 655, 
657 (8th Cir. 1987). 
 
 Here, we determine the government had a reasonable basis in law and fact 
under these unique circumstances to rely upon the original contract completion date to 
assess liquidated damages.  See Buck Town Contrs. & Co., 20-1 BCA ¶ 37,705 
at 183,049 (government’s litigation position substantially justified because it had a 
reasonable basis in fact and law relying on typical argument that the government’s 
failure to object to a contractor’s actions does not constitute waiver).  As such, the 
government’s assessment of liquidated damages was substantially justified.
2  
 
 Since we have determined the government’s position in this litigation was 
substantially justified, we need not address the allowability of Derian’s claimed EAJA 
fees and expenses.  We note, however, Derian already withdrew its claimed awarded 
interest (app. reply at 3).  In addition, Derian’s EAJA application includes a claim for the 
time spent by its own employees working on the appeal (app. EAJA application, at 3).  
We have long held time spent by a company’s employees on pro se litigation is not 
recoverable under EAJA.  See Amaratek, 15-1 BCA ¶ 35,866 at 175,348, and cases cited 
therein.  Finally, Derian claims attorney fees between $300 to $540 per hour (app. reply 
cost summary at 7-23).  To the extent those fees are otherwise allowable, they would be 
substantially reduced by the number of hours allocable to those claims upon which 
Derian prevailed and the $125 per hour EAJA rate limitation.  See 5 U.S.C. § 
504(b)(1)(A); K&K Industries, Inc., 19-1 BCA ¶ 37,353 at 181,628-29.   
 
CONCLUSION 
 
 For the reasons stated above, Derian’s application for fees and costs pursuant to 
EAJA is denied.  
 
 Dated:  August 26, 2024 
 
 
 
 
 
 
 
(Signatures continued) 
 
2 Even though we find the government’s assessment of liquidated damages 
substantially justified, we disagree with the government’s assertion that our 
decision failed to give effect to the contract terms (gov’t resp. at 15).   
 
 
 
ARTHUR M. TAYLOR 
Administrative Judge 
Armed Services Board 
of Contract Appeals 

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I concur 
 
 
 
OWEN C. WILSON 
Administrative Judge 
Acting Chairman 
Armed Services Board 
of Contract Appeals 
 I concur 
 
 
 
 MICHAEL N. O’CONNELL 
Administrative Judge 
Vice Chairman 
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 No. 62957-EAJA,
 Appeal of 
Derian, Inc., rendered in conformance with the Board’s Charter. 
 
 Dated:  August 27, 2024 
 
 
 
 
 
 
 
 
PAULLA K. GATES-LEWIS 
Recorder, Armed Services 
Board of Contract Appeals