CI², Inc.
Docket: ASBCA 56257, ASBCA 56337
Decision date: 2016-06-06

ARMED SERVICES BOARD OF CONTRACT APPEALS 
Appeal of -- ) 
) 
Cl2, Inc. ) 
) 
Under Contract No. DABNO l-03-C-0007 ) 
APPEARANCE FOR THE APPELLANT: 
APPEARANCE FOR THE GOVERNMENT: 
ASBCA No. 59948 
H.J.A. Alexander, Esq. 
Alexander Law Firm, P.C. 
Atlanta, GA 
Raymond M. Saunders, Esq. 
Army Chief Trial Attorney 
Kyle E. Chadwick, Esq. 
Trial Attorney 
OPINION BY ADMINISTRATIVE JUDGE DELMAN 
This appeal is the quantum proceeding related to the Board's entitlement 
decisions under ASBCA Nos. 56257 and 56337. Based upon appellant's Statement of 
Costs/Damages (SOCD), appellant seeks roughly $1.5 million as damages, inclusive 
of interest under ASBCA No. 56257, and roughly $2.6 million of damages, inclusive 
of interest under ASBCA No. 56337. We have jurisdiction under the Contract 
Disputes Act (CDA), 41 U.S.C. §§ 7101-7109. 
Under ASBCA No. 56257, the Board held that the government breached this 
contract to the extent it failed to assign the mandated quantities of registrars and 
temporary registrars in the base year of the contract based upon Modification 
No. P00002, and to the extent it failed to assign the mandated quantity of temporary 
registrars in the option year of the contract based upon Modification No. P00003. 
Under ASBCA No. 56337, the Board held that the government breached the contract 
by its failure to award to appellant the first Award Term. CI2, Inc., ASBCA 
Nos. 56257, 56337, 14-1BCA~35,698, ajf'd as clarified on recon., 15-1 BCA 
~ 35,829. Familiarity with our decision is presumed. 
The Board remanded the appeals to the parties to address quantum but the 
parties were unable to settle, and appellant sought reinstatement. On 23 April 2015, 
the Board granted reinstatement under ASBCA No. 59948 and issued an order on 
proof of costs/damages. Appellant filed its SOCD on 8 June 2015. The government 
filed its response on 8 July 2015. 

On 16 July 2015, the Board issued an order requesting proposals from the 
parties on further proceedings. By email dated 28 August 2015, the parties moved to 
submit their quantum positions 
on the record pursuant to Board Rule 11. The Board 
approved the parties' request and issued a schedule, which allowed for the submission 
of additional evidence, briefing and oral argument. 
FINDINGS OF FACT 
Alleged Damages for Failure to Assign Mandated Personnel 
1. Appellant's SOCD claimed damages based upon the contract price that 
appellant would have received if the government had assigned the registrars and 
temporary registrars, in full, as mandated by the contract modifications. Its claim for 
the base year is summarized below: 
Registrars: Base Year 
Total FFP Contract Amount 
360.50 months x $4,080 per month 
Less: Amount Paid by Government 
Less: Absent Registrars 
Amount Due 
(ASBCA No. 56257 (56257), SOCD at 4-5) 
Temporary Registrars: Base Year 
Total FFP Contract Amount 
354 months x $3,440 per month 
Less: Amount Paid by Government 
Amount Due 
(56257, SOCD at 7) 
= $1,470,840.00 
= $1,414,250.40 
= $816.00 
$55,773.60 
= $1,217,760.00 
= $1,079,265.60 
= $138,494.40 
2. Appellant's claim for the option year is summarized below: 
Temporary Registrars: Option Year 
Total FFP Contract Amount 
216 months x $3,509 per month 
Less: Amount Paid by Government 
Amount Due 
2 
= $757,944.00 
= $160,074.61 
= $597,869.39 

(56257, SOCD at 11)1 Appellant also appears to seek interest under the Prompt 
Payment Act (PPA) and the CDA. Appellant's certified claim dated 8 February 2006 
(R4, tab 23) did not assert a CDA claim for PP A interest. 
3. The government's response to the SOCD challenged appellant's quantum 
methodology on a number of grounds. The government contended that appellant 
improperly used the fixed contract rates-a gross revenue figure-without deducting 
any cost savings it realized by not providing the additional personnel required by the 
contract modifications (gov't resp. at 3). Appellant's SOCD stated that no deduction 
should be made because "expenses have already been incurred and paid by Appellant" 
(56257, SOCD ~ 50). However, at oral argument, appellant conceded that appellant 
did not pay the wages for the standby 
registrars and temporary registrars that were not 
assigned by the government (tr. 19), and we so find. 
4. With respect to the claim for the registrars for the base year, appellant deducted 
from the claimed contract rate/gross revenue figure the amount paid by the government 
for these registrars, which constituted the units delivered by appellant. The government 
was of the view that this deducted amount was inaccurate since it failed to account for 
those units actually assigned by the government to the various sites but not fully 
delivered by appellant due to the periodic absence of registrars (gov't resp. at 4 ). 
Appellant's damages formula compensated for absenteeism by crediting the government 
with 6 days of absence during the base year in accordance with the affidavit of 
Ms. Kenner, a corporate officer of appellant with personal knowledge of the contract 
(supp. R4, tab 88). The absentee credit was determined by obtaining a daily contract rate 
for the registrars of $136.00 ($4,080/month divided by 30 days) and multiplying that 
daily rate by 6 days of absence to obtain the credit of $816.00.2 
5. With respect to appellant's claim for temporary registrars in the base and 
option years, since there was nothing of record indicating that these units were affected 
by absences, the government acknowledged that for purposes of quantum, the 
delivered/paid quantities were the same as the quantities actually assigned by the 
government (gov't resp. at 6). 
1 Appellant's SOCD also asserted recovery for the government's failure to assign 
permanent registrars for the option year in the amount of $37,859.60 (56257, 
SOCD at 9), but at oral argument appellant acknowledged 
that it was unable to 
find a basis for such recovery in the Board's entitlement decision (tr. 23). This 
portion of appellant's claim is denied. 
2 We modify this absentee rate slightly to reflect that working hours under the contract 
were generally Monday through Friday (R4, tab 12 at 22), roughly 21 days per 
month, not 30 days per month as claimed. Using the former number to obtain a 
daily rate ($4,080 divided by 21), the credit for 6 days of absence is $1,165.71, 
not $816.00 as claimed. 
3 

Alleged Damages for Failure to Award First Award Term 
6. Appellant's SOCD that calculated damages/lost profit for the government's 
failure to award the first Award Term is summarized as follows: 
CLIN 2001-Project Manager 
CLIN 2002-Registrars 
Contract Amount if first Term Awarded 
Profit Rate on Contract (Base and Option Years) 
Lost Profit on first Award Term 
($1,978,596.00 x 39.6%) 
$196,116.00 
$1,782,480.00 
$1,978,596.00 
39.6°/o 
$783,524.02 
(ASBCA 56337, SOCD at 3). Appellant also appeared to seek interest under the PPA 
and the CDA. Appellant's certified claim dated 20 December 2007 (supp. R4, tab 58) 
did not assert a CDA claim for PP A interest. 
7. The SOCD stated that the profit rate of 39.6% was established by the profit rate 
that appellant experienced for the base and option years of the contract "as shown in the 
financial statement attached hereto as Exhibit 2" (56337, SOCD at 14). This financial 
statement was a "JOB SUMMARY REPORT" (JSR) dated 18 October 2007 that provided 
cost and revenue data for the contract. Appellant included the JSR in the supplemental 
Rule 4 file, and the document was admitted into evidence. (Supp. R4, tab 78) 
8. The government challenges appellant's claimed profit rate as "implausibly 
high" (gov't resp. at 2). The government also contends that the JSR failed to rely on 
actual cost data to support the claimed actual profit rate (id.). The government's brief 
also argues that the JSR contained discrepancies and was so unreliable 
that it should be 
disregarded, and appellant should be awarded zero damages. 
9. Appellant's SOCD also sought to expand its entitlement beyond that 
determined by the Board in its entitlement decision to include damages for the 
government's failure to award the second Award Term. In support, it proffered an Army 
procurement synopsis dated 11 January 2012 that provided notice of an exercise of an 
option under an IACS contract that was originally awarded on 9 January 2007. Appellant 
included this document in its Rule 
4 supplement on 18 December 2015 (supp. R4, 
tab 89), but the government objected. By order dated 1 February 2016, the presiding 
judge sustained the government's objection and excluded the document, holding that it 
was of questionable relevance. He also ruled that it was untimely insofar as it should 
have been tendered during the entitlement proceedings in 2013 and appellant provided no 
explanation for its tender at this late date. We affirm that decision. 
4 

The DCAA's Review of the JSR 
10. Per the government's request, the Defense Contract Audit Agency (DCAA) 
reviewed the JSR and the data provided by appellant, and issued a memorandum to 
counsel dated 19 October 2015. The government included the memorandum in the 
supplemental 
Rule 4 file, and the document was admitted into evidence 
(supp. R4, tab 100). 
11. This DCAA memorandum provided "comments on CI2, Inc.' s calculation 
of its claimed profit rate of 39.6 percent and the supporting documents it submitted to 
the Government..." (supp. R4, tab 100 at 1 ). The memorandum also stated: 
(Id.) 
The information provided in this memorandum is being 
provided for informational purposes only .... We have not 
specifically examined this information, nor do we express 
any opinion on the information as presented. 
12. With respect to direct labor costs, DCAA found a discrepancy of $163,864 
between the direct labor cost identified in the JSR for the contract, in the amount of 
$2,129,069, and the total amount found in the labor support documents, $2,292,933. 
Appellant did not dispute this discrepancy. DCAA also discovered that a number of 
employee W-2 forms were missing for certain employees. These W-2 forms were 
subsequently provided by appellant. (Supp. R4, tab 100 at 3-4) 
13. With respect to the subcontract costs for Advanced Computer Technology 
(ACT), for fiscal year (FY) 03, DCAA compared the ACT costs in the JSR with those 
in the ACT General Ledger, and found that the latter contained costs in the amount of 
$170, 197 that were not identified in the JSR (supp. R4, tab 100 at 5). This also was 
not disputed by appellant. For FY 03, the DCAA also found ACT costs in the amount 
of $581,565 that did not appear in the JSR (id.). Appellant explained that these 
payments to ACT were paid on other contracts (supp. R4, tab 85 at 2, ~ 7). For FY 04, 
DCAA also identified two transactions, each in the amount of $16,020, that were not 
included in the JSR. This also was not disputed. (Supp. R4, tab 85 at 2, ~ 6) 
14. With respect to appellant's indirect costs, the JSR did not allocate appellant's 
actual indirect costs incurred for each fiscal year. Rather, the JSR relied upon a 
rate for 
"Fringe" at 7.2% for each 
fiscal year, and relied upon a rate for "General and 
Administrative" (G&A) at 4.1 % (FY 03 ), 4.2% (FY 04 ), and 4.1 % (FY 05). Appellant 
advised DCAA that these rates were its "contract rates," that is, the rates proposed by 
appellant to build up its price proposal and that was subject to the government's original 
5 

pncmg review. (Supp. R4, tab 100 at 9) By memorandum dated 24 January 2003, the 
contracting officer determined that "[t]he WCC Financial Services Team considers 
[appellant's] indirect costs and overhead reasonable for the organizational structure 
proposed" (R4, tab 11 ). 
DECISION 
The RESTATEMENT (SECOND) OF CONTRACTS § 344 ( 1981 ), sets forth the 
pertinent principles underlying the judicial remedies for breach of contract: 
Judicial remedies under the rules stated in this Restatement 
serve to protect one or more of the following interests of a 
prom1see: 
(a) his "expectation interest," which is his interest in 
having the benefit of his bargain by being put in as good a 
position as he would have been in had the contract been 
performed, 
b) his "reliance interest," which is his interest in 
being reimbursed for 
loss caused by reliance on the 
contract by being put in as good a position as he would 
have been in had the contract not been made, or 
( c) his "restitution interest," which is his interest in 
having restored to him any benefit that he has conferred on 
the other party. 
In this case, appellant seeks "the benefit of his bargain" arising out of the 
government breach of this contract. Accordingly, appellant's theory of recovery is 
based upon§ 344(a), that is, the protection of its expectation interest, otherwise 
known as "expectancy damages." 
ASBCA No. 59948-Damages for Failure to Assign Personnel Mandated by Contract 
Modifications 
With respect to the measurement of expectancy damages, the RESTATEMENT 
(SECOND) OF CONTRACTS§ 347 (1981) provides as follows: 
Subject to the limitations stated in §§ 350-53, the injured 
party has a right to damages based on his expectation 
interest as measured by 
6 

(a) the loss in the value to him of the other party's 
performance caused by its failure or deficiency, plus 
(b) any other loss, including incidental or 
consequential loss, caused by the breach, less 
(c) any cost or other loss that he has avoided by 
not having to perform. [Emphasis added] 
This principle has been restated in many breach of contract cases. See, e.g., Boston 
Edison Co. v. United States, 658 F.3d 1361, 1369 (Fed. Cir. 2011), where the Court stated 
as follows: 
In Southern Nuclear Operating Co. v. United States, 
637 F.3d 1297, 1304 (Fed. Cir. 2011), we explained that a 
non-breaching plaintiff bears the burden of persuasion to 
establish both the costs that it incurred and the costs that it 
avoided as a result of a breach of contract. The breaching 
party may be responsible for affirmatively pointing out 
costs that were avoided, but once such costs have been 
identified, the plaintiff must incorporate them into a 
plausible model of the damages that it would have incurred 
absent the breach. [Citations omitted] 
See also Bluebonnet Savings Bank, F.S.B. v. United States, 339 F.3d 1341, 1345 (Fed. 
Cir. 2003) (breach damages must be reduced by the costs that plaintiff would have 
incurred absent the breach). 
Appellant's damage calculations for this breach of contract fail to account for 
the costs that appellant avoided or saved through the government's failure to make the 
required personnel assignments. At oral argument, appellant conceded that it did not 
pay the wages of those personnel that were on stand-by but were not assigned as 
required (tr. 19). Notwithstanding, appellant's damage calculations are based upon the 
full, gross contract revenue for these registrars and temporary registrars (finding 1 ), 
which contract prices include a portion for wages that appellant did not pay. Under the 
well settled law above, appellant's "gross revenue" approach to the measure of breach 
damages is improper. 
Appellant's methodology also results in placing appellant in a better position 
than if the government had fully performed and made all the required assignments. 
This is also contrary to the well-settled law. See Bluebonnet Savings Bank, 339 F.3d at 
1344-45 (quoting Mass. Bay Transp. Auth. v. United States, 129 F.3d 1226, 1232 (Fed. 
Cir. 1997)) ("One of the basic principles of contract damages is that 'damages for 
breach of contract shall place the wronged party in as good a position as it would have 
been in, had the breaching party fully performed its obligation.' Thus, the 
7 

non-breaching party should not be placed in a better position through the award of 
damages than if there had been no breach."). 
Based upon the foregoing, we must deny appellant's request for the gross contract 
revenue it would have realized ifthe government made all required assignments 
mandated by the contract modifications. Whether a fair "lost profit" percentage for the 
contract may be applied to these gross revenues will be addressed below. 
ASBCA No. 59948-Damages for Failure to Award First Award Term 
"To recover lost profits for breach of contract, the plaintiff must establish by a 
preponderance of the evidence ... that: (1) the loss was the proximate result of the 
breach; (2) the loss of profits caused by the breach was within the contemplation of the 
parties ... ; and (3) a sufficient basis exists for estimating the amount of lost profits with 
reasonable certainty (citations omitted)." Energy Capital Corp. v. United States, 
302 F.3d 1314, 1324-25 (Fed. Cir. 2002). We first address whether appellant has 
shown a loss that was the proximate result of the government's breach. 
As we found in our entitlement decision, after appellant was wrongfully denied 
the first Award Term by the government, appellant pursued the new Request for 
Quotation under the GSA Schedule in the hopes of obtaining that award. Appellant 
submitted a proposal that slashed its unit monthly prices from those in the original 
contract. See, e.g., Registrars, $4,080 (Base Year); $4,160 (Option Year); $4,244 
(First Award Term); $3,650 (GSA proposal) (R4, tab 12; supp. R4, tab 52 at 45). 
Prices were reduced for other personnel as well. It strains credulity that appellant 
would have pursued this new contract - at drastically reduced prices - if the base and 
option years were not otherwise profitable. We also note that if the government would 
have awarded appellant the first Award Term, as required, appellant would have been 
entitled to even higher revenues based upon the Award Term prices that appellant 
proposed under the original schedule (e.g., $4,244 per month for Registrars above). 
We are persuaded that this contract was quite profitable for appellant, and that 
appellant was damaged by the government's failure to award to appellant the first 
Award Term. We are persuaded that appellant's loss was the proximate result of the 
government's breach and that this loss was within the contemplation of the parties and 
was reasonably foreseeable. We next address whether a sufficient basis exists in the 
record for estimating the amount of appellant's lost profits with reasonable certainty. 
Given the discrepancies found in the JSR, many of which were undisputed by 
appellant (findings 12-14), we conclude that the record does not support appellant's 
claimed entitlement to lost profit on this contract in the exceptional amount of 39.6%. 
It does not follow, however, that this requires us to disregard the JSR and award zero 
damages to appellant, as the government argues. It is the Board's responsibility to 
8 

weigh the JSR and all the evidence ofrecord. 3 We do not believe that the JSR should 
be disregarded. The major cost under this contract was direct labor. Appellant 
provided actual source data of employee salaries that, for the most part, substantiated 
the labor figures in the JSR (finding 12). 
For Fringe and G&A, it is true that the JSR used the overhead rates that were 
part of its build-up of price for the original contract, in lieu of allocations of actual 
indirect cost for each fiscal year, but the record shows that prior to award the 
government considered appellant's indirect costs and overhead reasonable for the 
organizational structure proposed (finding 14). The government argues that perhaps 
appellant's actual indirect costs under the contract were so great that they caused a loss 
under the contract. The government cites no persuasive evidence to support such an 
argument, and it is also inconsistent with appellant's pursuit of the GSA schedule 
contract at reduced prices as stated above. 
We believe a sufficient basis exists in this record for estimating the amount of lost 
profits experienced by appellant with reasonable certainty due to the government's failure 
to award appellant the first Award Term. We consider the JSR and all the evidence of 
record as a whole to provide for a fair estimate of appellant's lost profits under this 
contract in the amount of 15%, and we apply this estimated lost profit rate to appellant's 
lost revenues on the remaining claims herein. 4 See attached Appendix for the 
calculations. In this respect, we find instructive the Court's statement in Bluebonnet 
Savings Bank, F.S.B. v. United States, 266 F.3d 1348, 1355 (Fed. Cir. 2001): 
The ascertainment of damages is not an exact 
science, and where responsibility for damage is clear, it is 
not essential that the amount thereof be ascertainable with 
absolute exactness or mathematical precision: "It is 
enough ifthe evidence adduced is sufficient to enable a 
court or jury to make a fair and reasonable approximation." 
[Citations omitted] 
We have considered all the government's arguments seeking to deny appellant 
all recovery but are not persuaded by them. Specifically we reject, for lack of proof, 
the government's contention that appellant is liable for spoliation of evidence. See 
Ensign-Bickford Aerospace & Defense Co., ASBCA No. 57929, 13 BCA ~ 35,322 
(and cases cited therein). 
3 The weight to be given any evidence "will rest within the discretion of the Board." 
Board Rule ll(d). 
4 We are mindful that appellant may have had different actual profit rates for 
registrars and temporary registrars under the contract, but we believe that the 
estimated contract-wide rate we have determined is fair and consistent with law. 
9 

CONCLUSION 
With respect to ASBCA No. 56257, appellant is awarded $118,768.15, plus 
CDA interest from the date the contracting officer received the certified claim, dated 
8 February 2006 (R4, tab 23), which absent proof of receipt, we deem to be 
13 February 2006. With respect to ASBCA No. 56337, appellant is awarded 
$296,789.40, plus CDA interest from 2 January 2008, the date the contracting officer 
actually received the certified claim dated 20 December 2007 (supp. R4, tab 58). 
ASBCA No. 59948 is granted in part consistent with this opinion (see Appendix 
for itemization of damages). 5 
Dated: 6 June 2016 
I concur 
Administrative Judge 
Armed Services Board 
of Contract Appeals 
I concur 
/?7~~ :7!_-;4:--_M_·· ---
MARK N. STEMPLER ~ RICHARD SHACKLEFORD 
Administrative Judge Administrative Judge 
Acting Chairman Vice Chairman 
Armed Services Board Armed Services Board 
of Contract Appeals of Contract Appeals 
5 To the extent appellant also seeks PPA interest, we are without jurisdiction over the 
matter because appellant failed to file a CDA claim for this interest. Firth 
Construction Co., ASBCA No. 51660, 00-1BCA~30,587 at 151,048. 
10 

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. 59948, Appeal ofCI 2, Inc., 
rendered in conformance with the Board's Charter. 
Dated: 
Attachment: 
Appendix 
11 
JEFFREY D. GARDIN 
Recorder, Armed Services 
Board of Contract Appeals 

APPENDIX 
CALCULATION OF DAMAGES ASBCA No. 59948 
ASBCA No. 56257 Registrars: Base Year 
Total FFP Contract Amount 
360.50 months x $4,080 per month 
Less: Amount Paid by Government 
Subtotal 
Less: Absent Registrars 
Subtotal 
Lost Profit at 15°/o 
= $1,470,840.00 
= ($1,414,250.40) 
= $56,589.60 
= ($1,165.71) 
= $55,423.89 
= $8,313.58 
ASBCA No. 56257 Temporary Registrars: Base Year 
Total FFP Contract Amount 
354 months x $3,440 per month 
Less: Amount Paid by Government 
Subtotal 
Lost Profit at 15°/o 
= $1,217,760.00 
= ($1,079,265.60) 
= $138,494.40 
= $20,774.16 
ASBCA No. 56257 Temporary Registrars: Option Year 
Total FFP Contract Amount 
216 months x $3,509 per month 
Less: Amount Paid by Government 
Subtotal 
Lost Profit at 15°/o 
= $757,944.00 
= ($160,074.61) 
= $597,869.39 
= $89,680.41 
ASBCA No. 56337 Damages for First Award Term 
CLIN 2001-Project Manager $196,116.00 
CLIN 2002-Registrars = $1,782,480.00 
Contract Amount/Gross Revenue first Award Term = $1,978,596.00 
Profit Rate on Contract (Base and Option Years) 15.0°/o 
Lost Profit on first Award Term = $296,789.40 
TOTAL DAMAGES AWARDED ........................... $415,557.55 
($8,313.58 + $20,774.16 + $89,680.41 + $296,789.40)