Vistas Construction of Illinois, Inc.
Docket: ASBCA 58479, ASBCA 58480, ASBCA 58481
Decision date: 2016-01-12

ARMED SERVICES BOARD OF CONTRACT APPEALS 
Appeals of --
Vistas Construction of Illinois, Inc. 
Under Contract No. W912P8-08-C-0036 
APPEARANC ES FOR THE APPELLANT: 
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APPEARANCES FOR THE GOVERNMENT: 
ASBCA Nos. 58479, 58480, 58481 
58482, 58483, 58486 
58487, 58488 
Thomas 0 . Mason , Esq. 
Francis E. Purcell , Jr., Esq. 
Cooley LLP 
Washington , DC 
Thomas H. Gourlay, Jr., Esq. 
Engineer Chief Trial Attorney 
William G. Meiners , Esq. 
Engineer Trial Attorney 
U.S. Army Engineer District, New Orleans 
OPINION BY ADMINISTRATIVE JUDGE O'CONNELL 
These appeals arise out of a contract between appellant, Vistas Construction of 
Illinois, Inc. (Vistas) , and the U.S. Army Corps of Engineers , New Orleans District, 
(Corps) to enlarge a levee in 
Louisiana. After the conclusion of the project, Vistas 
submitted a request for equitable adjustment (REA) seeking more than $17 million for a 
variety of issues, which it later certified as a claim. The contracting officer decided that 
Vistas was entitled to about $1.15 million. Vistas appealed to the Board, which assigned 
the discrete issues 10 ASBCA numbers of which eight remain. 1 The Board held a 
four-day hearing in Falls Church , Virginia , from 26-29 January 2015. At the hearing, the 
Board admitted large Rule 4 file supplements from both parties , including Vistas ' REA, 
which alone consists of more than 44 volumes. Both entitlement and quantum are before 
us. For the reasons set forth in this opinion we sustain ASBCA Nos. 58483 and 58488 in 
part. All other 
appeals are denied or dismissed. 
FINDINGS OF FACT 
The Project 
The contract is a post-Hurricane Katrina project at Lake Cataouatche in Jefferson 
Parish, Louisiana, which provided for the enlargement of approximately 5,000 feet of 
1 ASBCA Nos. 58484 and 58485 were previously dismissed at the request of 
appellant. 

levee. The work included placement of bedding stone, construction of temporary 
granular fill closures, granular fill, compacted and uncompacted fills, installation of two 
rows of 54-inch diameter double walled plastic pipe culverts, excavation within the 
existing drainage canal, levee degrading, sheetpile installation, grouted stone scour 
protection, rip rap, and above and below water surface geotextile placement. Vistas 
agreed to perform the work for a firm-fixed-price of $I4 ,622,356.54. (Ex. A-883 
(hereinafter "REA"), tab E.I at 5; R4, tab I at I; R4, appx. at I, 3) 
The contracting officer executed the contract on I 9 March 2008 and issued a 
notice to proceed on 28 March 2008 (R4, tab 6). Vistas started work on-site on 
24 April 2008 (supp. R4, tab 69 at 3; tr. 2/25). The contract provided for completion 
within 320 days (R4, app'x, tab A, § 00700, if 52.2I I-IO). 
Changes to the Work 
Almost immediately, Vistas discovered a problem with the contract drawings, 
which it described in a letter to the Corps dated 9 May 2008 (R4, tab 7 at I). The Request 
for Proposals (RFP) included drawing L-04 (New Sheet Pile and Culvert 
Section - Typical Section I). In the RFP, this drawing indicated in a 325-foot section 
from station I2I +75 to I25+00 that the levee would be constructed with a I vertical, 
4 horizontal (IV on 4H) slope of compacted fill (REA, tab E.I at 566). For unexplained 
reasons, the executed contract contained a different version of L-04, which included a new 
detail showing a slope of IV on I2H ofuncompacted fill from station I2I +25 to I23+43, 
a distance of about 2I 8 feet. From station I23+43 to I25+00 the drawing was consistent 
with the RFP drawing in that it depicted a IV on 4H slope of compacted fill. (Compare 
REA, tab E.I at 566 with tab E.2 at I06 & R4, app'x , tab Bat L-04) 
The geometry of the IV on I2H slope was not feasible because it would have 
extended the work outside the right of way (tr. 3/82). Nevertheless , Vistas stated in its 
9 May 2008 letter that field representatives of the Corps had directed Vistas to "continue 
placing compacted fill in the canal per the IV to I2H slope detail" (R4, tab 7 at 2). 
Because more fill would be required to construct the IV on I 2H slope, Vistas also asked 
the Corps to "clarify how the additional fill materials are to be paid for" (id.). 
The Corps seemingly solved the problem four weeks later on 6 June 2008 when it 
issued Modification No. A00002 (A00002). This modification included a new L-04, in 
which the detail showing the IV on I2H slope had been removed . The drawing now 
indicated that the entire length from station I2I+75 to I25+00 would be a IV on 4H slope 
of compacted fill, just as depicted in the RFP drawings. (supp. R4, tab 8 at 3, 4) 
With respect to compensation for the changed work, A00002 provided that no partial 
payments would be made under the modification. Rather, payment would be directed by a 
separate modification containing an agreed upon equitable adjustment. (Supp. R4, tab 8 at 3) 
2 

Vistas began performing the work with the 1 V on 4H slope, but a new problem 
developed before the parties definitized A00002. At 2:00 p.m. on 13 July 2008 , the 
Corps' inspector noticed that the embankment had begun to fail, that is, it had begun to 
shear and move towards the water in a nearby ditch. The inspector directed Vistas to stop 
work for safety reasons. (Supp. R4, tab75 at GOV46816-17) On the following day, that 
same inspector described the incident as "a severe embankment failure " (id. at 
GOV46812) . This embankment failure occurred in the 168 feet between station 121+75 
and 123+43 ; thus it was within the area that went from a 1Von4H slope in the RFP 
drawings , to 1 V on 12H after award , and then back to 1 V on 4H in A00002. The Corps 
absolved Vistas of any responsibili ty for the slope failure and recognized that the design 
needed to be changed (supp. R4, tab 13 at GOV43196). 
The area where the work had to be stopped due to the slope failure was on the 
critical path for the project and, due to phasing in the contract , there was no other work 
available (supp. R4, tab 13 at GOV43196). While the Corps approved some 
out-of-sequence work , it is clear that the slope failure caused a major delay (see id.). 
The Corps did not change the design immediately; it required until 7 October 2008 
to issue Modification No . POOOOl (POOOOl) to repair the drainage canal slope failure and 
to revise the pipe installation procedure (supp. R4, tab 28 at 1-2). The modification 
included a new L-04 , which now depicted a 1 V on 7H slope of compacted fill from 
station 123+43 to 125+00 (supp. R4, 8 April 2015 filing), which would have been 
adjacent to the area that suffered the slope 
failure. 
POOOOl contained only a short explanation of the nature of the change, stating that 
"[t]his modification is to repair the drainage canal side slope failure and to revise the pipe 
installation procedure. " It then listed seven drawings and six specification sections that 
were being replaced. (Supp . R4, tab G-28 at 2) 
In a memorandum to the Corps Office of Counsel from Stuart Waits , P.E., chief, 
construction division, dated 27 August 2012 , Mr. Waits described the POOOOl work as 
"changing the pipe installation method. " Mr. Waits stated that before POOOOl, Vistas 
would excavate the canal , add geotextile fabric, add bedding material , then dewater and 
place pipe culvert. After the modification , Vistas was required to dewater prior to 
excavation . (App. supp. R4, tab 1157 at 2, ii 17) 
At the hearing , the Corps construction manager, Ezra Batte , elaborated on the 
difficulties presented by dewatering prior to excavation. According to Mr. Batte , 
excavating in wet conditions in some respects is more difficult than a dry excavation 
because the contractor has to pull the dirt through water and place it on the ground where 
it does not hold any particular form. The contractor has to wait for the dirt to dry on the 
ground or place it in a lined truck that will hold the water. However , excavating in the dry 
presented Vistas a different set of problems because the weight of the water was no longer 
there to hold the side slopes in place, and cave-ins occurred. Moreover, when Vistas 
3 

placed the rock, mudwaves began to develop; Vistas would then push the mud waves out 
of the way and excavate again. (Tr. 3/84-85) 
In terms of payment for the changed work , POOOO 1, like A00002 , stated that the 
modification did not include any additional payment and that any such change would 
occur through a separate modification containing an agreed upon equitable adjustment. 
The modification contained a definitization schedule that provided 
for Vistas to submit a 
proposal by 6 November 2008, for negotiations to begin on 17 November , and for a 
modification to issue by 28 November 2008. (Supp. R4, tab 28 at 2-3) 
During this time period, the Corps believed that it would be entitled to a credit as a 
result of POOOOl. A 22 September 2008 memorandum from the Corps engineering 
division to the construction division estimated the savings at $1,685,692 (app. supp. R4, 
tab 78 at 3) and, as late as 23 January 2009, the Corps still estimated the credit to be more 
than $1 million (supp. R4, tab 17 at GOV43072). At the hearing , Mr. Batte attributed 
these conclusions to the relative inexperience of his predecessor as construction manager 
and her focus upon the cost savings that resulted from excavating "in the dry" without 
recognizing the increased difficulties that it presented (tr. 3/84). 
The Vistas ' Proposal and the DCAA Audit 
Due to the expectation of a credit for the POOOO 1 work , the Corps must have been 
quite surprised when it received a proposal from Vistas on 19 December 2008 seeking 
more 
than $18.5 million to perform the changed work (REA, tab E.9). The proposal 
included a six-page letter from Vistas along with more than 400 pages of spreadsheets and 
other documentation. Notably, for reasons which will become clear when we discuss the 
amounts for profit and G&A in the REA, Vistas sought 10% profit and 10% G&A in the 
19 December proposal (id. at 173). 
On 22 January 2009, the contracting officer 
wrote to Vistas instructing it to 
"resubmit its proposal in accordance with the format specified in Table 15-2, 
(INSTRUCTIONS FOR SUBMITTING COST/PRICE PROPOSALS WHEN COST OR 
PRICING DATA ARE REQUIRED), of FAR 15.408" (app. supp. R4, tab 186). She also 
informed Vistas that the Corps would require an audit under FAR 15.404-2, which 
effectively made the rapid definitization schedule impossible. Vistas thereafter revised 
the proposal in letters dated 19 February 2009 and 13 March 2009 (R4, tabs 14-15). In 
the 13 March submission, Vistas raised the amount it sought to $24,826,181.78, although 
the amount now also included the work involved with modification A00007 dated 
5 February 
2009, which addressed differential settlement of culvert pipe (R4, tab 15 at 2). 
The contracting officer informed Vistas that the audit could take up to 90 days to 
complete (app. supp. R4, tab 193 at 3). DCAA did not issue its report , however, until 
4 June 2010, more than 16 months later (supp. R4, tab 14). The lack of a completed audit 
impeded the Corps' ability to definitize and pay Vistas for the POOOO 1 work. We discuss 
4 

the audit and a related criminal investigation in more detail below in our discussion of 
ASBCA No. 58483. 
The Corps Makes Partial Payments to Vistas 
The parties agree that during the course of the project the Corps made 19 payments 
to Vistas totaling $21,246,217.77 (R4, tab 1 at 6; tr. 2/21-22). These records reflect 
regular invoices and payments to Vistas from June to December 2008: 
No. Invoice Date 
1 09 Jun 2008 
2 02 Jul 2008 
3 14 Aug 2008 
4 02 Oct 2008 
5 20 Nov 2008 
(R4, tab 1 at 6, tab 29) 
Due Date 
23 June 2008 
16 July 2008 
28 Aug 2008 
02 Oct 2008 
04 Dec 2008 
Subtotal: 
Amount 
$1,448, 303 .22 
$ 
1,923,125.19 
$ 566.08 
$ 393,908.70 
$ 2,462,634.36 
$ 6,228,537.55 
Due to the language in A00002 and POOOOl (as well as other modifications), which 
provided that there would be no partial payments and that payment would be made only 
after the issuance of an agreed upon modification , Vistas temporarily stopped submitting 
invoices after invoice no. 5 dated 20 November 2008 (R4, tab 1 at 6). On 20 January 2009, 
Vistas' president, Samuel Zepeda, Jr., wrote to the contracting officer requesting an interim 
payment (app. supp. R4, tab 180). Mr. Zepeda observed that in light of the DCAA audit he 
anticipated two or more months before Vistas could submit another payment application but 
that it could not withstand the financial impact of not billing on the contract and continuing 
to finance the changed work (id.). 
On the following day, 21 January 2009, the contracting officer, Cynthia Nicholas, 
wrote to another Corps official, Timothy Roth, stating "there are several small 
modifications on this contract that are old. I thought I could give him a partial pay on the 
large one that Jenny is working on but since talking with her I don't think 
that is possible 
at this time." (App. supp. R4, tab 184) ("Jenny " is presumably Jennifer Honeycutt , the 
construction manager at that time.) Ms. Nicholas further stated "Is there any way we can 
get 
some of these smaller ones finalized so we can pay him. He is an 8(a) contractor and 
I feel like these small mods could be done very quickly and easily." (Id.) 
By letter dated 23 January 2009, the contracting officer requested a meeting with 
Vistas on 3 February 2009 "to discuss the possibility of a partial payment." She further 
stated that "I do understand that you have not been able to invoice the Government for 
payment since October 31, 2008, and as a small business, you must have income to 
finance your operations." (App. supp. R4, tab 193) 
5 

The parties met on 3 February as planned (App. supp. R4, tab 1157 at 2, ii 24), 
leading to the issuance on 19 February 2008 of Modification No. P00003 (P00003), 
which provided for a partial payment of $500 ,000 for the POOOO 1 work (supp. R4, tab 28 
at 5-6). The Corps thereafter paid Vistas this amount. 
The record reflects fairly regular payments by the Corps to Vistas from March 2009 
until July 2010, when, as discussed below , the Corps deleted the remaining work from 
Vistas' contract: 
No. 
6 
7 
8 
9 
10 
11 
12 
13 
14 
15 
16 
Invoice Date 
11Mar2009 
18 Mar 2009 
14 May 2009 
01Jul2009 
4 Sept 2009 
26 Oct 2009 
18 Dec 2009 
01Mar2010 
21Apr2010 
28 May 2010 
29 Jun 2010 
Due Date 
25 Mar 2009 
01Apr2009 
28 May 2009 
15 July 2009 
18 Sept 2009 
09 Nov 2009 
01Jan2010 
15 Mar 2010 
05 May 2010 
11June2010 
13 Jul 2010 
Subtotal Invoice 1-16 
(R4, tab 1 at 6, tab 29 at 16-49) 
Amount 
$ 601,653.99 
$ 290 ,000.00 
$ 1,700,000.00 
$ 924 ,
431 .54 
$ 2,500 ,000 .00 
$ 
1,132,943 .21 
$ 1, 400 ,000.00 
$ 965 ,000.00 
$ 
1,664,999 .99 
$ 846,146.82 
$ 992 ,504.97 
$19 ,246,218. 07 
The invoices Vistas submitted after invoice no. 6 included significant amounts for 
the A00002 and POOOO 1 work. In fact, the record indicates that the payments for invoice 
nos. 8 to 16 were almost entirely directed at the A00002 and (mostly) the POOOOl work. 
(Supp. R4 , tab 28 at 8-39 ; R4, tab 29 at 22-51) 
On 26 July 2010, the contracting officer issued Modification No. POOO 17 (POOO 17), 
which deleted the remaining contract work (supp. R4 , tab 28 at 40). At the hearing , the 
contracting officer testified that she issued this modification because the Corps was "trying 
to meet schedules and Vistas was having a hard time completing the project " (tr. 4/80). 
The Corps Adopts a Total Cost Approach and Vistas Submits an REA 
By the time DCAA issued the audit report on Vistas ' revised proposal on 
4 June 2010 , Vistas had been working on the project for more than two years and had 
performed most of the work it would perform due to the deletion of the remaining work 
the following month as noted above. Thus , by the time that DCAA issued its report , the 
report was largely irrelevant because Vistas had performed the work and there was actual 
cost data. 
6 

According to Mr. Batte , the Corps faced a dilemma in determining how to finalize 
compensation for the .modifications. On the one hand , it did not see a way to measure the 
difference in time and cost between excavating in the dry versus the wet. Although the 
Corps based its determination that Vistas was entitled to additional compensation for 
POOOOI on the mud waves that developed , Mr. Batte testified that the wet excavation may 
also have presented problems with such waves. (Tr. 3/96) In addition , Mr. Batte testified 
that while the IV on 7H slope required more dirt to construct , it was also easier to operate 
heavy equipment on the more gradual slope (tr. 3/83, 97). 
Mr. Batte discussed how to proceed with his supervisor ; they w ere concerned that 
by paying Vistas on a total cost basis the Corps would be paying for cost increases for 
which the Corps was not responsible. However , they settled upon the total cost method 
for lack of a better alternative . (Tr. 3/96, 99) 
It is clear that there was a wide gap in the parties ' expectations as to how Vistas 
should proceed with finalizing compensation for the modifications . Mr. Batte testified that 
he asked for "a simple accounting of their , what I would call hard costs. Labor , materials , 
supplies, subcontractors , etcetera , field office overhead , you know whatever they spent 
essentially ." Mr. Batte informed both Samuel and Ignacio Zepeda (Vistas president and 
project manager , respectively) of these expectations in June 2010 . (Tr. 3/99-100) 
Vistas ultimately took more than I 0 months after the discussions with Mr. Batte to 
prepare its REA, which is dated 26 April 2011. (Vistas later submitted a one-page 
certification of the REA as a claim on 3 May 2012 (R4 , tab 4)). Vistas rejected the 
Corps' total cost approach using what it referred to as "a reasonable actual cost approach 
and estimates of cost." (REA, Executive Summary (exec. summ.) at 2). 
The REA contains a 23-page executive summary, followed by a 29-page 
methodology of cost allocation with attached letters from its cost expert and attorneys. 
These materials are then followed by 44 binders of information . The heart of the analysis 
is contained in the first 26 binders , which contain five "levels " of "work papers ," that is, 
spreadsheets , in some cases quite lengthy, detailing various costs and calculations , along 
with supporting documents. 
In the REA, Vistas claimed entitlement to a total contract sum of $36,990,484. 71. 
Subtracting contract payments of $19 ,246,218.07 , it sought a net amount of $17,744,266.64. 
(Exec. summ. at 20-21) 
Subsequent to Vistas ' submission of the REA, the Corps made three further 
payments to Vistas in the latter part of201 l and early 2012 totaling $2 million (R4, tab 1 at 
6). The modifications that authorized these payments indicated that they were additional 
payments for the POOOOl work (supp . R4, tab 28 at 43-60). These payments brought the 
total amount paid to Vistas to $21,246 ,218.07. 
7 

The Corps analyzed the REA by breaking it down into components such as labor, 
equipment, profit and other categories (see R4, tab 1 at 18). Because the Board adopted this 
approach when it assigned ASBCA numbers to the matters in dispute , and because Vistas 
adopted it when it filed its complaint , we will continue with that approach. We observe that 
there is no pending issue involving payment for labor , materials , or equipment on either the 
changed or unchanged work. The issues before the Board involve: G&A, profit , interest , 
costs to respond to the DCAA audit , bonding costs , and REA preparation costs . 
G&A Expenses -ASBCA No. 58479 
ADDITIONAL FINDINGS OF FACT 
Vistas' initial bid price for this project was $16 ,050,700.86 , which included an 
"overhead" rate of 10% (exec . summ. at 1 O; supp . R4, tab 22). After the contracting 
officer notified Vistas that its price was high , Vistas reduced its price by more than 
$1.4 million , which resulted in the contract price of $14 ,622,356.54 (exec . summ . at 6). 
Vistas achieved this lower price by reducing its profit and G&A (id.). The final contract 
price included G&A of7.7% (supp. R4, tab 14 at 18; app. supp. R4, tab 413 at 8). 
In Vistas' 19 December 2008 proposal for POOOOl, it requested "overhead " of 10% 
(R4, tab 11, last page ; REA , tab E.9 at 173). In its 13 March 2009 amendment to that 
proposal
, Vistas increased its "general and administrative overhead expense " from 10 to 14% 
(R4, tab 15 at 1). 
In the REA, Vistas sought G&A of$2,585 ,601, or 13.7% of its direct costs (R4, tab 1 
at 18; compl. ii 126). The REA stated that Vistas had used a "value-added cost input" basis 
as defined in 48 C.F.R . § 9904.410-50 (Cost Accounting Standards) to determine G&A 
(exec. summ . at 14). The difference between using the contractor's total costs and value­
added cost input for the allocation base is that total cost includes everything except G&A 
while value-added removes materials and subcontractors from the base (tr. 3/54). 48 C.F.R. 
§ 9904.410-50( d)(2). A value-added base is used where inclusion of material and 
subcontract costs would significantly distort the allocation of the G&A expense pool in 
relation to the benefits received , and where costs other than direct labor are significant 
measures of total activity (tr. 3/54). 48 C.F.R . § 9904.410-50(d)(2). Vistas attached to the 
REA a letter from its eventual expert at trial, Darrell J. Oyer , CPA . In his letter , Mr. Oyer 
stated that Vistas had used an "added value base " and opined that this was permissible under 
the FAR and appropriate u·nder the circumstances (Oyer ltr. at 3 (exec. summ. at .pdf 56/83)). 
In her final decision , the contracting officer determined that use of the value-added 
approach was not appropriate. Among other things, she observed that Vistas had used a total 
cost input method on all modifications. She took the 2008 G&A rate determined by DCAA , 
8.5% (see R4, tab 25 at 19), and used that rate for the entire project. Multiplying 8.5% by 
total direct costs of $18 ,805,339, the contracting officer determined that Vistas was entitled 
to total G&A of $1,598,454 , about $987,000 less than Vistas sought (R4, tab 1 at 8-9). 
8 

In its complaint , Vistas contended that it had properly used a value-added base "at 
the advice of its expert consultant " and that it was entitled to $2,585,601 in G&A costs, 
which amounted to a rate of 13.7% (compl. ~ 126). In its prehearing brief filed just two 
weeks before the start of trial, Vistas continued to assert that it had used a valued-added 
base, but it now stated without explanation that it was entitled to application of a 13.5% 
rate (app. pre-hearing br. at 7-8). 
Vistas' Contentions at the Hearing 
At the hearing , Vistas changed its position. Vistas ' director of corporate affairs and 
finance, Maribel Zepeda , testified that in calculating G&A, "we took our experts advice and 
utilized the total cost input to capture 
a fair and actual amount of G&A" ( tr. 2/6). In fact, 
she went so far as to testify that she was not familiar with the value-added method and could 
not respond to a question about it (tr. 2/58). Subsequently , Mr. Oyer testified that Vistas 
had used a total cost input base (tr. 3/24), which contradicted his 25 April 2011 letter 
attached to the REA (exec. summ. at .pdf 54/83). 
During cross-examination , Mr. Oyer was fairly adamant and convincing that total 
cost input was the proper method for calculating Vistas ' G&A : 
Q. Now you state in this paragraph 10 that, in fact, 
Vistas used the total cost input method to calculate G&A. 
Is that correct? 
A. That 's correct, yes. 
Q. And are you confident of that? 
A. Yes. 
Q. And so you also are confident that Vistas did not 
use the value added method to calculate G&A? 
A. Yes. 
Q. Now is it your expert opinion that in this case it 
is appropriate for Vistas to use the total cost input method 
to calculate G&A? 
A. Yes. 
9 

(Tr. 3/54-56) 
Q. And that it is, in fact, the most appropriate 
method, correct? 
A. Yes. 
Q. And why is that? 
A. They did not have -- if you do a value added 
base , you need to also have subcontract administration 
material handling. So you can allocate some indirect costs 
to the materials and subcontracts . They don 't get a free 
ride under the value added .... 
[T]he company had not set up material handling 
subcontract administration pool in the past. We would have 
to go back and do that retroacti vely which sometimes is 
frowned on by auditors . 
Q. And so isn 't it correct , Mr. Oyer , that in your 
review of the accounting records of Vistas, you determined 
that it was Vistas' established practice to calculate G&A 
based upon the total cost input method ? 
A. Yes. 
Q. And isn't it correct that to your knowledge , Vistas 
has never used a value added method to calculate G&A? 
A. Not to my knowledge. 
During the government's cross-examination of Mr. Oyer an explanation for 
Vistas ' switch to a total cost input base emerged: using a rate of 13. 7% and a 
value-added base would actually reduce the amount of G&A to which Vistas is entitled to 
about $1.3 million , or about $300 ,000 less than the contracting officer awarded in her 
final decision (tr. 3/59-60; R4, tab 1 at 18). 
Vistas also called Louis Butler , the consultant who worked with Vistas during the 
project , as a witness. Contrary to Ms. Zepeda and Mr. Oyer , Mr. Butler testified that "[w]e 
used the value added approach" because Vistas had to subcontract out a project in Chicago 
that it had planned to self-perform (tr. 2/155-56) . Mr. Butler , who describes himself as "a 
CPA " but "not a practicing CPA" (tr. 2/167) , did not seem aware that Vistas had switched 
10 

to advocating a total cost input base; he testified that use of the value-added approach "was 
obviously supported " and "ratified by" Mr. Oyer (tr. 2/156) . 
Mr. Butler testified as a fact witness not as an expert. His work for Vistas 
included preparation of the work papers in which Vistas calculated its REA, including the 
G&A calculation (tr. 1/130, 137, 2/13-14 , 18, 155-58). Unfortunatel y, Mr. Butler seemed 
unsure on how he had calculated the G&A ; he was not able to explain how he calculated 
the amount sought despite repeated questions from Vistas ' attorney on direct examination 
(tr. 2/1 55-65). 
In its initial post-hearing brief, Vistas continued to maintain that it had used a total 
cost input approach , that it was entitled to a G&A of 13.7%, and total G&A of $2,585,601 
(app. br. at 24). Vistas stated that it had "mislabel[ed]" the methodolog y in the REA but 
requested that the Board apply a 
total cost input rate and award it $2,585,601 (id. ). 
The Government 's Position 
In its brief, the government made a convincing case that Vistas had, in fact, used a 
value-added base in the REA. The government analyzed the REA work papers for the four 
periods that Vistas divides its claim.2 For example , one of the periods of time is calendar 
year 2009, for which Vistas calculates the appropriate amount of G&A to be $1,089,499.32 
(see REA, tab D.8 at 65 (WP NN-2 , Summary of General and Administrative Expenses 
Fiscal Year 2009)). Vistas arrived at this amount by calculating its total direct costs of 
construction for all jobs ($21,622,323 .28) and then subtracting its material and subcontract 
costs for all jobs ($16,792,296.96) to reach a value-added base of $4,830,026.32.3 Next, 
G&A expenses of $1,218,111.19 (REA, tab D.8 at 65 (WP NN-2)) are divided by the 
value-added base of $4,830,026.32 , resulting in a rate of25.2195559%. Finally, this rate is 
multiplied by the Lake Cataouatche direct costs (minus materials and subcontracts) of 
$4,320,057.514 (REA, tab D.8 at 16 (WP DD-2)) , resulting in the $1,089,499.32 that Vistas 
sought for 20095 (REA, tab D.8 at 65, WP NN-2). The total G&A amount calculated by 
2 These periods are: 1 January to 15 November 2008; 16 November to 31 December 
2008; 1 January to 31 December 2009 ; and 1 January to 30 September 2010 
(see, e.g., REA, tab D.2 at 169, tab D.8 at 63-66). 
3 These numbers come from REA, tab D.8 at 16 (WP DD-2 , Profit Loss by Job). The 
calculation requires adding the numbers in the "Lake Cataouatche " and "All 
Other Contracts " columns. Thus, the total direct costs of construction are 
$7,297,681.28 + $14,324 ,642 = $21,622,323.28. From this amount, the 
numbers in lines 50300 (Direct Costs-Direct Materials) and 50400 (Direct 
Costs-Subcontractors) are subtracted. The value-added cost base is the sum of 
the amounts in the "Value-Added Cost Input" columns: $4,320,057.51 (Lake 
Cataouatche) + $509,968.81 (All Other Contracts)= $4,830,026.32. 
4 $7,297,681.28- $2,977,623.77 = $4,320 ,057.51. 
5 $4,320 ,057.51 x .252195559 = $1,089 ,499.32 . 
11 

Vistas for all time periods was $2,832,190.936, from which it deducted $246,589 .95 in 
unallowable consulting and other costs, including nearly $100,000 for Kenneth Nix (REA, 
tab D.8 at 62/75), a consultant whose work is discussed below in our decision on the 
DCAA audit appeal , which resulted in the final claim number of $2,585,601. 
The government provided its own calculations of G&A using a total cost input base: 
2008 thru 
Nov. 15 
Nov. 16-
Dec. 31, 2008 
2009 
2010 
(
thru Sept 30) 
Total Cost Rate Total Project Costs 
11.406% $5,988,349.17 
5.65% $649,233.16 
5.63% $7 ,297 ,681.28 
12.085% $4, 116,512.80 
Total= 
Amount 
$683,031.11 
$36,681.11 
$410,859.46 
$497,480.57 
$1,628,052.25 
(Gov't br. at 39) By way of example, for 2009, the government divided the G&A expenses 
of $1,218, 111.19 for all jobs by the total direct costs of construction for all jobs of 
$21,622,323.28 (see REA, tab D.8 at 16 and n.2 above), to arrive at the rate of 5.63%.7 
Then, it took total Lake Cataouatche direct constructions costs for 2009 of $7 ,297 ,681.288 
and multiplied it by 5.63% to arrive at total cost input G&A of $410,859.46.9 
The amount that the government calculates for G&A, $1,628,052.25, is about 
$30,000 higher than the amount 
awarded by the contracting officer (R4, tab 1 at 18). But, 
as the government observes , Vistas has also conceded that $246,589.95 should be 
6 Dates 
01/01/08-11/15 /08 
11/16/08-12/31/08 
01/01/09-12 /31/09 
01/01/10-09 /30/l 0 
G&AAmount 
$ 654,275.68 
$ 37,906 .04 
$ 1,089,499.32 
$ 1,050,509.89 
=$2,832,190.93 
7 $1,218,111.19 -7- $21,622,323.28 = 5.63%. 
Citation 
REA tab D.2 at 169 
REA tab D.8 at 63 
REA tab D.8 at 65 
REA tab D.8 at 66 
8 See REA, tab D.8 at 16 (WP DD-2) in the row marked "Total COGS [cost of goods 
sold]" in the Lake Cataouatche column . 
9 $7,297,681.28 x .0563 = $410,859.46. 
12 

deducted from the final G&A number because ofunallowable costs, including $98,250 for 
Kenneth Nix (REA, tab D.8 at 62, 67 (WPs NN & NN-4.1)). Thus, the government 
concludes that Vistas has been overpaid by more than $200,000. 
Vistas ' Reply Brief 
Faced with the government 's computations, Vistas abandoned total cost input in 
its reply brief; it now concedes that it used value-added but contends that this is the 
proper approach. It does not attempt to explain the testimony of Ms. Zepeda or Mr. Oyer, 
but it does provide an all new set of calculations using both the value-added method and, 
in the alternative, the total cost method. Under the value-added method, it now contends 
that the proper calculation is $3,345 ,032.16, but states that it is not requesting more than 
the $2,585,601 it sought in its claim (app. reply at 11). 
In its total cost input calculation , Vistas calculates that it is entitled to $1 ,905,485.64, 
or about $307,000 more than the contracting officer awarded (app. reply at 11). Vistas' 
calculations contain minor differences in the November - December 2008 and the January -
December 2009 time periods as compared to the Corps (compare app. reply at 9 and gov't br. 
at 39). However, its calculations contain significant differences for 1 January through 15 
November 2008 ($927,170.88 vs. $683,031.11 for the Corps) and for 2010 ($589,732.70 vs. 
$497,480.57) (id.). But Vistas' new calculations have obvious errors. For one thing, it 
adjusts the 2008 G&A expenses 
through 15 November up from $754,769.82 to 
$1,016,974.94, an increase of $262,205.12 (app. reply at 9). The source of this calculation, 
Work Paper N, the summary of G&A expenses through 15 November, does not support this 
change. This work paper contains an amount for "Allowable G&A Expenses" of 
$754,769.82, the G&A amount for all contracts for the entire year. Because more than 86% 
of this amount was attributable to Lake Cataouatche, it further states that $654,275.68 is for 
"Allowable G&A Chargeable to Corps contract." (REA, tab D.2 at 169/173) The 
$654,275.68 is further broken down into $262,205.12 , which is "Allowable G&A Expense 
incurred prior to April 24, 2008 initiation of field operations ," and $392,070.56 , which is 
"Allowable G&A Expense incurred subsequent to April 24, 2008 initiation of field 
operations" (id.). Thus, the $262,205.12 is a component of the $754,769.82, not a separate 
amount that should be added to it. 
Second, for this same time period in 2008, Vistas increases the total direct costs of 
construction of all jobs from $6,617,269.84 to $11,245,398.83 by adding $2,180,097.07 in 
materials and $2,448,032.42 in subcontracts (app. reply at 9). But Work Paper N-1, Profit 
Loss by Job Jan 1- Nov 15, 2008, clearly indicates that the materials and subcontract costs 
are already included in the $6,617,269 .8410 (REA, tab D.2 at 172). 
10 This amount is calculated by adding "Total COGS" of $5,988,349.17 for Lake 
Cataouatche and $628,920.67 for "All other contracts." Note that these 
amounts already include lines 50300 - Direct Costs-Direct Materials, and 50400 
13 

Finally, Vistas' calculations for 2010 are different from the Corps because it uses a 
total G&A amount of $1,477,749.42 instead of the $1,244,116.37 used by the Corps 
(compare app. reply at 9 & gov't brief at 38). Vistas' use of this number appears to be an 
error. It cites REA tab D.8, Work Paper DD-3 , Profit Loss by Job, in support of its 
assertion. This work paper does contain the number $1,477,749.42 , but it appears in the 
row entitled 
"Net Income ." (REA, tab D.8 at 17) The number used by the Corps is 
contained in Work Paper NN-3, Summary of General and Administrative Expenses, in 
the column entitled "Distributable G&A Overhead Pool" and the row marked "Total 
G&A" (REA, tab D.8 at 66). Thus, we find that the Corps used the correct number. 
DECISION 
When a contractor files an appeal or lawsuit challenging a contracting officer's 
final decision, the findings of fact in that decision are not binding and are not entitled to 
any deference. The claimant has the burden of proving the fundamental facts of liability 
and damages de novo. Wilner v. United States , 24 F.3d 1397, 1401 (Fed. Cir. 1994) 
(en bane). Once an action is brought following a contracting officer's decision, the 
parties start before the Board with a "clean slate." Id. at 1402. The Board has the 
authority to decrease or increase the amount awarded by the contracting officer. 
Id. at 1401 (citing Assurance Co. v. United States , 813 F.2d 1202, 1206 (Fed. Cir. 1987)). 
The basic question to be resolved in Vistas' G&A claim is whether the contracting 
officer awarded Vistas the proper amount. However, we must first decide whether Vistas 
may use a 
value-added base despite its historical use of total cost input. In PACCAR, Inc., 
ASBCA No. 27978, 89-2 BCA ii 21,696 at 109,080, we observed that it is well established 
that a change in the method of accounting for indirect costs may be justified under special 
circumstances in order to produce equitable results, and that "the change may be retroactive 
where unusual circumstances in the contractor 's operations do not become apparent" until 
the time proximate to the requested change. Id. (citing Celesco Industries , Inc., 
ASBCA No. 20569, 77-1 BCA ii 12,445; Zero Manufacturing Co., ASBCA No. 14558, 
70-2 BCA ii 8489); FAR 31.203( e) (2008). The Board has been reluctant to permit either 
party to benefit from retroactive accounting changes. Id. (citing Falcon Research and 
Development Co., ASBCA No. 19784, 77-1BCAii12,312; Celesco Industries, Inc., 
ASBCA No. 23165, 80-1BCAii14,455), and have taken note of the "commercial havoc" 
that could result by permitting the practice in the absence of "peculiar" circumstances. Id. 
(citing Blue Cross and Blue Shield Ass 'n, ASBCA No. 26529, 86-2 BCA ii 18,751, ajf'd, 
13 Cl. Ct. 710, ajf'd, 852 F.2d 1294 (Fed. Cir. 1988) (table) . 
We conclude that Vistas has not carried its burden of demonstrating that 
retroactive application of a value-added base is appropriate. We reach this conclusion 
- Direct Costs-Subcontractors. Thus, Vistas double counts materials and 
subcontractors in its reply brief. 
14 

based not only on the head-spinning changes in Vistas' position, which undermine its 
case, but also on several other considerations. First, the only company employee who 
testified on this issue, Maribel Zepeda, Vistas' director of corporate affairs and finance, 
testified that she had never heard of the value-added method and understood Vistas to be 
using a total cost input method. This significantly undercuts any assertion that the 
company made a reasoned determination that a switch to a value-added base would be 
appropriate. Second , Vistas ' retained expert , Darrell Oyer, opined at trial that total cost 
input was the appropriate base. In support of his conclusion , Mr. Oyer cited Vistas ' 
historical use of total cost input, its failure to establish a material handling subcontract 
administration pool , and the fact that retroacti ve changes are "frowned on by auditors" 
(tr. 3/56). Mr. Oyer also candidly admitted that application of the value-added base at the 
13. 7% rate claimed by Vistas would result in a significantly lower award than that 
calculated by the contracting officer. 
Third, although Louis Butler testified that Vistas had used a value-added base in 
calculating the REA , his testimony overall was rather vague and unhelpful on this issue. 
Although Mr. Butler did testify that Vistas had used a value-added base in the REA 
because Vistas had experienced increased subcontracting on a project in Chicago 
(tr. 21155-56), his inability to explain how he had calculated the G&A despite repeated 
questions from Vistas ' attorney on direct examination causes us to give his testimony 
little weight. Moreover, it would seem to us that the witness in the best position to 
explain how Vistas ' subcontracting needs on the Chicago project necessitated a switch to 
a value-added base would have been Ms. Zepeda , but she provided no such testimony. 
The 
question then becomes whether Vistas is entitled to the $1,905,485.64 that it 
contends it is entitled to if total cost input is used , or to some other amount in excess of 
the $1,598,454 awarded by the contracting officer using total cost input. We have 
already found that the $1 ,905,485.64 calculation contains three errors that inflate the 
amount sought. Given our conclusion, we will not address whether it is appropriate to 
consider calculations raised for the first time in a reply brief. 
The Corps has calculated the total cost input G&A to be $1,628,052.25 minus 
$246,589.95 in consulting and other costs that Vistas removed from the claim because 
they represent unallowable costs. This would result in a final amount of $1,381,462.30 
and would mean that the contracting officer overpaid Vistas by more than $200,000. We 
find the calculation of the $1,628,052.25 to be convincing. The methodology the Corps 
used is similar to that used by Vistas in its reply ; they reach different conclusions simply 
because Vistas' calculations contain incorrect numbers , as we have found. 
In its reply brief, Vistas did not challenge the Corps' assertion that Vistas had 
subtracted $246,589.95 in unallowable costs from the REA, nor did it challenge the Corps' 
assertion that this amount should be deducted from the final G&A calculation , whether it 
was value-added or total cost input. Accordingly, we agree with the government that 
15 

Vistas was entitled to $1,381,462.30 in G&A on its certified claim. Because this is less 
than the amount granted by the contracting officer , we deny the appeal. 
Profit-ASBCA No. 58480 
ADDITIONAL FINDINGS OF FACT 
The majority of the money that Vistas is seeking is profit: $4,421,891.60 on what it 
refers to as the firm-fixed-price contract work (that is, the work not affected by 
modifications or other impacts, see exec. summ . at 10-11); plus $4,573,921.84 on the 
undefinitized modifications, including POOOOl (id.; app. br. at 20); and, although not 
addressed in Vistas' opening post-hearing brief, $131,292.44 in profit for work performed 
on negotiated , definitized modifications . Given the magnitude of these amounts (more than 
$9 .1 million), some discussion of the profit levels and method of calculation is in order. 
Vistas' Profit in its Proposals 
Vistas ' initial bid price included profit of seven percent (exec. summ. at 1 O; supp. R4, 
tab 22). After Vistas reduced its G&A and profit by more than $1.4 million, Vistas' final 
proposal included profit of just 4.44% (supp. R4, tab 14 at 21; app. supp. R4, tab 413 at 8). 
As described above, when Vistas submitted its original proposal for POOOO 1, it 
sought profit of 10 % (REA, tab E.9 at 33). By its second revision to this proposal on 
13 March 2009, Vistas had increased profit to 10.29% (R4, tab 15 at 2). Negotiated 
modifications A00003 , A00004, and A00005 contained profit rates of 7.71, 9.35, and 
10.0%, respectively (methodology at 26). 
In the REA, Vistas acknowledged that it was a small business with no prior 
experience in levee enlargements and that it entered into the contract knowing that it 
would encounter a steep learning curve (exec. summ. at 5). Vistas alleged that the Corps 
improperly induced it to reduce its offer by $1.4 million (id. at 6-10). It further stated that, 
during construction it encountered a host of problems, including the unavailability of the 
entire project site, errors in other drawings besides L-04, and the design issues that led to 
the embankment failure (id. at 6-7). While these ingredients - a low bid price, an 
inexperienced contractor, erroneous drawings , an allegedly unscrupulous agency, and 
difficult working conditions - might lead one to expect a loss on the project , that is not 
Vistas' contention here. Rather, it contends that, due to its "productivity
, efficiencies and 
value engineering " (exec. summ. at 12), it made a profit of $4,421,891.60 on the 
firm-fixed-price contract work (id. at 11, 20). But Vistas did not offer any evidence at the 
hearing that proved any productivity, efficiencies or value engineering. Vistas 
nevertheless contends that it earned a 34.81 profit on the firm-fixed-price work. Vistas 
seeks to apply the same 34.81 % profit to the undefinitized modifications , bringing the 
total profit for these two items to nearly $9 million. 
16 

As we observed above, Vistas' has submitted volumes of information in support of 
its damage calculations, much of which is difficult to review. However, at the highest 
level, Vistas' profit calculations are easily understood. It contends that it received 
$12,702,495.70 in payments from the Corps for the firm-fixed-price (unchanged) contract 
work and that it incurred $10,012,708.90 in costs for such work (Methodology at 26). It 
contends that, because this latter amount was incurred over 869 days instead of the 
original 320 days, it incurred unabsorbed indirect costs and escalations in prices and wage 
rates amounting to $1, 817,55 5 .21; subtracting this amount from its costs results in an 
"actual cost" of performing the firm-fixed-price contract work of $8,280,604.10. (Id.) 
Finally, $12,702,495 .70 in payments minus $8,280,604.10 in costs, minus $85,450.41 in 
allocable bond premiums equals $4,421 ,891.60 in profit. 11 While it is reasonable to 
contemplate that costs may increase if work is performed over a much longer period of 
time, Vistas did not spend any time at the hearing or in its briefs explaining how it 
calculated more than $1.8 million in unabsorbed costs and price escalations. Further, both 
Vistas' calculation of the amounts it received from the Corps for the firm-fixed-price 
contract work, and the cost of performing that work , have problems . 
Vistas ' Calculation of Amounts Paid for the Firm-Fixed-Price Work 
With respect to the amount paid to Vistas, this much is known: the Corps made five 
payments to Vistas totaling $6,228,537.55 for the period through the end of October 2008, 
the month 
that the contracting officer issued POOOO 1. Vistas characterizes all of this as 
payments for the firm-fixed-price contract work (Methodology at 26). However , this 
amount is still less than half of the $12,702,495.70 that Vistas contends it received for that 
work. Vistas closes this gap by characterizing nearly $6.5 million in what it refers to as 
"unallocated partial payments" as payments for the firm-fixed-price contract work (id.). 
Vistas identifies these payments in Work Paper B (Summary of Contract Payments by 
COE) (REA, tab D.1 at 48). However, a review of Work Paper Band the pertinent contract 
modifications readily indicates that these payments were for POOOO 1 work (the changed 
work), not the unchanged work. 
For example , on 1 September 2009, the contracting officer issued Modification 
No. P00007 in the amount of $2.5 million (supp. R4, tab 28 at 17-19). The modification 
specifically stated that it was a "partial payment in the amount of $2,500,000.00 for 
Modification POOOO 1" (id. at 18). Vistas submitted an invoice three days later, and the 
Corps paid Vistas the $2.5 million on 18 September 2009 (R4, tab 1 at 6). Thus, it is hard 
for us to believe that Vistas did not realize that the 18 September payment was for POOOO 1. 
In fact, in its post-hearing fact brief, Vistas acknowledges that the payment was for POOOOl: 
163. On September 1, 2009, the Corps issued unilateral 
Modification P00007 , which increased the Contract price by 
11 12, 702,495.70 - (10,012,708.90 - 1,817,555.21) - 85,450.41 = 4,421,891.60 
17 

$2,500,000 as partial payment for the changed work 
required by Modification POOOOl. R4 Vol I Tab Cat 21-22. 
But in Work Paper B Vistas allocated all of the $2.5 million to the firm-fixed-price 
contract work , and none to POOOOl work (REA , tab D.l at 48). Thus , Vistas ' 
post-hearing brief contradicts the REA. 
Similarly, as described above, Mr. Zepeda wrote to the Corps on 20 January 2009 
requesting payment for the undefinitized modifications , including A00002 and POOOO 1 
(app. supp. R4, tab 180). The parties met to discuss his request and the contracting officer 
issued Modification No. P00003 on 19 February 2009, which approved payment of 
$500,000 to Vistas for the POOOO 1 work (supp. R4, tab 28 at 5). Despite this history, in 
Work Paper B, Vistas allocated this $500,000 to the firm-fixed-price contract work (REA, 
tab D.l at 48). Yet, in paragraph 81 of its post-hearing fact brief, Vistas acknowledged that 
this payment was for POOOO 1. Again, we are puzzled by these inconsistent positions. 
Based on the foregoing, we find Vistas' contention that it received 
$12,702 ,495.70 in payments for the firm-fixed-price contract work to be unproven. Vistas 
has no evidence that nearly $6.5 million in payments designated by the contracting officer 
for POOOO 1 were really payments for the unchanged work. While we accept as true that 
Vistas received $6,228 ,537.55 in payments for the firm-fixed-price work , this is all that 
Vistas has proven. This amount by itself would result in a loss on the firm-fixed-price 
work, even if we accepted Vistas' contention that it incurred $8,280,604.10 in costs to 
perform that work , which we discuss next. 
Vistas' Calculation of Costs to Perform the Firm-Fixed-Price Contract Work 
A. $1,817,55 5 .21 in Unabsorbed Indirect and Escalation Costs 
We find Vistas calculation of $8,280,604.10 in costs to perform the 
firm-fixed-price contract work to be even more problematic than its calculation of the 
amounts paid for that work. First , Vistas actually calculates that it cost $10,012,708.90 to 
perform the firm-fixed-price work (Methodology at 26). However, it subtracts 
$1,817 ,555.21 in what it refers to as unabsorbed indirect and escalation costs. As best we 
can tell, this amount is somehow derived from the calculations in: Work Paper (WP) A 
(Detail of Request for Equitable Adjustment); WP A-3 (Increased Costs CLIN 0001); 
WP A-3.l ("Should Have Cost" Labor Burden); WP A-3.2 ("Should Have Cost" Labor 
Burden) ; WP A-3.3 (FFP Equipment Should Have Cost); WP 
A-3.4 (CLIN 0007 Trucking 
Should Have Cost); WP C (Summary Analysis and Allocation of Costs Incurred , Apr 24, 
2008 - Nov 15, 2008); and WP CC (Summary of Contract Performance), plus any further 
work papers to which these papers cite. (See REA, tab D.l at 1, 17-39, tab D.2 at 1-18, 
18 

tab D.8 at 1-10). These work papers are nearly impenetrable due to their complexity. 12 
While these work papers might have provided some support for the claimed amount if a 
witness had explained the methodology , identified the underlying source of information , 
and made that documentation available to the Board, none of this occurred. The principal 
architect of the REA , Louis Butler , testified , but neither he nor any other Vistas witness 
explained how Vistas calculated the unabsorbed indirect and escalation costs. The 
spreadsheets are not helpful standing alone and we do not give them any weight. 
B. Vistas ' Calculation of Costs to Perform the Unchanged Work 
In evaluating Vistas ' contention that it cost $10 ,012,708.90 to perform the 
firm-fixed-price work , several basic questions arise , namel y: what were Vistas ' total 
costs on the project ; how did Vistas determine whether costs arose from the changed or 
unchanged work ; and how accurate was its methodology. In Work Paper A, Vistas 
indicates that its "Total Cost Incurred Through General and Administrative Expense " for 
the project was $23,555,257 .15 (REA , tab D.l at 1). Subtracting $10,012,708.90 for the 
unchanged work , results in a total of $13,542,548.25 in costs incurred on changed work , 
according to Vistas. Vistas distributes this amount among item numbers 18 to 65, which 
it has created in addition to contract line item numbers (CLINs) 1-17 in the original 
contract (id.; R4, appx., tab A at 3; tr. 1/48). Vistas presented little evidence at the 
hearing explaining these additional items. However , it appears that Vistas contends that 
about $13.1 of the $13.5 million in costs is attributable to Modification Nos . POOOOI, 
A00002 , and A00007 (which addressed differential settlement of culvert pipe but was the 
subject of only brief testimony). (See REA , tab D.1 at 1 ("transferring " costs of impacts 
in the amount of$571 ,689 .59 and $6,970,709.10 to Mod. POOOOl costs of$2 ,026,635.54 
and then aggregating these amounts with A00007 costs of $3,204 ,974.64 and POOOOl 
new activities costs of $365,213 .03); tr. 1/41-42) 
The accuracy of Vistas ' method of segregating costs between changed and unchanged 
work is a matter of considerable controversy. The REA methodology of allocation contains a 
description of Vistas ' process; Vistas also presented witness testimony explaining how it 
classified the costs . 
1. Vistas ' REA Methodology 
In the REA methodology section , Vistas stated that it had derived its direct costs by 
performing an "extensive analysis" of "the direct labor hours cost recorded in the weekly 
certified payrolls submitted to the COE and of equipment hours/cost" (methodology at 5). 
Vistas stated that it analyzed the labor hours and cost reflected in the certified payrolls and 
segregated them into: i) definitized modifications ; ii) all undefinitized modifications ; iii) 
"its Impacts "; and iv) the firm-fixed-price contract (id.) . However , it is not clear from the 
12 For example , the work papers include A-3 , which includes 18 pages of spreadsheets 
and, in tum, references work papers A-3.1 , 3.2, 3.3, 3.5, A-8, C, and CC. 
19 

face of these payrolls how they could have been used to determine the labor to be allocated 
to the firm-fixed-price contract. While these documents list the names of workers, their 
hours for each work day, and their work classification , they do not identify the CLINs or 
the tasks performed by the worker that day, nor do they identify the equipment used (see 
supp. R4, tab 69). Vistas cites to various work papers (WPs F-2, FF-2, F-1, FF-1, C, CC, E 
and EE (Methodology at 6)) but does not explain how Vistas used the certified payrolls to 
untangle the firm-fixed-price work from POOOOl and other impacted work. 
With respect to equipment, Vistas submitted to the Corps a daily contractor ' s 
quality control report that the parties refer to as a daily report or daily log (E.g., supp. R4, 
tab 70). Among other things, this report required Vistas to list the equipment used on the 
project on that day and to specify the operating and standby hours for each piece of 
equipment. The report requires the contractor to "certify that this Report is complete and 
correct " (e.g., id. at GOV 46139). While these daily reports would seemingly be the 
foundation for any equipment costs in the claim, Vistas states that "the COE requested 
that Vistas amend the use of the [application for creating the report] as if we were 
working on a cost plus contract" 
(methodology at 6). Vistas contends that based on the 
directives it received from the Corps, both the operating and standby hours listed in the 
daily reports are "not reliable" (id.). Vistas has not, however , identified any 
contemporaneous document where it protested or documented an alleged demand by the 
Corps to under report equipment hours. 
Vistas stated that it instead used the certified payrolls to determine equipment 
hours, just as it did with the labor costs (methodology at 6). However, just as with 
labor, it is not clear from the face of these payrolls how they could have been used to 
determine the equipment to be allocated to the firm-fixed-price work because they do 
not identify the equipment used (see supp. R4, tab 69). 
An explanation begins to emerge in the REA Executive Summary, in which Vistas 
stated that it had used the "certified payroll records , daily reports and accounting records as 
primary source data" for the REA. While this statement appears to be inconsistent with the 
statement in the REA Methodology section that the daily reports are not accurate , Vistas 
clarified this assertion in a footnote. Vistas stated that it included with the REA copies of its 
daily reports "with notations to assist USACE in any reconstruction of the costs and estimates" 
and that it also included copies of the certified payrolls. (Exec. summ. at 13 and n.59) 
Review of the daily reports and certified payrolls submitted with the REA indicate 
that Vistas did not merely add notations to "assist" the Corps; it essentially re-wrote these 
documents when it drafted the REA. For example, Vistas submitted a signed daily report 
to the Corps for 23 May 2008. In that report, Vistas certified that no work was performed 
due to previous weather conditions and that there were no equipment hours being 
reported (supp. R4, tab 70 at GOV47009-10). By contrast, in the REA Vistas submitted 
an unsigned copy of this document in which it hand wrote 34 equipment operating hours 
20 

(REA, tab D.5.1 at 128/376). Vistas ' superintendent , Fernando Balderas , testified that he 
added these notations to the daily reports when Vistas prepared the REA (tr. 1/84, 90). 
Similarly, Vistas hand wrote in the certified payrolls the pieces of equipment that 
the employee allegedly used that day (e.g., REA, tab D.7 at 7/220; tr. 1/97). Apparently, 
the final step in this process was the creation of work papers that purported to assign the 
equipment and labor to specific items, which, in turn, allowed Vistas to allocate these 
costs to the changed or unchanged work (REA, tabs D.3, D.6, D.9, D.10.1, D.10.2). 
By taking such liberties with previously certified information , Vistas dramatically 
increased its equipment operating hours. In its daily reports, it kept a cumulative total of 
equipment operating hours. For 15 November 2008 (the last day of what Vistas refers to 
as Period 1), Vistas certified that it had 8,043.5 equipment operating hours to date 
(supp. R4, tab 70 at GOV46335). Yet, in Work Paper E-1.1, the Period 1 Hour and Cost 
Summary created for the April 2011 REA, Vistas asserted that it had 16,125 operating 
hours, more than double the number in the daily reports (REA, tab D.2 at 29/173). This 
work paper further indicated that more than 90% of these hours had been expended on 
items 18 to 65 that represented the changed work (id.) . 
2. Vistas ' Testimony Concerning Profit Methodology 
Perhaps realizing the problem with its methodology , Vistas ' employees took a new 
tack at the hearing, testifying that all of the data in the REA was based on contemporaneous 
documentation . Thus, at the hearing it identified a new source document that had gone 
unmentioned in the REA: time sheets. Mr. Balderas , (the superintendent) , testified that each 
day he recorded on a time sheet the hours for each worker and the CLIN upon which he or 
she worked (tr. 1156). Vistas' project manager , Ignacio Zepeda , testified that they used the 
time sheets to determine equipment hours for the REA (tr. 11114-15). When asked what was 
the "base set of documents that you used to prepare your REA?", Mr. Zepeda responded 
"Certified payrolls and then time sheets" (tr. 11177). Similarly , Maribel Zepeda testified: 
(Tr. 2/16) 
So we utilized primarily that timesheet , those payroll 
records , other contract records , letters and transmittals that 
had been sent to the government. All kind of daily 
correspondence with them to use in this segregation effort .... 
According to Maribel Zepeda , Vistas derived Work Paper F-4, Weekly Labor 
Allocation (REA, tab 
D.6) from the time sheets (tr. 2/19-20, 38-39). Work Paper F-4 is a 
132-page document that contains various spreadsheets that purport to show the CLIN 
upon which each Vistas employee worked and the amount of costs allocated to each 
CLIN as a result of that labor. She testified that Vistas ' effort to segregate costs to the 
21 

firm-fixed-price contract began with the time sheets and their classification of the work 
into various CLINs (tr. 2/15-16). 
The time sheets are not in the record and there is no reference to them in the REA 
Executive Summary or Methodology of Cost Allocation. This is particularly noteworth y 
because in the 44 volume REA, Vistas included virtually everything else but the kitchen 
sink. For example , despite stating that the information in the daily reports is "not 
reliable ," Vistas included 8 binders of those daily reports in the REA (see REA , 
tabs D.5J-5 .8). Yet, it contends that , in the time sheets , it has contemporaneous 
documents that identify the CLINs on which its employees performed their work and the 
CLINs on which each piece of equipment was used (tr. 11103, 115, 177, 2/15-16) , but that 
it neglected to mention them or attach them to the REA. 
After Messrs. Balderas and Zepeda had testified , and at the conclusion of the 
direct examination of Ms . Zepeda, counsel for Vistas sought to move the time records 
into evidence (tr. 2/39-40). This drew an immediate objection from the government 's 
counsel who noted that the time to supplement the record had passed and that the 
government had specifically requested these documents in discovery but had been told by 
Vistas that the government had all of its records. Vistas' attorney conceded that the 
government had requested these documents in discovery (tr. 2/40). Vistas still had not 
provided the time records to the government at this time , but counsel stated that he could 
"get them this week " (tr. 2/42). Based on this representation , and the representation of 
counsel that the information in the time records was the same -as in the certified payrolls 
that were already in the record (tr. 2/40-42), the Board did not immediately rule on Vistas 
request to supplement the record or on the government's objection. Instead , the Board 
ordered Vistas to produce the records to the government , which could examine them and 
determine whether it still objected (tr. 21 43-44). The parties never reported back to the 
Board (except in the post-hearing briefs) and the time sheets have not been added to the 
record . 
3. Louis Butler ' s Testimony 
Mr. Butler, the consultant who worked with Vistas during the project , testified that he 
set up the process for separating the costs of the changed and unchanged work (tr. 2/132). 
Mr. Butler stated that he wrote the Methodology of Cost Allocation (tr. 2/134) and that he 
was responsible for allocating costs between the changed and unchanged work (tr. 2/144-45). 
Notably , Mr. Butler did not testify that he had relied upon the time sheets in preparing the 
REA. Moreover , Mr. Butler's billing records in the months leading up to the submission of 
the REA contain no mention of the time sheets; rather, they point squarely to his use of the 
certified payrolls to calculate the REA . 
22 

Thus, in an entry for 9 September 20 I 0 in which Mr. Butler billed nine hours , 
he wrote: 
Preparation of Vistas' REA proposal.... The general ledger 
activity for 2008 and 2009 was reconciled to company 's 
published financial statements ; direct cost was allocated to 
"scopes of contract performance " based on analyses of 
certified payrolls prepared by Vistas field overhead 
personnel. ... 
(REA, tab D .13 at 56/178) (Underlining added) Similarly, in an entry for 27 January 2011 
in which Mr. Butler billed 10.5 hours , he wrote: 
Preparation of submission documentation of Vistas ' REA 
proposal , which was primarily based on extensive and 
detailed analysis and segregation of direct labor based on 
certified payrolls, field overhead time, EP 1110 equipment 
cost calculations .... 
(Id. at 58-59/178) (Underlining added) After each of these quoted provisions Mr. Butler 's 
billing summaries also include numerous entries stating that he is continuing preparation 
of the REA proposal "as described above " (id. at 56-59/178) . 
In its post-hearing brief, the government represented that Vistas never provided it 
with the time sheets that the Board had directed Vistas to provide to the government. In its 
reply brief, Vistas does not dispute this (app. reply at 26). Vistas has not explained why it 
failed to provide these records either in discovery or in response to the Board ' s order . 
The Accuracy of Vistas' Calculations of Cost to Perform the Firm-Fi xed-Price Work 
In evaluating the reasonableness of Vistas methodology of assigning costs to 
changed or unchanged work , one question that comes to mind is how could Vistas identify 
two to three years after the fact the equipment that a particular worker used on any 
particular day. During his testimony , Superintendent Balderas offered an explanation , he 
suggested that operators always used the same piece of equipment , so this allowed him to 
use labor hours to identify equipment used (tr. 1/60-61 , 63-64) . Yet, as the government 
points out in its brief, this is exactly the opposite of what Vistas told DCAA in a 
I September 2009 letter. In that letter , Vistas stated that it allowed its operators to "float" 
between multiple pieces of equipment , "which would negate any tie-in between labor 
hours and equipment usage " (ex. A-458 at 24/75). 
In its brief, the government contends that there are hundreds of errors in Vistas ' 
calculation of labor and equipment hours (gov't br. at 85). The government then spends 
12 pages of its brief providing examples of these errors. These errors include: conflicts 
23 

between the certified payrolls and the labor or equipment allocation sheets; claimed 
equipment hours when there were no operators present to operate that equipment, 
specifically, for Period 1 the government calculates that there are more than 1,900 more 
equipment hours billed than there were hours recorded for laborers; and conflicts between 
the information submitted in Vistas' original POOOO 1 proposal and the REA, including 
equipment listed in the proposal as having been idle that it changed in the REA to have 
been operating , and changes to the CLINs upon which employees performed their work. 
(Gov't br. at 86-97) In its reply, Vistas does not dispute any of the errors that the 
government identified ; it just dismisses the government 's analysis as finding "a few 
alleged errors" (app. reply at 35). 
Vistas ' Calculation of Profit on Definitized Modifications 
As a fallback position, Vistas requests that the Board award it the 24.41 % profit it 
contends that it earned on definitized Modification Nos. A00003 (clay veneer change), 
A00004 (emergency preparation for Hurricane Gustav), A00005 (interim storm scour 
protection, and AOOO 17 (Bypass pumping) (see exec. summ. at 20). This profit contrasts 
with the negotiated profit percentages on A00003 , A00004 , and A00005of7 .71, 9.35, 
and 10.0%, respectively (see methodology at 26). 
According to the REA Executive Summary , Vistas received payments for these 
modifications totaling $535,305.44, while the cost of performing the work was 
$406,500.29 (exec . summ. at 20). Vistas ' method of assigning costs to the definitized 
modifications is apparently the same method it used to assign costs to the firm-fixed-price 
contract work (methodology at 5). 
The Contracting Officer 's Decision 
In the contracting officer 's final decision , Ms. Nicholas agreed that Vistas is 
entitled to a fair profit on its work but determined that Vistas had not substantiated the 
34.81 profit rate that it had requested. Ms. Nicholas applied the weighted guidelines in 
EFARS (Engineer FAR Suppplement) 15.404-73-100 then in effect and determined that a 
profit rate of 8.7% was appropriate (R4, tab 1 at 9). Thus, she concluded that Vistas was 
entitled to $1,105,117 on the firm-fixed-price contract work, $634,647 on the 
undefinitized modifications , and $35,366 on the definitized modifications (id. at 18). 
DECISION 
The parties disagree as to the proper methodology for calculating damages. In her 
final decision, the contracting officer used a 
total cost method to which she then applied 
the weighted guidelines to determine the profit rate (R4, tab 1 at 6), while Vistas 
advocates use of actual costs. Under the total cost method , the measure of damages is the 
difference between the actual cost of the contract and the contractor's bid. The total cost 
method of recovery is not favored and will not be used ifthere is another, more reliable 
24 

method available by which to establish the contractor's damages. Hi-Shear Technology 
Corp. v. United States, 356 F.3d 1372, 1383 (Fed. Cir. 2004). 
We have no quarrel with Vistas' contention that it is entitled to the actual profit it 
earned on the unchanged work. However , Vistas has not demonstrated that it earned any 
profit on the unchanged work, and certainly has not demonstrated that it earned profit of 
34.81 %. First, Vistas simply asks us to accept at face value its assertion that its 
"productivity , efficiencies and value engineering " led to such a high profit rate, even in 
the face of its own inexperience and the challenges that this project presented. The Corps 
contends that this profit rate is unreasonable on its face and should be rejected by the 
Board. (Gov't br. at 59) While we believe that this is an overstatement , it is fair to say 
that Vistas ' failure to explain what it did to earn such a healthy profit rate causes us to 
view the claim with some skepticism. 
Second, as we have found, Vistas has not proven that the Corps paid Vistas 
$12,702 ,495.70 to perform the unchanged work. Vistas' unilateral designation of 
payments that were designated for POOOO 1 as payments for the unchanged work is 
self-serving and unreasonable. We are mystified that Vistas on the one hand concedes in 
its post-hearing fact briefthat these payments were for POOOOl, but still includes them in 
its $12.7 million calculation of payments for the unchanged work. Vistas' method is 
sufficiently arbitrary that it could just as easily contend that it had received $10, $12, or 
$14 million in payments from the Corps without it being any more or less unreasonable 
than the $12.7 million it contends it received. 
Third, as we have found, Vistas has not demonstrated that it incurred unabsorbed 
indirect costs and escalations in prices and wage rates amounting to $1,817 ,555.21. 
While there may be some information in the myriad work papers submitted with the REA 
that would flesh this out, we do not consider work papers prepared by a consultant to be 
probative in the absence of witness testimony or other evidence that gives substance to it. 
Fourth , we are troubled by Vistas ' alleged reliance on the time sheets and its failure 
to produce them. Vistas has both shirked its discovery obligations and disregarded the 
direction of the Board to provide these documents to the government. It seems rather odd 
to us that Vistas would have spent the time to rewrite multiple volumes of certified 
payrolls and daily reports if it had contemporaneous records that proved its case. 
Moreover, it also seems to us that, if Vistas had relied on the time sheets, it would have 
mentioned them in the REA Executive Summary or Methodology of Cost Allocation , and 
that Louis Butler, as the author of the Methodology and the person behind the REA 
preparation, would have mentioned them in his billing records. In place of the time 
sheets, Vistas has submitted certified payrolls and daily reports marked up long after the 
fact. As the Supreme Court has explained , "[t]he production of weak evidence when 
strong is available can lead only to the conclusion that the strong would have been 
adverse. Silence then becomes evidence of the most convincing character." Interstate 
Circuit, Inc. v. United States, 306 U.S. 208, 226 (1939) (citations omitted). Accordingly , 
25 

we draw the inference that if Vistas had produced the time sheets, they would not have 
been favorable to its case. 
Fifth, we have volumes of daily reports certified by Vistas' employees as being true 
and accurate. Vistas witnesses now ask the Board to ignore those certifications and accept 
as true the heavily edited daily reports, which provide a much different version of the events 
on the project. We find it very difficult to believe that Vistas would have under reported its 
equipment hours by more than 8,000 hours in the period from April to 15 November 2008 
without at least protesting or documenting some alleged direction by the Corps to 
misrepresent the actual hours. Combined with the mystery of the never-produced time 
sheets, this has seriously undermined the credibility of Vistas' witnesses. 
Finally, we agree with the government that there are serious errors and 
inconsistencies in Vistas' calculations of the labor and equipment to be allocated to the 
changed and unchanged work. Based on the methodology Vistas used, its profit on the 
unchanged work would have increased whenever it allocated costs to the changed work. 
Thus, it was incumbent on Vistas to demonstrate that its methodology was accurate and 
reasonable. But its witnesses never provided a satisfactory explanation with respect to the 
criteria that they used to determine the CLINs upon which its employees worked and its 
equipment operated for each day on the project. Although it would be difficult to quantify 
the exact magnitude of the errors in Vistas' calculations, the government has demonstrated 
through its cross examination of Vistas' witnesses and the many examples it provided in 
its brief, that Vistas' marked up certified payrolls and daily reports, and its labor and 
equipment allocation work papers, contain a critical mass of errors. Thus, even if there 
were not all of the other problems we just described, we still would not accept that Vistas 
had incurred $10,012,708.90 to perform the unchanged work. 
Vistas seeks to apply the same profit rate on the undefinitized modifications, 
including POOOOl (methodology at 26). Thus, because its profit calculation fails on the 
unchanged work, it also fails with respect to POOOO 1 and any other undefinitized 
modification. Although Vistas invites the Board to award additional profit based on a jury 
verdict approach, there is no basis for us to do so. As we have already discussed, there is 
no evidence that Vistas earned any profit on the unchanged work that could be 
extrapolated to the changed work. Moreover, Vistas has not provided us with any analysis 
or argument concerning the contracting officer's application of the EFARS weighted 
guidelines that would provide a basis for increasing the 8. 7% profit she awarded. 
Finally, with respect to profit on the undefinitized modifications, we do not 
understand what Vistas seeks. The REA Executive Summary appears to indicate that: 
Vistas had been paid $535,305.78 to perform these modifications; that it had cost Vistas 
$406,500.29 to perform these modifications; and that $2,486.95 remained to be paid on 
modification POOO 17. Summing this up, Vistas stated that it had earned $131,292.44 on 
these modifications. (Exec. summ. at 20) Vistas never explained why it contends it was 
entitled to an additional $131,292.44 (if that is its contention). No Vistas' witness explained 
26 

this at the hearing and Vistas did not address it in any of its post-hearing briefs. To the 
extent that Vistas has not abandoned this claim, we find that there is a complete failure of 
proof and that it is not entitled to any additional profit on these definitized modifications . 
This appeal is denied. 
ASBCA No. 58481 - Change 
To Payment Terms 
ADDITIONAL FINDINGS OF FA CT 
In this claim, Vistas seeks $1,170,831 as a result of an alleged inability to invoice as 
a result of POOOOl and other modifications that : a) required Vistas to proceed with the 
changed work; and b) provided for an agreed upon modification to be issued later 
(exec. summ. at 14-15). As described above, the rapid definitization schedule that the 
Corps originally envisioned for POOOO 1 was derailed when Vistas submitted a much larger 
proposal than the Corps expected and the DCAA audit took more than five times longer 
than the Corps estimated. Among other things , this played at least some role in the gap 
between Vistas ' submission of invoice no. 5 dated 20 November 2008 and invoice no. 6 
dated 11 March 2009 (R4, tab 1 at 6). However , in her final decision denying this aspect of 
the claim, the contracting officer concluded that "POOOOl did not remove Vista's [sic] right 
to submit progress payment invoices . Vistas still retained this fundamental right under the 
contract." (R4, tab 1 at 10) 
Vistas ' calculations for this issue are set forth in Work Papers A, A. l , and A.1.1 
(REA, tab D.l at 1-5). The calculations purportedl y use the interest rates provided for in 
the Prompt Payment Act and are based on total contract earnings of $31,068,633.85. This 
amount includes profit on the firm-fixed-price work and on the undefinitized 
modifications totaling about $9 million , as discussed above. 
Rather than focus on POOOO 1 or other modifications , Vistas seeks interest going back 
to the beginning of the project . Vistas ' calculations are based on a hypothetical 
reconstruction of history in which it submitted an invoice for a month 's work on the last day 
of that month, making the payment due on the 14th day of the following month. Thus, it 
posits a scenario where it submitted its first invoice for contract earnings of $1,718,846.35 on 
31May2008 , which came due on 14 June 2008. (REA, tab D.l at 2 (WP A-1, Summary of 
Prompt Payment Interest)) Because the Corps did not pay anything according to Work Paper 
A. l, $2,907 .91 in interest accrued , which continued to increase thereafter (id.). 
This scenario ignores the reality that Vistas submitted an invoice that was both 
smaller and later than in the scenario presented in the REA- it sought $1,448,303.22 on 
9 June 2008 (R4, tab 1 at 6). There is no evidence that the Corps forced Vistas to submit 
its invoice on 9 June rather than 31 May. Further , the Corps timely paid the invoice (id. ). 
In fact, as far as we can determine , there is no dispute that the Corps paid all of the 
invoices that Vistas submitted within 14 days (id. ; tr. 2/21-22). 
27 

Similarly , in the following month, June 2008 , Vistas posits a scenario where it 
submitted an invoice for $2,657,126.96 on 30 June, which thus came due on 14 July 2008 
(REA, tab D.1 at 2). What really happened is that Vistas submitted an invoice for 
$1,923,125.19 on 2 July, which the Corps paid on time on 16 July 2008 (R4, tab 1at6). 
For reasons that are not clear, in the scenario presented in the REA work papers , Vistas 
credits the $1 ,448,303 .22 paid for invoice no. 1 as a partial payment for invoice no . 2. 
Thus, because more than $1 million was left unpaid , and because interest apparently 
continued to accrue on invoice no. 1, the total interest due after month two more than 
quadrupled to $12,933.39 (REA, tab D.1 at 2). It then nearly doubled the following 
month to $25,703.82 (id.). 
The contract contained FAR 52.232-5, PAYMENTS UNDER FIXED-PRICE 
CONSTRUCTION CONTRACTS (SEP 2002) (R4, appx., tab A, § 00700 at iii). This clause, 
among other things , provided that "The Government shall pay the Contractor the contract 
price as provided in this contract. " FAR 52.232-5(a). The contract also incorporated 
FAR 52.232-27 , PROMPT PAYMENT FOR CONSTRUCTION CONTRACTS (SEP 2005) (R4, 
appx., tab A, § 00700 at iii). 
DECISION 
The Prompt Payment Act (PPA) provides in relevant part that "the head of an 
agency acquiring property or service from a business concern , who does not pay the 
concern for each complete delivered item of property or service by the required payment 
date, shall pay an interest penalty to the concern on the amount of the payment due." 
31 U.S.C. § 3902(a). The contract's prompt payment clause provided that the due date for 
progress payments was 14 days after the billing officer received a proper payment request. 
The PP A further provides that it "does not require an interest penalty on a payment that is 
not made because of a dispute between the head of an agency and a business concern over 
the amount of payment or compliance with the contract. " 31 U.S.C. § 3907(c) . 
In both 
its pre-hearing and post-hearing briefs , the government cited two Board 
cases that illustrate a limitation on the obligation to pay PPA interest. In HZ. & 
Company , Ltd. , ASBCA No. 31055 , 86-2 BCA ii 18,976, the appellant, like Vistas, 
performed changed work when directed to do so, but then sought interest due to the 
length of time it took to negotiate the price of the change and the cost of financing the 
work. Id. at 95,846-47 , iii! 35, 42. The contract at issue, like the contract in this case, 
required the government to pay "the contract price." Id. at 95,849. The Board denied the 
appeal, holding that until a change order had been formalized , the amount of money 
involved in that change could not be added to the value of the contract and that the 
government could not pay an amount greater than the contract price. Id. 
More recently , in Dick Pacifi c/GHEMM, JV, ASBCA No. 55829, 08-2 BCA 
ii 33,937 at 167,942, we held that "there is nothing in the PPA or the Prompt Payment 
clause that would apply the PP A to alleged constructive withholdings based upon a 
28 

contractor's stated inability to invoice under modifications that have not been 
definitized." Similarly, the Court of Federal Claims has held that the government is only 
obligated to pay interest under the PP A when a payment is inadvertently late, not when 
the government refuses to pay or questions its underlying liability . Laure/wood Homes 
LLC v. United States , 78 Fed. Cl. 290, 293 (2007); Inversa , S.A. v. United States , 
73 Fed. Cl. 245, 247 (2006). 
Although the government cited HZ. & Company and Dick Pacific in both its pre and 
post-hearing briefs, Vistas has not attempted to distinguish them. Accordingly, we are 
bound by our precedent. Vistas is not entitled to an interest penalty based upon the 
government's failure to pay an amount greater than the contract price. As we have found, 
from the time that Vistas submitted its original proposal for POOOO 1 there has been a 
disagreement as to the amount the government owed Vistas and, in fact, the government 
originally thought POOOO 1 would result in a credit to the government. Further, there is no 
dispute that the government paid all of the invoices in the amount specified within 14 days. 
Thus, there is no basis for the award of interest under the PP A. This appeal is denied. 
ASBCA No. 58482-Interest Impact on Borrowings 
ADDITONAL FINDINGS OF FACT 
Vistas seeks $266, 7 40 .15 in interest owed to an affiliated company due to 
increased borrowing that resulted from the gaps in payment on this project. According to 
Maribel Zepeda, Vistas was 
unable to obtain financing from a bank so it turned to an 
affiliate, Vistas Belize Limited (Vistas Belize) (tr. 2/53). Vistas Belize is wholly owned 
by appellant (methodology at 52). Vistas ' calculation of its damages is contained at 
Work Paper A-6.1, Accrual of Interest on Borrowings (REA, tab D.1at43). This work 
paper references a promissory note in the amount of $962,472.96 dated 29 December 
2006 (supp. R4, tab 6). This note provided for an interest rate of 4.99%. It also 
contained a payment schedule that called for repayment in full by 30 September 2007, or 
about six months before the parties entered into the contract at issue. However, it appears 
that Vistas made only one payment of $137,499.99 and two smaller payments totaling 
about $10,000, and, based on the language of the note, Vistas appears to have been in 
default at the time it entered into the contract with the Corps. Work Paper A-6.1 also 
indicates that Vistas continued to borrow money from Vistas Belize in 2008-09 so that 
the total principal outstanding reached $1,939,911.29 , or about double the face value of 
the note. While there is a second promissory note in the record (supp. R4, tab 5) that 
would accommodate such borrowing, Vistas did not reference it in its work papers. 
Ms. Zepeda acknowledged that Vistas had borrowed money from Vistas Belize in 
the past, but testified that the gaps in payments on this project resulted in an increase in 
the need to borrow, which led to increased interest payments (tr. 1/214, 2/51-52). Work 
Paper A-6.1 shows a total of $314,389.09 in accrued interest (REA, tab D.1 at 43), of 
29 

which it is seeking $266,740.15. The Corps has not challenged Vistas ' calculation of 
quantum on this item. 
The contract incorporates Defense Federal Acquisition Regulation Supplement 
(DF ARS) 252.243-7001, PRICING OF CONTRACT MODIFICATIONS (DEC 1991) 
(R4, app'x, tab A, § 
00700 at iv). This clause provides: "When costs are a factor in any 
price adjustment under this contract, the contract cost principles and procedures in 
FAR part 31...in effect on the date of this contract, apply." Part 31 appears to bar the 
interest that Vistas seeks, providing in subsection 31.205-20, Interest and other financial 
costs, that "Interest on borrowings (however represented) ... [is] unallowable. " 
DECISION 
Vistas relies upon Wickham Contracting Co. v. Fischer , 12 F.3d 1574, 1582 (Fed. 
Cir. 1994), in which the Federal Circuit held that "a contractor may recover interest 
actually paid on funds borrowed because of the government's delay in payments and used 
on the delayed contract." Wickham, however , must be read with a caveat because, as the 
Court of Federal Claims has explained, the decision by the General Services Board of 
Contract Appeals under review in that case did not address the predecessor regulation to 
FAR 31.205-20, which contained the same substantive provision barring payment of 
interest on borrowed funds. Thus, the Wickham court did not have the opportunity to 
address the ef~ect of this regulation. Northern States Power Co. v. United States, 78 Fed. 
Cl. 449, 471 n.16 (2007). 
The Federal Circuit has come to a different result when it has addressed 
FAR 31.205-20 or a similar regulation. Servidone Constr. Corp. v. United States, 
931 F.2d 860, 863 (Fed. Cir. 1991). In Servidone the Federal Circuit upheld the Claims 
Court's denial of a claim for interest on funds borrowed to cover excess costs because the 
contract incorporated a Defense Acquisition Regulation provision that, like the provision 
applicable in this case, provided that "[i]nterest on borrowed funds (however represented) 
[is] unallowable." Servidone Constr. Corp. v. United States, 19 Cl. Ct. 346, 383 (1990); 
accord VA Venture Pueblo, LLC v. Principi , 119 F. App'x 274 (Fed. Cir. 2004) (affirming 
Veterans Board of Contract Appeals decision denying interest based on FAR 31.205-20); 
Centennial Leasing v. Austin , 17 F.3d 1443 (Fed. Cir. 1994) (table) (affirming General 
Services Board of Contract Appeals decision denying financing costs based on FAR 
31.205-20); Tomahawk Construction Co., ASBCA No. 45071, 94-1BCAii26,312. 
Because the contract bars the interest that Vistas seeks, this appeal is denied. 
30 

ASBCA No. 58483 - Costs to Respond to DCAA Audit 
ADDITIONAL FINDINGS OF FACT 
The Audit 
The audit of Vistas ' POOOO 1 proposal unfolded in what could be described as 
three phases . Phase I began in late January 2009 when the Corps requested the audit 
and Vistas retained Mr. Butler (supp . R4, 
tab 23). Mr. Butler began charging his time 
to the DCAA audit on 21January2009 (REA, tab D.13 at 36). 
The audit appears to have started without any problems; as late as 3 March 2009, 
DCAA indicated that its field work would be complete by 23 March , and its report issued 
by 31 March 2009 (app. supp. R4, tab 260 at 2). However , the original auditor soon 
became concerned about an evolving scope for the audit (app. supp . R4, tab 314 at 2-3, 
tab 362 at 1-2, tab 365 at 1-4). In late April , DCAA concluded that Vistas' proposal 
should be treated as an REA and that it would appoint a new auditor , Howard Salita 
(app. supp. R4, tab 381). 
Phase II began in late April with the appointment of Mr. Salita. Vistas soon began 
registering complaints with the contracting officer and DCAA about the volume of 
information Mr. Salita was requesting (supp. R4 , tab 48) and his inquiries into technical 
aspects of the contract (app. supp. R4, tab 552). According to Maribel Zepeda , 
Mr. Salita, came to Vistas ' office " 18 times , whole days on occasions " (tr. 1/196). 
Ms. Zepeda testified that her interactions with Mr. Salita were a "grinding dialogue. " 
Further , she stated that: 
(Id.) 
[W]e had to sit here and walk him through every aspect of 
the proposal. He went layer after layer after layer he 
would ask for one thing. We would have to support the 
thing with another thing below , below, below . It got down 
to having to provide him cancelled checks .... 
On 20 July 2009, a DCAA supervisory auditor informed Vistas that the audit 
would be completed by the end of September (app. supp. R4, tab 606). Mr. Salita 's 
field work ended on 14 August 2009 and DCAA conducted an exit conference on 
18 August 2009, thus ending Phase II (supp. R4, tab 55 at l; app. supp. R4, tab 690.1). 
Phase III took place from the exit conference until 4 June 2010 when DCAA 
issued its report. Why it took so long to issue the report is not entirely clear and 
Mr. Salita 's absence as a witness makes our factual inquiry more difficult. However , the 
record indicates that three levels of supervisors reviewed Mr. Salita's report and that they 
31 

were dissatisfied with some of his work product or conclusions. The supervisors 
identified problems in his report and pointed to specific provisions in the FAR and 
Defense Contract Audit Manual in support of their positions but Mr. Salita clung to his 
positions based on his notion of "equity." The internal debates at DCAA went on for 
months. (app. supp. R4, tab 769 (3 December 2009 email from DCAA branch manager 
to regional manager: "I've attached some emails sent to Howard to have him explain 
some inconsistencies /errors in the audit report. I'm trying to get to the bottom on it but it 
is difficult. A lot ofHoward 's numbers are not correct. "), tabs 791, 795, 813, 828, 833, 
834 (email from Salita to all three supervisors 
dated 19 February 2010 that stated : "My 
disagreement is based on equity ... I don't think it is right to pay $3,000,000 that they have 
not incurred."), tabs 912, 
918, 925). As these debates went on, the date for issuance of 
the report continued to slip. By early June 2010, the Corps had reached the limit of its 
patience. On 3 June 2010 the Corps sent the DCAA regional manager a scathing email 
that concluded with the Corps requesting that DCAA cancel the audit and return the 
$126,721 that the Corps had paid DCAA (app. supp. R4, tab 1012). DCAA issued its 
report the following day (supp. R4, tab 14). 
Robert Starks was Mr. Salita 's supervisor at DCAA. He became Mr. Salita's 
supervisor on 1 October 2008 - six weeks after the exit conference - and was not involved 
with this matter prior to that. (Tr. 4/8) He was the only DCAA witness who testified. 
The Criminal Investigation 
While DCAA was performing the audit, other government agencies were 
conducting a criminal investigation . It is not clear when Vistas began to suspect that the 
government was conducting such an investigation . However , Maribel Zepeda testified that 
by 7 July 2009 it had become "very apparent" that a criminal investigation was being 
conducted and Samuel Zepeda raised this as an issue at a meeting with the Corps (tr. 2/36). 
Because Mr. Zepeda did not testify , we do not know how much he knew by this point in 
time. However , as events unfolded it is clear that he had a good reason for concern: The 
Federal Bureau of Investigation (FBI) listed both Vistas and Mr. Zepeda as subjects of the 
investigation in a 5 October 2009 affidavit submitted in support of the search warrant 
application (supp. R4, tab 64 at 2289) . 
The contracting officer learned of the investigation on 10 June 2009 (ex. A-292). 
Mr. Salita met with the criminal investigators two to three times after an agent from the 
FBI contacted him (ex. A-876 at 41-42). Mr. Salita was cited as a source of information 
in the affidavit submitted with the search warrant application (supp. R4, tab 64 at 2294). 
There is no evidence that the Corps or DCAA initiated or directed the criminal 
investigation. 
The investigation involved the execution of a search warrant at Vistas ' job site 
and home office on 7 October 2009 (app. supp. R4, tab 738; tr. 1/73, 205-06). As a 
result of that investigation, Kenneth Nix, who worked at various times as a Vistas 
32 

employee or consultant and who was also a former contracting officer, and his wife, 
also a former contracting officer, were indicted and convicted by the government , 
although no witness specified the basis of the convictions (tr. 2/57-58) . (According to 
the docket in the Western District of Texas, Mr. Nix pled guilty to filing false tax 
returns , 26 U.S.C. § 7206(1) , and aiding and abetting, 18 U.S.C. § 2, and received a 
sentence of 30 months in prison (W.D. Tex. No. SA-1 l-CR-523-0LG , Dkt. No. 246)). 
According to the sentencing memorandum filed in the district court by the 
government, Mr. Nix ' s relationship with Vistas (identified only as "Company A" but 
clearly Vistas based on other documents in that record , e.g. Dkt . No. 237), involved, 
among other things, Mr. Nix 's award , as branch chief of the Army Contracting Agency 
- Americas , of contracts to Vistas after he had received payments from Vistas invoiced 
under a false company name (id., Dkt. No. 242 at 1-2). 
Vistas' Claimed Costs 
Vistas is seeking $876,552.10 in costs related to the DCAA audit (app. post-hearing 
br. at 39). This amount includes the following: 
Consulting Fees and Cost 
Samuel Zepeda 
Maribel Zepeda 
Maria Zepeda 
Ignacio Zepeda 
$567,835.32 
$118,328.24 
$ 69,389.56 
$ 69,185.87 
$51,813.11 
(REA, tab D.1 at 47 (WP A-9, Summary ofDCAA Audit Cost)) The consulting fees 
include $339,875 in "Audit Support" from Mr. Butler, plus $63,345.06 for his expenses 
such -as airfare, lodging and meals (REA, tab D.8-at 67 (WP NN-4.1)) . They also include 
$134,262 for George Munoz, Attorney /CPA for "Legal Fees in 
Propriety and Interpretation 
of Audit Results" and $22,949.51 in fees from the law firm Cohn Mohr (id.). 
A. Louis Butler 
The record contains a 21 January 2009 "Independent Consultant Agreement" 
between Vistas and Mr. Butler (supp. R4, tab 23). The agreement lists five work 
categories for Mr. Butler, including: the preparation of cost or pricing data in support of 
pending modifications ; evaluation of the company's financial and accounting systems ; 
consulting on the applicability of various procurement regulations; and interaction with 
DCAA (id. at 1-2). The agreement capped his total hours at 400 and his fees at $35,000, 
but also provided that the parties could agree that further services would be provided. 
Based on our review of the billing summaries provided in REA tab D.13, it appears that 
Mr. Butler eventually charged more than 2,300 hours to the audit work but neither party 
has directed us to an additional agreement between Vistas and Mr. Butler that governed 
his time above the initial 400 hours. 
33 

The itemization of Mr. Butler's time is contained in two different documents in 
REA tab D.13. The first is a 13-page spreadsheet entitled "Summary of Louis Butler 
CPA's Services in Connection with DCAA Audit in 2009" and covers the period from 
21 January to 15 September 2009 (REA, tab D.13 at 36). The second document covers 
the period from 16 September 2009 to 11 April 2011 and is entitled "Summary of 
Consulting Total Hours and Fees for Louis R. Butler, CPA Subsequent to DCAA Field 
Audit Report" (REA, tab D.13 at 49). This document includes time for Mr. Butler on 
not only the DCAA audit, but also general services and REA preparation. 
Both of these documents state the number of hours billed on each work day, and 
the hourly rate. The first document indicates that Mr. Butler worked 286 hours at $75 per 
hour and 1,128.5 hours at $125 per hour for a total amount billed of$162,512.50 
(REA tab D.13 at 48). The second document indicates that Mr. Butler performed work 
on the audit totaling $113,843.75 (id. at 56). Adding these amounts ($162,512.50 + 
$113,843.75) equals $276,356.25, which is significantly less than the $339,875 that 
Vistas has included in the claim (REA, tab D.8 at 67). Adding to the confusion, Work 
Paper NN-4.1 states that Vistas' general ledger reflects an even lower number for 
Mr. Butler's time, $260,455, but under the heading "Adjustments and Reclassifications" 
an additional $79,420 is added to this amount to reach the amount claimed (id.). 
Mr. Butler did not address this in his testimony. 
There are also other problems with Mr. Butler's time. There are significant blocks 
of time for which the description of Mr. Butler 's services has been redacted. For 
example, all of his time from 17 April to 7 May 2010, a total of 162.5 hours, is redacted 
(REA, tab D.13 at 49). Further, there are other blocks of time charged to the audit claim 
for which Mr. Butler was providing other assistance to Vistas that was not audit support 
(tr. 2/176-77; REA, tab D.13 at 37). Mr. Butler also spent a large amount of time on the 
criminal investigation but he billed the work to the audit (tr. 2/101, 189-90; REA 
tab D.13 at 50). 
With respect to the $63,345.06 that Vistas is seeking for Mr. Butler's expenses, 
Work Paper NN-4.1 indicates that Vistas ' general ledger lists $38,912.23 in such 
expenses (REA, tab D.8 at 
67). The remainder comes from another unexplained 
adjustment or reclassification to the general ledger. Vistas apparently expects us to 
simply accept the amount claimed despite a lack of testimony; in terms of support, Vistas 
has given us nearly 100 pages of bills to credit cards issued to Maria Zepeda. Vistas has 
not attempted to organize or explain these bills either through testimony or in its briefs. 
We decline the invitation to go through them line by line but it is obvious that many of 
the charges bear no relationship to Mr. Butler's expenses. Examples of such charges are 
a $2,640 charge to "Concrete Clinic, New Lenox, IL," airline tickets for various members 
of the Zepeda family, and a number of charges for DirecTV service (REA, tab D.13 at 99, 
101, 113). We find that the claim for Mr. Butler's expenses has not been adequately 
supported. 
34 

B. Other Consultants / Attorneys 
The record contains $10,622.75 in bills from Mr. Oyer (REA, tab D.13 
at 
29-34) of which Vistas has allocated $7,403.75 without explanation to the audit claim 
(REA, tab D.8 at 67). The record does not contain any written agreement between 
Vistas and Mr. Oyer. 
As for the $134,262 included in the claim for George Munoz , Attorney/CPA, other 
than a passing reference during Maribel Zepeda 's testimony (tr. 2/13), no witness 
explained what services Mr. Munoz performed that furthered Vistas ' response to the 
audit, nor has Vistas mentioned Mr. Munoz in its post-hearing briefs. In tab D.13, there 
are a series of invoices from Mr. Munoz from 2009 to 2011 that total $212,672.72 (REA, 
tab D.13 at 64). The bills appear to stem from Mr. Munoz's work as an attorney in that 
they are from "Law Offices of George Munoz" (id. at 66, 69, 78) and do not appear to 
involve any accounting work product. Eliminating work performed in 2011 (the year 
after DCAA issued its report) during which Mr. Munoz appears to have concentrated on 
the REA (see id.) leaves a balance of $134,423.62 , which is close to the amount Vistas is 
seeking in the DCAA audit appeal for Mr. Munoz's work. However , at least some of the 
work Mr. Munoz performed in 2009 and 2010 appears to be related to preparation of the 
REA, for which Vistas has a separate appeal, or is for work unrelated to the Corps 
(e.g., id. at 75) but Vistas has included it in the audit claim. 
Finally, Vistas has included $22,949.51 in fees from the law firm Cohn Mohr. The 
REA contains an invoice from Cohn Mohr in this amount for work performed in May 2010, 
the month before DCAA issued its report (REA, tab D.13 at 23-27). Although there are 
numerous references to DCAA in these invoices, it is not entirely clear what Cohn Mohr 
had been tasked to do. The individual entries indicate that Vistas was concerned about a 
government claim under the Truth in Negotiation Act or the False Claims Act. For 
example, the invoice reflects that an attorney spent about 10 hours (at $360 per hour before 
a discount) on 27-28 May 2010 "Reviewing TINA Act cases for guidance on standards 
applied and elements of Government claim" and "Drafting memorandum on TINA and 
defective pricing." (Id. at 26) In the only testimony during trial about Cohn Mohr's 
involvement with respect to the DCAA audit support claim, Ms. Zepeda testified "I'm not 
sure if [Cohn Mohr] was involved here but probably not" (tr. 2/13). 
C. Vistas' Employees 
With respect to the $308,716.78 Vistas is seeking for its four employees , these 
amounts are broken down in Work Paper NN-4.1 , Analysis of Consultant , Legal and 
Accounting Cost (REA, tab D.8 at 67). Mr. Butler prepared this work paper (tr. 2/14). 
Curiously, it states that Vistas' general ledger contained only $13,267.86 in costs for 
these employees related to the audit (REA, tab D.8 at 67). However, under the heading 
"Adjustments and Reclassifications," 
Mr. Butler again added an additional amount - a 
very large amount in this instance, $295,448.92 - to bring the total to $308,716.78 (id.). 
35 

Neither Mr. Butler nor any other witness explained this adjustment/reclassification at the 
hearing. (In the one instance during the hearing that Mr. Butler was asked to explain one 
of the adjustments /reclassifications to the general ledger he could not explain it , stating 
that the information was on an "old laptop" he has in Houston (tr. 2/157-59)) . 
Work Paper NN-4.1 identifies the number of hours charged for each employee and 
the rate. The largest number of hours belonged to Vistas ' president , Samuel Zepeda, who 
is listed as having worked 1,497.70 hours on the audit in 2009 and 2010. In addition , 
Maribel 
Zepeda is listed as having worked 1,145 hours, Maria Zepeda is listed at 
1, 146.5 hours and Ignacio Zepeda is listed at 719.52 hours . (REA, tab D.8 at 68). There 
are no time sheets or any other document in the record that evidences these hours. 
Samuel Zepeda did not testify so we have no explanation 
as to how he spent nearly 
1,500 hours working on the audit. Although Ms. Zepeda testified to Mr. Salita's 18 visits 
to her office and the "grinding dialogue" that ensued , the testimony at the hearing was 
completely inadequate to explain how these 
four employees _ collectively spent a total of 
more than 4,500 hours on the audit. 
Work Paper NN-4.1 also identifies the hourly rate charged for each of the four 
employees' time on the audit claim. With respect to Samuel Zepeda , it states that he had 
a "2008 Salaried Personnel Cost of$91 ,000" (REA, tab D.8 at 68). Elsewhere in tab D.8, 
Vistas submitted Work Papers FF-1.2 and FF-1.3 (each entitled "Payroll Summary ") that 
identified Mr. Zepeda's 2009 "total gross pay " at $98,875.00 (id. at 30) and his total 
gross pay for the first nine months of 2010 to be $75,075.05 (id. at 39). Vistas did not 
use any of these amounts , however, in calculating the hourly cost of Mr. Zepeda for the 
audit support claim in Work Paper NN-4.1. Instead, Work Paper NN-4.1 uses hourly 
rates for 2009 and 2010 that are "Based on 1.5 Time Vistas 2008 Salaried Personnel Cost 
of $91,000 Plus 20% Fringes Benefits and Impacted by 7% Raise for 2009 and 201 O" 
(id. at 68). Cutting through the math, Vistas is seeking an amount more than 50% higher 
than Mr. Zepeda's compensation during this period. 13 Vistas calculated the amounts it is 
seeking for the other three employees in the same manner (id.). 
13 After the government pointed out these issues during its cross-examination of 
Ms. Zepeda, on re-direct (after a 10 minute break) Ms. Zepeda contended that 
Mr. Zepeda's actual compensation was $165,000 and that the additional 
amounts had been paid to him in subsequent pay periods (tr. 2/65-66). We do 
not find this testimony to be credible. Ms. Zepeda admitted on re-cross that she 
could not identify any documents in this voluminous record that 
supported her 
assertion (tr. 2/68). Nor has Vistas identified any in its post-hearing briefs. 
36 

DECISION 
Vistas contends that the costs that it is seeking are allowable as costs incidental 
to contract administration , citing Bill Strong Enterprises , Inc. v. Shannon , 49 F.3d 
1541 (Fed. Cir. 1995), overruled in part on other grounds Reflectone , Inc. v. Dalton , 
60 F.3d 1572 (Fed. Cir. 1995) (en bane). In Bill Strong , the Federal Circuit considered 
whether consultant costs were allowable under FAR 31 .205-33, Professional and 
consultant service costs. 
The court of appeals first observed that there are at least three distinct categories of 
legal, accounting , and consultant costs in the contract cost principles : (1) costs incurred in 
connection with the work performance of a contract; (2) costs incurred in connection with 
the administration of a contract; and (3) costs incurred in connection with the prosecution 
of a CDA claim. The court held that the first two categories are presumptivel y allowable, 
if they are also reasonable and allocable , while the third category is unallowable . 
Bill Strong , 49 F.3d at 1549. The court also observed that the line between costs that are 
incidental to contract administration and costs that are incidental to prosecution of contract 
claims is "rather indistinct. " Id. The court explained that: 
[T]he contractor and the CO usually enter a negotiation 
stage after the parties recognize a problem.... Although 
there is sometimes an air of adversity in the relationship 
between the CO and the contractor , their efforts to resolve 
their differences amicably reflect a mutual desire 
to 
achieve a result acceptable to both. This negotiation 
process often involves requests for information by the CO 
or Government auditors ~or both, and, inevitably, this 
exchange of information involves costs for the contractor. 
These costs are contract administration costs, which should 
be allowable .... 
Id. at 1549-50 (underlining added). In considering such claims, the Federal Circuit 
directed the Board to examine the objective reason why the contractor 
incurred the cost. 
If the contractor incurred the cost for the purpose of materially furthering the negotiation 
process, the cost normally is allowable under FAR 31.205-33 as a contract administration 
cost even ifthe negotiation ultimately fails. On the other hand, if the cost is incurred to 
promote the prosecution of a claim, then the costs are unallowable .14 Id. at 1550. 
14 In its post-hearing brief, the government contends that Vistas' Bill Strong theory is a 
new theory . We agree that Vistas' position has evolved considerably in its 
post-hearing briefs and have considered whether we possess jurisdiction to 
entertain this claim. See K-Con Bldg. Sys., Inc. v. United States , 778 F.3d 1000, 
1005-06 (Fed. Cir. 2015). While it was not the focus of Vistas' claim, Vistas 
did present its Bill Strong theory to the contracting officer. (Exec. summ. at 17 
37 

Under FAR 3 l .205-33(f), consultant fees are allowable only when supported 
by evidence of the nature and scope of service furnished. This subsection further 
provides that: 
Evidence necessary to determine that work performed is 
proper and does not violate law or regulation shall include-
(1) Details of all agreements (e.g., work 
requirements, rate of compensation , and nature and amount 
of other expenses, if any) with the individuals or 
organizations providing the services and details of actual 
services performed; 
(2) Invoices or billings submitted by consultants, 
including sufficient detail as to the time expended and 
nature of the actual services provided; and 
(3) Consultants' work products and related 
documents, such as trip reports indicating persons visited 
and subjects discussed, minutes of meetings, and collateral 
memoranda and reports. 
48 C.F.R. § 31.205-33(f). 
Vistas ' Employee Costs 
In considering Vistas' claim in light of FAR 31.205-33, one immediate problem for 
Vistas is that this regulation expressly excludes costs for officers or employees of the 
company. FAR 3 l .205-33(a) (2008). Accordingly, Bill Strong does not support Vistas 
position that the $308,716.78 it is seeking for its four employees are allowable. Moreover, 
even if these costs were potentially allowable, we would still deny them because Vistas 
has not proved its damages. As we have found, other than numbers written on a 
spreadsheet, there is no support for the hours alleged. Moreover, the amount sought is 
based upon a large increase in the amount reflected in Vistas' general ledger - from 
$13,267.86 to $308,716.78 - by virtue of an unexplained adjustment or reclassification. 
Finally, the hourly rates used by Vistas represent nothing more than wishful thinking on 
the part of Vistas in that they are more than 50% higher than the amounts actually paid to 
the employees in question. 
(referring CO to legal opinion), at 74 (legal opinion citing FAR 31.205-33 and 
Bill Strong). Thus, we possess jurisdiction. 
38 

The Consultant and Attorney Costs 
In considering the remaining portion of the audit claim (the consultant costs), a 
second line of cases is relevant. In Orlando Helicopter Airways, Inc. v. Widnall, 
51F.3d258 (Fed. Cir. 1995), the government investigated the contractor for flight safety 
violations and fraud. After the Department of Justice conducted a criminal investigation 
that closed without any charges filed, the contractor submitted a claim for costs related to 
that investigation. Id. at 259. After the Board granted the government summary 
judgment based on the sovereign acts doctrine, the Federal Circuit affirmed. The court of 
appeals held that the government's police powers "are an ancient and fundamental indicia 
of sovereignty" and that the contractor lacked any remedy under the contract when the 
contracting officer did not initiate and direct the investigation. Id. at 262. As we have 
found, there is no evidence in this case that the contracting officer initiated or directed the 
criminal investigation. 
A. Attorney Fees 
Mindful of these considerations, we start with the bills from the attorneys at 
Cohn Mohr and George Munoz. First, as we have found, Vistas did not make any 
effort at the hearing to demonstrate why these fees are reasonable and allowable. No 
one from either of these firms testified and there were only passing references to these 
attorneys by other witnesses, which, in the case of Cohn Mohr, was Maribel Zepeda 's 
testimony that she did not believe that Cohn Mohr had worked on the audit. Nor has 
Vistas addressed the attorney costs in its post-hearing briefs. 
Second, Vistas has not brought to our attention any retainer agreement that 
explains~ the scope of work that either firm provided to Vistas. This, combined with 
the lack of testimony, leaves us uncertain as to the purpose for which Vistas retained 
these firms, particularly in light of the pending criminal investigation. Thus, Vistas 
has not met its burden with respect to FAR 31.205(±)(1). See Fru-Con Constr. Corp., 
ASBCA Nos. 55197, 55248, 07-2 BCA il 33,697 at 166,815 (lack of specificity in 
agreement with consultant used as a factor in reducing fees by about 90% ). 
Third, although Vistas included in the REA bills from both firms, some of the 
explanations as to the work performed lack sufficient detail or appear to be for work 
on something other than the audit, as we have found. For example, a bill for $10,000 
from attorney Munoz for August 2009 states little more than that he talked to Vistas 
about the audit, reviewed "materials being submitted" to the government, and that he 
"worked on" the exit conference. Another entry for an out-of-pocket expense for 
Mr. Munoz states merely "Gen. Creer $3,911.12" ; a few pages earlier, the bills stated 
that a "Ret. Robert Crear" had been retained for a 
$3,000 fee. (REA, tab D.13 at 73, 
76) Presumably Creer and Crear are the same person, but there is no indication as to 
his line of work or what he did for Vistas. 
39 

For the foregoing reasons, we conclude that Vistas has not met its burden of 
demonstrating that it incurred these fees for the purpose of materially furthering the 
negotiation process or that they were reasonable. Vistas has not explained why it 
retained these firms, what they did (beyond the bare outlines in the bills) , what work 
product they produced , or why the fees were in the amount billed. 
B. Darrell Oyer 
With respect to Mr. Oyer, Vistas fails to meet the requirements of FAR 3 l .205-
33(f). As we have found there is no written agreement that provides the details of the 
tasks Mr. Oyer was retained to perform . The record does contain invoices for 
Mr. Oyer but they lack sufficient detail as to the time expended and the nature of the 
actual services provided in that they merely state such things as "Visit to 
your office 
including prep and follow up," and "Review documents " (REA , tab D.13 at 31-32). 
The record does not appear to contain any work product for Mr. Oyer for the genuine 
purpose of materially furthering the negotiation process. Vistas did not address these 
fees in Mr. Oyer 's testimony or in its briefs. There is no basis for us to award Vistas 
fees for Mr. Oyer. 
C. Louis Butler 
With respect to Mr. Butler, the issue is more complex . As we have found, the 
record contains an Independent Consultant Agreement between Mr. Butler and Vistas 
that defines a scope of work, at least up to the first 400 hours. There also appears to be 
no dispute that Mr. Butler did, in fact, spend significant time on work related to the 
audit (see app. post-hearing fact br., ilil 123-24). 
On the other hand, there are a number of pieces of evidence that have to be 
construed as red flags. First, as we have found , Vistas is seeking $339 ,875 for Mr. Butler 's 
time on the audit work but his billing summaries support only $276 ,356.25 , reflecting an 
unexplained increase of more than $63,000. Vistas did not address this discrepancy at the 
hearing or in its briefs. 
Second, there is no dispute that Mr. Butler spent a great deal of time on work 
related to the criminal investigation. In its brief, the government identifies a total of 
454 hours of work between 18 October 2009 and 15 January 2010 that, based on 
Mr. Butler's testimony (tr. 2/190), may have been spent entirely on work related to the 
criminal investigation . We cannot determine how many hours Mr. Butler spent on work 
related to the criminal investigation , but we note that a portion of his testimony could be 
read to state that he actually spent half his time on the criminal work (tr. 2/189). 
Mr. Butler attempted to justify his billing the criminal work to the audit claim 
by contending that the search warrant would not have been issued but for DCAA 's 
cooperation with the criminal investigators (tr. 2/194). This is at best speculation. To 
40 

the extent that Vistas is asking us to carve out an exception to Orlando Helicopter 
simply because Mr. Salita cooperated with the FBI after the FBI made such a request , 
we decline that invitation. 
Third , we do not believe it was reasonable for Vistas to allow Mr. Butler to bill 
more than 2,300 hours , considerably more than a full year of work at 40 hours per week. 
In comparable circumstances in Fru-Con , we held that consultant fees were not 
reasonable because the contractor 's lack of oversight had almost given the consultant a 
blank check. Fru-Con , 07-2 BCA ii 33,697 at 166,815. 
In terms of compliance with the FAR 3 l .205-33(f) requirements , the evidence is 
mixed. Vistas has provided us with its agreement with Mr. Butler , but it covers only the 
first 400 hours and $35,000 in fees . Vistas has also provided Mr. Butler 's billing 
summaries but it is questionable whether many of the entries provide sufficient detail 
under FAR 31.205-33(£)(2). For example, entries from 20-25 February 2009 describe 
Mr. Butler ' s services as "Preparation of file analyzing historical project activity " and bills 
44 hours to this activity. In terms of work products and related documents under 
FAR 31.205-33(£)(2) , Vistas has directed our attention to several dozen emails authored by 
Mr. Butler , but nothing that would substantiate more than 2,300 hours of work. Some of 
Mr. Butler ' s work product is not in the record. When asked by the government 's attorney 
where one could see the work product of his efforts for 20-25 February 2009 , Mr. Butler 
testified that it "may be" on a laptop he has in Houston (tr. 2/175). 
In Fru-Con , we recognized that the public policy identified in Bill Strong favors 
payment of the contractor's contract administration costs. However , because of the 
various deficiencies in the claim that we identified, we awarded the contractor about 
11.5% of-the amount claimed as ajuryverdict. The Federal Circuit has held that to use 
the jury verdict method "[the Board] must first determine three things: (1) that clear 
proof of injury exists; (2) that there is no more reliable method for computing damages ; 
and (3) that the evidence is sufficient for a [board] to make a fair and reasonable 
approximation of the damages." Grumman Aerospace Corp. v. Wynne, 497 F.3d 1350, 
1358 (Fed . Cir. 2007) (quoting Dawco Constr., Inc. v. United States, 930 F.2d 872, 880 
(Fed. Cir. 1991)). 
In this case , we are satisfied 
that the first two elements of this test have been met 
because Mr. Butler clearly performed work in response to the audit and that there is no 
more reliable method of calculating damages. With respect to the third prong of the test, 
the question is more difficult. Based on the issues we have identified , including the 
criminal investigation , the lack of a written agreement for hours above 400, the cursory 
nature of the billing records , the lack of work products to support the hours claimed, and 
the apparent blank check that Vistas gave Mr. Butler , any amount awarded to Vistas 
should represent a sharp reduction from the amount sought. After careful consideration 
of the record, we have determined that a fair and reasonable approximation of Vistas 
41 

damages can be achieved by awarding Vistas the $35 ,000 contemplated by its agreement 
with Mr. Butler. 
Accordingly , this appeal is sustained 
in part. 
ASBCA No. 58486-Impact of Bond Premium on Deleted Work 
Vistas seek s $13, 174.59 for what it describes as "unnecessary bond premium costs 
that Vistas paid for work that was deleted from the contract " (compl. iJ 158). As we 
described above, in July 2010 , POOOl 7 deleted the w ork remaining on the contract but did 
not reduce the contract price (supp . R4 , tab 28 at 40). No witness discussed this issue at 
the hearing and Vistas did not introduce any evidence that indicates that it paid more for 
bond costs than it received from the Corps. 
In its post-hearing brief, the government observes , among other things , that the 
contracting officer approved total bond costs of$221 ,789 (see R4 , tab 1at18) . The 
government contends that because Vistas did not offer any evidence with respect to 
bond costs, let alone that it incurred more than $221 ,789, it is not entitled to any 
recovery. In its reply brief, Vistas contends that it incurred bond costs of $102 ,027 .70 
(app. reply at 53-54). Assuming that this is accurate , we do not see why this would 
entitle Vistas to bond costs of $13 ,174.59 in addition to the $221 ,789 approved by the 
contracting officer. 
DECISION 
Vistas has not proven entitlement or quantum. This appeal is denied. 
ASBCA No. 58487 - Contract Reformation 
In this appeal , Vistas sought $3,215 ,991.77 based on a contention that ifit had 
known the actual site conditions and defective drawings issued by the Corps , it would 
have bid the project with a 21 % profit rate (exec. summ. at 10). During its opening 
statement , Vistas ' counsel stated that it did not intend to pursue this appeal (tr. 1/23) and it 
thereafter did not submit any evidence. Vistas stated in its post-hearing brief that it is 
withdrawing this appeal (app. br. at 1 n.l). 
DECISION 
This appeal is dismissed with prejudice . 
42 

ASBCA No. 58488 -Proposal Preparation Costs 
ADDITIONAL FINDINGS OF FACT 
Because we draw upon the facts and analysis of Vistas' DCAA audit support 
costs appeal , familiarity with our decision in ASBCA No. 58483 is presumed . 
Vistas seeks $1,268,288 for costs related to the preparation of its REA. This 
amount includes $850 ,314.93 for costs or estimated costs of its consultants and 
employees , plus G&A of 10.64% or $90,473.51 , plus profit of $327,499.78 
(REA, tab D.l at 41 (WP A-5)). 
The $850,314.93 includes $67,884.14 for outside consulting and legal costs 
through 30 September 2010 (REA, tab D.l at 41). Vistas also seeks $286,267.59 in 
estimated costs for outside legal and consulting fees from 1 October 2010 to proposal 
submission (REA , tab D .1 at 41 ), bringing the total for consultant and legal costs to 
$354,151.73. According to Mr. Butler 's billing records , he billed 1,598.5 hours and 
$199,812.50 to REA preparation (REA, tab D.13 at 60), which was in addition to the 
2,300+ hours he billed for audit support. Further, there are bills from Attorney Munoz in 
2011 for work relating to the REA that total $78,254.10 (id. at 64-71) and from Cohn 
Mohr from July 2010 to April 2011 in the amount of $36,780.50 (id. at 1-22). Finally, as 
we found above, the record contains $10,622.75 in bills from Mr. Oyer (REA, tab D.13 at 
29-34) but Vistas has allocated $7,403.75 to the audit claim (REA, tab D.8 at 67), which 
effectively leaves, at most, a balance of $3 ,219 in work on the REA. Adding up these 
various amounts results in a total of $318,066.10 for the attorneys and consultants. 
With respect to its employees , Vistas seeks an estimated $496, 163 .20 for eight 
individuals for "Involvement Above and Beyond Routine Employment Functions in the 
Preparation and Through Submission of REA Proposal" (REA, tab D.1 at 41). While the 
REA does not tell us how Vistas calculated these amounts , presumably Vistas used the same 
method that greatly increased the hourly rates for the DCAA audit claim that we rejected 
above. There is no documentation of the hours spent by the employees on the REA. 
In the contracting officer's final decision , Ms. Nicholas rejected the REA 
preparation costs in their entirety because she found them to be unreasonable. Among 
other things, she observed that the $1,268 ,288.23 Vistas sought for proposal preparation 
costs exceeded the $1, 154,494 to which she had concluded Vistas was entitled. She 
stated that the Corps had requested a "simple 
accounting" of Vistas ' final costs but Vistas 
had responded with something much more complex. She found many of the documents 
provided by Vistas to be "confusing, unusable and unhelpful to the resolution of this 
matter." Ms. Nicholas stated that "it is my finding that Vistas' proposal did not 
materially further the negotiation process. " (R4, tab 1 at 17) 
43 

DECISION 
In its brief, the government agrees that REA preparation costs are generally 
allowable under Bill Strong. Vistas has submitted an REA that was much more time 
consuming to prepare than the total cost proposal that the Corps requested but contends 
that it was under no obligation to submit its costs in the format requested by the Corps. 
We agree but precedent , including Bill Strong , limits its recovery to reasonable costs and 
requires Vistas to prove those costs. In this case, Vistas ' 44-volume REA is more 
confusing than helpful , relies on theories and calculations that are fanciful , unsupported , 
or barred outright , and fails to document anywhere near the amount of REA preparation 
costs that Vistas is seeking. 
We also agree with the government that there is a serious question as to whether 
Vistas was in a litigation posture the entire time, which would bar it from recovering 
REA preparation costs. Bill Strong, 49 F.3d at 1549-50. For example , in the REA Vistas 
sought more than $3 .2 million for contract reformation costs that it ultimately dropped on 
appeal (exec. summ. at 20). FAR 33.205(b) specifically requires the contracting officer 
to treat contract reformation as a claim. In addition, for the reasons set forth in this 
opinion, Vistas could not have reasonably believed that the government would pay many 
of the items that it sought, either because the amounts were so high, such as the profit 
claim, or they were outright barred, like the interest claim, or because the calculations 
were so convoluted and flawed, like the G&A claim . We conclude that either Vistas was 
in a litigation posture on at least significant portions of the REA from the outset or, to the 
extent it actually believed that the government would enter into negotiations , that belief 
was not reasonable. See TMS Envirocon, Inc., ASBCA No. 57286, 12-2 BCA ii 35,084 
(REA preparation costs rejected where expectation of negotiations was unreasonable); 
Grumman Aerospace Corp., ASBCA No. 50090, 01-l BCA ii 31,316 (claim preparation 
costs denied where contractor was in litigation posture from the outset). 
We have examined the record carefully to determine whether a jury verdict award 
is feasible. As we have found, there is no record support for the time spent by Vistas ' 
employees on the REA , and there are no agreements in the record between Vistas and 
Mr. Munoz , Cohn Mohr , or Mr. Oyer. Nor can it be said that there is an agreement 
between Mr. Butler and Vistas because the agreement that we discussed in connection 
with the DCAA audit support claim did not cover REA preparation. Neither Mr. Munoz 
nor anyone from Cohn Mohr testified. We have no doubt that Mr. Butler spent an 
enormous amount of time on the REA, as evidenced by his nearly $200,000 in bills. 
Although Mr. Butler 's skills are surely impressive in certain areas, his skill in claims 
preparation on a government construction project is lacking. According to his testimony, 
he drew on his knowledge of "hospital accounting" to prepare the REA (tr. 2/132) but the 
result was an unwieldy REA that did not come close to achieving the lofty aims to which 
Vistas aspired. 
44 

On the other hand, the REA was not completely unsuccessful. As we found above, 
after the submission of the REA, the Corps made partial payments to Vistas totaling 
$2 million and the contracting officer awarded Vistas an additional $1 , 154,494 in the 
contracting officer's final decision. However , it is our conclusion that Vistas could have 
achieved these results more quickly and easily with a much simpler approach. As a jury 
verdict, we award Vistas $50,000, which represents about 25% of Mr. Butler's fees. 
Accordingly , this appeal is sustained in part. 
CONCLUSION 
For the foregoing reasons , we sustain ASBCA Nos. 58483 and 58488 in part. We 
deny ASBCA Nos. 58479, 58480, 58481, 58482 and 58486. We dismiss ASBCA No. 58487. 
Dated: 12 January 2016 
I concur 
Administrative Judge 
Acting Chairman 
Armed Services Board 
of Contract Appeals 
rr<1~01 - C)<~ 
MICHAEL N. O'CONNELL 
Administrative Judge 
Armed Services Board 
of Contract Appeals 
I concur 
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 Nos. 58479, 58480, 58481, 
58482, 58483, 58486, 58487, 58488, Appeals of Vistas Construction of Illinois, Inc., 
rendered in conformance with the Board 's Charter. 
Dated: 
45 
JEFFREY D. GARDIN 
Recorder, Armed Services 
Board of Contract Appeals