ARMED SERVICES BOARD OF CONTRACT APPEALS 
Appeal of -- ) 
) 
Magwood Services, Inc. ) 
) 
Under Contract No. W912PQ-13-C-0016 ) 
APPEARANCE FOR THE APPELLANT: 
APPEARANCES FOR THE GOVERNMENT: 
ASBCA No. 59293 
Mr. Heyward R. Manigault 
President 
Raymond M. Saunders, Esq. 
Army Chief Trial Attorney 
Erica S. Beardsley, Esq. 
MAJ Ildiko Szentkiralyi, JA 
Trial Attorneys 
OPINION BY ADMINISTRATIVE JUDGE JAMES 
This appeal arises from the contracting officer's (CO's) 24 April 2014 decision 
that denied the $72,283.00 termination settlement proposal of Magwood Services, Inc., 
(Magwood) under the captioned contract. The Board has jurisdiction of the appeal 
under the Contract Disputes Act of 1978 (CDA), 41 U.S.C. §§ 7101-7109. Magwood 
elected 
an expedited disposition of the appeal and to submit its case upon the record 
under Board Rules 12.2 and 11. The government elected a hearing, which was held 
on 6 August 2014 in West Point, New York. The parties have submitted post-hearing 
briefs. The Board is to decide both entitlement and quantum (tr. 1110). 
SUMMARY FINDINGS OF FACT 
1. Contract No. W912PQ-13-C-0016 (contract 16) was awarded to 
Construction Solutions Group, LLC, on 17 July 2013 and was cancelled (Bd. corr. file, 
app. 21July2014 filing; tr. 1/27). Contract 16 was awarded to Magwood effective 
12 September 2013 (R4, tab 1 at 1-2 of 42, tab 3, ex. B). Contract 16 required 
Magwood to replace two diversion holding tanks at Stratton Air National Guard Base, 
Scotia, New York, for the fixed-price of $66,496.00 (R4, tab 1 at 1, 3 of 42). 
1 The Contract Disputes Act, implemented by Board Rule 12.2, provides that this 
decision shall have no value as precedent, and in the absence of fraud shall be 
final and conclusive and may not be appealed or set aside. 

2. Contract 16 included the Federal Acquisition Regulation (FAR) 52.249-2, 
TERMINATION FOR THE CONVENIENCE OF THE GOVERNMENT (FIXED PRICE) (APR 
2012) clause, which provided in pertinent part: 
( e) After termination, the Contractor shall submit a final 
termination settlement proposal to the (CO] in the form 
and with the certification prescribed by the [CO]. ... 
(f) Subject to paragraph (e) of this clause, the Contractor 
and the [CO] may agree upon the whole or any part of the 
amount to be paid ... because of the termination. The 
amount may include a reasonable allowance for profit on 
work done. However, the agreed amount, whether under 
this paragraph [(f)] or paragraph (g) of this clause, 
exclusive of costs shown in subparagraph (g)(3) of this 
clause, may not exceed the total contract price .... 
(g) If the Contractor and the [CO] fail to agree on the 
whole amount to be paid because of the termination of 
work, the [CO] shall pay the Contractor the amounts 
determined by the [CO] as follows, but without duplication 
of any amounts agreed on under paragraph ( f) of this 
clause: 
( 1) The contract price for completed supplies or services 
· accepted by the Government ... not previously paid for, 
adjusted for any saving of freight or other charges. 
(2) The total of-
(i) The costs incurred in the performance of the work 
terminated, including initial costs and preparatory expense 
allocable thereto, but excluding any costs attributable to 
supplies or services paid or to be paid ... ; 
(iii) A sum, as profit on subdivision (g)(2)(i) of this 
clause, determined by the [CO] under 49.202 of the [FAR], 
in effect on the date of this contract, to be fair and 
reasonable; however, if it appears that the Contractor 
would have sustained a loss on the entire contract had it 
been completed, the [CO] shall allow no profit under this 
2 

subdivision (iii) and shall reduce the settlement to reflect 
the indicated rate of loss. 
(3) The reasonable costs of settlement of the work 
terminated, including-
(i) Accounting, legal, clerical, and other expenses 
reasonably necessary for the preparation of termination 
settlement proposals and supporting data; 
(i) The cost principles and procedures of Part 31 of the 
[FAR], in effect on the date of this contract, shall govern 
all costs claimed, agreed to, or determined under this 
clause. 
G) The Contractor shall have the right of appeal, under the 
Disputes clause, from any determination made by the [CO] 
under paragraph ( 
e ), (g), or (1) of this clause .... 
(R4, tab 1 at 36-38 of 42) 
3. From mid-September to 16 October 2013 the parties disagreed whether 
Magwood could submit a "Tripartite Escrow Agreement" (TEA) instead of a payment 
bond required by the government (R4, tabs 3, 7). From 26 September to 
13 December 2013 Magwood submitted contract progress schedules and submittals for 
the holding tanks and components (R4, tabs 4-6, tab 11 at 3, tab 21 at 1-2). 
4. Contract 16 had no FAR 52.249-10, DEFAULT (FIXED-PRICE CONSTRUCTION) 
(APR 1984) clause (R4, tab 1). On 16 October 2013 CO MSgt Wanda Yarbor issued a 
decision to terminate contract 16 for default (R4, tab 13). Magwood appealed from that 
default termination decision on 17 October 2013, which appeal was docketed as ASBCA 
No. 58968 
(R4, tab 9 at 1). 
5. On 6 December 2013 the parties entered into a Settlement Agreement with 
respect to ASBCA No. 58968 
(R4, tab 9 at 1-2, 5). On 23 December 2013 the parties 
agreed that the settlement was null and void (app. supp. R4, tab 4 at 4-24, 4-28). The 
Board dismissed ASBCA No. 5 8968 on 24 March 2014. 
6. On 24 February 2014 CO Yarbor issued unilateral Modification No. P00003 
"terminating the Contract for the convenience of the Government" (R4, tab 13). 
3 

7. On 11 March 2014 Magwood submitted a termination settlement proposal 
(TSP) for the amount of $72,283.00 to CO Yarbor on Standard Form 1436 (SF 1436). 
The SF 1436 listed 19 items, some correlated to "Schedules" A through H, on which 
Magwood provided the following cost elements as summarized below: 
Other Costs (from Schedule B) 
General and Administrative 
Expenses (from Schedule C) 
Total Costs (Items 1 thru 6) 
Profit (Explain in Schedule D) 
Total Costs (Items 7 and 8) 
Settlement Expenses (from Schedule E) 
Net Payment Requested 
Schedule B - Other Costs 
Item 
Tripartite Escrow Agreement 
Explanation 
$997.44 TEA fee, $997 
execution fee, Paperwork 
prep: $667 (1 hr. Pres. @ 
$35/hr., 30.75 hrs. O.A.@ 
$20/hr., lhr. Clerk@ 
$16.50/hr.) 
$20,398.00 
$40,504.00 
$60,902.00 
$ 9,136.00 
$70,038.00 
$ 2,245.00 
$72,283.00 
Amount 
$2,662.00 
Appeal costs Supplies/mail: $25, $17,736.00 
Paperwork prep: $17,711 
(217 hrs. Pres.@ $35/hr. 
302 hrs. O.A. @ $20/hr., 
247 hrs. Clerk@ $16.50/hr.) 
Schedule C - General and Administrative Expenses 
Detail of Expenses Method of Allocation 
Daily Rate, Proj. start to 37[2J days@ $244/day 
Term. for Default 
Amount 
$9,028.00 
Daily Rate, Term. for 129[21 days@ $244/day $31,476.00 
Default to issue of Term. 
for Convenience of Gov't 
2 The actual time periods are not 3 7 + 129 = 166 days; they are 34 + 131 = 165 days. 
4 

* Gen Cond. = 13 % of contract + 1 % of line items 1, 4, 5, 6, 7, 8, 10 = 7% + 
1/2% of line items 3, 9, 11, 12 = 2%. Total of 22% of contract price= 
14,630/60 days= 244/day* 
Schedule D - Profit 
Explanation 
15% ($60,902 x 15%) 
Schedule E - Settlement Expenses 
Item Explanation 
President settlement prep. 27 hrs.@ $35/hr. 
Office Administrator settlement prep. 32 hrs.@ $20/hr. 
Clerk settlement prep. 40 hrs.@ $16.50/hr. 
(R4, tab 14 at 2-4) 
Amount 
$9,136.00 
Amount 
$945.00 
$640.00 
$660.00 
8. Mr. Manigault explained the foregoing terms in the TSP: he is "Pres."; his 
wife Shirley Manigault is "Office Administrator" ("O.A."); and Magwood employee 
Anastasia Austin is "clerk" (tr. 1/71, 85, 118; R4, tab 25 at 2 of 8). These three 
persons were Magwood's only employees who performed office work on contract 16 
(tr. 11119). Magwood did not perform any field or physical work on contract 16 
(tr. 1/66). 
9. On 31 March and 16 April 2014 Magwood sought CO Y arbor's advice on 
the status of its TSP (R4, tabs 16, 17). On 24 April 2014 CO Yarbor denied in its 
entirety Magwood's TSP for $72,283 and advised Magwood of its appeal rights (R4, 
tab 18). On 6 May 2014 Magwood appealed that decision to the Board, which was 
docketed as ASBCA No. 59293 (R4, tab 19). 
10. TEA Costs - Schedule B. Regarding the TEA, from 24 September through 
16 October 2013 Magwood received 22 emails from the CO and others, and sent 16 
emails in reply, totaling 200 lines in 50 paragraphs (R4, tab 25 at 3 of 8, ~~ 9-11; app. 
supp. R4, tab 2). The record substantiates Magwood's payment of the $997.44 and 
$997 TEA fees (app. supp. R4, tab 2 at 2-7, 2-8). Mr. Manigault testified that he spent 
30.75 hours, and Mrs. Manigault 
spent 1 hour, discussing TEA terms with the CO and 
TEA participants (tr. 1/74-75). Mr. Manigault 
stated that his $35/hr. rate "is the 
estimate time that it takes to do a job" (tr. 1/80). Mrs. Manigault said her $20/hr. rate 
was "fair ... for what I do" (tr. 1/139). 
5 

11. Appeal Costs - Schedule B. Magwood identified these "Appeal Costs" as 
spent "on the Appeal (Docket #58968)" (R4, tab 25 at 3-4of8, iii! 12-14). 
12. G&A Expenses- Schedule C. Magwood described the work encompassed 
in the G&A costs claimed from award to default termination of contract 16 as follows: 
G&A time ... may include ... correspondence, production 
planning, creating a project schedule, talking with 
suppliers, contract management, organizing and/or filling 
out project paperwork, personnel organization, time spent 
working with supplier to create submittals, and any other 
time spent preparing for the contract work to begin.. . . The 
daily rate also includes costs for office supplies related to 
the management of the project, such as paper and ink for 
the printer, binders, pens, writing pads, etc. 
Magwood described the work encompassed in the claimed G&A costs from default 
termination to convenience termination of contract 16 as "keeping the project open, 
filing any paperwork associated with the contract and keeping current with what was 
happening with the contract ... as well as office supplies needed to do so." (R4, tab 25 
at 5-6 of 8, iii! 22, 23) During the 14-month period May 2013 through June 2014, 
Magwood performed nine commercial and federal agency contracts other than contract 
16 (R4, tab 25 at 7 of 8). The record contains no Defense Contract Audit Agency 
audit report on Magwood's TSP, nor any evidence on how Magwood allocated its 
G&A expenses to the 10 contracts performed in 2013-2014. 
13. Settlement Expenses - Schedule E. Magwood described discussions about 
identifying employee hours, rates, supplies and mail costs, and preparing and 
proofreading the TSP (R4, tab 25 at 4 of 8, iii! 15-17). 
14. During the period of contract 16 performance from September 2013 through 
March 2014, Anastasia Austin worked 164.36 hours and was paid $1,685.28, an average 
hourly rate of $10.25 (app. supp. R4, tab 1 at L-1, 1-2, tab 3 at 3-1 - 3-3, tab 5 at 5-1, 
5-2). Mr. and Mrs. Manigault own Magwood and are salaried employees who do 
not receive regular paychecks or keep regular hourly timesheets (R4, tab 25 at 5 of 8, 
iii! 20-21; tr. 1/120-21). Magwood's 2012 Corporation Income Tax Return, line 12, 
"Compensation of officers," stated $4,694 (R4, tab 23 at 2). That $4,694 divided by 
2,080 annual working hours yields $2.26 per hour for both Mr. and Mrs. Manigault 
in 
2012. No tax returns or other records of Magwood officer compensation in 2013 and 
2014 are in the record. 
6 

DECISION 
Magwood argues that CO Y arbor's 24 April 2014 decision violated 
FAR 49.103, "When possible, the TCO should negotiate" and FAR 49.109-7(b) 
requirement to give it 15 days notice to substantiate its TSP before unilaterally 
determining the settlement amount; thus, that decision "should not stand" (app. hr. 
at 3, 4). FAR 49.103 is hortatory, not mandatory. Magwood cites no authority, and 
none is known to the Board, that noncompliance with the FAR 49.109-7(b) 15-day 
notice requirement invalidates a CO's final decision. Magwood disputes the reasons 
to deny the TSP stated in the CO's 24 April 2014 decision (app. hr. at 8-15). "De nova 
review [by the Board] precludes reliance upon the presumed correctness of the [CO's] 
decision. Thus, once an action is brought following a [CO's] decision, the parties 
start ... before the board with a clean slate." Wilner v. United States, 24 F.3d 1397, 
1401-02 (Fed. Cir. 1994) (citations omitted). 
With respect to TSP 
Schedule B TEA costs, the $997.44 TEA fee and the $997 
execution fee Magwood paid were proven (finding 10). The 31.75 hours claimed for 
Mr. and Mrs. Manigault's efforts do not appear to be excessive for the 38 emails and 
related discussions on the TEA issue. The record supports no more than3 $2.26/hr. for 
their hours, or $1.13 for each of Mr. and Mrs. Manigault (finding 14 ). The Board 
concludes that TEA costs are allowable to the extent of $2,066.20 ($997.44 + $997;00 
+ $71.76). 
With respect to TSP Schedule B "Appeal costs," contract 16's FAR 52.249-2 
TERMINATION FOR THE CONVENIENCE OF THE GOVERNMENT clause, ,-r (i), provides 
that the FAR 31 cost principles shall govern all costs claimed under that clause 
(finding 2). FAR 31.205-47(f)(l) expressly disallows "Costs .. .incurred in connection 
with ... claims or appeals ... against the Federal Government." Accordingly, 
Magwood's "Appeal costs" in the amount of $17,736.00 for its efforts in connection 
with ASBCA No. 58968 (findings 4-5, 7, 11) are unallowable. 
With respect to TSP Schedule C, G&A expenses, the work Magwood described 
as production planning, project scheduling, talking with suppliers, project paperwork, 
creating submittals, project preparation for work, keeping the project open, keeping 
current on contract happenings (finding 12) is directly allocable to contract 16. See 
FAR 31.201-4(a). Office supplies such as paper, printer ink, binders, pens, writing 
pads, appear to be necessary to the overall operation of Magwood' s business. See 
FAR 31.20 l-4( c ), 31.203(b ). However, indirect costs including G&A costs are to be 
allocated to "final cost 
objectives" (FAR 31.203(b) ), which include contracts 
(FAR 31.001). Hence Magwood was required to allocate its G&A costs 
to its 10 
3 The qualifier "no more than" is used because, lacking Magwood's 2013-2014 cost 
data, its 2012 costs are used rather than disallowing such cost items. 
7 

commercial and government contracts performed in 2013-2014 (finding12). But the 
record contains no evidence of how Magwood allotted its G&A expenses to those 10 
contracts (id.). Therefore, no G&A costs may be allowed. 
With respect to TSP Schedule D, Profit, we accept Magwood's 15% rate 
(finding 7). The amount allowed for Schedule Bis $2,066.20. Profit at 15% of 
$2,066.20 is $309.93. 
With respect to TSP Schedule E, settlement expenses, the hours Magwood 
claimed for its employees' settlement preparation work are reasonable. The hourly 
rates Magwood claimed are not supported by the record. Applying the hourly rates in 
finding 14, the following amounts for settlement preparation are allowed: 
Employee Hours Rate/hr. 
President 27 $ 1.13 
Office Adm'r 32 $ 1.13 
Clerk 40 $10.25 
Total: 
In summary, the costs allowed in this decision are: 
Schedule B 
Schedule 
D 
Schedule E 
Total Allowed: 
$2,066.20 
$ 309.93 
$ 476.67 
$2,852.80 
Amount 
$ 30.51 
$ 36.16 
$410.00 
$476.67 
A TSP does not become a CDA claim until the parties are at an impasse. See 
James M Ellett Construction Co. v. United States, 93 F.3d 1537, 1544 (Fed. Cir. 
1996). When the CO's 24 April 2014 decision denied in its entirety Magwood's 
$72,283 TSP (finding 9), which amount required no CDA certification, the parties 
plainly were at an impasse, and Magwood's TSP 
became a CDA claim. See 
Ensign-Bickford Aerospace & Defense Co., ASBCA No. 58671, 14-1BCA~35,599 at 
174,407-08 (impasse can occur when one party evidences a desire to begin the 
disputes process or a unilateral determination by the CO) (dicta). 
8 

CONCLUSION 
The appeal is sustained in the amount of $2,852.80 with CDA interest thereon 
starting 24 April 2014. The balance of the costs claimed is denied. 
Dated: 16 September 2014 
Administrati e J ge 
Armed Servi oard 
of Contract Appeals 
I certify that the foregoing is a true copy of the Opinion and Decision of the 
Armed Services Board of Contract Appeals in ASBCA No. 59293, Appeal of 
Magwood Services, Inc., rendered in conformance with the Board's Charter. 
Dated: 
9 
JEFFREY D. GARDIN 
Recorder, Armed Services 
Board of Contract Appeals