ARMED SERVICES BOARD OF CONTRACT APPEALS 
 
Appeal of -- ) 
 ) 
Alderman Building Company, Inc. ) ASBCA No. 58082 
 ) 
Under Contract No. N40085-09-D-5321 ) 
 
APPEARANCE FOR THE APPELLANT: Marilyn H. David, Esq. 
   D’Iberville, MS 
 
APPEARANCES FOR THE GOVERNMENT: Craig D. Jensen, Esq. 
  Navy Chief Trial Attorney 
Genifer M. Tarkowski, Esq. 
  Trial Attorney 
 
OPINION BY ADMINISTRATIVE JUDGE YOUNGER 
 
 In this sponsored appeal regarding a contract for the renovation and interior repair 
of a building, Alderman Building Co., Inc. (Alderman), seeks unabsorbed home office 
overhead on behalf of its electrical subcontractor relating to performance delays.  The 
issues are heavily fact-intensive, and we have previously denied motions for summary 
judgment filed by both parties.  After disposition of their summary judgment motions, the 
parties elected to submit the appeal on the record pursuant to our Rule 11 and 
supplemented the record with additional documents.  Both entitlement and quantum are 
before us for decision.  We sustain the appeal in part.   
 
FINDINGS OF FACTS 
 
A.  Contract and Subcontract 
 
1.  By date of March 27, 2009, the Navy awarded a Ta sk Order for supplies or 
services under Contract No. N40085- 09-D-5321 to Alderman for renovations of the 
interior, repairs to building systems, and incidental related work, on building M403 
at Marine Corps Base Camp Lejeune, North Carolina (R4, tab 1 at 1 -7).  The 
Task Order provided that “[t]he entire work . . . shall be completed by 3/22/2010” 
(id. at 7). 
 
2.  The contract contained various standard clauses, including Federal Acquisition 
Regulation (FAR) 52.233-1, DISPUTES (JUL 2002); FAR 52.242-14, SUSPENSION OF 
WORK (APR 1984); and FAR 52.243-4, CHANGES (JUN 2007) (R4, tab 5.6 at 958). 
 

 2 
 3.  By date of April 8, 2009, Alderman entered into a subcontract with 
Big John’s Electric Co., Inc. (Big John’s), for labor, equipment, materials, and 
supplies for specified portions of the interior repairs to the building (R4,  
tab 5.12 at 995).  Big John’s was an electrical subcontractor that performed 
approximately 90 percent of its work on Federal projects  (ex. A-1, tab 40 ¶¶ 2-27).  
The subcontract provided that “time is of the essence,” and that Big John’s was to 
“begin work within 7 days after notification” by Alderman (R4, tab 5.12 at 996).   
 
 B.  Delays 
 
 4.  Approximately two months after award, by email dated May 27, 2009, the 
Navy directed Alderman to “[c]ontinue to get all  of your submittals approved and 
ready to start construction and we will move the [contract completion date] ” 
accordingly when we have a nailed down work start date” (R4, tab 5.13).  We find 
that the Navy expected the work to be initiated with full force by all parties.  
 
 5.  While the solicitation provided that the contract start date would be  
10 days after award (R4, tab 5.6 at 948), we find that contract performance was 
characterized by repeated government -caused delays that aggregated to 263 days 
and pushed the start work date into February 2010.  The delays were chiefly caused 
by the unavailability of new facilities for the existing tenants in b uilding M403 
(R4, tab 6 at 1107).  The multiple delays to the start date were memorialized 
as follows: 
 
Date Document  Start Date Record Citation  
January 13, 2009 Solicitation  10 calendar days 
after award. 
R4, tab 5.6 at 948 
March 10, 2009 Solicitation 
Amendment 
No. 0003 
“Work may not 
begin . . . until  
01 June 2009.” 
R4, tab 1 at 21 
May 27, 2009 Email, Navy 
project engineer 
to Alderman 
Project Manager  
“Lets plan on 
starting” in mid-
July 2009 “time 
period.”* 
R4, tab 5.13  
June 19, 2009 Email, Navy 
project engineer 
to Alderman 
Project Manager  
Afraid construction 
may be pushed 
back to August 
2009. 
R4, tab 5.14  

 3 
 
*Underscoring in original. 
 
 6.  In his July 7, 2009 letter to Alderman, the contracting officer  had advised 
that, pursuant to the Suspension of Work clause (see finding 2), “you are hereby 
July 1, 2009 Email, Navy 
project engineer 
to Alderman 
Project Manager  
“Lets set the new 
start date at 15 
October” 2009.* 
R4, tab 5.15 
July 7, 2009 CO Suspension 
Letter to 
Alderman  
Suspension “until 
further notice.” 
R4, tab 5.16  
July 9, 2009 Email, Alderman 
Project Manager 
to Subcontractors  
Project start date 
“suspended until 
October” 2009.* 
R4, tab 5.17 
September 30, 2009 Email, Alderman 
Project Manager 
to Subcontractors  
“[N]ew start date 
for the project is 
12/15/09.” 
R4, tab 5.18 
November 18, 2009 Email, Navy 
project engineer 
to Alderman 
Project Manager 
“We are still on for 
15 December 
[2009] at this 
point.”* 
R4, tab 5.20 
December 8, 2009 Email, Navy 
project engineer 
to Alderman 
Project Manager 
“[N]o earlier than 
the 1st of February 
[2010] for 
Starting.” 
R4, tab 5.21 
December 8, 2009 Email, Alderman 
Project Manager 
to Subcontractors  
“Project will not be 
starting now until 
February 1st 
[2010], at the 
earliest.”* 
R4, tab 5.22 
February 2, 2010 Email, Navy 
project engineer 
to Alderman 
Project Manager  
Some tenants not 
moving out “until 
sometime, probably 
after the 9th”; 
others will vacate 
on the 8th. 
R4, tab 5.28 

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directed to suspend all work under the referenced contract,” with an exception not 
relevant here, “until further notice.”   The contracting officer ’s cited reason was 
“Government delays in vacating the premises. ”  (R4, tab 5.16 at  1004)  The 
contracting officer’s notice did not contain any explicit direction to Alderman to 
place its work force on standby during the suspension period.   
 
 7.  After the delays set forth in finding  5, above, Alderman began contract 
performance on February  19, 2010 (ex. A-1 at 2).  Big John’s began performance 
of its subcontract on the same date and completed work on October 28, 2010 
(ex. A-1, tab 40 ¶¶ 4-5). 
 
 8.  In a three-part email string dated March 17, 2010, the Navy project 
engineer agreed to submit Alderman’s requested 270- day time extension  in the 
contract completion date  to the contracting officer  (R4, tab 4.11).  
 
 C.  Claims Sponsorship Agreement     
 
 9.  By date of August  18, 2011, Alderman and Big John’s executed a 
Claims Sponsorship Agreement  (R4, tab 5.57).  In the introductory paragraph of 
that agreement at issue here, the  two parties provided:  
 
WHEREFORE, pursuant to the terms of the 
Subcontract, and this Agreement, Contractor and 
Subcontractor agree that the Owner is the ultimate 
responsible party to pay for the Subcontractor’s and 
Contractors’ claims, and further agree that it is the 
intent of this Agreement to reserve and preserve to 
Subcontractor the right to have its claims prosecuted in 
Contractor’s name against the Owner, in accordance 
with this Agreement.  
 
(R4, tab 5.57 at 1101)  Consistent with that stated intent, the agreement provided 
in paragraph 1 that “Contractor will pay any Subcontractor’s sums due 
Subcontractor with respect to its claims promptly upon payment to Contractor by 
the Owner” (id.).  It also provided in paragraph 2(a) that “[t]he claims of 
Subcontractor will be included in a claim to be presented by Contractor and 
Subcontractor in the name of Contractor against the Owner before the 
Contracting Officer .  . .” (id.). 
 
 10.  We find no evidence in the record that Big John’s released Alderman  
from liability to Big John’s for any costs of performing its subcontract.  
 

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 11.  By date of February  20, 2012, Alderman’s president executed a final 
release under the prime contract providing that, in consideration of a specified 
sum, Alderman:  
 
[D]oes, and by the receipt of said sum shall, for itself, 
its successors and assigns, remise, release and forever 
discharge the Government, its officers, agents , and 
employees, of and from all liabilities, obligations and 
claims whatsoever in law and in equity under or arising 
out of said contract.  
 
(Respondent’s Motion for Summary Judgment and Motion to Dismiss for Lack of 
Jurisdiction, dated August 31, 2012,  attachment A)  The release does not contain 
any reservation of rights by Alderman (id.).  In a March 13, 2015 stipulation, both 
parties agreed that the rel ease does not bar this appeal ( ex. A-5). 
 
D.  Claim and Appeal  
 
12.  By letter to the contracting officer dated August  18, 2011, Alderman 
submitted a pass-through claim for $20,518, on behalf of Big John’s, for Eichleay 
damages, and for attorney fees and expenses, breach of contract, and requested a 
contracting officer’s final decision (R4, tab  5 at 869, 874, 884).  In the course of 
this litigation, Dr. Seals  (see finding 14) calculated that the correct amount of the 
claim should be $56,548 ( ex. A-4, tab 7).  We find no evidence that the claim 
included an item fo r the direct costs of standby.   We find that the contracting officer 
received the claim on August 24, 2011 (R4, tab 5 at 868). 
 
13.  By date of January 19, 2012,  the contracting officer denied the claim in 
its entirety (R4, tab 6).  Alderman thereafter , brought this timely  appeal. 
 
14.  Alderman’s position in this appeal relies heavily on the expert opinion of 
Roger K. Seals, Ph.D., P.E., a retired professor of Civil and Environmental 
Engineering at Louisiana State University.  Dr. Seals’ report has multiple iterations 
in the record.  The version that we understand to be authoritative is his 2nd  
Supplemental Expert Report – Corrected Version, dated October 17, 2016.  It 
appears in the record as Exhibit A -27.  Unless otherwise indicated, citations to the 
Seals report are solely to this corrected version of the original report.  
 
15.  We find that Dr. Seals is qualified as an expert in civil engineering.  We 
find no evidence, however, that he is qualified as an expert in cost accounting.  
 
  

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E.  Standby 
 
 16.  We find that, during Delay 1, which ran from  June 1, 2009 to February 11, 
2010, the Navy did not explicitly require Alderman or Big John’s to place t heir 
workforces on standby (ex. G -5 at 174). 
 
17.  We find that it was the Navy ’s practice to afford Alderman and Big John’s 
little advanced notification of the delays in the project’s start dates.  With his expert 
report, Dr. Seals included a table showing both definite and indefinite start dates for 
each delay (ex. A-1 at 3).  Dr. Seals opined that “these notification periods were 
inadequate for material acquisition and re-scheduling and/or rehiring employees” (id. 
at 8).  Mr. Michael Dougherty, Big Johns’ project manager, agreed regarding the 
inadequacy of the periods with definite dates and stated that, with respect to the 
remaining start date notices, which were sent on May 27, June 19, and July 7, 2009:  
 
[T]he Navy did not even give definite, revised start -dates 
that [Big John’s] could use for planning.  Instead, the Navy 
gave indefinite, broad timeframes like “mid -July,” 
“August,” and “until further notice.”  These indefinite dates 
prevented [Big John’s] from being able to schedule 
replacement work or to take its workers off of standby for 
the . . . job. 
 
(Ex. A-1, tab 40 ¶ 26) 
 
18.  The Navy points to three email exchanges that are said to show that it did 
not require Alderman to resume work immediately a nd at full speed (Respondent’s 
Cross-Motion for Summary Judgment and Response in Opposition to Appellant’ s 
Motion for Partial Summary Judgment Regarding (1) Unabsorbed Overhead Under 
Alternative to Eichleay Formula and (2) Standby Labor Costs , dated September 27, 
2013 at 9-10).  We find that none are conclusive.  The first cited exchange is dated 
February 1, 2010 between Alderman, Big John’s, and the Navy.  It was, by its terms, 
technical in nature, initiated by the subcontractor ’s expression of “a few concerns 
with a partial turnover of the building” regarding “several circuits.”  (R4, tab 4.5)  
The second cited exchange is between the Navy project engineer  and Alderman on 
January 28 and February 2, 2010 regarding “New Developments.”  It relates to 
arrangements to have “temp. power going before the start date,” to avoid consuming 
time on such arrangements when work ultimately began.  (R4, tab 4.6)  The third 
cited exchange is between the project engineer and Alderman on February 1-2, 2010 
regarding the cost of doing inside work while the buil ding was partially occupied, 
as well as tracking “contractual impacts . . . due to the government delays [for] a 
revised cost proposal” (R4, tab 5.27). 
 

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19.  By date of August 16, 2010, the Navy and Alderman executed 
Modification No. 03 which, in pertinent part, increas ed the contract performance 
time by 270 calendar days (R4, tab 3 at 847-48).  We find that this modification, 
executed seventeen months after contract award ( see finding 1), was the first time 
extension granted to Alderman by the Navy.  
 
20.  With respect to standby, Dr. Seals set forth his conclusion that: 
 
[I]t was necessary for Big John’s to be prepared to 
commence work immediately when the delays were lifted, 
not as much as 7 days thereafter, because of the overriding 
factors of proper project coordination and prevention of 
liquidated damages. 
 
(Ex. A-1 at 8) 
 
21.  Dr. Seals conceded at his deposition that he never found a document in 
which the Navy explicitly directed Big John’s to keep its workforce on standby, 
ready to perform work immediately (ex. G -5 at 174).  Dr. Seals also testified that 
Big John’s kept its workforce on standby because of the Navy’s failure to issue a 
time extension and the threat of liquidated damages:   
 
[T]he fact that they [Big John’s] were dealing with 
potential for liquidated damages, the fact that they were at 
this point, they had no extension for the completion date 
and, thus, they stood . . . the possibility of liquidated 
damages – I think that really drove the decision m aking on 
the part of Big John’s to ensure that they had standby so 
they could begin work immediately.  
 
(Ex. G-5 at 175) 
 
 22.  Dr. Seals’ overall conclusion regarding standby as it affected Big John’s 
was that: 
 
[C]ircumstances surrounding the short durations of time 
and indefinite new start dates after each postponement 
notification caused insufficient time for Big John’s to take 
its workers off of standby status during either Delay 1 or 
Delay 2.  I conclude Big John’s keeping workers on 
standby was necessary and reasonable, in order to respond 
to the dwindling period of performance with no time 
extension, and due to [] other factors . . . .   

 8 
 
(Ex. A-27 at 51) 
 
23.  Alderman has also tendered the affidavit of M r. Dougherty, Big John’s 
project manager.  Mr. Dougherty ’s background is in “residential, commercial and 
light industrial construction, specifically electrical subcontracting” ( ex. A-1, tab 40 ¶ 
1).  In this first affidavit, he noted that “the project was delayed 8 times from the 
original date of June 1, 2009 to February 19,  2010” (id. ¶ 6).  With respect to the Navy 
project engineer’s May 27, 2009 email regarding the first post-award delay (see finding 
4), Mr. Dougherty stated that the email resulted from Alderman ’s request for 
clarification of the start date, but that the Navy “failed to give a definite date for 
ending the delay” (ex. A-1, tab 40 ¶ 11). 
 
  24.  In his second affidavit in the record, Mr. Dougherty attested:  
 
22.  Throughout both delay periods [ June 1, 2009 – 
February 11, 2010 and February 17, 2010 - February 19, 
2010], Big John’s planning for the Bldg. M403 work was 
hampered by important uncertainties.  These included the 
availability of qualified workers for rehire when the delays 
ended, the diminishing period of performance with no 
Navy time extension, the potential for liquidated damages 
that could be imposed by the Navy since there was no time 
extension, and the Navy’s pattern of issuing short-notice 
postponements which overruled each other and many of 
which had no clear or definite start -date.   
 
23.  These uncertainties were not under Big John’s control.  
If Big John’s were to be able to start and complete the 
work on time, then Big John’s had to keep a sufficient 
workforce on standby during both delays.    
 
(Ex. A-4, tab 45 ¶¶ 22-23) 
 
 25.  Mr. Daugherty also stated, and we find, that Big John’s “kept 2 workers 
on standby as floated or nonproductive labor during the period from 3 June 2009 
to 17 February 2010” (ex. A-1, tab 40 ¶ 31).  These workers “would be a full crew 
and would be able to commence work  . . . immediately” (id. ¶ 33). 
 
 26.  The Navy points to several emails in 2010 which it says demonstrate 
that it and Alderman “openly negotiated when to begin [building] M403 contract 
performance” (gov’t br. at 13-14).  We find these emails unpersuasive  because, by 
their own terms, they reflect little t o no actual negotiation.  Thus, while the Navy 

 9 
stated in its January 28, 2010 email that it wanted to res chedule a power outage in 
building M403 to February 19, 2010, and inquired whether that rescheduling 
would affect Alderman’s schedule (see R4, tab 4.6), this email pertained to one of 
the last in a series of revisions to the contract start date  (see finding 5).  It did not 
occur until Delay 1 (June 1, 2009 – February 11, 2010) was almost concluded,  
and, in any event, the parties did not agree to the proposed February 19 revised 
start date.  We further find that the January 28, 2010 email, as late in t he 
performance period as it was, constituted the first time that the Navy asked 
Alderman about the scheduling impact of a revised start date.    
 
27.  The Navy also relies upon an email chain beginning on February 2, 
2010 that is also said to show that the  parties negotiated the start date for when 
work would begin and “therefore the Navy did not require Alderman or Big John’s 
to resume work immediately” (gov’t br. at 14).  The Navy asserts that a February 
2, 2010 email from Alderman requesting that the Navy reschedule the planned 
February 19, 2010 power outage to an earlier date, stating that Alderman “would 
like to get Big John’s to set the pole and have the temp. power going before the 
start date of the project” (R4, tab 4.6; ex. A-27 at 28 ¶¶ 4-5). 
 
 28.  We find that Alderman and the Navy did not reach agreement on an 
extension of the contract completion date until August 16, 2010, when they executed 
Modification No. 03 (see finding 19). 
 
 F.  Replacement Work 
 
29.  We find that in the period of June 4, 2009 through February 18, 2010,  
Big John’s bid on 28 other contracts, from which it received five contract awards in 
the total amount of $3,552,312  (R4, tab 5.53; ex. A-2 at 11).  The Navy contends 
that these five contracts constituted replacement contracts , by which it means that 
Big John’s was able to bid on this work because it was not occupied in performing 
the contract at issue, and that they were adequate  to absorb overhead that would 
otherwise have been paid by this contract.  The  five contracts pointed to as 
replacement contracts are as follows:  
 
(a) a $505,000 contract for building 118 date d June 26, 2009 (ex. A-2  
at 11-13, section E; ex. A-2, attach. SR2B at 4);  
 
(b) a $1,046,500 contract for buildings 205 and 213 date d June 29, 2009  
(id.); 
 
 (c)  a $445,000 contract for building 19 date d July 15, 2009 (id.); 
 
 (d)  a $668,700 contract for building 730 ( id.); and 

 10 
 
 (e)  a $887,121 contract for P619 Tactical Van Pad date d January 26,  
       2010 (id.). 
 
 30.  During Delay 1 and Delay 2, Big John’s received a total of $147,416 under 
three replacement contracts on the following dates and in the following amounts:   
 
Date    Amount   Replacement Contract 
 January 6, 2010  $15,070 19B 
 February 3, 2010  $43,310 19B 
 February 22, 2010  $89,036  205, 213 
 
(Ex. A-2 at 11-13, section E; ex. A-4, tab 12; ex. A-4, tab 24 at 168-69; ex. A-27 at 55 ¶ 8) 
 
31.  During Delay 1, Big John’s posted actual labor charges on four replacement 
contracts, as follows: 
 
(a)  on October 14, 2009, to replacement contract 213 (ex. A-2, attach. SR2B at 4); 
 
(b)  on November 11, 2009, to replacement contract 19 (id.); 
 
(c) on November 18, 2009, to replacement contract 118 (id.); and 
 
(d) on January 6, 2010, to replacement contract 730 (id.). 
 
32.  During Delay 1, Big John’s submitted five invoices for a cumulative amount 
of $188,452 under replacement contracts, as follows: 
 
(a) by date of October 26, 2009, Big John’s invoiced $60,000 for replacement 
contracts 205 and 213 (ex. A-2, attachment SR3 at 5; ex. A-2 at 11-13,  
section E; ex. A-4, tab 12; ex. A-4, tab 33C at 444-52);   
 
(b) by date of December 18, 2009, Big John’s prepared an invoice for $15,070 for 
replacement contract 19B (ex. A-2, attachment SR3 at 5; ex. A-2 at 11-13, 
section E; ex. A-4, tab 12; ex. A-4, tab 36C at 651-55);  
 
(c) by date of  January 14, 2010, Big John’s prepared an invoice in the amount of 
$43,310 for replacement contract 19B (ex. A-2, attachment SR3 at 5; ex. A-2 
at 11-13, section E; ex. A-4, tab 12; ex. A-4, tab 36C at 656-59); 
 
(d) by date of  January 25, 2010, Big John’s prepared an invoice in the amount of 
$89,036 for replacement contracts 205 and 213 (ex. A-2, attachment SR3 at 5; 
ex. A-2 at 11-13, section E; ex. A-4, tab 12; ex. A-4, tab 33C at 453-61); and 

 11 
 
(e) by date of January 26, 2010, Big John’s prepared an invoice in the amount of 
$36,036 for replacement contract 118 (ex. A-2, attachment SR3 at 5; ex. A-2 
at 11-13, section E; ex. A-4, tab 12; ex. A-4, tab 31C at 318-22).  
 
 33.  Big John’s attributed home office overhead expenses to four replacement 
contracts during Delay 1, as follows: 
 
(a) on July 15, 2009, Big John’s started home office overhead for replacement 
contract 205 (ex. A-2, attach. SR2B at 4);   
 
(b) on July 15, 2009, Big John’s started home office overhead for replacement 
contract 213 (id.);   
 
 (c)  on July 28, 2009, Big John’s started home office overhead for replacement           
        contract 19B (id.); and 
 
(d)  on July 30, 2009, Big John’s started home office overhead for replacement 
       contract 118 (id.). 
 
34.  Mr. Daugherty attested, and we find, that Big John’s was unable to obtain 
sufficient replacement work during the delay periods to absorb the overhead that it 
would have realized had it been performing its subcontract with Alderman during the 
delay periods (ex. A-2 at 11, ¶ 2; ex. A-1, tab 40 ¶ 35). 
 
 35.  Mr. Daugherty attested that “Big John’s began seeking other work to 
perform as soon as it learned that the Building M403 job would be delayed to June 1, 
2009” (ex. A-1, tab 40 ¶ 34).  Mr. Daugherty summarized:  
 
From June 4, 2009 – February 18, 2010, Big John’s 
submitted a total of 28 bids and received 5 contract awards 
for Federal jobs. . . .  Big John’s submitted 10 of those 28 
bids during June 2009, and 10 during August and 
September 2009.  The awards totaled $3,552,312 .  . . .  
 
(Id.)  With respect to the process of seeking replacement work, Mr. Daugherty 
identified the Navy’s notification policy as an obstacle to scheduling adequate 
replacement work.  He attested that “the Navy gave very short advance 
notifications of when each delay was to end and work had to start” ( id. ¶ 26; 
see also finding 5).  Some notification periods, Mr. Daugherty attested, “did not 
allow Big John’s sufficient time for acquiring materials and re-scheduling 

 12 
and/or re-hiring employees.”  With respect to other notification periods, 
Mr. Daugherty attested that “the Navy gave indefinite, broad timeframes like  
‘mid-July,’ ‘August,’ and ‘until further notice.’  These indefinite dates preve nted 
[Big John’s] from being able to schedule in replacement work or to take its workers 
off standby . . . .”  (Id. ¶ 26)  Mr. Daugherty also attested that the short notification 
periods posed an obstacle to Big John’s’ rescheduling of employees.  “Re-hiring 
qualified employees laid off due to lack of adequate work also requires time to 
accomplish,’ he attested, and it “cannot be accomplished during notification periods 
running from only 4 to 7 days, or when new definite start -dates are not provided” 
(id. ¶ 27).  We find this evidence from Mr.  Daugherty credible. 
 
36.  With respect to replacement work, Dr. Seals concluded:    
 
It is evident that Big John’s was active in seeking 
replacement work and was successful, as measured against 
the company’s previous bid-and-award history . . . . Despite 
this, the billings for replacement work were insufficient to 
compensate Big John’s for unabsorbed [home office 
overhead] as calculated [earlier in his report].   
 
(Ex. A-27 at 71) 
 
 37.  We find that Big John’s substantially completed its subcontract work on 
August 24, 2010 (ex. A-27 at 19, ¶¶ 6, 10). 
 
 38.  While the Navy asserts that Big John’s was “working on at least six 
other contracts during the M403 Contract suspension period” ( gov’t br. at 20), 
we find the Navy’s contention, in and of itself unpersuasive because it does not 
establish that billings for these replacement contracts were sufficient to 
compensate Big John’s for its unabsorbed home office overhead.  
 
 39.  We find that, in computing the direct costs of standby labor, Dr. Seals 
employed an equivalent hourly rate estimate .  To arrive at this rate, Dr. Seals 
explained that he took “the total labor cost for either floated or non- productive 
labor during the delay periods divided by the respective number of labor hours.  
These calculations yield hourly rates that are weighted averages of the actual range 
of labor rates.”  (Ex. A-27 at 79)  We have found no credible evidence that 
Dr. Seals is qualified to render opinions regarding cost accounting issues 
(see finding 15). 
 

 13 
 G.  Contracting Officer Authority  
 
40.  In our 2013 decision denying summary judgment, we concluded that 
there was an outstanding issue of fact regarding whether Meghan J. Hislop had 
contracting officer authority.  See  Alderman Building Co., ASBCA No. 58082,  
13 BCA ¶ 35,381 at 173,617.  We now find, from the Navy’s subsequent 
interrogatory response in the record, that, from the beginning of the contract, she 
had a contracting officer’s warrant of $5,000,000, as well as authority over this 
contract (exs. A-15 at 12 n.1, A-16 at 5, A-18 at 4). 
 
41.  In our 2014 decision, we concluded that “there is no triable issue that 
portions of the total delay period were of uncertain duration.”  Alderman Building 
Co., ASBCA No. 58082, 15 BCA  ¶ 35,841 at 175,273.        
 
DECISION 
 
As indicated in our findings, we have previously rendered two decisions in 
this Rule 11 appeal .  See Alderman Building Co., ASBCA No. 58082, 15 BCA ¶ 
35,841 and Alderman Building Co., ASBCA No. 58082, 13 BCA ¶ 35,381.   In those 
decisions, we denied summary judgment on multiple issues of fact, concluding that 
their resolution must await a fuller post-trial record trial.  Nonetheless, following our 
decisions, the parties elected Rule 11 disposition.   
 
In this decision, we first resolve outstanding legal issues relating to a  release 
said to bar the appeal; to the applicability of the Sever in doctrine to the appeal; and to 
our jurisdiction in light of the certification of the claim.  We then consider the merits 
of Alderman’s entitlement to Eichleay recovery on behalf of its subcontractor, Big 
John’s. 
 
Alderman’s lengthy complaint is in 15 co unts.  Styling the counts as 
Alderman does, we summarize the allegations regarding entitlement to Eichleay 
recovery as follows: 
 
 (a)  Count I:  Ordered and Constructive Suspensions of Work.  In general, 
Alderman  alleges  that the Navy “delayed  the start  of Big John’s work, by delaying 
the Notice to Proceed and by successively revising the date the job site would be 
available and work could start” (comp1. ¶ 27).  Alderman then makes particular 
allegations regarding the delays in the start date ( see finding ¶ 5), and alleges that 
the delays were unreasonable,  that they were due to the Navy’s convenience, and 
alleges entitlement to extended and unabsorbed home office overhead costs on 
behalf of Big John’s (id.  ¶¶     28-46). 
 

 14 
(c) Count III:  Eichleay Claim and Prerequisites.  In general, Alderman 
alleges that it meets the requirements for application of the Eichleay 
formula, “[e]ven with use of an alternate method of computation”  
(id. ¶ 79). 
 
Alderman also alleges entitlement to recovery of unabsorbed overhead using a 
methodology other than the Eichleay formula, including the Changes clause (id. ¶ 125) 
and quantum meruit (id. ¶¶ 131-35). 
 
 In its present briefing, Alderman organizes its argument around the 
elements for Eichleay recovery set forth in P.J. Dick, Inc. v. Principi, 324 F.3d 
1364, 1369-70 (Fed. Cir. 2003).  Alderman asserts that it satisfies those elements 
for the two delay periods at issue, which it has denominated Delay 1 (June 1, 2009 
through February 11, 2010) and Delay 2 (February 17, 2010 through February 19, 
2010). 
 
 In defending against entitlement, the Navy advances three broad arguments.  
First, the Navy contends that we lack jurisdiction because , in the Claims 
Sponsorship Agreement (see finding 9), Alderman and Big John’s agreed that 
Alderman is not liable to Big John’s for the latter’s costs, which embraces home 
office overhead costs incurred during the suspension period for Building M403 
(gov’t br. at 11-12). 
 
Second, the Navy maintains that we also lack jurisdiction over the appeal 
because Alderman has not executed a proper certification of the claim (id. at 12).  
Third, addressing the merits of Eichleay  entitlement, the Navy asserts that 
Alderman has failed to prove the requisite elements of either an uncertain 
suspension period or an extension of the time for contract performance ( id.  
at 12-21). 
 
The Navy urges that Alderman has failed to prove the merits of its 
unabsorbed home office overhead claim.  The Navy thus stresses, first, that it did 
not instruct Alderman to place its workers on standby, or to begin work 
immediately (gov’t br. at 13-15).  The Navy also points out that the “time is of the 
essence” provision in Big John’s subcontract (finding 3) does not translate into a 
requirement imposed by the Navy to be on standby ( gov’t br. at 15).  The Navy 
further urges that its exchanges with Alderman regarding modification of the 
contract completion date (see finding 26-27) negate any claimed requirement that 
Alderman keep its forces on standby ( gov’t br. at 15-16).  In addition, the Navy 
dismisses as irrelevant the market conditions for Big John’s to hire qualified 
workers, rejecting Dr. Seals’ conclusion that such conditions forced it to keep 
workers on standby and asserts that the minimal numbe r of hours that it actually 
billed during February 2010 belie ved Alderman’s standby argument (id. at 16-17). 

 15 
 
After carefully considering the parties’ submissions, we conclude that the 
appeal must be sustained.  We reach this conclusion for the reasons set  forth below.  
 
A. Release 
 
 Alderman first argues that the final release that Alderman and the Navy 
executed on February 20, 2012 (see finding 11) does not bar the appeal (app. br.  
at 8-9).  In our 2013 decision, we concluded on summary judgment that the motion 
papers raised a genuine issue of material fact regarding the finality of the release.  
Alderman Building Co., ASBCA No. 58082, 13 BCA ¶ 35,381 at 173,618-19.  In its 
present brief, however, the Navy now agrees that the release does not serve as a bar.  
The Navy admits that “Big John’s claim is not barred by the release signed by 
Alderman . . . .  The Contracting Officer who discussed the release as well as the 
exception to the release has proper warrant and authority to preserve Alderman’s 
rights to pursue this . . . appeal” (gov’t br. at 21). 
 
 We accordingly conclude that there is no longer any issue between the parties 
regarding whether the release bars the appeal.  We accor dingly reject Alderman’s 
release argument as moot.  
 
B.  Severin Doctrine     
 
 Invoking Severin v. United States, 99 Cl. Ct. 435 (1943), cert . denied,  
322 U.S. 733 (1944), the Navy argues that the appeal must be dismissed with 
prejudice because “Alderman . . . avers that it is not responsible for the costs 
allegedly incurred by . . . Big John’s” (resp. br. 11-12).  In general, the Severin 
doctrine “is based upon the principles of sovereign immunity and privity of contract.  
It generally precludes a prime contractor from sponsoring a subcontractor claim 
against the government if the prime contractor is not liable to the subcontractor for 
the costs or damages in question.”  Freedom Systems, LLC, ASBCA No. 59259, 
15 BCA ¶ 36,103 at 176,266. 
 
According to the Navy, dismissal is required “because Alderman asserts it is 
not responsible for the costs incurred by Big John’s during the Contract suspension 
period” (gov’t br. at 11).  The Navy focuses upon a portion of one of the introductory 
paragraphs of the Claims Sponsorship Agreement between Alderman and Big John’s 
(see finding 9) in which the parties “agree that the Owner is the ultimate responsible 
party to pay for the Subcontractor’s . . . claims” (gov’t br. at 11).  The Navy tells us 
that, by this provision, Alderman “avers that it is not responsible for the costs 
allegedly incurred by the subcontractor,” Big John’s (gov’t br. at 11-12).       
 

 16 
In its reply brief, Alderman challenges the Navy’s Severin argument 
(app. reply br. at 1-3).  Alderman asserts that the Navy has not met  its burden 
under E.R. Mitchell Construction Co. v. Danzig, 175 F.3d 1369, 1370 (Fed. Cir. 
1999) to prove that “the prime contractor is not responsible for the costs incurred 
by the subcontractor” (emphasis in original).  In Mitchell, the court quoted with 
approval the Court of Claims’ decision in Cross Construction Co. v. United States , 
225 Ct. Cl. 616, 618 (1980) that the Severin doctrine “requires an iron-bound 
release or contract provision immunizing the prime contractor completely from 
any liability to the sub.” 
 
We conclude that the Severin doctrine does not warrant dismissal of the 
appeal.  Applying the standard articulated in Mitchell, we cannot say that the Navy 
has made the requisite showing that Alderman “is not responsible for the costs 
incurred by” Big John’s.  Mitchell, 175 F.3d at 1370 (emphasis in original).  We 
reach this conclusion for two principal reasons. 
 
First, we reject the Navy’s argument that the cited provision of the Claims 
Sponsorship Agreement constitutes either an “iron- bound release or contract 
provision immunizing [Alderman] completely from any liability to [Big John’s].”  
Cross Construction, 225 Ct. Cl. at 618.  By its terms, the provision cited by the Navy 
does not purport to be a release.  It appears in an introductory clause of the Claim s 
Sponsorship Agreement (finding 9), not in a substantive provision.   Neither this 
provision, nor any other part of the agre ement, constitutes an express undertaking by 
either Big John’s or the Navy to release Alderman from any obligation. 
 
Second, in advancing this argument, t he Navy disregards Alderman’s 
unqualified undertaking in paragraph 1 of the agreement that “Contractor will pay 
any Subcontractor’s sums due Subcontractor with respect to its claims promptly 
upon payment to Contractor by the Owner” ( finding 9).  This undertaking is the 
antithesis of “an iron-bound release or contract provision immunizing the pri me 
contractor completely from any liability to the sub.” Cross Construction, 225 Ct. Cl. 
at 618.  
 
We accordingly reject the Navy’s Severin doctrine defense. 
 
C. Claim Certification 
 
The Navy contends that we lack jurisdiction to consider Alderman’s claim until 
it is properly certified, inasmuch as it now exceeds $100,000 (gov’t br. at 12).  For its 
part, Alderman asserts that certification is unnecessary because the claim amount was 
only $20,518 when submitted to the contracting officer and, even if the amount rose 
during the disputes process, certification would not be required because “it is not a new 
claim arising from a different set of operative facts” (app. reply br. at 3).  Alderman 

 17 
asserts that the Navy’s position is based on a factual error.  Alderman represents that 
its: 
 
[C]laim amount when submitted to the contracting officer was 
$20,518, due to Navy delays from [1 June 2009 into mid-
February 2010]. . . .  During litigation of this appeal, 
Alderman’s expert found the current amount of [Big John’s] 
direct and indirect costs, due to the Navy delays, is $56,548. . . .  
At no time did Alderman revise the amounts arising from these 
operative facts (i.e., Navy delays) to reach at or above $100,000. 
 
(App. reply br. at 3)  Alderman adds that its expert “listed his fees . . . on the same page as 
the claim amount,” which “should not be considered” for purposes of certification (id.).   
 
 We accept this uncontroverted explanation, which is supported by the record.   
Dr. Seals’ October 2013 Second Supplemental Expert Report contains the updated 
claim summary that reflects direct labor cost of $23,073, unabsorbed home office 
overhead of $33,218, and bond premium of $257, all aggregating $56,548 (ex. A-4,  
tab 7 at 108), the amount that Alderman recites in its reply.  On the same page, 
Dr. Seals adds to this amount $45,556 in interest and costs of his expert reports (id.).  
These amounts are not components of the claim and, at best, would only be 
recoverable as incidental costs after Alderman has prevailed on its claim.   
 
  We accordingly conclude that Alderman’s claim aggregates $56,548.  Inasmuch 
as that amount is less than $100,000, we reject the Navy’s argument that we lack 
jurisdiction over the appeal until it is properly certified. 
 
 D. Unabsorbed Overhead 
 
 In our 2014 decision, we denied both Alderman’s motion for summary 
judgment, and the Navy’s cross-motion for summary judgment, regarding the issue of 
Alderman’s entitlement to Eichleay recovery.  We followed the Federal Circuit’s 
holding in Nicon, Inc. v. United States, 331 F.3d 878, 888 (Fed. Cir. 2003), that 
Eichleay “is the exclusive formula for the calculation of damages for unabsorbed 
overhead due to a period of government-caused delay in situations in which contract 
performance has begun.” 
 
In applying the formula, we looked to the three Eichleay elements set forth in 
Satellite Electric Co. v. Dalton, 105 F.3d 1418, 1421 (Fed. Cir. 1997).  With respect to 
the first element, we concluded that there was “no triable issue that portions of the total 
delay period were of uncertain duration.”  Alderman, 15 BCA ¶ 35,841 at 175,273.  
With respect to the remaining two elements – standby and replacement work -- we 
concluded that there were triable issues regarding whether Alderman was on standby 

 18 
and whether it was unable to take on replacement work.  Alderman, 15 BCA ¶ 35,841 
at 175,273-74.  The parties have since submitted evidence regarding these latter two 
elements, which we analyze below.       
 
 1.  Standby 
 
In our 2014 decision, we concluded that three email exchanges between 
Alderman, Big John’s, and the Navy, as well as both the Dougherty affidavit, and the 
Seals report, collectively established a triable issue regarding standby.  Alderman, 
15 BCA ¶ 35,841 at 175,273-74.   
 
Alderman now argues that indirect evidence establishes that it was on standby 
during both Delay 1 and during Delay 2.  With respect to both delays, Alderman relies 
on P.J. Dick, Inc. v. Principi, 324 F.3d 1364 (Fed. Cir. 2003).  Inasmuch as the 
contracting officer did not issue a written order suspending “all the work . . . for an 
uncertain duration and [requiring] the contractor to remain ready to resume work 
immediately or on short notice,” P.J. Dick, 324 F.3d at 1371, Alderman seeks to prove 
standby by indirect evidence (app. br. at 11).  While the Navy contends that Big John’s 
made a business decision to keep its workers on standby, Alderman urges that the 
workers were on standby due to the Navy’s contract administration practices, such as 
the lack of a time extension, the reduced work force, the remobilization time, and relief 
from the risk of liquidated damages (app. reply br. at 3).  Alderman continues by 
denying the Navy’s contention that there was no nexus between standby and the Navy 
delays, insisting that the Navy’s awareness of Alderman’s and Big John’s unrelaxed 
performance obligations is an “‘operative fact’ driving a holding that the Navy 
required standby” (app. reply br. at 4).  Alderman also stresses that the parties did not 
negotiate or agree upon the Navy’s multiple revisions to the work start date 
(see finding 5), and the parties did not agree to a time extension before the delays 
ended (app. reply br. at 4-5).  Finally, Alderman rejects the Navy’s defense that the 
large number of hours that Big John’s billed in February 2010 refutes the conclusion 
that the Navy kept Big John’s on standby (app. reply br. at 5-6). 
 
In its brief, the Navy stresses that, in its original suspension notice (see finding 
6), it did not require Alderman to place its workforce on standby, and hence Alderman 
must demonstrate that it was required to be on standby through indirect evidence 
(gov’t br. at 13).  The Navy tells us that Alderman cannot do so, pointing to emails in 
2010 that “clearly show[] that Alderman and the Navy were negotiating when to begin 
the M403 Contract performance” and hence the Navy did not require Alderman or  
Big John’s to resume work immediately (id. at 14).   
 
We accept Alderman’s argument that it had to place its forces on standby.  In 
reaching this conclusion, we acknowledge that the Navy did not explicitly order 
Alderman to place its workers – and Big John’s – on standby (finding 16).  

 19 
Nonetheless, we accept Dr. Seals’ explanation, which is consistent with the other 
evidence of record, that Big John’s kept its work force on standby chiefly because of 
the threat of liquidated damages and because of the absence of a time extension 
(finding 21).  We also accept Dr. Seals’ overall conclusion that, as time went on, 
“keeping workers on standby was necessary and reasonable, in order to respond to the 
dwindling period of performance with no time extension” (finding 22).  Finally, we 
find persuasive Mr. Dougherty’s outline of the “important uncertainties” facing 
Big John’s, such as “the availability of qualified workers for rehire when the delays 
ended,” and “the Navy’s pattern of issuing short-notice postponements” (finding 24), 
both of which are evident from the chart in finding 5. 
 
We accordingly conclude that Alderman has established that it was required to 
have its workforce on standby. 
 
 2.  Inability to Take On Replacement Work 
 
The parties’ arguments regarding replacement work are chiefly factual.  In our 
2014 decision, we concluded that the parties’ arguments regarding replacement work 
required a more fully developed record concerning the start dates (see finding 5) and 
their impact.  Alderman, 15 BCA ¶ 35,841 at 175,274.     
 
At the outset, the Navy acknowledges the burden shifting that takes place after 
we conclude, as we have, that Alderman has made a prima facie case that the Navy 
required Big John’s to be on standby during a government-caused delay of uncertain 
duration (gov’t br. at 18).  That is, the burden shifts to the Navy to show “either (1) 
that it was not impractical for the contractor to obtain ‘replacement work’ during the 
delay, or (2) that the contractor’s inability to obtain such work, or to perform it, was 
not caused by the government’s suspension.”  Melka Marine, Inc. v. United States,  
187 F.3d 1370, 1375 (Fed. Cir. 1999) (citing West v. All State Boiler, Inc., 146 F.3d 
1368, 1376 (Fed. Cir. 1998)). 
 
The Navy now urges that “[i]t was not impractical for Big John’s to obtain 
replacement work during the M403 Contract suspension period” (gov’t br. at 20).  
The Navy points to five contracts with a cumulative value of $3,552,312 that it says 
constitute replacement contracts that were awarded to Big John’s during this period 
(gov’t br. at 18-20).  The Navy argues that Big John’s suffered no loss, or should have 
suffered no loss, because of Navy actions, inasmuch as Big John’s posted actual labor 
hours, submitted invoices, and received three payments, and allocated the unabsorbed 
home office overhead from the M403 contract to these contracts during the suspension 
period (id.). 
 
For its part, Alderman insists that Big John’s was unable to obtain sufficient 
replacement work to compensate for the unabsorbed overhead related to the contract 

 20 
for the relevant period, which Alderman defines as the 192 day period from June 1, 
2009 through December 9, 2009 (app. reply br. at 6). 
 
To meet its burden, the Navy contends that it was “not impractical” for Big 
John’s to obtain replacement work (gov’t br. at 18-20).  The thrust of the Navy’s 
argument is to attack Dr. Seals’ conclusions.  The Navy emphasizes that it has met its 
burden of proof “using evidence submitted by Big John’s to establish that it was not 
impractical for Big John’s to obtain ‘replacement work’ during the . . . suspension 
period.”  (Gov’t br. at 21) 
 
We agree that Big John’s made efforts to obtain replacement work; we have 
given credence to the evidence of bids that it submitted for other work in June to 
September 2009 (finding 35).  We agree that Big John’s efforts met with some success, 
and that it was able to take on some replacement work during the suspension period, as 
its billings and book entries reflect (findings 29-36, 38).  But we also conclude that  
Big John’s was unable to obtain sufficient replacement work during either Delay 1 or 
Delay 2 to compensate for the disruptive effect of the multiple delays.  We are persuaded 
by Dr. Seals’ analysis, as well as by Mr. Daugherty’s evidence, that Big John’s was 
frustrated in the first instance by the Navy’s practice of giving Alderman “very short 
advance notifications of when each delay was to end and work had to start” (finding 35). 
 
We accordingly conclude that the Navy has not met its burden regarding 
Big John’s ability to take on replacement work. 
 
 E.  Direct Costs of Standby 
 
As a separate category of relief, Alderman contends that, independent of the 
Eichleay formula, it is entitled to $21,753 in direct costs of standby.  Alderman tells us 
that “[t]hese are the costs of paying an electrician-supervisor and a licensed electrician 
to keep them on standby during the delays.”  (App. br. at 23)  Alternatively, Alderman 
urges that these amounts are recoverable “under a jury verdict approach” (app. reply 
br. at 10). 
 
For its part, the Navy derides Alderman’s argument as “lacking any basis in 
case law, regulation or fact” (gov’t br. at 22).  The Navy points out that these costs rest 
upon a calculation by Dr. Seals, who constructed an “equivalent hourly rate” 
calculation that we do not accept as within Dr. Seals’ expertise (findings 15, 39; 
gov’t br. at 22-23).  In addition, we do not accept Alderman’s alternate argument 
regarding the use of a jury verdict to recover these costs.  In Dawco Construction, Inc. 
v. United States, 930 F.2d 872, 882 (Fed. Cir. 1991) (overruled on other grounds by 
Reflectone, Inc. v. Dalton, 60 F.3d 1572 (Fed. Cir. 1995) (en banc)), the court of 
appeals set out the criteria for applying the jury verdict method: 
 

 21 
(1)  [T]hat clear proof of injury exists; (2) that there is no 
more reliable method of computing damages; and (3) that the 
evidence is sufficient for a court to make a fair and 
reasonable approximation of the damages. 
 
On this record, we cannot conclude that Alderman has made the requisite 
showing to justify resort to the jury verdict method.   
 
We accordingly deny the alleged direct costs of standby and deduct this item 
from the amount due Alderman. 
 
 F.  Amount of Award 
 
As indicated, we deduct the amount of the alleged direct costs of standby from 
Alderman’s claim of $56,548 (see finding 12), leaving a net recoverable amount of 
$34,795.  Alderman is entitled to recover this amount, plus interest under the Contract 
Disputes Act, 41 U.S.C. §§ 7101-7109, from August 24, 2011 until paid (see finding 12). 
 
 
CONCLUSION 
 
The appeal is sustained in part to the extent indicated and is otherwise denied. 
  
 Dated:  May 21, 2020 
 
 
 
ALEXANDER YOUNGER 
Administrative Judge 
Armed Services Board 
of Contract Appeals 
 
 
(Signatures continued) 


 22 
I concur 
 
 
 
 I concur 
 
 
 
RICHARD SHACKLEFORD 
Administrative Judge 
Acting Chairman 
Armed Services Board 
of Contract Appeals 
 J. REID PROUTY 
Administrative Judge 
Vice Chairman 
Armed Services Board 
of Contract Appeals 
 
 
 I certify that the foregoing is a true copy of the Opinion and Decision of the 
Armed Services Board of Contract Appeals in ASBCA No. 58082, Appeal of 
Alderman Building Company, Inc., rendered in conformance with the Board’s Charter. 
 
 Dated:  May 21, 2020 
 
 
       
  
PAULLA K. GATES-LEWIS 
Recorder, Armed Services 
Board of Contract Appeals