ARMED SERVICES BOARD OF CONTRACT APPEALS 
Appeal of-- ) 
) 
Nexagen Networks, Inc. ) 
) 
Under Contract No. Wl5P7T-13-D-E077 ) 
APPEARANCE FOR THE APPELLANT: 
APPEARANCES FOR THE GOVERNMENT: 
ASBCA No. 60641 
David A. Rose, Esq. 
Rose Consulting LLC 
Valdosta, GA 
Raymond M. Saunders, Esq. 
Army Chief Trial Attorney 
MAJ Stephen P. Smith, JA 
Trial Attorney 
OPINION BY ADMINISTRATIVE JUDGE O'CONNELL ON 
THE GOVERNMENT'S MOTION FOR PARTIAL SUMMARY JUDGMENT 
Appellant, Nexagen Networks, Inc. (Nexagen) has appealed the contracting 
officer's (CO's) denial of its certified claim. The Army has moved for partial 
summary judgment on a portion of the claim in which Nexagen seeks $37,597,526.94 
in "compensatory consequential damages." We grant the motion in part. 
STATEMENT OF FACTS FOR PURPOSES OF THE MOTION 
The following facts are undisputed. 
On May 31, 2013, the Army awarded Nexagen Contract No. Wl5P7T-13-D-E077 
(the contract) a multiple award indefinite-delivery/indefinite-quantity contract to provide 
software and systems engineering services (app. resp. at 3; R4, tab 1). The contract 
contains various clauses, including Federal Acquisition Regulation (FAR) 52.249-6, 
TERMINATION (COST-REIMBURSEMENT) (MAY 2004 ), ALTERNATE IV (SEP 1996) (R4, 
tab 1 at 133). 
On February 13, 2015, the Army awarded Nexagen task order KXOl for "Data 
Strategy Service and Software Support" (the task order). The task order had a one-year 
base period with a one-year option. (App. resp. at 4; R4, tab 2) 

With respect to its value, the task order provided: 
BASE PERIOD 
Estimated Labor Cost 
Fixed Fee 
Estimated Travel & ODC 
Total 
OPTION PERIOD 
Estimated Labor Cost 
Fixed Fee 
Estimated Travel & ODC 
Total 
Grand Total 
(App. resp. at 5; R4, tab 2 at 2) 
$ 18,170,944.36 
$ 908,547.22 
$ 3,881,775.40 
$22,961,266.98 
$ 18,534,362.29 
$ 926,718.11 
$ 3,887,296.90 
$ 23,348,377.30 
$ 46,309,644.28 
During the less than three-month period that Nexagen performed the task order, the 
Army sent Nexagen deficiency notices and a cure notice (app. resp. at 6-7; R4, tabs 5, 8-9). 
On May 4, 2015, the CO notified Nexagen that he was terminating the task order for default 
due to Nexagen's failure to perform (app. resp. at 7; R4, tab 13). The CO quickly changed 
course, however, and on May 15, 2018, notified Nexagen that he was changing the 
termination to a "no-cost termination for convenience" (app. resp. at 7; R4, tabs 14-15). 
On December 22, 2015, Nexagen submitted a certified claim to the CO. It sought 
$37,597,526.94 for "Compensatory Consequential Damages: Breach of implied covenant 
of good faith and fair dealing," and $2,646,853 for "Compensatory Expectation 
Damages: Breach of contract based upon wrongful termination." (App. resp. at 8-9; R4, 
tab 20 at 9) For ease of reference, we will refer to the former as the "consequential 
damages claim" and the latter as the "expectation damages claim." 
Nexagen's certified claim is 304 pages long. Pages 1-9 consist of a cover, table 
of contents, narrative, and certification (R4, tab 20). Pages 10-304 consist of various 
spreadsheets and other documents that purport to document the $2.6 million in 
expectation damages. The biggest single component of the expectation damages claim 
is the fixed fee (or lost profits) of $1,835,265.33 for the base and option years of the 
contract ( id. at 11 ). 1 
1 $908,547.22 (base year)+ $926,718.11 (option year)= $1,835,265.33. 
2 

By contrast, there is nothing in the claim that itemizes the $3 7 .6 million 
consequential damages claim.2 The claim does allege, however, that Nexagen 
suffered: 
• Partnership cancellation by CACI due to Loss of Confidence with 
Nexagen on an $SOM acquisition on which CACI is the 
incumbent 
• Emboldened industry concerns about Nexagen ability to 
effectively perform and partner as a result of the 
government's actions 
• Potential for biased TOR submission evaluations by ACC 
acquisition and legal team on future solicitations 
• Loss of $35M+ in revenue and Technical Expertise related to 
Predictive Analytics, Cloud Computing and Messaging 
Technologies 
• $48M in gross revenue Good Will Lost Due to Breach of Contract 
• $1 OM in OH, G&A and Profit 
(R4, tab 20 at 8) 
The CO issued a final decision denying the claim on May 6, 2016 (app. resp. at 10; 
R4, tab 22). With respect to the fixed fee Nexagen sought in the expectation damages 
claim, the CO denied it for the option year because "there is no entitlement to unexercised 
options." For the base year fee of $908,547.22, she granted a prorated $151,424.54 to 
reflect Nexagen's actual performance period, and denied the remainder. (R4, tab 22 at 2) 
As for the consequential damages claim, the CO stated "Nexagen's claim for damages for 
breach of contract in the amount of$37,597,526.94 are denied in full as they are 
unsupported and not provided for under FAR 49 .3" (id.). 
Nexagen has submitted as exhibit 3 to its response to the government's motion 
a spreadsheet that for the first time itemizes its consequential damages claim: 
2 Nexagen disputes the Army's assertion that the claim failed to itemize the 
consequential damages claim. Its only basis for the denial is that the CO did 
not seek clarification. (App. resp. at 9) We find that Nexagen has failed to 
properly address the government's assertion of fact and we consider it 
undisputed for purposes of the motion. FED. R. CIV. P. 56(e)(2). 
3 

Nexagen Pro Forma for Termination of SSESR-2031 
Description I I Year I I I Year 2 I I Year 3 I I Year 4 I I Year 5 I I Total Remarks 
Count II Breach of Contract (SSESR-2031 DS4 Award) 
Lost Fee $ 908,547 $ 926,718 $ 1,835,265 Two years of 
Lost G&A $ 1,886,284 $ 1,924,009 $ 3,810,293 Lost •Gross 
Lost OH $ 873,120 $ 890,582 $ 1,763,702 Profit (16%) 
on the DS4 
Contract. 
Subtotal I $ 7,409,260 
Count I Breach of implied Covenant of 200d faith dealin2 
Loss on $5,451,283.32 $5,560,308.66 $ 11,011,592 Six times Fee 
Corporate for each year 
Market Value 
Subtotal I $11,011,592 
Count I Breach of implied Covenant of good faith dealing 
"No Bid" $1,874,444 $1,874,444 $1,874,444 $1,874,444 $ 7,497,776 16% of 
Technology Revenue 
Opportunities Generating 
Gross Profit Con tracts that 
we can not 
bid on 
without the 
talent pool 
we had hired 
to perform 
DS4. These 
areas include 
opportunities 
in: Predictive 
Analytics, 
Cloud 
Computing 
and 
Messaging; 
Calculation 
based on 
those 
opportunities 
no bid and 
our historical 
bid to win 
ratio of 25°/o 
of all 
opportunities 
bid. 
Subtotal I S 7,497,776 
Also Count II: Recompete of DS4 
Lost Fee $ 945,252 $ 964,158 $ 983,441 $ 2,892,851 DS4: Year 3. 
LostG&A $ 1,962,489 $2,001,739 $ 2,041,774 $ 6,006,002 4 and 5 Gross 
Profits ( 16%) 
Lost OH $ 908,393 $ 926,561 $ 945,092 $ 2,780,047 withPWIN of 
60% 
Subtotal I $ 11,678,899 
TOTAL I S 37,597,527 
Exhibit 3 clarifies that the consequential damages claim is based on lost profits, 
loss of corporate market value ( calculated by multiplying by six the lost profits on the 
base and option years), along with general and administrative costs (G&A), and 
overhead. Exhibit 3 indicates that Nexagen seeks its fixed fee for not only the base 
and option years but also for three additional years for which it contends it would have 
been the awardee after a recompetition. For the five years, Nexagen seeks a total of 
$19,088,159 in lost profits, G&A, and overhead. On top of this it seeks $11,011,592 
4 

for the alleged loss of corporate market value, and nearly $7 .5 million in lost profits on 
other contracts due to its loss of the "talent pool" it hired to perform this contract. 
Exhibit 3 illustrates that the damage calculations for the two claims overlap. As 
stated above, the major component of the expectation damages claim is the $1,835,265 
in lost profits for the base and option year. Nexagen also included these in the 
consequential damages claim. (Compare app. resp., ex. 3, and R4, tab 20 at 11) 
DECISION 
Jurisdiction 
After reviewing Nexagen's claim, the Board raised the issue of our jurisdiction 
to consider the consequential damages claim because, while the claim has an 
abundance of detail for the much smaller expectation damages claim, it makes only 
relatively vague assertions with respect to consequential damages. We have held, for 
example, that if a claim is so lacking in specificity that the CO would "have to be 
omniscient to decipher appellant's intent," we do not possess jurisdiction. Sermor, 
Inc., ASBCA No. 46755, 95-1 BCA i127,500 at 137,043. We requested that the 
parties address the issue in their briefs. 
FAR 2.101 provides that a "claim" is: "a written demand or written assertion 
by one of the contracting parties seeking, as a matter of right, the payment of money in 
a sum certain, the adjustment or interpretation of contract terms, or other relief arising 
under or relating to the contract." The Court of Appeals for the Federal Circuit has 
held that the claim must provide the CO adequate notice of the basis and amount of the 
claim. Contract Cleaning Maintenance, Inc. v. United States, 811 F.2d 586, 592 (Fed. 
Cir. 1987). 
Shortly after our decision in Sermor, the Court of Appeals clarified the minimal 
amount of information required in H.L. Smith, Inc. v. Dalton, 49 F .3d 1563 (Fed. Cir. 1995). 
In H.L. Smith, the contractor submitted nine letters requesting equitable adjustments that did 
not explain how it calculated the amounts due, and did not submit any documentation, even 
after repeated requests from the CO asking for a more detailed explanation so that he could 
evaluate the claim. (Id. at 1564 ). The Board dismissed the appeals, finding that the "claim 
letters consist merely of broad allegations of Government caused delay and disruption 
without linking a specific assertion of delay or disruption to the actual dollar amounts 
requested." H.L. Smith, Inc., ASBCA No. 45111 et al., 94-2 BCA i126,723 at 132,933. The 
Board held that it lacked jurisdiction because the contractor failed to present enough 
information to the CO for him to meaningfully evaluate the claims. Id. 
The Federal Circuit reversed, holding that neither the Contract Disputes Act nor 
the FAR required the contractor to account for each cost component of the claim. 
5 

H.L. Smith, 49 F.3d at 1565. The Court held that, while our decision accurately 
described the claim letters, providing the CO adequate notice of the basis and amount 
does not require the contractor to submit a detailed breakdown of costs or financial 
documentation. Id. at 1564-65. Thus, the Court held that allegations of government 
delay, along with a sum certain, are sufficient for jurisdiction, even if there is no 
explanation as to how the delay resulted in the damages or how the damages were 
calculated. In applying this standard, we have thus characterized the amount of 
information required to provide adequate notice of the basis and amount of the claim 
as "quite low.'· L-3 Communications Integrated Systems, L.P., ASBCA Nos. 60713, 
60716, 17-1BCAi136,865 at 179,626. 
In its supplemental brief, Nexagen implicitly acknowledges that it did not provide 
the CO all of the information contained in Exhibit 3. But it states that after submission of 
the claim, "the Contracting Officer should have been on notice that the claim of 
$37,597,526.94 reflected the loss of value, loss of goodwill, loss of profit, overhead and 
G&A resulting from the termination." (App. supp. br. at 5) 
We agree with N exagen that it submitted enough information, if just barely so, to 
pass the low jurisdictional bar. Without doubt, administrative review of the claim 
would have been difficult unless the CO were omniscient or telepathic. Otherwise, 
there is no way for her to have known, for example, that Nexagen seeks an $11 million 
reduction in corporate value equal to the base and option year fees multiplied by six. 
But the claim does cite a "loss of $35M+ in revenue ... related to Predictive Analytics, 
[ and] Cloud Computing" and "$48M in gross revenue Good Will Lost," conveying by 
virtue of numbers larger than the value of the task order that Nexagen must be basing 
the claim on the loss of other contracts. Further, the reference in the claim to losing a 
partnership on an $80 million contract, and "emboldened industry concerns" about its 
ability to effectively perform and partner, and the loss of "Technical Expertise," at least 
suggest the notion of a company that has been weakened and is less valuable due to the 
government's alleged actions. Further the claim specifically cites the loss of $10 
million in overhead, G&A and lost profit. Thus, we agree with Nexagen that the CO 
would have been on notice that the $37+ million claimed reflected the loss of value, 
loss of goodwill, loss of profit, overhead and G&A resulting from the termination, even 
if she had no idea how Nexagen calculated its alleged losses. 
Accordingly, we conclude that we possess jurisdiction to consider the 
consequential damages claim and now consider whether Nexagen is entitled as a 
matter of law to recover the types of damages it seeks. 
Summary Judgment Standard of Review 
Summary judgment is appropriate when there is no genuine issue of material fact 
and the moving party is entitled to judgment as a matter of law. Anderson v. Liberty 
6 

Lobby, Inc., 477 U.S. 242, 247-48 (1986). When considering a motion for summary 
judgment, the Board must determine whether there is a genuine issue for trial. Id. at 249. 
Claims for Lost Profits after a Termination/or Convenience 
Because so much ofNexagen's consequential damages claim is based on lost 
profits after a convenience termination, we begin with the termination for convenience 
clause. FAR 52.249-6 provides in relevant part that: 
(a) The Government may terminate performance of work 
under this contract in whole or, from time to time, in part, 
if -
(I) The Contracting Officer determines that a 
termination is in the Government's interest.. .. 
Such clauses allow the government to terminate a contract and avoid the 
payment of common law damages such as anticipatory profits for which it could be 
liable if it terminated a contract lacking such a clause. SWR, Inc., ASBCA No. 56708, 
15-1 BCA ,i 35,832 at 175,222. The Court of Claims explained that "[t]his exclusion 
from relief of unearned profits [in a termination for convenience] is a settled policy 
which has long been accepted and enforced." William Green Constr. Co. v. United 
States, 477 F.2d 930,936 (Ct. Cl. 1973). 
The CO's election to terminate for the government's convenience is conclusive 
unless the contractor can show a clear abuse of discretion or that the government acted 
in bad faith. T&M Distributors, Inc. v. United States, 185 F.3d 1279, 1283 (Fed. Cir. 
1999). A termination tainted by bad faith or abuse of discretion opens the door to 
breach damages such as anticipatory profits. Krygoski Constr. Co. v. United States, 94 
F.3d 1537, 1541 (Fed. Cir. 1996). To prove bad faith, there must be clear and 
convincing ( or "well-nigh irrefragable") evidence of some specific intent to harm the 
contractor. Am-Pro Protective Agency, Inc. v. United States, 281 F.3d 1234, 1239-40 
(Fed. Cir. 2002). Due to the heavy burden of proof, contractors have rarely been 
successful in demonstrating the government's bad faith. Krygoski, 94 F .3d at 1541. 
But, if Nexagen meets this elevated standard, it may be entitled to lost profits on the 
base year of the contract. (We address the option year at the end of this opinion.) 
7 

Anticipatory Profits on other Contracts and Loss of Business Value 
Even if a contractor succeeds in showing bad faith, it is not entitled to 
consequential damages 3, such as lost profits on other contracts. William Green 
Cons tr, 4 77 F .2d at 936. Such damages, whether in a termination for convenience or 
in the event of some other kind of breach, are not recoverable because the award of 
future contracts is too remote and speculative. The Court of Claims explained that: "if 
[ the damages] are such as would have been realized by the party from other 
independent and collateral undertakings, although entered into in consequence and on 
the faith of the principal contract, then they are too uncertain and remote to be taken 
into consideration as a part of the damages occasioned by the breach of the contract in 
suit." Ramsey v. United States, 121 Ct. Cl. 426, 435 (1951) ( quoting Myerle v. United 
States, 33 Ct. Cl. 1, 26 (1897) ( quoting Fox v. Harding, 61 Mass. 516, 522 (1851 )). 
The Court of Claims and the Federal Circuit have followed this rule in numerous 
cases. Rumsfeld v. Freedom NY, Inc., 329 F.3d 1320, 1333 (Fed. Cir. 2003) (after 
default termination converted to one for convenience, denying. as too remote and 
uncertain profits and overhead on contracts appellant contended it would have been 
awarded but for the government's breach); Olin Jones Sand Co. v. United States, 225 
Ct. Cl. 741, 744 (1980) ("The speculative alleged loss of future contracts and work in 
this case comes within the losses of outside business, outside contracts, and general 
company worth referred to in [ William Green Cons tr.].... [T]here is no assurance that 
plaintiff would have received any additional contracts or work."); William Green 
Constr., 477 F.2d at 936 ("even in a common-law suit there would be no recovery for 
general loss of business, the claimed loss of the entire Green net worth, and losses on 
the non-federal work-such damages are all deemed too remote and consequential"); 
Ramsey, 121 Ct. Cl. at 433-35 (denying costs of bankruptcy reorganization and profits 
lost on corporation's overall business activities). 
In this appeal, Nexagen seeks $11,011,592 in lost corporate value, $7,497,776 in 
lost business opportunities in predictive analytics and other fields, and $11,678,899 for 
what it refers to as "gross profits" on the successor contract to the one at issue (app. resp., 
ex. 3). Raj Parikh, Nexagen's Chief Operating Officer, states in a declaration that 
Nexagen has a historical success rate of 25% when it bids on contracts and that Nexagen 
would have been bidding on the successor contract as the incumbent (app. resp., ex. 12). 
Even if we accept these assertions, the claim remains speculative. The contract at issue 
did not entitle appellant to these contracts and there is no assurance that it would have 
received any additional contracts, e.g., Olin Jones, 225 Ct. Cl. at 744, and, to the extent 
that it received them, there is no assurance that it would have made a profit. 
3 Consequential damages are "[l]osses that do not flow directly and immediately from 
an injurious act but that result indirectly from the act." BLACK'S LAW 
DICTIONARY (10th ed. 2014). 
8 

Thus, we grant the government summary judgment with respect to Nexagen's 
claims for $11,011,592 in lost corporate value, $7,497,776 in lost business opportunities 
in predictive analytics and other fields, and $11,678,899 in lost profits, G&A and 
overhead on the successor contract. 
The Option Year 
This opinion does not address the portion of Nexagen's claim in which it seeks 
lost profits, G&A, and overhead totaling more than $3.7 million on the option year of the 
task order (app. resp., ex. 3). In an option contract, the government has bargained for the 
right to exercise or not exercise the option at its discretion and a contractor cannot 
compel the government to exercise the option. Government Systems Advisors, Inc. v. 
United States, 847 F.2d 811, 813 (Fed. Cir. 1988). The Board has recognized a limited 
exception to this rule if the contractor can prove bad faith, an abuse of discretion or that 
the CO acted in an arbitrary or capricious manner. IMS Engineers-Architects, P. C., 
ASBCA No. 53471, 06-1 BCA ,J 33,231 at 164,674, recon. denied, 07-1 BCA ,J 33,467, 
ajf'd, IMS Engineers-Architects, P.C. v. Geren, 274 F. App'x 898 (Fed. Cir. 2008). 
At the time of termination in this appeal, roughly seven months remained 
before the government had to issue a preliminary notice if it wished to exercise the 
option (see R4, tab I at 140, tab 2 at 2). The parties have not addressed in their briefs 
whether we should treat the exercise of an option so far in the future as similar to a 
future contract and thus barred as too remote and speculative by William Green 
Construction and the other cases cited above, or whether a finding of bad faith in the 
base year termination for convenience could somehow extend to the option year as 
well. We decline to rule on this issue sua sponte. 
CONCLUSION 
We grant the government's motion for partial summary judgment as set forth in 
this opinion. 
Dated: January 29, 2019 
(Signatures continued) 
9 
'-~\~1() o·~ 
MICHAEL N. O'CONNELL 
Administrative Judge 
Armed Services Board 
of Contract Appeals 

I concur 
Administrative Judge 
Acting Chairman 
Armed Services Board 
of Contract Appeals 
I concur 
J. REii5PROUTY 
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. 60641, Appeal of Nexagen 
Networks, Inc., rendered in conformance with the Board's Charter. 
Dated: 
10 
JEFFREY D. GARDIN 
Recorder, Armed Services 
Board of Contract Appeals 
I '