ARMED SERVICES BOARD OF CONTRACT APPEALS 
Appeals of -- ) 
) 
Thorpe See-Op Corporation ) 
) 
Under Contract No. W911 W6-05-C-0047 ) 
APPEARANCE FOR THE APPELLANT: 
APPEARANCES FOR THE GOVERNMENT: 
ASBCA Nos. 58960, 58961 
Mr. Virgil Clark 
Vice President of Business Development 
E. Michael Chiaparas, Esq. 
DCMA Chief Trial Attorney 
Stephen D. Sanders, Esq. 
Trial Attorney 
Defense Contract Management Agency 
Dallas, TX 
Douglas R. Jacobson, Esq. 
Trial Attorney 
Defense Contract Management Agency 
Bloomington, MN 
OPINION BY ADMINISTRATIVE JUDGE MCILMAIL 
INTRODUCTION 
The government 
contracted with appellant, Thorpe See-Op Corporation, to 
develop an unmanned aerial vehicle that could be launched from an aircraft using a 
rocket launcher. Subsequently, the government terminated the contract for 
convenience, and appellant submitted a termination for convenience settlement 
proposal. Subsequently, the government demanded repayment of a portion of the 
interim payments that it had already made. Appellant appeals from the government's 
payment demand, and from the denial of its request for further payment pursuant to its 
settlement proposal. Because the appeals address the same issues, we address these 
consolidated appeals together. We deny the appeals. 1 
1 We previously denied government's motion to dismiss and cross-motions for 
summary judgment. Thorpe See-Op Corporation, ASBCA Nos. 58960, 58961, 
15-1BCA~35,833. 

FINDINGS OF FACT 
On 24 January 2005, the Aviation Applied Technology Directorate 
(government) awarded Contract No. W911 W6-05-C-0047, a cost-plus-fixed-fee 
contract for $500,000 (including a fixed fee of $23,810) to appellant "develop a sensor 
and weapons equipped software test [Wing Store Unmanned Aerial Vehicle]" (R4, 
tab 1, at 1, 3, 4). On 9 May 2005, the government increased the contract amount by 
$70,000 to $570,000 (including a $3,334 increase in the fee to $27,144) (R4, tab 8 
at 27-28). The contract incorporated by reference Federal Acquisition Regulation 
(FAR) 52.216-7, ALLOWABLE COST AND PAYMENT(DEC 2002) (R4, tab 1at16), 
which provides: 
(a) Invoicing. (1) The Government will make 
payments to the Contractor when requested as work 
progresses .... 
(2) Contract financing payments are not subject to 
the interest penalty provisions of the Prompt Payment Act. 
Interim payments made prior to the final payment under 
the contract are contract financing payments .... 
(g) Audit. At any time or times before final 
payment, the Contracting Officer may have the 
Contractor's invoices or vouchers and statements of cost 
audited. Any payment may be-
( 1) Reduced by amounts found by the Contracting 
Officer not to constitute allowable costs or 
(2) Adjusted for prior overpayments or 
underpayments. 
From 8 February 2005 through 3 May 2005, appellant submitted to the 
government seven vouchers for payment (Voucher Nos. 1-7) in amounts totaling 
$303,023.57 (R4, tab 110). The government subsequently paid-that amount (tr. 1/20). 
The record also contains appellant's Voucher No. 8, which lists $38,060.12 in costs 
and $1,903.01 in fees for the period 2 May 2005 through 12 June 2005 (app. supp. R4, 
tab 3a). Supporting that voucher are purchase receipts for materials and tools, an 
invoice for services, as well as timecards for various personnel (id.). 
2 

On 13 June 2005, the government ordered appellant to stop work (tr. 2/118). 
On 29-30 June 2005, a government team inspected appellant's worksite and 
determined that appellant had performed only 15% of the contract work (R4, tab 10 
at 34). The government team concluded that there had been "little data generated to 
support the claim for $326,964.18 of effort," 2 that many of the items that appellant had 
shown to the government team had been generated after the government had ordered 
appellant to stop work, and that some of the appellant's work may have been 
associated with another contract, with the Department of the Navy (id.). On 22 August 
2005, the contracting officer issued a unilateral modification terminating the 
contract 
for convenience pursuant to FAR clause 52.249-6, which the modification stated was 
read into the contract pursuant to G.L. Christian & Associates v. United States, 
320 F.2d 345 (Ct. Cl. 1963) (R4, tab 12 at 40-41). The contracting officer's warrant 
recites his authority to perform "Duties as a Terminating Contracting Officer pursuant 
to FAR 42.302(a)(23)" (app. 4th supp. R4, tab 1). 
FAR clause 52.249-6, TERMINATION (COST-REIMBURSEMENT) (MAY 2004), 
provides, in pertinent part: 
(h) If the Contractor and the Contracting Officer 
fail to agree in whole or in part on the amount of costs 
and/or fee to be paid because of the termination of work, 
the Contracting Officer shall determine, on the basis of 
information available, the amount, if any, due the 
Contractor, and shall pay that amount, which shall include 
the following: 
( 1) All costs reimbursable under this contract, not 
previously paid, for the performance of this contract 
before the effective date of the termination, and those 
costs that may continue for a reasonable time with the 
approval of or as directed by the Contracting Officer; 
however, the Contractor shall discontinue these costs as 
rapidly as practicable. 
(2) The cost of settling and paying termination 
settlement proposals under terminated subcontracts that 
are properly chargeable to the terminated portion of the 
contract if not included in subparagraph (h)(l) of this 
clause. 
2 The source for the government team's $326,964.18 figure is not apparent. Voucher 
No. 8 lists a cumulative cost figure through 12 June 2005 of $326,654 (app. 
supp. R4, tab 3a at 1). 
3 

(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; 
(ii) The termination and settlement of subcontracts 
(excluding the amounts of such settlements); and 
(iii) Storage, transportation, and other costs 
incurred, reasonably necessary for the preservation, 
protection, or disposition of the termination inventory. If 
the termination is for default, no amounts for the 
preparation of the Contractor's termination settlement 
proposal may be included. 
( 4) A portion of the fee payable under the contract, 
determined as follows: 
(i) If the contract is terminated for the convenience 
of the Government, the settlement shall include a 
percentage of the fee equal to the percentage of completion 
of work contemplated under the contract, but excluding 
subcontract effort included in subcontractors' termination 
proposals, less previous payments for fee. 
(i) The cost principles and procedures in Part 31 of 
the Federal Acquisition Regulation, in effect on the date of 
this contract, shall govern all costs claimed, agreed to, or 
determined under this clause. 
In October 2006, appellant submitted a settlement proposal to the government 
(R4, tab 16 at 56). On 31 January 2007, the Defense Contract Audit Agency (DCAA), 
responding to a request to audit that proposal, determined that it had "significant 
concerns over the accuracy and reliability of [appellant's] books and records," and that 
"due to the repeated alteration of the books and records and poor internal controls 
exercised over them, it will be impossible for us to render an audit opinion on the total 
costs (direct costs or indirect rates) for this subject contract" (R4, tab 19 at 62). In 
May 2011, appellant presented two revised termination settlement proposals, 
4 

ultimately requesting $339,071.88 (R4, tabs 36, 37). On 1 July 2011, DCAA issued a 
report determining that appellant's settlement proposal was inadequate for audit (R4, 
tab 43). On 25 July 2011, appellant submitted a further revised termination settlement 
proposal, requesting payment of $359,963.14, consisting of $662,986.71 in costs, fees, 
and settlement expenses, minus $303,023.57 in payments already received (R4, tab 45 
at 482). On 29 June 2012, DCAA issued a report determining that "the cost or pricing 
data and other than cost or pricing data submitted by [appellant] are not adequate," and 
that the proposal was not "an acceptable basis for negotiation of a fair and reasonable 
price" (R4, tab 72 at 544). DCAA questioned the entire proposed settlement amount, 
for lack of adequate supporting documentation or for unallowability (id. at 545-55). 
By 15 October 2012, the parties had reached an impasse regarding the 
termination settlement proposal (R4, tab 80 at 638). On 15 July 2013, the government 
unilaterally issued Modification No. A00004, determining that appellant was entitled 
to a termination settlement amount of $106,900, consisting of (according to the 
modification) $81,424 in costs, $4,072 in fee, and $21,400 in settlement expenses) 
(R4, tab 98 at 
676).3 The contracting officer arrived at the cost and fee amounts by 
applying the 15%-contract completion determination of the government team that 
inspected appellant's worksite to the contract's total cost and total fee amounts, and 
arrived at the settlement expenses amount "[a]fter conferring with [the] DCAA 
Auditor" (id. at 679-80). The contracting officer further determined that the 
government had paid appellant $300,673.44, and that appellant owed the government 
the difference: $193,773 (id. at 676). Appellant filed a timely notice of appeal 
challenging that modification; we docketed that appeal as ASBCA No. 58960. 
On 12 August 2013, appellant presented to the contracting officer a certified claim 
in the amount of $579,140.19, consisting of the following elements: 
Direct Material 
Direct Labor 
Indirect Factory Expense 
General and Administrative Expense: 
Total Cost 
Fee 
Settlement Expenses 
Net Proposed Settlement 
Prior Payments 
Net Payment Requested 
$70,118.46 
$133,171.01 
$49,316.86 
$111,224.93 
$363,831.26 
$27,260.36 
$491,072.14 
$882,163.76 
($303,023.57) 
$579,140.19 
3 $81,424 plus $4,072 plus $21,400 actually equals only $106,896. 
5 

(Supp. R4, tab 111) The contracting officer has not issued a final decision upon that 
claim. Appellant filed a notice of appeal challenging the deemed denial of the claim; 
we docketed that appeal as ASBCA No. 58961. 
DECISION 
Appellant must prove by a preponderance of the evidence that it is entitled to a 
greater termination settlement amount than that determined by the contracting officer. 
See General Dynamics Land Systems, Inc., ASBCA No. 52283, 02-1BCA,-i31,659 
at 156,411. Because the contracting officer determined that appellant was entitled to a 
termination settlement amount of $106,900, appellant must prove that it is entitled to 
more than that amount, and, therefore, that it does not owe the government $193, 773. 
The parties agree that FAR clause 52.249-6, TERMINATION (COST-REIMBURSEMENT) 
(MAY 2004), governs their claims. Thorpe See-Op, 15-1BCA,-i35,833 at 175,247. That 
clause provides for 
recovery of a settlement amount consisting of several elements, 
including reimbursable costs of pre-termination contract performance, the reasonable costs 
of settlement of the work terminated, and (if, as here, the contract is terminated for the 
convenience of the government) a percentage of the fee equal to the percentage of 
completion of work contemplated under the contract. FAR clause 52.249-6(h). In addition, 
the clause provides that "[t]he cost principles and procedures in Part 31 of the Federal 
Acquisition Regulation, in effect on the date of this contract, shall govern all costs claimed, 
agreed to, or determined under this clause." FAR clause 52.249-6(i). FAR 31.201-1 (b ), 
Composition of total cost, provides that "[ w ]hile the total costs of a contract includes all 
costs properly allocable to the contract, the allowable costs to the Government are limited to 
those allocable costs which are allowable pursuant to [FAR] part 31." FAR 31.201-2(d), 
Determining allowability, provides that "[a] contractor is responsible for accounting for 
costs appropriately and for maintaining records, including supporting documentation, 
adequate to demonstrate that costs claimed have been incurred, [and] are allocable to the 
contract." Furthermore, we agree with the government that FAR subpart 49.3, Additional 
Principles for Cost-Reimbursement Contracts Terminated for Convenience, applies to the 
termination for convenience of the cost-reimbursement contract at issue in this appeal, not, 
as appellant urges, FAR subpart 49.2, Additional Principles for Fixed-Price Contracts 
Terminated for Convenience. Appellant asserts that Jacobs Engineering Group, Inc. v. 
United States, 434 F.3d 1378 (Fed. Cir. 2006), "held that FAR 49.201 was applicable to 
cost-reimbursement contracts" (app. br. at 90), but we find no reference to that regulation in 
that opinion. 
The government has paid appellant $303,023.57. In addition, the best evidence 
in the 
record of the percentage of the contract work that appellant completed is the 
report of the government's June 2005 trip to appellant's worksite. That report, which 
6 

we find a credible, contemporaneous account of the state of appellant's performance, 
indicates that appellant completed no more 15% of the contract work; therefore, we 
find that appellant is entitled to no more than $4,071.60 in fee (.15 times $27,144). 
We disagree with appellant (app. br. at 164) that labor hours is a better measure of 
contract completion. Furthermore, we reject appellant's contention (id.) that it is 
entitled to the entire fee because the government terminated the contract, a contention 
that runs afoul of FAR clause 52.249-6(h)(4)(i). Appellant is correct (id.) that, 
according to FAR 4.804-4(a)(2), physically completed contracts, a contract is 
considered to be "physically completed" when "[t]he Government has given the 
contractor a notice of complete contract termination." However, that means that the 
work of a terminated contract is at an end, not that a contractor whose contract has 
been terminated has completed 100% of "work contemplated under the contract." The 
latter is the measure under FAR clause 52.249-6(h)(4)(i), and even appellant does not 
contend that it performed to completion the work contemplated under the contract. 
Finally, with the exception of one set of claimed costs - some of those listed in 
appellant's Voucher No. 8- none of the claimed performance costs and settlement 
expenses is supported by record evidence of, in the language of FAR 31.201-2( d), 
"documentation, adequate to demonstrate that costs claimed have been incurred, are 
allocable to the contract"; consequently, appellant has not proven that it is entitled to 
any of those claimed costs qr settlement expenses. 4 Appellant admits that it incurred a 
4 On 5 May 2015, the first day of the hearing, appellant requested that its "Exhibit 1," 
a box of documents that appellant represented contained evidence of contract 
costs, be admitted into evidence (tr. 11100, 121). The government objected, 
contending that it had been given no notice of the existence of Exhibit 1, 
despite having requested such evidence in discovery (tr. 1/101-02). Appellant 
represented that it had located Exhibit 1 only the day before, that the 
government had not had an opportunity to inspect Exhibit 1, and that Exhibit 1 
contained documents that the government had requested in discovery on 
13 January 2015 (tr. 11106, 109). The Board denied appellant's request for 
failure to comply with a 24 December 2014 Board order adopting the parties' 
jointly-proposed deadline to "close the record" (which the Board interprets to 
mean the close of the documentary record) by 6 March 2015 (tr. 1/100-01, 115, 
121). (The parties' proposed schedule listed 6 March 2014 as the deadline to 
close the 
record, but the other deadlines proposed in that schedule - all in 2015 
- indicate that the reference to 6 March 2014 is a typographical error). 
Appellant could not, later in the hearing, state with specificity whether 
Exhibit 1 contained contract-related payroll checks or bills for materials and 
supplies (tr. 2/165-68). 
In addition, and relatedly, although a spreadsheet found in the record appears to 
be a contemporaneous record of contract costs created by appellant (app. 2nd 
7 

portion of the claimed costs during the period between the stop-work order and the 
termination of the contract, in an attempt to have the contract "reinstated" (app. br. 
at 123-24); however, appellant provides no authority for the allowability of such costs. 
With respect to Voucher No. 8, the purchase receipts, invoice, and timecards 
supporting that voucher are the type of documentation that would be "adequate to 
demonstrate that costs claimed have been incurred, [and] are allocable to the contract"; 
however, even if we were to credit appellant the entire Voucher No. 8 amount (and 
ignore that $1,903.01 of that amount is for fee) the amount to which appellant would 
be entitled would be only $44,034.73 ($39,963.13 plus $4,071.60). Subtracting 
$44,034.73 from $303,023.57 in government payments would result in $258,988.84 in 
government overpayment. Because the contracting officer claimed less than that 
amount ($193,773), we deny both appeals. 
Appellant contends that the contracting officer did not possess authority to issue 
Modification No. A00004. We disagree. The contracting officer was warranted to 
perform "Duties as a Terminating Contracting Officer pursuant to FAR 42.302(a)(23)." 
FAR 42.302(a)(23), Contract administration functions, includes "[n]egotiate and execute 
contractual documents for settlement of partial and complete contract terminations for 
convenience as otherwise described by Part 49." FAR 49.105(a)(4), Duties of 
termination contracting officer after issuance of notice of termination, includes 
"[p]romptly settle the contractor's settlement proposal by determination for the elements 
that cannot be agreed on, if unable to negotiate a complete settlement." By Modification 
No. A00004, the contracting officer determined appellant's settlement proposal, upon 
which the parties were unable to negotiate a complete settlement; that is a determination 
expressly within his warranted authority as a termination contracting officer. 
Citing FAR 49 .303-1, Submission of settlement proposal, appellant contends 
that it is entitled to retain the $303,023.57 that the government paid pursuant to the 
seven vouchers that appellant submitted before the termination of the contract. 
Although FAR 49.303-1 provides that "[t]he contractor shall submit a final settlement 
proposal covering unvouchered costs," that does not mean that in the event of 
termination of a cost-reimbursement contract, a contractor is entitled to retain 
payments made by the government prior to termination. Pursuant to FAR clause 
52.216-7(a)(l)-(2), "[t]he Government will make payments to the Contractor when 
requested as work progresses," and "[i]nterim payments made prior to the final 
payment under the contract are contract financing payments"; pursuant to FAR clause 
52.216-7(g), "[a]t any time or times before final payment, the Contracting Officer may 
supp. R4, tab 14 at 7-11), we will not treat that spreadsheet as a summary under 
Federal Rule of Evidence 1006, because appellant did not make the source 
materials for that spreadsheet available to the government before the hearing. 
See WRIGHT & GOLD, FEDERAL PRACTICE AND PROCEDURE: EVIDENCE § 8045 
(2000). 
8 

have the Contractor's invoices or vouchers and statements of costs audited." 
Furthermore, also pursuant to FAR clause 52.216-7(g)(l)-(2), "[a]ny payment may 
be ... [r]educed by amounts found by the Contracting Officer not to constitute allowable 
costs; or ... [a]djusted for prior overpayments or underpayments." That means that 
although a termination for convenience settlement proposal need only include 
unvouchered costs, the contracting officer may, prior to final payment pursuant to any 
settlement, audit vouchered costs already paid to determine the amount of final 
payment, and may reduce the amount of final payment by the amount of unallowable, 
vouchered costs already paid, as well as adjust any payment for prior overpayment. 
Therefore, a contractor whose cost-reimbursement contract is terminated for 
convenience is not, prior to final payment, necessarily entitled to retain payments by 
the government of vouchered costs. 
We have considered and reject appellant's other arguments. 
The appeals are denied. 
Dated: 3 February 2016 
I concur 
CONCLUSION 
TZo~?~P 
Administrative Judge 
Armed Services Board 
of Contract Appeals 
I concur 
~AJ:;;:---=-~~~---
MARKN:STEMPiER ~ RICHARD SHACKLEFORD 
Administrative Judge 
Acting Chairman 
Armed Services Board 
of Contract Appeals 
9 
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. 58960, 58961, Appeals of 
Thorpe See-Op Corporation, rendered in conformance with the Board's Charter. 
Dated: 
10 
JEFFREY D. GARDIN 
Recorder, Armed Services 
Board of Contract Appeals