ARMED SERVICES BOARD OF CONTRACT APPEALS 

Appeal of -- ) 

) 

Jaynes Corporation ) 

) 

Under Contract No. W912PL-09-C-OOIO ) 

APPEARANCE FOR THE APPELLANT: 

APPEARANCES FOR THE GOVERNMENT: 

ASBCA No. 59234 

Judith Ward Mattox, Esq. 

Colorado Springs, CO 

Thomas H. Gourlay, Jr., Esq. 

Engineer Chief Trial Attorney 

John F. Bazan, Esq. 

Engineer Trial Attorney 

U.S. Army Engineer District, Los Angeles 

OPINION BY ADMINISTRATIVE JUDGE CLARKE 

This is a quantum case relating to our 7 May 2013 Rule 12.3 and Rule 11 

decision in Jaynes Corporation, ASBCA No. 58385. The Board has jurisdiction 

pursuant to the Contract Disputes Act (CDA), 41 U.S.C. §§ 7101-7109. 

DISCUSSION 

The Army Corps of Engineers awarded Contract No. W9l2PL-09-C-OO10 to 

Jaynes Corporation (Jaynes) on 26 May 2009 to design and build an unmanned aircraft 

systems operations facility at Creech Air Force Base, Indian Springs, Nevada. Jaynes 

Corporation, ASBCA No. 58385, 13 BCA ~ 35,311 at 173,348. Jaynes claimed that the 

government improperly rejected certain pipe to be used in a fire sprinkler system. In our 

7 May 2013 decision the Board found "[t]he government changed the contract when it 

rejected appellant's initial pipe submittal. Appellant is entitled to recover its costs 

associated with the change, plus CDA interest on that amount from the date of receipt of 

the claim by the contracting officer." Jaynes, 13 BCA ~ 35,311 at 173,353. We 

sustained the appeal on entitlement and remanded the matter to the parties to determine 

quantum. Id. The parties were unable to agree on quantum and on 1 April 2014 we 

docketed appellant's request that the Board determine quantum as ASBCA No. 59234. 

Jaynes claims increased costs of $56,305 plus CDA interest from 20 June 2012 

(app. br. at 2; app. reply hr. at 7). Although the government challenges certain profit 

and Jaynes' failure to credit the government with salvage value of the rejected pipe, it 

does not dispute the accuracy of the itemized costs that Jaynes presents or the 20 June 

2012 date. While the government admits that it "must pay Jaynes reasonable costs 
related to what this constructive change caused Jaynes in damages" (gov't br. at 1 ), it 

makes several arguments in its defense of quantum that we briefly discuss. 

Jaynes' Quantum Numbers 

Jaynes' 20 June 2012 certified claim is in the amount of $56,305. Jaynes, 

13 BCA ii 35,311 at 173,352. This amount is based on Southland Industries, Inc., 

Jaynes' pipe subcontractor, calculation of the cost of the replacement Wheatland1 pipe 

of$50,579.70 (app. br. at 2, ex.Bat 5of11). This amount included a 17% mark-up for 

"Margin" (app. br., ex.Bat 5of11). Appellant included an affidavit from Mr. Nicolas 

Sfeir, VP Southland Industries, stating that a "mark-up" of 17% margin was their normal 

rate for similar government work (id. at 2of11). We interpret margin to include both 

overhead and profit. 

Appellant takes Southland's $50,579.70 and calculates its claim as follows: 

Cost for Material (Schedule 40 Pipe) 

Appellant's Overhead and Profit (10%) 

Appellant's Bond and Insurance 

Total 

{App. br. at 2, ex.Bat 5of11) 

Adjustments to Jaynes' Quantum Numbers 

$50,579 

$ 5,058 

$ 668 

$56,305 

In his affidavit, Mr. Sfeir explains that the cost of materials amount of$28,221.39 

used above was an estimate and that the actual cost was $27,434.69. Therefore, the 

$50,579.70 must be reduced by $786.70 for a value of $49,793.00. The claim value is 

then changed as follows: 

Cost for Material (Schedule 40 Pipe) 

Appellant's Overhead and Profit (10%) 

Appellant's Bond and Insurance 

Total 

(App. br., ex.Bat 1 of 11, ex.Cat 13-16of16) 

$49,793.00 

$ 4,979.30 

$ 668.00 

$55,440.30 

1 The support for this amount states that it is for the rejected Allied pipe, but the invoices 

and Mr. Sfeir's affidavit establish that Southland used the Wheatland numbers 

(app. br., ex.Bat 1, 5of11). 

2 
Salvage Value of Rejected Allied Pipe 

Appellant states that the salvage value of the rejected Allied pipe is $1,295 

(app. br., ex.Bat 9of11). The government does not contest this amount, but contends 

that this amount should be credited to the government in the total quantum calculation. 

Appellant counters that it need not credit the government the salvage value of the pipe 

because the contract was a fixed-price contract and not a time and materials contract 

(app. reply br. at 3). Appellant provides no case precedent in support of this position 

and its cite to a FAR provision is unpersuasive. We agree with the government that it 

should receive a credit in the amount of $1,295 for the salvage value of the Allied pipe 

retained by appellant. The value of the claim then becomes $55,440.30 - $1,295.00 = 

$54,145.30. 

Unreasonable Profit 

The government points out that appellant includes 10% mark-up for its overhead 

and profit and that its subcontractor included a 17% mark-up in its calculation. We 

consider Jaynes' 10% for both profit and overhead reasonable. We accept Mr. Sfeir's 

assertion in his affidavit that 17% "mark-up" for overhead and profit is Southland's 

usual rate and therefore consider it reasonable. 

Design Costs 

The government objects to Southland including $400 in "Design Impact" costs 

associated with the replacement Wheatland pipe (app. br., ex.Bat 5of11). 

The government contends it should be responsible for this amount because "Jaynes, 

however, was already obligated under the contract to design the system and has been 

paid for the design" (gov't br. at 5). The government overlooks Southland's 4 May 

2012 letter that explains the design time was spent on material submittals (app. br., ex. B 

at 4 of 11 ). We find the $400 spent on submittals for government approval of the 

replacement pipe reasonable. 

Rejected Allied Pipe 

The government makes several arguments2 based on the idea that since the 

government rejected the Allied pipe before Jaynes purchased it, Jaynes caused its own 

damage. We agree with appellant's characterization of this argument as "absurd" 

{app. reply br. at 4). The government never had the right to reject the Allied pipe that 

was fully in conformance with contract requirements. The government, primarily 

ACO Caskie, was wrong on 2 December 2011, wrong on 2 February 2012, wrong on 

10 April 2012, wrong on 3 May 2012, wrong on 4 May 2012 and wrong on 8 May 2012. 

2 Arguments D and E at government brief pages 5 to 7. 

3 
Jaynes, 13 BCA ~ 35,311 at 173,349-52, findings 4-9, 12. The government was 

consistently and persistently wrong and we will not shift the fault to appellant. 

The Government's Cost Difference Argument 

The government's final argument is that the proper measure of damages is "the 

reasonable cost to perform the work as originally required and the reasonable cost to 

perform the work as changed" (gov't br. at 7). While this premise may be an accurate 

description of the computation of an equitable adjustment under the Changes clause, the 

government's argument does not follow this principle in that it suggests that the damage 

simply be the difference in the cost of the Allied pipe and the Wheatland pipe when 

appellant, due to the government's change had to buy both pipes. We reject this method 

of calculating damages because it would result in Jaynes paying for both the Allied pipe 

and the Wheatland pipe and recovering only the difference in cost which is certainly not 

an equitable adjustment. 

Quantum Decision 

Jaynes was entitled to use the Allied pipe and since it was required to replace the 

Allied pipe with Wheatland pipe, Jaynes is entitled to recover its increased costs 

associated with the constructive change of$54,145.30 plus CDA interest from 20 June 

2012. 

CONCLUSION 

Jaynes is entitled to $54,145.30 plus CDA interest from 20 June 2012. 

Dated: 19 May 2015 

RICHARD SHACKLEFORD 

Administrative Judge 

Vice Chairman 

Armed Services Board 

of Contract Appeals 

4 

Administ tive Judge 

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. 59234, Appeal of Jaynes 

Corporation, rendered in conformance with the Board's Charter. 

Dated: 

5 

JEFFREY D. GARDIN 

Recorder, Armed Services 

Board of Contract Appeals