## United States Court of Appeals for the Federal Circuit

04-1119

SINGLETON CONTRACTING CORPORATION, Appellant,

v.
Francis J. Harvey, SECRETARY OF THE ARMY, Appellee.

Harvey K. Hess, Jr. , of Kitty Hawk, North Caroli na, argued for appellant. Of counsel was Arlie O. Pritchard, Jr. , of Williamsburg, Virginia. Carolyn J. Craig , Trial Attorney, Civil Division, Commercial Litigation Branch, United States Department of Justice, of Washington, DC, argued for appellee. With her on the brief were Peter D. Keisler , Assistant Attorney General, David M. Cohen , Director, and Harold D. Lester, Jr. , Assistant Director. Of counsel on the brief was Major Anissa Parekh , Trial Attorney, Office of the J udge Advocate General, Department of the Army, of Arlington, Virginia. Appealed from: Armed Servic es Board of Contract Appeals

## United States Court of Appeals for the Federal Circuit

04-1119 SINGLETON CONTRACTING CORPORATION, Appellant,

v. Francis J. Harvey, SECRETARY OF THE ARMY, Appellee.

___________________________ DECIDED: January 26, 2005

___________________________ Before NEWMAN, CLEVENGER, and BRYSON, Circuit Judges

. BRYSON, Circuit Judge

. In September 1993, Singleton Contracting Corporation entered into a contract with the Department of the Army to do construc tion work at two Army Reserve Centers. The contract contained a clause requiring Singl eton to buy and maintain specified types and amounts of insurance “during the entire period of performanc e under this contract.” The same clause required Singleton to provide the contracting office r with proof of the required insurance “prior to commencement of work.” The cont ract contained another clause requiring Singleton to furnish a certific ate of insurance at the preconstruction conference. The preconstruction conference was hel d on November 2, 1993. During the conference, it became apparent that the government’s pl ans were flawed and that04-1119 2 construction could not begin until the gov ernment provided Singleton with new construction drawings. In addition, Singleton fa iled to provide a cert ificate of insurance at the conference. Singleton’ s representative stated that Singleton would submit proof of insurance “within the next few days,” but Singleton never did so. On February 15, 1994, the contracting officer informed Singleton that the governm ent would not allow Singleton to begin work at either Reserve C enter until Singleton subm itted the required certificate of insurance. Si ngleton responded that it was not obligated to furnish proof of insurance until ten days after the gov ernment allowed work to begin. In the meantime, Singl eton began submitting invoices requesting payment for material and bonds purchased for the contract. The contracting officer refused to pay the invoices on the ground that no proof of insurance had been submitted. Finally, on August 8, 1994, the contracting officer termi nated the contract for the convenience of the government. At that point, the gov ernment had not provi ded Singleton with the revised drawings and specification c hanges, Singleton had not provided proof of insurance, and none of the cont ract work had been performed. Singleton submitted proposals for settlem ent of the termination. Singleton sought settlement costs, the costs of mate rial and bonds it procured for the contract, and overhead costs. The Defense Contract Audit Agency conducted an audit and issued a report on Singleton’s claims. The audi t focused on the amount that Singleton claimed it was owed for unabsor bed overhead, but it did not ma ke a determination as to whether Singleton was entitled to the overhead. The auditor first found that Singleton’s total amount of overhead duri ng the period of the contract should be reduced from $108,125 to $88,343. More importantly, the audi tor found that the contract accounted04-1119 3 for only 13 percent of Singleton’s revenue in 1993 and 1994. Applying that fraction to Singleton’s total overhead, the auditor determined that only $11,485 of overhead should be allocated to the government contrac t. Singleton subsequently demanded that the contracting officer make a decision with respect to the audit report. When the contracting officer did not make a timely decision, Singleton appealed to the Armed Services Board of Contract Appeals from the deemed denial of its claims. Before the Board, Singleton sought to recover overhead costs, the costs of material purchased for the contract, and post-termination settlement costs. Singleton Contracting Corp. , ASBCA No. 51692 (Aug. 8, 2003). R egarding the claim for overhead for the period during which per formance of the contract wa s delayed, the Board found that Singleton was responsible for the delay . The Board ruled that the government’s failure to provide new drawings was merely a concurrent cause of the delay and that Singleton therefore was not ent itled to unabsorbed overhead under Nicon, Inc. v. United States , 331 F.3d 878 (Fed. Cir. 2003). The Board further found that Singleton had not presented sufficient evidence to justify an award of overhead on any other theory of recovery. The Board failed to specifically address Singleton’s claims for the costs of materials purchased for the contract and the post-termination settlement costs.
I In pressing its case for unabsorbed overhead resulting from the contract delay, Singleton essentially asks that we find that the government was solely responsible for the delay. Singleton bases its argument on two al ternative theories. Fi rst, it claims that it was not required to provi de proof of insurance before begi nning work. Therefore, it asserts, the lack of insuranc e cannot form the basis for attributing the delay to the04-1119 4 company. Second, Singleton contends that if it was required to provide proof of insurance before beginning work, it was requir ed to do so only at the preconstruction conference. Because the conference was suspended and never rescheduled, Singleton argues that its obligation to produce proof of insurance never matured. Singleton’s first theory relies on a clause entitled “Insurance—Work on a Government Installation,” which states that Singleton must offer proof of insurance “before commencing work under this contract.” The contract also specifies that Singleton must begin work within ten days of receiving the government’s notice to proceed. Singleton theref ore claims that it was required to provide insurance only after the government directed it to begin work. The problem with this argument is that t he contract also cont ains a clause that explicitly required Singleton to furnish a certificate of insurance during the preconstruction conference. The two provisions are easily reconciled: the first specifies that the contractor must s ubmit a certificate of insur ance before beginning work, while the second specifies exactly when proof of insurance must be provided during that prework period, i.e., at the preconstruction conference. Accordingly, we agree with the Board that Singleton was requir ed to present proof of insur ance at the preconstruction conference. Alternatively, Singleton assert s that it did not fail to fu rnish proof of insurance at the preconstruction conference because the business at the conference was never concluded. Singleton argues that the gover nment’s construction drawings were so defective that it was necessary to schedul e another conference before construction could begin. For support, Singl eton points to the notes made by the government during04-1119 5 the meeting, which state t hat another preconstruction conf erence would be scheduled. Singleton contends that it c ould be held accountable for the delay only if it did not produce proof of insurance by the conclusi on of that second meet ing, because only then would it have failed to meet its obligati on to furnish proof of insurance at the preconstruction conference. Singleton’s argument is based on a stra ined reading of the contract. The contract provided that t he contracting officer would schedule a preconstruction conference and that Singleton w ould be required to produce proof of insurance at that time. The government was required to pr oduce adequate construction drawings at the same conference. The preconstruction c onference was held, but Singleton did not produce the required certific ate of insurance and the gov ernment did not produce the required drawings. The fact that neither party complied wit h its obligations as of the time of that conference does not mean that either one shoul d be excused for its default. If Singleton’s obligations did not mature on account of the need to schedule a new conference, then neither did t he government’s. The better inte rpretation of the contract is that both the gover nment and Singleton were required to comply with their obligations at the original preconstructi on conference and their failure to do so jointly caused delay in the project. The fact that it became necessary to schedule another conference does not mean that Singleton was freed from the requirement that it produce a certificate of insurance at the initially scheduled conferenc e. We therefore agree with the Board’s conclusion that Singleton’s delay “began on t he date of the pre-c onstruction conference when submittal of such proof [of insurance] was required.”04-1119 6 Singleton’s agreement at the preconstruction conference that it would provide proof of insurance “in the next few days” s uggests that Singleton was aware that the company was not in full compli ance with its obligations. Yet Singleton never cured its failure in that regard, even after subsequent requests by the government for the proof of insurance. If Singleton had provided that pr oof, it would have placed responsibility for the delay entirely on the shoulder s of the government. Instead, Singleton failed to do so and therefore was properly held jointly accountable with the government for the delay. See Nicon , 331 F.3d at 887. For that reason, Singleton is not entitled to reimbursement for its unabsorbed overhead duri ng the contract period.
II Singleton argues that it was entitled to overhead on its direct costs under the contract solely by reason of the termination for convenience. The government acknowledges that a contractor ma y receive overhead on its direct costs following a termination for convenience. The government also points out, however, that whenever the calculation of overhead is made under this method, very specific information is required from the cont ractor. As the gover nment auditor testified before the Board, this calculati on starts with the cont ractor’s total indirect costs for each fiscal year of the contract’s performance and divides that amount by the contractor’s total direct costs for that year to yield an “overhead rate.” The overhead rate is then multiplied by the total direct costs of the contract in questi on to arrive at the indirect costs that are allocable to t hat contract for that fiscal year. The problem is that Singleton never submitted evidence to the Boar d of the company’s total direct costs for04-1119 7 1993 and 1994. Thus, it was impossible for the Board to apply this formula and determine the amount of Singleton’s overhead t hat was allocable to the contract. Singleton admits that it never supplied the Board wit h the information needed to make the allocation calculation but contends that it is nonethele ss entitled to relief because of the unusual circumst ances of this case. Singleton bases its claim on the fact that during the pendency of the contract, it had no other business. Singleton argues that it is ther efore entitled to have all of its ov erhead for the contract period paid by the government. This li ne of reasoning, however, i gnores the possibility that Singleton had other contracts in 1993 and 1994, outside of the c ontract period. Indeed, the audit report states that Singleton had other contract re venue in both 1993 and 1994. Singleton’s argument also over looks the fact that the ca lculation of the company’s overhead costs was based on Singleton’s to tal overhead for 1993 and 1994, which was then multiplied by the fraction consisting of the proportion of the days in those years in which the contract was in effect. It would be unfair to let Singleton base its calculation of indirect costs on the overhead for the entire year, but to limit the direct costs to those experienced during a specific time period chos en by the contractor. Simply because the parties stipulated to the “total fixed overhead expenses for the contra ct period” does not entitle Singleton to the entirety of this “total fixed overh ead,” as Singleton suggests. To support that claim, Singleton re lies on the auditor’s statement before the Board that if a contractor has only one contract, the over head expenses during the contract period would be allocable to that contract. Howeve r, the auditor immediatel y clarified that if other contracts were under way during the cont ractor’s fiscal year, they would bear their share of the overhead. Singleton never presented evidence est ablishing either that it04-1119 8 had no other contracts during t he years in question or the amount of direct costs attributable to those other cont racts. Thus, the Board was never given the evidence it needed to address Singleton’s claims. Singl eton admitted as much during oral argument and suggested that we remand to t he Board for further proceedings. We see no reason to give Singleton a second opportunity to prove its case when it failed to take advantage of the first. We therefore affi rm the Board’s decision to deny overhead based on the termination for convenience.
III Singleton also appeals with regard to its cl aims for settlement costs and the costs of materials procured for the contract, plus pr ofit. Specifically, Singleton asks for $4,706 for settlement costs and $1,441 for the cost and profit on materials bought for the contract. Although the Board failed to rule on those claims, the government concedes that Singleton is owed that money. Accordi ngly, we reverse in part and direct that Singleton recover those expenses. AFFIRMED IN PART and REVERSED IN PART

.