NOTE: This disposition is nonprecedential.

United States Court of Appeals 

for the Federal Circuit ______________________ 

M.E.S., INC.,

Appellant,

v.

JOHN MCHUGH, SECRETARY OF THE ARMY,

Appellee.

______________________ 

2012-1457, -1466

______________________ 

Appeal from the Armed Services Board of Contract 

Appeals in Nos. 56349, 57074, Administrative Judge 

Monroe E. Freeman, Jr.

______________________ 

Decided: January 15, 2013 

______________________ 

MICHAEL H. PAYNE, Cohen Seglias Pallas Greenhall & 

Furman, of Philadelphia, Pennsylvania, for appellant. Of 

counsel was JOSEPH A. HACKENBRACHT, JR. 

DANIEL B. VOLK, Trial Attorney, Commercial Litigation Branch, Civil Division, United States Department of 

Justice, of Washington, DC, for appellee. With him on the 

brief were STUART F. DELERY, Acting Assistant Attorney 
2 M.E.S., INC. v. ARMY

General, JEANNE E. DAVIDSON, Director, BRYANT G. SNEE, 

Deputy Director. 

______________________ 

Before DYK, MOORE, and WALLACH, Circuit Judges.

PER CURIAM.

M.E.S., Inc. appeals a decision by the Armed Services 

Board of Contract Appeals (“Board”) denying M.E.S.’s 

claims for equitable adjustments under a construction 

contract. The Board found that M.E.S. had failed to 

present sufficient evidence to support the two claims at 

issue in this appeal. We affirm. 

BACKGROUND

On September 29, 2001, the U.S. Army Corps of Engineers (“Corps”) awarded M.E.S. a $10.3 million firmfixed-price contract to design and build a fitness center at 

McGuire Air Force Base in New Jersey. The scheduled 

duration of the contract was 720 days, with a planned 

completion date of November 4, 2003. The project was 

repeatedly delayed, for reasons ranging from unusually 

severe weather to the discovery of unexpected quantities 

of asbestos in the existing structure. The Corps agreed to 

postpone the contract completion date twelve times, 

extending its duration by 345 days and awarding M.E.S. 

$626,469 in additional compensation. Three of the modifications were issued unilaterally by the Corps, and most of 

the remaining, bilateral modifications included a clause 

reserving M.E.S.’s right “to request additional compensation for the delay and impact costs, as well as any adjustment to the Overhead charged.” J.A. 3. Though M.E.S. 

disputes it, at least one modification appears to have 

included an allowance for additional home office overhead 

accrued by M.E.S. as a result of the delay. The work was 

substantially completed on October 14, 2004. 
 M.E.S., INC. v. ARMY 3

M.E.S. submitted five claims for equitable adjustments to the Corps’ contracting officer, totaling 

$1,250,597.33 (later amended to $1,593,949). The contracting officer denied each of the claims, and M.E.S. 

appealed to the Board. The Board sustained two of the 

appeals, awarding M.E.S. $105,286.03 (consisting of 

$97,908.70 for 155 days of additional field office overhead 

and $7377.33 for rental and installation of temporary 

bleachers, including profit and fourteen percent overhead), and denied three others. M.E.S. has appealed two 

of those denials.

In the first of the appealed claims (the “cost overrun 

claim”), M.E.S. sought $575,113 in cost overruns related 

to thirteen work activities, plus profit and overhead. 

M.E.S. sought compensation on two theories: first, that 

government-caused delays had created inefficiencies and 

increased M.E.S.’s material and labor costs, and second, 

that the government had constructively accelerated the 

project by denying M.E.S. additional time extensions. 

M.E.S. sought to recover the entire difference between the 

actual cost of each activity, including seven percent profit

and fourteen percent overhead, and the projected value of 

the activity as included in its contract bid. The Board 

rejected this claim, finding that M.E.S. “ha[d] failed to 

prove that the claimed increased [cost] over and above the 

‘as-bid’ amounts . . . was caused by government-directed 

acceleration or . . . government delays.” J.A. 11; see also

J.A. 14 (noting that M.E.S. had “failed to establish a 

causative connection between the delays and the alleged 

increased costs claimed”).

In the second claim (the “overhead claim”), M.E.S. 

sought $459,845 in “additional Home Office Overhead 

Costs” for the added duration of the contract. J.A. 12 

(quotation marks omitted). M.E.S. arrived at this figure 

by multiplying 210 days of allegedly government-caused 
4 M.E.S., INC. v. ARMY

delay1 by a daily allocable home office overhead rate of 

$2189.74.2 The Board rejected this claim, too, finding 

that:

None of these alleged dollar amounts [relied on by 

M.E.S. to calculate its daily rate] are supported in 

the evidentiary record by a [government] audit 

report, or in the absence of such report, by testimony or affidavit of the accountant preparing the 

claim or copies of the pertinent financial statements . . . prepared contemporaneously in the 

regular course of business, or other persuasive 

substantiating accounting documents. Moreover, 

nowhere in the [M.E.S.] calculation is there any 

allowance for home office expense paid in the 

price adjustments previously granted in the modifications for compensable government delays.

J.A. 13. The Board also found “no persuasive evidence 

that [M.E.S.] was required to remain on standby and/or 

was unable to shift its resources to other un-impacted 

work.” J.A. 12.

1 The 210 “delay days” did not include the additional extensions to which M.E.S. alleged that it was 

entitled in its cost overrun claim, but which it never 

received. 

2 M.E.S. calculated this daily rate by dividing 

its 2004 revenue from the contract ($3,971,284) by its 

total revenue for the year ($4,359,551); multiplying this

fraction by its total home office overhead for the year 

($692,303); and dividing the result by the number of days 

it worked on the contract during 2004 (288). In its original claim, M.E.S. provided a separate daily rate for each 

of the four years during which it worked on the contract; 

before the Board, however, it sought to be compensated 

for the entire delay at the substantially higher 2004 rate.

 
 M.E.S., INC. v. ARMY 5

M.E.S. timely appealed the Board’s disposition of 

these two claims, and we have jurisdiction under 28 

U.S.C. § 1295(a)(10).

DISCUSSION

This court may set aside the Board’s determination on 

a question of fact only if it is “fraudulent, arbitrary, or 

capricious; . . . so grossly erroneous as to necessarily 

imply bad faith; or . . . not supported by substantial 

evidence.” 41 U.S.C. § 7107(b)(2). A determination is 

adequately supported if it is based on “such relevant 

evidence as a reasonable mind might accept as adequate 

to support a conclusion.” E.L. Hamm & Assocs. v. England, 379 F.3d 1334, 1338 (Fed. Cir. 2004).

I. The Cost Overrun Claim

A. The delay theory

A contractor who seeks compensation for costs allegedly caused by government-imposed delays “has the 

burden of proving the fundamental facts of liability and 

damages.” Wilner v. United States, 24 F.3d 1397, 1401 

(Fed. Cir. 1994). Here, the Board found “no persuasive 

and particularized evidence . . . establishing the nature 

and extent of specific interferences or inefficiencies and 

how they materially increased [M.E.S.’s] cost,” and concluded that “[M.E.S.] ha[d] failed to prove that the [cost 

overruns] w[ere] caused by . . . compensable government 

delays.” J.A. 8, 11.

On appeal, M.E.S. points to testimony by its president 

and owner, George Makhoul, recounting the delays it 

experienced and tying them to a few specific cost escalators such as material and labor cost inflation and difficulty working in cold weather. M.E.S. has not attempted to 

quantify the specific additional costs directly attributable 
6 M.E.S., INC. v. ARMY

to any particular item, and instead has asserted that all

its overruns on the thirteen activities, measured relative 

to the cost estimates developed for its bid, were caused by 

the delays. Substantial evidence therefore supports the 

Board’s conclusion.

B. The acceleration theory

Constructive acceleration occurs “when the government requires the contractor to adhere to the original 

performance deadline set forth in the contract even 

though . . . excusable delay[s] . . . entitle the contractor to 

a longer performance period.” Fraser Constr. Co. v. United 

States, 384 F.3d 1354, 1361 (Fed. Cir. 2004). To prove 

such a claim, the contractor must prove “that the government insisted on completion of the contract within a 

period shorter than the period to which the contractor 

would be entitled.” Id. Here, the Board found that M.E.S. 

“has not proven that it was entitled to any extension of 

the contract performance time beyond [October 14, 2004].” 

J.A. 10.

The contractor’s theory was that it was entitled to additional delay days and that the government compelled it 

to complete by October 14, 2004, thus leading to an acceleration claim. The evidence cited by M.E.S. on appeal to 

demonstrate that it was legally entitled to a later completion date, beyond October 14, 2004, consists of two letters, 

from August and September 2004, in which the contractor 

stated, in a conclusory manner, that the completion date 

was January 2005 or later. See J.A. 207, 1115. The Board 

found the contractor’s evidence insufficient to “prove[] 

that it was entitled to any extension of the contract performance time beyond [October 14, 2004].” J.A. 10. Substantial evidence supports the Board’s finding that M.E.S. 

“has failed to prove that the [cost overruns] w[ere] caused 

by government-directed acceleration.” J.A. 11.
 M.E.S., INC. v. ARMY 7

II. The Overhead Claim

M.E.S. claims that the Board erred in denying its 

claim for additional home office overhead. As a general 

rule, home office overhead damages are calculated in 

government contract cases by applying a fixed percentage 

to the additional direct costs included in the contract 

modification or in the claim for equitable adjustment. See 

C.B.C. Enters., Inc. v. United States, 978 F.2d 669, 674-75 

(Fed. Cir. 1992). Indeed, the Corps included an allowance 

for home office overhead in at least one of the modifications it issued to M.E.S., and M.E.S. was awarded a fixed 

percentage for overhead in one of the two claims allowed 

by the Board. M.E.S.’s second claim on appeal does not 

rely on this theory, however.3 Rather, the overhead claim 

relies on the so-called Eichleay formula, derived from the 

Board’s decision in Eichleay Corp., ASBCA No. 5183, 60-2 

BCA ¶ 2688, aff’d on reconsid., 61-1 BCA ¶ 2894.4

In certain limited circumstances, this court has approved the use of the Eichleay formula, which relies on a 

daily allocable overhead rate, as an alternative to the 

fixed-percentage method. In order to recover Eichleay

3 M.E.S. did include a fixed percentage of overhead in the damages it sought in its first claim on appeal, 

the cost-overrun claim. 

4 In its reply brief, M.E.S. asserts for the first 

time that the damages it seeks are not Eichleay damages, 

but rather “insufficient compensation for its general and 

administrative expenses associated with contract modifications.” Reply Br. 26. The formula it used to calculate its 

alleged damages is clearly based on Eichleay, however, 

and it previously claimed to be “using the Eikley [sic] 

formula,” see J.A. 70. In its briefs, M.E.S. refers interchangeably to “overhead” and “G&A,” or “general and 

administrative,” expenses. 

 
8 M.E.S., INC. v. ARMY

damages, however, a contractor must demonstrate, among 

other elements, that “performance of the contract [was] 

suspended or significantly interrupted” by the government, and not merely that the period of contract performance was extended and an additional stream of direct 

costs created. See Interstate Gen. Gov’t Contractors, Inc. v. 

West, 12 F.3d 1053, 1056-58 (Fed. Cir. 1993); see also 

Cmty. Heating & Plumbing Co. v. Kelso, 987 F.2d 1575, 

1581-82 (Fed. Cir. 1993), modified on reh’g, 1993 U.S. 

App. LEXIS 31453 (Fed. Cir. May 21, 1993); C.B.C. Enters., 978 F.2d at 674-75. The requirement that the work 

on the contract must have been suspended or interrupted

is one facet of the more general requirement that the 

government must have placed the contractor on 

“standby.” See Interstate, 12 F.3d at 1056-57 & n.5; see 

also P.J. Dick, Inc. v. Principi, 324 F.3d 1364, 1371-73 

(Fed. Cir. 2003) (outlining the elements of the standby 

requirement). Here, the Board found “no persuasive 

evidence that [M.E.S.] was required to remain on 

standby” during any of the additional time periods, J.A. 

12, and we find no reason to disturb this finding.5

Even if M.E.S. in this claim had proceeded on the theory that it is entitled to home office overhead as a fixed 

percentage of the additional direct costs caused by the 

5 On appeal, M.E.S. points to evidence showing 

that it had no other contracts during most of the time that 

it was engaged by the Corps. The “standby” element 

requires a contractor to show more than just that delays 

rendered it idle; it must also show that the government 

required it to remain idle, or that circumstances otherwise 

rendered mitigation “impractical.” See Daly Constr., Inc. 

v. Garrett, 5 F.3d 520, 522 (Fed. Cir. 1993); see also Cmty.

Heating, 987 F.2d at 1582 (requiring the contractor to 

“demonstrate[] that it could not have taken on any other 

jobs during the contract period”). 

 
 M.E.S., INC. v. ARMY 9

contract modifications, M.E.S. could not prevail. M.E.S. 

has failed to present, at any stage of the litigation, a 

sufficient calculation of such damages. The Board found 

M.E.S.’s home office overhead calculation to be deficient 

both for its lack of substantiation and for its failure to 

account for those home office overhead amounts already 

included by the Corps in its price adjustments. Substantial evidence supports the Board’s determination that “the 

alleged increased home office expense incurred for compensable government delays is not proven in any 

amount.” J.A. 13.

Thus, substantial evidence supports the Board’s findings that M.E.S. failed to prove that its overruns were 

caused by government delays; that any “acceleration” of 

the contract took place; or that M.E.S. is entitled to 

additional compensation for home office overhead.

AFFIRMED