Opinion ID: 659890
Heading Depth: 3
Heading Rank: 2

Heading: Wickham's Arguments

Text: 17 In this case the ratio of billings from the delayed contract to total billings is about 34%. Thus, under the Eichleay formula, 34% of Wickham's overhead expense, incurred during the contract period, is allocable to the contract. However, Wickham claims that approximately 80% of its home office activity and, therefore, 80% of its home office overhead expense was devoted to the Albany contract during the delay period. 6 Thus, Wickham seeks compensation for 80% of the home office overhead costs actually incurred during the delay because, according to Wickham, they are directly attributable to the Albany contract. Wickham argues the Eichleay calculation is unfair because it is less than the actual percentage of overhead devoted to the delayed project. Therefore, per Wickham, the Eichleay formula should be used only when overhead costs cannot otherwise be accurately determined. In short, Wickham seeks to completely avoid the Eichleay formula. 18 Wickham's argument fails for a fundamental reason--Wickham confuses direct and overhead costs. As the Board noted, overhead costs benefit and are caused by the business as a whole, not any one project. Thus, overhead costs are never attributable to or caused by any one contract. Wickham's claim to directly attributable home office overhead is a non sequitur. If a cost is directly attributable to a contract, then it is a direct cost, not an overhead cost. 19 Wickham attempts to blur the distinction between overhead and direct costs simply to avoid the clear rule that the Eichleay formula governs the calculation of unabsorbed overhead. A contractor who wishes reimbursement for a cost directly attributable to a contract must submit it as a direct cost. In a case such as this, where a contractor and the government have already consistently treated a cost as overhead, we will not upset their agreement by ourselves treating that cost as a direct cost and ordering reimbursement as such. In any event, we would lack jurisdiction under the CDA to do so because there were no contracting officer and board decisions denying such costs as direct costs. Therefore, there is no fact finding or ruling for us to review; and, of course, as an appellate court we may not make fact findings or initial rulings, generally or in the circumstances of this case. 20 Responding to Wickham's argument, the Board said, [i]t makes no difference what the actual overhead effort was. We are here dealing with theoretics which produce approximations because more precise results cannot be obtained. 92-3 BCA p 25,040 at 124, 818, 1992 WL 88326. In this statement the Board refers to the concept that the Eichleay formula calculates the unabsorbed overhead by a pro-rata share out of necessity. The Eichleay pool contains only overhead costs, those which cannot be attributed to a particular contract and which benefit and are caused by the business as a whole. To accurately determine how much unabsorbed overhead was caused by any one contract is impossible, even though Wickham claims to have done so. 7 21 Unlike direct costs which are incurred only because of a particular contract, overhead costs are incurred even if the contractor had not undertaken a particular project. Ordinarily, all home office expenses fall into the overhead category because the contractor must operate a home office in order to seek work and administer contracts whether or not he is performing a particular contract. For instance, a contractor must provide for the home office space, pay for utilities pertaining to that space, pay licensing fees and officer's salaries even when the contractor has no current contracts and is merely seeking work. 22 Given this established definition of overhead costs, the very premise of Wickham's argument is incorrect. Wickham contends that because 80% of its home office activity related to the Albany contract, 80% of its home office costs is directly attributable to that contract. Wickham fails to recognize that a cost is directly attributable to a contract only when the cost is caused by the contract. The Albany project did not cause 80% of Wickham's home office costs because Wickham would have incurred the individual cost components of the home office overhead whether or not it ever undertook the Albany project. For instance, the Albany project did not cause 80% of Wickham's home office rent even if 80% of the activity in that office related to the Albany project. 8 Because Wickham would have incurred the same or similar rental expense in any event, no portion of the rent is directly attributable to the Albany project.