Nicon, Inc. v. United States

51 Fed. Cl. 324, 2001 U.S. Claims LEXIS 261, 2001 WL 1649828
CourtUnited States Court of Federal Claims
DecidedDecember 21, 2001
DocketNo. 99-982C
StatusPublished
Cited by4 cases

This text of 51 Fed. Cl. 324 (Nicon, Inc. v. United States) is published on Counsel Stack Legal Research, covering United States Court of Federal Claims primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Nicon, Inc. v. United States, 51 Fed. Cl. 324, 2001 U.S. Claims LEXIS 261, 2001 WL 1649828 (uscfc 2001).

Opinion

OPINION

FIRESTONE, Judge.

This action arises from a contract between plaintiff, Nicon Inc. (“Nicon”), and the Department of the Army, Corps of Engineers, Mobile District, to perform repair work at MacDill Air Force Base in Florida. Contract performance never began. The contract was terminated for convenience before a notice to proceed was issued. Following the termination, Nicon submitted a settlement proposal and was reimbursed for its direct costs [325]*325and associated overhead and profit. Nicon’s additional claim for unabsorbed home office overhead was, however, denied. The present issue before the court is whether Nicon is entitled to unabsorbed home office overhead for the period between the date of the contract award and the termination for convenience. The matter is before the court on Nicon’s motion for partial summary judgment on Count I of its complaint and the government’s cross-motion for partial summary judgment.

FACTS

The following background facts are not in dispute unless otherwise noted. On March 30, 1998, the Corps of Engineers (“the COE” or “the government”) awarded to Nicon Contract No. DACA01-98-C-0033 for $1,423,624 to conduct repairs of Dorm 371 at MacDill Air Force Base in Hillsborough County, Florida. On April 3, 1998, a bid protest was filed with the Comptroller General of the United States by a disappointed bidder. In accordance with 31 U.S.C. § 3553 (year), the government suspended action on the contract pending the outcome of the protest. Thereafter, on April 23,1998, the government notified Nicon that a bid protest had been filed and that Nicon should “take no further actions as to the preparation and forwarding of submittals” in connection with the contract. Nicon wrote back to the COE on April 24 stating that it had “ceased any further mobilization efforts.” No performance or payment bonds were ever issued to Nicon on the contract.

On July 15, 1998, the bid protest was dismissed by the Comptroller General. However, the COE did not direct Nicon to proceed. After several months of waiting for the notice to proceed, Nicon, on October 14,1998, wrote to the COE complaining about the delay. The COE did not respond and Nicon again wrote to the COE seeking permission to proceed. Finally, on January 12, 1999, the COE terminated the contract for convenience.

Nicon submitted a Termination Settlement Proposal seeking reimbursement of its direct costs and associated overhead and profit. In addition, Nicon claimed delay damages, including the unabsorbed home office overhead costs for the period of time between contract award and the notice of termination at issue here. Nicon’s settlement proposal and the underlying financial data were audited by the Defense Contract Audit Agency.

On October 25, 1999, the COE’s contracting officer issued his decision granting Ni-con’s claim in part and denying it in part. The contracting officer agreed to pay Nicon $187,757 in direct costs, related overhead, and profit, but denied Nieon’s claims for delay damages. The contracting officer stated with respect to Nicon’s claim of $387,513.86 for 291 days of alleged unabsorbed home office overhead:

[I]t is my determination, as Contracting Officer, that the use of the Eichleay formula 1 by Nicon in determining unabsorbed overhead is not appropriate. During the contract period Nicon did not generate any contract billings____ The Eichleay formula is the only method for determining unabsorbed overhead costs ____The application of all components of the Eichleay formula is essential .... [The Eichleay formula requires proof of contract billings, days of performance, and days of delay.] Since no contract billings were generated, there can be no fixed overhead costs allocable to the terminated contract using the basic Eichleay formula.

The contracting officer further stated that Nicon had failed to establish the prerequisites for Eichleay damages. The two prerequisites to application of the Eichleay formula are: (1) that the contractor be on standby; and (2) that the contractor be unable to take on other work. The contracting officer determined that Nicon had, in fact, taken on 200 contracts during the period in question.

[326]*326THE PRESENT LITIGATION

On December 8,1999, Nicon filed the present action in this court seeking the delay damages denied by the contracting officer. On July 20, 2000, Nicon filed a motion for partial summary judgment in which it argued that it is entitled to judgment on Count I of its complaint regarding its claim for Eichleay pre-termination home office overhead expenses. Nicon contends that it has satisfied the prerequisites for Eichleay damages. In support of its motion, Nicon filed the declaration of Joseph D. Lopez, President of Nicon, who states that Nicon began contract performance preparations after receiving notification of the contract award. According to the declaration, after the government suspended performance of the contract, Nicon was never relieved of its obligation to stand ready to commence contract performance. For 291 days, Nicon was allegedly required by the government to remain on standby, and for this reason was unable to take on other work. Lopez states that, had Nicon been given the notice to proceed, Nicon could have completed the contract within the 271 days originally provided for in the contract.

The government filed a cross-motion for partial summary judgment on July 6, 2001, in which it argues that Nicon has no legal right to unabsorbed home office overhead for the period between contract award and contract termination. According to the government, Nicon is not entitled to unabsorbed home office overhead because it never received a notice to proceed, and thus never started “performance” of the contract. The government contends that the Federal Circuit has made plain that the Eichleay formula requires the contractor to establish actual days of contract performance and actual contract billings. Here, because Nicon did not bill under the contract and did not have any days of contract performance, applying the Eichleay formula to Nicon’s facts results in a zero recovery.

The government explains that the Eichleay formula is intended to reimburse contractors where the government causes delay during the contract performance period. Where, as here, the contractor never began contract performance, there is no basis for use of the Eichleay formula. The government also contends that Nicon cannot meet the eligibility criteria for unabsorbed home office overhead, in any event. According to the affidavits filed by the government, Nicon was not on standby and was able to take on additional work.

Following the filing of supplemental briefs, oral argument was held on December 13, 2001.

SUMMARY JUDGMENT

Summary judgment is appropriate where there are no genuine issues of material fact in dispute and the moving party is entitled to summary judgment as a matter of law. See Rule 56(c) of the United States Court of Federal Claims; Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). Although the parties dispute whether Nicon satisfied the eligibility criteria for the use of the Eichleay

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Related

Nicon, Inc. v. United States
331 F.3d 878 (Federal Circuit, 2003)
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Bluebook (online)
51 Fed. Cl. 324, 2001 U.S. Claims LEXIS 261, 2001 WL 1649828, Counsel Stack Legal Research, https://law.counselstack.com/opinion/nicon-inc-v-united-states-uscfc-2001.