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Court Of Appeals Expounds On "Eichleay" Recovery Delay-damages; Overhead

Wednesday, July 02, 2003 03:08 pm

Court Of Appeals Expounds On "Eichleay" Recovery Delay-damages; Overhead

The U.S. Court of Appeals for the Federal Circuit has elaborated on the "standby" requirement for recovery of unabsorbed home office overhead under the Eichleay formula. The Court also provided the most explicit description of the elements of Eichleay recovery issued to date.

The Department of Veterans Affairs awarded a contract to P. J. Dick Incorporated (PJD) to construct a clinical addition to a medical center in Ann Arbor, Michigan. During contract performance, the VA issued a series of change orders increasing the contract price by more than five percent and extending the performance period by 260 days. PJD signed off on these changes while reserving the right to seek delay damages under the Suspension of Work clause. The VA agreed to a stipulation stating that to the extent PJD could prove suspension, it could recover field and home office overhead at stated daily rates "without the need for future proof of costs or damages."

The VA Board of Contract Appeals ruled that PJD was not entitled to recover unabsorbed home office overhead under the Eichleay formula because it had been able to continue work on o [...]

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