ASBCA 60129

ARMED SERVICES BOARD OF CONTRACT APPEALS Appeal of - ) ) Voxtel, Inc. ) ASBCA No. 60129 ) Under Contract Nos. FA8750-05-C-0041 et al. ) APPEARANCES FOR THE APPELLANT: Eric Nackarud, Esq. Counsel Marcus W. Eyth, Esq. Davis Wright Tremaine LLP Portland, OR Kate H. Kennedy, Esq. Davis Wright Tremaine LLP Seattle, WA APPEARANCE FOR THE GOVERNMENT: Samuel W. Morris, Esq. DCMA Chief Trial Attorney Defense Contract Management Agency Chantilly, VA OPINION BY ADMINISTRATIVE JUDGE CATES-HARMAN Appellant Voxtel, Inc. (Voxtel) appeals from a final decision of the Defense Contract Management Agency (DCMA or government) administrative contracting officer (ACO) unilaterally establishing final overhead rates. In that decision, the ACO found that Voxtel included unallowable costs related to independent research and development (IR&D), rent, executive compensation, and depreciation in its indirect cost rate proposals for fiscal years (FY) 2007-2009. We have jurisdiction pursuant to the Contract Disputes Act (CDA), 41 U.S.C. §§ 7101-7109. We sustain in part and deny in part the appeal. FINDINGS OF FACT Background 1. Voxtel is a small business that develops and manufactures advanced 3D imaging technologies (compl. ¶ 3). Voxtel’s primary customer since its inception in 1999 has been the U.S. government. For the years in question (FY 2007-2009), its work was almost exclusively federal contracts, including Small Business Innovative Research (SBIR) contracts. (Tr. 2/18-19) Voxtel is organized as a subchapter S corporation, and its sole owner is its president and chief executive officer, George Williams (tr. 2/12). 2. For purposes of this appeal, the relevant contracts include one contract awarded to Voxtel in 2005 by the United States Air Force Research Laboratory (No. FA8750-05-C-0041), another awarded in 2008 by the Office of Naval Research (No. N00014-08-C-0101), and a small business and innovation research (SBIR) contract with the Naval Surface Warfare Center, issued in 2006 (No. N00178-06-C3024) (R4, tabs 1-2, 5). Contract Requirements 3. Each of the contracts incorporated by reference Federal Acquisition Regulation (FAR) 52.216-7, ALLOWABLE COST AND PAYMENT (DEC 2002), 1 which imposes obligations upon both the government and contractors (R4, tabs 1 at 16, 2 at 42, 5 at 83). 2 This clause requires the government to pay the contractor as work progresses in amounts determined to be allowable by the contracting officer and in accordance with the version of FAR subpart 31.2 in effect on the date of the contract. See FAR 52.216-7(a)(1). This includes “[p]roperly allocable and allowable indirect costs, as shown in the records maintained by the Contractor for purposes of obtaining reimbursement under Government contracts . . . .” FAR 52.216- 7(b)(1)(ii)(F). 4. FAR 52.216-7 also requires contractors to submit to the Defense Contract Audit Agency (DCAA) an adequate final indirect cost rate proposal (ICP) based upon the contractor’s actual cost experience for that particular fiscal year. Those ICPs are due within six months of the expiration of each fiscal year. See FAR 52.216- 7(d)(2)(i)-(ii). 5. Except for the SBIR contract, the relevant contracts incorporate by reference DFARS 252.215-7002, COST ESTIMATING SYSTEM REQUIREMENTS, which generally requires contractors to have an acceptable cost estimating system and disclose it to the government (R4, tab 1 at 18, 5 at 87). 1 One of the contracts renumbers this clause as 52.216-07 (R4, tab 1 at 16). 2 The parties numbered pages in their Rule 4 submissions with a prefix of letters and/or leading zeros. We have dropped the prefix and leading zeros and just cite the numeric page number. 2  Voxtel’s FY 2007-2009 ICPs 6. Voxtel failed to submit its ICPs for FY 2007-2009 within the required time frame set forth in FAR 52.216-7(d)(2)(i)-(ii). DCAA informed Voxtel in nine separate letters between 2008 and 2013 that its ICPs were overdue (R4, tab 14).