Board Rejects Measured Mile Damages Calculation

In a recent decision, the Armed Services Board of Contract Appeals rejected a large portion of a contractor’s damages claim based on the Board’s determination that the contractor’s measured mile calculation did not measure productivity. In King Aerospace, Inc., ASBCA 60933, the Board evaluated the quantum of King’s claim for additional costs related to its performance of a contract for aircraft maintenance and repair. King submitted a certified claim to the Contracting Officer in 2009 for $22.6 million. Included within this claim, King sought $6,418,176 for the condition of the aircraft and $2,054,297 for the condition of Government-furnished parts. In a prior hearing, the Board ruled King was entitled to damages due to Government misrepresentations and problems with Government-furnished property.

In its quantum ruling, the Board cited testimony that King had the ability to track contemporaneously its increased costs related to the condition of the aircraft and Government-furnished parts. The Board also determined King possessed time cards and other records that could have been used to determine, or at least support, its increased actual costs. Instead, King supported its damages claim with a measured mile calculation, which compares periods of impacted work with periods of work that were unaffected by changes. King’s measured mile attributed all labor costs above its average costs to the Government. The Board held King’s measured mile calculation, which was based on a total cost theory, to be “unconvincing” and awarded King $3,640,794 plus $191,574 for REA preparation costs.

The Board’s holding is a good reminder that claims based on actual costs are generally worth the time and effort to prepare, as other methods of estimating damages, such as the total cost method and the measured mile approach are viewed with scrutiny by Boards and Courts.