(Editor’s Note.  The following case reminds of us of the total cost method option of recovery on claims and the grounds for precluding its use.)

In quantifying its claim, the contractor sought a recovery of $3.2 million based on the total cost method which allows a contractor to recover the difference between its costs of performance and its bid price.  The judge alluded to a longstanding reluctance to use the method because its use assumes all costs were reasonable, the bid was accurate and reasonably computed and the contractor is not responsible for increases in cost.  To use the method, the court said a contractor must show (1) it is impossible or impracticable to prove actual losses (2) its bid or estimate is realistic (3) its actual costs are reasonable and (4) it was not responsible for the added expenses.  The contractor could produce no relevant records, saying they were damaged by vandalism.  Their absence indicated no proof of losses, no evidence of a reasonable bid,  could not “remotely show what actual costs were” and no proof of lack of responsibility for increased costs could be demonstrated (Cavalier Clothes, Inc. vs. United States, Fed. Cl., No 95-713C).

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