In its IDIQ contract where delivery orders for various services would be separately awarded and bid and proposal costs were explicitly not to be considered as direct costs chargeable to a specific order, Link asserted the cost analysis conducted by the government was faulty and sought damages for B&P costs and lost profit. The Board granted Link the B&P costs stating the contract prohibitions against direct B&P costs were “irrelevant” because they concerned how to charge B&P costs if incurred not how to charge damages that Link wanted to recover.  However the Board denied lost profits quoting a prior case holding that award of lost profit required that there would have been profit but for the breach where here the government rationally showed the delivery order would have nonetheless been given to the awardee (L-3 Commc’ns Corp., Link Simulation & Testing, ASBCA 54920).

A commentator on the case addressed some circumstances where contractors can and cannot recover lost profits.  Generally a party can recover lost profit that will place it in as good a position as it would have been in had there been no breach of contract but it is not entitled to be put in a better position had the breach not occurred. Examples provided are that anticipatory profits are allowed if a requirements contract diverts work to another company or anticipatory profits are proper even if the government contracted to purchase its requirements from a limited number of contractors although no one contractor was guaranteed to receive an order.  Courts have recognized that by considering the total amount of diverted work and other relevant factors can a court reasonably determine that amount of actual business and profits the company would have lost as a result of the breach. However, in another case, the Court declined to extend the right of anticipatory profits to the government’s breach of a requirement contract that provided negligent estimates of the requirements in the RFP.

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