## Facts

- Wickham Contracting Company, Inc. entered a fixed-price GSA contract (July 28, 1977) to renovate the Albany, New York Federal Post Office and Courthouse for $2,968,000, with a 365-day performance period ending August 15, 1978.
- During performance, GSA issued multiple delay orders due to structural concerns, and substantial completion did not occur until April 10, 1981 (969 days late).
- Wickham maintained a small home office staff during the delay period and performed only two other major contracts (West Point and Foley Square), which were managed mainly on site, while the Albany project was managed mainly from the home office.
- GSA conceded some liability for unabsorbed home office overhead and awarded approximately $333,000 using the Eichleay formula.
- Wickham sought a larger recovery, arguing that about 80% of its home office overhead during the relevant period was attributable to the Albany project and should be recovered on that basis rather than via Eichleay allocation.

## Issues

1. Whether a contractor that qualifies for Eichleay recovery may use a project-specific “actual allocation” method instead of the Eichleay formula to recover unabsorbed home office overhead.
2. Whether the overhead “pool” used in the Eichleay calculation may be enlarged by including costs that are properly treated as direct costs.
3. Whether the compensable delay period may be extended based on an asserted earlier achievable completion date without proof the contractor would have finished by that date.
4. Whether the contractor may recover interest-type amounts for the use of equity capital or borrowed funds during the delay absent express statutory or contractual authorization.

## Decision

- The Federal Circuit affirmed the GSBCA on all issues.
- The court held the Eichleay formula is the only proper method for calculating unabsorbed home office overhead when Eichleay prerequisites are satisfied; no alternative formula is permitted.
- The court held the contractor may not expand the Eichleay overhead pool by reclassifying direct costs as overhead.
- The court upheld the Board’s refusal to extend the compensable delay period because Wickham did not prove it would have completed by its projected earlier date.
- The court affirmed denial of interest-type recovery for the use of equity capital or borrowed funds because such recovery against the United States requires express authorization.

## Legal Principles

- When a contractor meets the prerequisites for unabsorbed home office overhead recovery due to government-caused delay, the Eichleay formula is mandatory and exclusive.
- Home office overhead is treated as a common cost allocated across the contractor’s business; it is not recoverable through a project-specific allocation method in place of Eichleay.
- The Eichleay overhead pool cannot be enlarged by including costs properly characterized as direct, job-specific expenses.
- A contractor seeking compensation for delay beyond the period found by the tribunal must prove, with evidence, that it would have completed by the asserted earlier date.
- Interest (or functionally equivalent compensation for use of capital) is not recoverable against the United States without express statutory or contractual authorization.

## Conclusion

The Federal Circuit required use of the Eichleay formula as the exclusive measure of unabsorbed home office overhead for qualifying government-caused delays, barred inflating the overhead pool with direct costs, rejected a longer delay period absent proof of earlier completion, and disallowed interest-type recovery without explicit authorization.


Wickham Contracting Co. v. Fischer, 12 F.3d 1574 (Fed. Cir. 1994)