Construction Law

Method of Calculating Recovery Of Extended Home Office Overhead

By Michael Payne

In a decision earlier this month, the Armed Services Board of Contract Appeals reiterated that the recovery of unabsorbed home office overhead, based on the Eichleay formula, is for "a stand-by of an uncertain duration." The Board held that where a contractor is entitled to a compensable contract time extension for additional work, the contractor is entitled to recover extended home office overhead.  Extended home office overhead is calculated as a fixed percentage markup of costs incurred during the contract time extension. Fru-Con construction Corporation, ASBCA No. 55197, 55248, October 4, 2007. For a discussion on the Eichleay formula and the recovery of unabsorbed home office overhead, see our earlier article.

Full post as published by Federal Construction Contracting Blog on October 30, 2007 (boomark / email).