The Damages Report
When Can Lost Future Profits be Recovered on a Terminated Government Contract?
ASBCA finds Contractor allowed to seek reimbursement for costs of keeping employees ready during COVID-19 lockdowns.
By James L. McGovern, CPA/CFF, CVA, Fellow
February 2024
Most government contracts are covered by the Federal Acquisition Regulations (“FAR”) and include a termination-for-convenience clause which governs the costs a contractor is entitled to recover when the government exercises its right to terminate the contract for its convenience.
However, a recent Armed Services Board of Contract Appeals (“ASBCA”) decision found that in situations where a government contract is not covered by the FAR and does not include an express termination-for-convenience clause, a contractor’s recovery for the government’s termination of its contract should be calculated using commercial breach of contract principals which includes the profits the contractor would have earned but for the government’s termination.
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Hire Your Damages Expert Early
(and the Federal Circuit agrees?)
By Ronald A. Bero, Jr., CPA/ABV, CVA, CFF
January 2022
Just like hiring an architect before you build your new home, hiring a damages expert before you build your case makes sense. It may just provide you and your clients with damages related insights early on that can help guide portions of your case. A recent ruling by the U.S. Court of Appeals for the Federal Circuit (the “Federal Circuit”) may also highlight the importance of doing so.
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Why Are Lost Wages Certain?
They Aren’t.
By Ronald A. Bero, Jr., CPA/ABV, CVA, CFF
April 2021
I remember years ago my first wrongful death, lost wage (w-2 employee wage) claim. The economist quantified lost wages through the Social Security Administration’s retirement age and “discounted” them back to the present using the total offset method.
I understood the concept of the total offset method. What bothered me, however, was the idea that wages, through retirement age, were as certain (riskless) as a U.S. Government Bond.
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Proximate Cause, Foundation and Alignment
By Ronald A. Bero, Jr.,
CPA/ABV, CVA, CFF
March 2021
While damage experts are usually aware of connecting damages with proximate cause, I am sometimes surprised by how misguided some experts' understanding of it is. Damage experts and attorneys should know that any claimed damages must be proximately caused by the alleged wrongdoing(s). The concept of proximate cause dates back to at least 1858.
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Sunk Costs, Capital Obsolescence and COVID-19
By Ronald A. Bero, Jr., CPA/ABV, CVA, CFF
January 2021
In the Capitolism Newsletter, I learned that Josh Hawley berated Walmart in a Twitter Tweet: “… for the pathetic wages you pay your workers as you drive mom and pop stores out of business.”
Mr. Hawley is ignoring the concept of sunk costs and perhaps knows most of us forget the concept often… I can’t sell my house – I have too much sunk into it … The “mom and pop stores” are the sunk costs of the populist right. Mom and pop stores equal Capital Obsolescence as spotlighted and amplified by the COVID crisis, the rule of sunk costs dictates, we ignore them and move on.
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COVID-19 Impacts Discount Rates, Which Impacts Some Damage Calculations
By Ronald A. Bero, Jr., CPA/ABV, CVA, CFF
August 2020
Clearly linkable to COVID-19, Duff & Phelps has made two adjustments to components used in calculating discount rates since February 2020. A discount rate is used when valuing a business or quantifying future lost profits. The future benefits stream (e.g., cash flow) needs to be brought back to its present value (e.g., as of a valuation date or a date of wrongdoing) via a discount rate commensurate with the risks associated with the benefits stream. Adjustments to discount rates will directly impact damage calculations that involve future damages. Through its Cost of Capital Navigator, Duff & Phelps publishes data that companies use to determine appropriate discount rates.
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COVID-19 Impacts Damage Calculations — as may any major macroeconomic factor
By Ronald A. Bero, Jr., CPA/ABV, CVA, CFF
August 2020
I had a discussion with an attorney recently wherein the topic of COVID-19 and foreseeability arose. In the hypothetical being discussed, the claimed wrongdoing occurred mid-2019 and its economic impact continues today. In mid-2019, COVID-19 was not reasonably foreseeable, so my initial thoughts included the consideration of minimizing or correcting for the COVID-19 economic impact. COVID-19 is novel (you caught the pun there, reader, didn’t you? )
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MLC Intellectual Property, LLC v. Micron Technology, Inc.
On June 11, 2020, Jim McGovern, a Senior Director of The BERO Group, along with David Long of Essential Patent LLC, gave a presentation to the IPO Damages Committee. Jim and David discussed damages issues addressed in MLC Intellectual Property, LLC v. Micron Technology, Inc., No. 3:14-cv-03657 (N.D. Cal.), No. 2020-1413 (Fed. Cir.).
In 2014, MLC Intellectual Property, LLC (“MLC”) sued Micron Technology Inc. (“Micron”) for patent infringement of U.S. Patent No. 5,764,571 (the “ ‘571 patent”). The ‘571 patent generally related to non-volatile memory devices. MLC alleged that certain Micron flash memory products, that could be used in consumer products including tablet computers, personal music players, smart phones and other wireless devices, infringed the ‘571 patent.
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