Free Exhibit List - District Court of Federal Claims - federal

Case 1:01-cv-00459-GWM

Document 56

Filed 08/08/2005

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IN THE UNITED STATES COURT OF FEDERAL CLAIMS ____________________________________ ) ) ) ) Plaintiff, ) ) vs. ) ) THE UNITED STATES OF AMERICA ) ) Defendant. ) ____________________________________) INTERNATIONAL DATA PRODUCTS CORPORATION

No. 01-459C (Judge George W. Miller)

PLAINTIFF'S PRETRIAL BRIEF AND MEMORANDUM OF CONTENTIONS OF FACT AND LAW In its decision issued on March 28, 2005, this Court concluded that the United States was obligated to terminate plaintiff International Data Products Corp. ("IDP")'s "Desktop V" or "DTV" contract in its entirety, and was not permitted, as it did, to terminate the contract partially and to demand that IDP continue to provide warranty services. It is undisputed that the Government demanded these warranty services without authority, and that IDP, therefore, provided them without obligation. The only issue now left for this Court is the damages IDP suffered as a result. IDP's position is that these damages equal the amount IDP expended to provide those services. IDP submits that this amount is no less than $375,269, plus interest. This amount is the amount IDP expended subsequent to August 31, 1999 ­ the date of the Small Business Administration's decision directing termination of the IDP contract -- for third party warranty work, shipping costs, and employee costs. The basis for, and underlying evidence of, these

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damages are summarized below. Statement of Facts Plaintiff Expects to Prove and Plaintiff's Position with Respect to Facts on which Defendant is Expected to Rely to Prove Entitlement to $375,269 At trial, IDP expects to prove the following: 1. The Government was obligated under 15 U.S.C. § 637(a)(21)(A) to terminate IDP's Desktop V contract in May 1998 when SteelCloud bought the stock of IDP. See 15 U.S.C. § 637(a)(21). Instead of terminating the contract, however, the Department of the Air Force requested a waiver of the obligation. USAF 2341-2342. The Administrator of the United States Small Business Administration denied the waiver request on July 31, 1998. IDP appealed, and more than a year later, on August 31, 1999, the United States

Small Business Administration's Office of Hearings and Appeals ruled in a final decision that the Administrator's denial of the waiver was legally correct. See In the Matter of International Data Products Corp., SBA-OHA Dkt. No. BDPW-98-10-14-05. 2. Thereafter, DAF delayed issuing a termination, USAF 3443, 3449, 3450; tried to convince IDP to agree to continue the warranty services, USAF 3449; and ultimately issued only a partial termination in October 1999. USAF 3418. Beginning and continuing after August 1999, DAF consistently demanded that IDP continue to provide the government warranty service. E.g., USAF 3418. 3. Between August and October 1999, IDP demanded that the Government officially terminate the contract. USAF 3437, 3246, 3431. In October 1999, after the Government partially terminated the contract in response to IDP's demands for full termination, IDP attempted to resolve the issue of the Government's demands for continued warranty services issue through a series of conversations, letters, email, and meetings. USAF 2

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3244-3246, 2584-2588, 2610. The Government proved by April 2000 that it would not budge on the matter. E.g., USAF 2950. The costs, however, were threatening the very survival of IDP and its parent, and the company was left with no choice but to stop the work, which it did, in April 2000. USAF 3319-3320. 4. During the eight month period between August 1999 and April 2000, IDP provided services with in house employees and third party warranty service firms. It incurred costs for repair components and for their shipments, and for its personnel and third party service firms. 5. The costs IDP incurred during the period between August 1999 and April 2000 included $126,990 in employee costs, and no less than $247,958 in third party costs. 6. IDP will prove these costs through a combination of testimony and documentation. The documents will show the total costs incurred during the period at issue. The testimony will show the percentage of these costs that relate to the warranty work. These percentages are not self-evident from the documentation, because IDP did not maintain or retain the documents necessary for this type of evidentiary showing. For example, IDP records will show that it paid $365,764 to the third party service firms that provided DTV warranty services during the period at issue. IDP has the billing and payment information, but not the billing backup which ties the work specifically to DTV services. IDP's personnel, however, will testify that all the work done by these providers can be allocated on a percentage basis to the DTV contract, so that not less than $248,279 of the $365,764 is recoverable in this action. 7. DCAA audited the employee costs and approved the employee time, tracking it back to

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IDP's records. DCMA 00353, 00400. These amounts are not in serious dispute. 8. As to the service firms, DCAA claimed that it did not have information to audit these amounts. IDP asserts that it provided that information to DCAA initial auditor, and some of the backup for the information is now largely missing. Sufficient documentation still exists, however, to prove the amounts due.

We expect that the Government's responses to the foregoing will be that the evidence is insufficient to demonstrate the amounts expended because there is an incomplete paper record. In this regard, there are no employee time sheets, and some of the third party documentation is missing. IDP believes that the documentation and testimony are sufficient, however, to prove its case based on the civil burden of proof, i.e., a preponderance of the evidence. Statement of Issues of Fact and Law to be Resolved by the Court It appears that the only issue is the following: What are IDP's costs during the period August 1999 through April 2000 which IDP expended to provide warranty services? Statement of Legal Principles Plaintiff Believes are Applicable and Response to Defendant's Anticipated Legal Position The legal issues in this matter seem to revolve around the amount of proof which IDP can muster. IDP believes that its evidence of damages is sufficient on the basis of the normal civil standard of preponderance of the evidence. The Government apparently believes that unless the evidence is clear, essentially, beyond any doubt, not even beyond a reasonable doubt, IDP cannot recover. The law in this regard is straightforward. A contractor may prove its costs using the best evidence available under the circumstances. The preferred method is through the submission of 4

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actual cost data. Cen-Vi-Ro of Texas, Inc. v. United States, 210 Ct. Cl. 684, 685, 538 F.2d 348 (1976) (table)). When these data are unavailable, however, courts have held that, "the ascertainment of damages . . . is not an exact science, and where responsibility for damage is clear, it is not essential that the amount thereof be ascertainable with absolute exactness or mathematical precision." Elec. & Missile Facilities, Inc. v. United States, 189 Ct. Cl. 237, 257, 416 F.2d 1345, 1358 (1969) (citations omitted). See also Seaboard Lumber Co. v. United States, 308 F.3d 1283, 1302 (Fed. Cir. 2002); Confederated Tribes of Warm Springs Reservation of Oregon v. United States, 248 F.3d 1365, 1372 (Fed. Cir. 2001). Thus, a plaintiff will meet its burden of proving damages if it "furnishes the court with a reasonable basis for computation, even though the result is only approximate." Wunderlich Contracting Co. v. United States, 173 Ct. Cl. 180, 199, 351 F.2d 956, 968 (1965). See also Daly Constr., Inc. v. Garrett, 5 F.3d 520, 522 (Fed. Cir. 1993); Capital Elec. Co. v. United States, 729 F.2d 743, 746 (Fed. Cir. 1984); Addison Miller, Inc. v. United States, 108 Ct. Cl. 513, 557, 70 F. Supp. 893, 900, cert. denied, 332 U.S. 836 (1947); Jackson v. United States, 12 Cl. Ct. 363, 366-67 (1987). As the law makes clear, when "relevant records [are] not available," the Court may estimate the damages. Hi-Shear Tech. Corp. v. United States, 55 Fed. Cl. 418, 422-23 (Ct. Cl. 2003). In arriving at the estimate, courts may use the "jury verdict" method in situations where (1) there is clear proof that the contractor was injured, (2) there is no more reliable method of computing damages, and (3) the evidence is sufficient to make a fair and reasonable approximation of the damages. Raytheon Co. v. White, 305 F.3d 1354, 1367 (Fed. Cir.), reh'g denied (2002); WRB Corp. v United States, 183 Ct. Cl. 409, 425 (1968). The jury verdict method is appropriate whenever "the evidence adduced is sufficient to enable a court or jury to

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make a fair and reasonable approximation." Specialty Assembling & Packing Co. v. United States, 174 Ct. Cl. 153, 184, 355 F. 2d 554, 572 (1966). See River Construction Corp. v. United States, 159 Ct. Cl. 254, 271 (1962); Western Contracting Corp. v. United States, 144 Ct. Cl. 318, 320, 333-36 (1958); Brand Investment Co. v. United States, 102 Ct. Cl. 40, 45, 58 F. Supp. 749, 751 (1944), cert. denied, 324 U.S. 850 (1945). These rules have been applied in circumstances similar to those here. For example, in the underlying United States Claims Court decision in Dawco Constr., Inc. v. United States, 18 Cl. Ct. 682 (1989), aff'd in part, 930 F.2d 872 (Fed. Cir. 1991), rev'd on other grounds, Reflectone, Inc. v. Dalton, 60 F.3d 1572 (Fed. Cir. 1995), the trial judge discussed the conditions under which the jury verdict might be useful, as follows: "Notwithstanding that a judge of this court is the sole trier of fact, the court has held that a jury verdict approach to the computation of damages is proper when it is not possible for the plaintiff to prove actual damages, but sufficient information exists to enable the court to arrive at a fair approximation of the damages." Id., 18 Cl. Ct. at 698 (citations omitted). Similarly, in S.W. Elec. & Mfg. Corp. v. United States, the United States Court of Claims applied the jury verdict method because, "when confronted with the clear liability of defendant and the plaintiff's efforts to present all available evidence on damages, the [court] was under a heavy obligation to provide compensation. While there was 'uncertainty as to the extent of the damage, . . . there was none as to the fact of damage.'" S.W. Elec. & Mfg. Corp. v. United States, 228 Ct. Cl. 333, 351, 655 F.2d 1078, 1088 (1981) (quoting Joseph Pickard's Sons Co. v. United States, 209 Ct. Cl. 643, 650, 532 F.2d 739, 743 (1976)). Here, it is clear that the Government's improper demand for warranty work after the Desktop V contract should have been terminated imposed unrecovered costs on IDP. These

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costs were the costs for its personnel, the costs it paid out of pocket to third parties, and the costs for parts. No one now can segregate the costs of parts. The costs of the personnel and third party warranty costs can be calculated, however, with sufficient precision to justify an award of damages in the amount of $375,269. Conclusion For the foregoing reasons, IDP will ask the Court to award it $375,269 in damages in this matter. Respectfully submitted, s/Edward J. Tolchin Edward J. Tolchin Fettmann, Tolchin & Majors, P.C. 10509 Judicial Drive, Suite 300 Fairfax, Virginia 22030 (703) 385-9500 (703) 385-9893 (Fax) Counsel for Plaintiff Certificate of Service I hereby certify that on this 8th day of August 2004, the foregoing Plaintiff International Data Products Corp.'s Pretrial Brief and Proposed Findings of Uncontroverted Facts was filed electronically with the Court and served on all counsel of record by the same means. s/Edward J. Tolchin Edward J. Tolchin

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Case 1:01-cv-00459-GWM

Document 56-2

Filed 08/08/2005

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IN THE UNITED STATES COURT OF FEDERAL CLAIMS ____________________________________ ) ) ) ) Plaintiff, ) ) vs. ) ) THE UNITED STATES OF AMERICA ) ) Defendant. ) ____________________________________) INTERNATIONAL DATA PRODUCTS CORPORATION

No. 01-459C (Judge George W. Miller)

PLAINTIFF INTERNATIONAL DATA PRODUCTS CORPORATION'S LIST OF EXHIBITS AND WITNESSES Exhibits Plaintiff International Data Products Corporation intends to offer at trial for case-in-chief or rebuttal purposes the following exhibits. Exhibits marked with an * will be offered if the need arises: 1. Summary of Third Party and Employee expenses totaling $375,269 2. Documentation of Employee hours worked - DCAA document numbers 0014 through 0018 3. Labor calculation for September 1999 through April 2000 4. Astronautics summary billing totaling $216,626 4A. Astronautics billing backup totaling $216,626 5. Accutek summary billing totaling $8,471 5A. Accutek billing backup totaling $8,471

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6. Fedex summary billing totaling $140,667 6A. Fedex billing backup totaling $140,667 7. Claim summary -- third party maintenance totaling $248,279 8. * Payment details (accounting documentation) showing third party payments 9. * Payroll details showing employee salaries and fringes 10. * DCAA Audit Report No. 6151-2000H17100101 (DCMA 00344-00414)* 11. * Itemization of third party service calls by contract opened August 1999 through April 2000 (with back up) 12. * Itemization of third party service calls by contract closed August 1999 through April 2000 (with back up) 13. Slemons letter dated 9/14/99 (USAF 3450-3451) 14. * SBA Decision dated August 31, 1999 15. Email from DAF to IDP dated 9/16/99 (USAF 3449) 16. DAF memo to IDP counsel dated 9/22/98 (USAF 2275) 17. Letter from IDP counsel to DAF dated 9/23/99 (USAF 3437) 18. Internal DAF memo dated 10/7/99 (USAF 3253) 19. Memo from IDP to USAF dated 12/10/99 (USAF 2829) 20. DAF meeting memo (USAF 3335) 21. * Email string (USAF 2946 through2957) 22. * Email string (USAF 2990 through 2991) 23. * Email string (USAF 3129 through 3134) 24. * Memo for the Record (USAF 3244)

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25. * Email string (USAF 3245 through 3246) 26. * Email string (USAF 2584 through 2588) 27. * Email string (USAF 2598 through 2602) 28. * Email string (USAF 2610) 29. * Email string (USAF 2807) 30. * Email string (USAF 2859 through 2860) 31. * Email string (USAF 2905 through 2906) 32. Letter from IDP to DAF (USAF 3319 through 3320) 33. Termination notice dated October 8, 1999 (USAF 3418) 34. * Email string (USAF 3431-3432) 35. * Email string (USAF 3443) 36. IDP reserves the right to offer any exhibits identified by the Government to which IDP does not object.

Witnesses Plaintiff International Data Products Corporation intends to call at trial for case-in-chief or rebuttal purposes the following witnesses. Names marked with an * will be called if the need arises: Kevin Murphy ­ Mr. Murphy will testify concerning the payments made to the third party vendors and the payroll costs of employees performing work in the DTV contract. He also will testify concerning the methodology used to assign percentages to DTV work. He also will testify concerning the attempts made to resolve matters with DAF, discussions between IDP and

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Case 1:01-cv-00459-GWM

Document 56-2

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DAF, documents provided to DCAA, financial impacts of the warranty work on IDP and its parent, and the inability of IDP to reach a resolution with DAF thus leading to the April 2000 work stoppage. Expected duration of testimony: 3 hours David Costello ­ Mr. Costello will testify concerning the work performed by the third party vendors and employees, and the methodology used to assign percentages to DTV work. Expected duration of testimony: 1 ½ hours * Darryl Oyer ­ Mr. Oyer is an expert in accounting and may testify, if necessary, concerning the correct accounting treatment for the employee and third party payments. If called, expected testimony ­ 2 hours * Ed Spear ­ Mr. Spear is a former officer of IDP who may testify concerning the work performed by the third party vendors and employees, and the methodology used to assign percentages to DTV work. If called, expected testimony ­ 1 hour * Edwin Blake ­ Mr. Blake may testify concerning the collection and collation of the accounting information at issue. If called, expected testimony ­ 1 hour * Cynthia Kopec - Ms. Kopec may testify concerning the collection and collation of the accounting information at issue and discussions with DCAA personnel. If called, expected testimony ­ 1 hour

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Case 1:01-cv-00459-GWM

Document 56-2

Filed 08/08/2005

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IDP reserves the right to call any witness identified by the Government to which IDP does not object. Respectfully submitted, s/Edward J. Tolchin Edward J. Tolchin Fettmann, Tolchin & Majors, P.C. 10509 Judicial Drive, Suite 300 Fairfax, Virginia 22030 (703) 385-9500 (703) 385-9893 (Fax) Counsel for Plaintiff Certificate of Service I hereby certify that on this 8th day of August, 2005, the foregoing Plaintiff International Data Products Corp.'s List of Exhibits and Witnesses was filed electronically with the Court and served on all counsel of record by the same means. s/Edward J. Tolchin Edward J. Tolchin

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