Government’s Counterclaim Against Quimba

As I mentioned in my last post, in December of 2013, over 18 months after this litigation began, the Government filed a Counterclaim against Quimba. In his brief, DOJ Attorney Paul ‘P.’ David Oliver made some interesting and unique assertions. Specifically, he wrote:

 “6. The compensation costs at issue are the compensation costs that Quimba incurred in connection with the Contract. Although Quimba reported to the IRS total costs of $114,400 in 2004 for its employees, not all of those costs are compensation costs that relate to the Contract. In addition to the Contract, plaintiff had two other contracts with the Government in 2004, both of which were firm fixed price contracts. Plaintiff’s Final Incurred Cost Proposal identifies the labor costs that it incurred in connection with the Contract and the two firm fixed price contracts. Based upon plaintiff’s Final Incurred Cost Proposal, 54% of the plaintiff’s total labor costs for 2004 relate to the Contract; the remainder relate to the two firm fixed price contracts, which are not at issue. Thus, for purposes of applying FAR 31.205-6 (2003), compensation costs to which that FAR provision applies is $61,560, which is 54% of $114,400.

7. As such, no more than $61,560 of Quimba’s compensation costs for 2004 are allowable under FAR 31.205-6(b)(2)(i)(2003).”

In case that little piece of linguistic gymnastics, in our opinion solely designed to confuse the Court, also confused you, let me explain. The good attorney Oliver is arguing that they should be allowed to use the wages we reported to the IRS and divide that by the number of contracts we had during the Fiscal Year 2004 to determine how much of our costs (not wages) is attributable to the CPFF contract.

If your reaction is What the Franklin, then you are not alone. We had the same exact reaction. Of course, please do let me know if you understand the logic in attorney Oliver’s position, particularly if you can tie it to GAAP or CAS in any shape or form. Oh, another minor detail. DOJ attorney Paul ‘P.’ Davis Oliver seems to clearly lack even the most basic understanding of how costs are computed – and not just in the Government contracting business. For example, his logic here clearly ignores the fact that the $114K he is quoting is Quimba’s costs before indirect rates would be added. Unless this is yet another evidence of attorney Oliver’s lack of expertise in any topic remotely related to cost accounting, here he is arguing that Quimba is not entitled to collect indirect rates on the wages paid to it’s employees.

We are dying to see how the judge reacts to this little gem of an argument. If the Court buys this, we can’t wait until DCAA is shut down as the result!!! This would follow from a decision to uphold the above argument because if we could simply divide the wages a company paid during the fiscal year by the number of Contracts to determine costs that can be allocated to each contract, then who needs DCAA? If that happens, not only the entire contracting community will celebrate, we will put up attorney Paul ‘P.’ Davis Oliver for some sort of a national medal because he will have saved the taxpayers the cost of funding DCAA’s 10,000+ employees, not to mention all their operating costs!

In addition to the above, in our Response, we pointed out to the judge that every time the Government proposes a new amount Quimba supposedly owes, the Government comes up with a new final number. In fact, we listed 6 or 7 different “Final Final” Sum Certain amounts the good attorney Oliver and his cohort, attorney Srikanti ‘Sri’ Schaffner of DCMA have come up with since the whole ridiculous process started. What attorney Oliver’s position did was in fact further solidify my personal opinion that we are dealing with two incredibly dishonorable organizations, and in fact individuals, who are determined to continue to persecute a small business, and its citizen founders, to defend the ruling of one incompetent contracting officer, ACO Craig M. Studley. In my opinion, an honorable organization, and indeed individual, would have by now accepted responsibility for Craig Studley’s incompetence, apologized, made amends and moved on – particularly since Craig Studly under oath admitted that he made a mistake, that he knew about it shortly after he made the mistake, but did not correct the COFD in violation of the law. We’ll of course discuss Craig Studley’s deposition soon in this blog.

The Government’s Motion to Amend is here, their proposed Counterclaim is here, our Response to the Motion is here, and their Reply is here. As of this post, we are awaiting Judge’s decision.

People in this post:
Bob Dourandish – bob@quimba.com
Paul ‘P.’ Davis Oliver, Esq. (DOJ Attorney) – P.Davis.Oliver@usdoj.gov
Srikanti ‘Sri’ Schaffner, Esq. (DCMA Attorney) – Srikanti.Schaffner@dcma.mil
Craig M. Studley – DCMA ACO – Retired on for-life taxpayer-funded Pension and for-life taxpayer-funded Healthcare. No email on file.