Method of Calculating Recovery Of Extended Home Office Overhead
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.
