Board of Contract Appeals
                    General Services Administration
                         Washington, D.C. 20405
 
 
 
                ________________________________________
 
                    GRANTED IN PART; DENIED IN PART;
                  DISMISSED IN PART: October 28, 1999
                ________________________________________
 
 
                            GSBCA 14296-COM
 
 
                       RAYTHEON STX CORPORATION,
 
                                                Appellant,
 
                                   v.
 
                        DEPARTMENT OF COMMERCE,
 
                                                Respondent.
 
        Daniel R. Allemeier of Raytheon STX Corporation, Malibu, CA,
   counsel for Appellant.
 
        Jerry A.  Walz, Fred Kopatich,  and Edward Weber,  Office of
   General Counsel, Department of  Commerce, Washington, DC, counsel
   for Respondent.
 
   Before Board Judges BORWICK, WILLIAMS, and GOODMAN.
 
   WILLIAMS, Board Judge.
 
        Appellant,  Raytheon   STX  Corporation   (Raytheon),  seeks
   $196,994,  representing  its  costs  arising  from  the   partial
   shutdown of Government operations due to the expiration of Fiscal
   Year 1996 funds  in December 1995.  Specifically, appellant seeks
   reimbursement  for   layoff  pay   of  its   employees  and   its
   subcontractors'  salary  costs  paid   or  potentially  owed   to
   employees for the period of the shutdown when they were unable to
   work.  Appellant invokes the Stop Work, Administrative Leave, and
   Changes  clauses of the cost-reimbursement contracts at issue, as
   well as the doctrine  of equitable estoppel.   Respondent alleges
   that reimbursement  is not warranted  because the shutdown  was a
   "sovereign  act"  which  would  relieve  the  Government  of  any
   liability under particular contracts,  and alternatively contends
   that  appellant  has  not  demonstrated  entitlement because  the
   employees performed no work during the shutdown.
 
        Although  the shutdown  was a  sovereign act,  we grant  the
   appeal in part, finding that the sovereign acts doctrine does not
   bar recovery since the cost-reimbursement contracts obligate  the
   Government  to bear  the  increased  costs  attributable  to  the
   shutdown which  are allocable  to the  contracts.   Specifically,
   because  the Government  closed  the  sites  of  performance  and
   stopped work for an uncertain  time frame but expected  appellant
   to maintain its work force  and resume work immediately after the
   shutdown,  appellant  is  entitled to  recover  its  employee and
   subcontractor salary costs actually paid during the shutdown.  We
   grant appellant's claim in  part in the  amount of $166,944.   We
   deny that portion  of the claim representing the  salary that one
   subcontractor potentially owes but has not paid to its employees.
   We dismiss appellant's  claim for delay damages in  the amount of
   $3084.24 because that claim was  never presented to a contracting
   officer.
 
                            Findings of Fact
 
   The Contracts and Subcontracts
 
        The National  Oceanic and Atmospheric  Administration (NOAA)
   operates and maintains  Geo Stationary Operational  Environmental
   Satellites  (GOES), which  provide continuous  coverage of  cloud
   conditions over the  Western Hemisphere.  Appeal  File, Exhibit 1
   at C-2.   Hughes STX  Corporation (HSTX), the predecessor  to the
   appellant, Raytheon, entered into four contracts with NOAA:
 
             Contract  No. 50-DDNE-0-00045  (Contract No.  45),
             dated September 27,  1990 (executed by  ST Systems
             Corporation, which  was later  part of  HSTX), for
             the development of products obtained from GOES-I/M
             series satellites.
 
             Contract  No. 50-DDNE-2-00029  (Contract No.  29),
             dated September 30,  1991 (executed by  ST Systems
             Corporation),   for   software   maintenance   and
             development for support of environmental satellite
             data processing.
 
             Contract  No. 50-DGNW-2-00054  (Contract No.  54),
             dated May 13,  1992, for  Systems Engineering  and
             Technical   Support  Services   (SETSS)  for   the
             National  Weather   Service  and   NOAA's  Systems
             Program Office.
 
             Contract No.  50-DDNE-4-00155 (Contract  No. 155),
             dated September 30,  1994 (executed by  HSTX), for
             services  in support  of  the Tiros-N  Operational
             Vertical Sounder (TOVS) and revised TOVS (RTOVS).
 
   First Set of  Stipulated Facts (July 15, 1998)  (Stipulations)   
   1-4; Appeal  File, Exhibits 1-4.   Contract Nos. 45, 29,  and 155
   were cost-plus-fixed-fee type  contracts.  Contract No. 54  was a
   cost-plus-award-fee type  contract, which had  no base fee.   Id.
   Because all actions relevant to this case occurred when HSTX held
   the contracts,  we refer to  the appellant  by that name  in this
   opinion.
 
   Contract No. 45
 
 
        Under Contract No. 45, appellant was required to develop and
   implement a  data processing  capability for  the generation  and
   distribution of atmospheric sounding  products from radiance data
   obtained  from  the  GOES-I/M  series  satellites,  and   provide
   technical  reports to  NOAA's  National Environmental  Satellite,
   Data and Information  Service (NESDIS).   Appeal  File, Exhibit 1
   at C-2 to C-3.   The Statement of  Work (SOW) of Contract No.  45
   detailed the complex software as well as the science required for
   contract performance, including atmospheric physics, mathematics,
   statistics,  meteorology, and radiative transfer theory.  The SOW
   continued:  "The science aspects require expert support involving
   state-of-the-art technology."  Id. at C-3.
 
        Paragraph  6.0 of Contract No. 45 required the contractor to
   furnish full-time personnel with education in computer science or
   physics,  mathematics, meteorology, or  astronomy to work on-site
   at Federal  Office Building  (FOB) No. 4  in Suitland,  Maryland.
   Appeal File, Exhibit 1  at C-11.  The Work Site  and Hours clause
   further  provided:    "The   contractor  shall  schedule  planned
   vacations so that  no more than twenty to  twenty-five percent of
   the  contractor force  is  absent  at any  time.   Office  space,
   telephones, office furniture, and  computer resources . . .  will
   be provided  by the  Government."  Id.   Paragraph  F.4 expressly
   required  all  services  furnished under  Contract  No. 45  to be
   performed at FOB No. 4 in Suitland.  Id. at F-2.
 
   Contract No. 29
 
        Contract No. 29 required appellant  to maintain and  develop
   software  supporting   operational  environmental satellite  data
   processing  within  NESDIS.    Appeal  File,  Exhibit 2  at  C-1.
   Contract  No. 29  was  also  to  be performed  at  FOB  No. 4  in
   Suitland, Maryland.   Id. at F-1.   Under clause G.7  in Contract
   No. 29,   HSTX   was   "authorized  to   use   on   a  no-charge,
   noninterference  basis  . . .  Government  owned  facilities   in
   Building 4 at Suitland."  Id. at G-6.[foot #] 1
 
        The  Statement of Work  for Contract No. 29  provided, "[I]n
   addition  to  the complex  software,  the  work  involves .  .  .
   mathematics,  statistics,  meteorology,   oceanography,  physics,
                                                                    
                   ----------- FOOTNOTE BEGINS ---------
 
        [foot #] 1 Although  paragraph   H.14  of   Contract  No. 29
   authorized the Government to direct personnel to perform software
   development  services  offsite,  there is  no  indication  in the
   record that  the Government exercised this option.   Appeal File,
   Exhibit 2 at H-7 to H-8.
 
                   ----------- FOOTNOTE ENDS -----------
 
 
   atmospheric physics, data  communications, and computer science."
   Appeal File,  Exhibit 2 at  C-3.  The  Statement of  Work further
   required the  contractor  to  provide  approximately  thirty-five
   "full  time scientists and programmers each having an educational
   background in computer science, atmospheric physics, meteorology,
   physics,  oceanography,  mathematics, statistics,  other  related
   physical sciences, or data communications."  Id.   The contractor
   was also required  to obtain appropriate security  clearances for
   its personnel.  Id. at C-4.
 
   Contract No. 54
 
 
        Under  Contract No. 54,  HSTX was  to  support the  National
   Weather  Service's  programs  on  automated  weather  observation
   systems,  forecast   information  systems,   communications,  and
   meteorological  and  hydrological   data  from  satellite  radar.
   Appeal File, Exhibit 3, Attachment 1 at 1.
 
        The personnel  required for  this contract  included systems
   engineers, software and communications engineers, meteorologists,
   physical  scientists,   computer  scientists,   and  technicians.
   Appeal  File, Exhibit 3, Attachment 2.  This contract was also to
   be performed on-site at NOAA facilities.  Id., Attachment 1 at 5;
   see also id. at H-2.
 
   Contract No. l55
 
        Under  Contract  No. 155,  HSTX  was   required  to  provide
   software   support  for   operational  science   troubleshooting,
   interactive graphics  display  and quality  control, and  science
   improvements  to the TOVS/RTOVS sounding operation.  Appeal File,
   Exhibit 4 at C-5.  The contract was also to  be performed on-site
   at FOB No. 4.  Id. at C-19; see id. at C-20.
 
        The four contracts at issue include the following clause:
 
        STOP-WORK ORDER (AUG 1989), ALTERNATE (APR 1984)
 
             (a)  The Contracting Officer may, at any time,  by
        written order to the Contractor, require the Contractor
        to stop  all, or any  part, of  the work called  for by
        this contract for  a period of 90 days  after the order
        is delivered  to the  Contractor, and  for any  further
        period to which the parties may agree.  The order shall
        be specifically identified as  a stop-work order issued
        under  this clause.   Upon  receipt of  the order,  the
        Contractor shall immediately comply  with its terms and
        take all reasonable steps to minimize the incurrence of
        costs allocable to the work covered by the order during
        the period  of work  stoppage.  Within  a period  of 90
        days  after a  stop-work  order  is  delivered  to  the
        Contractor, or within  any extension of that  period to
        which the  parties shall have  agreed, the  Contracting
        Officer shall either--
 
             (1)  Cancel the stop-work order; or
             (2)  Terminate  the work covered  by the  order as
        provided in the Termination clause of this contract.
             (b)  If a stop-work order issued under this clause
        is canceled or the period of the order or any extension
        thereof expires, the Contractor shall resume work.  The
        Contracting Officer shall  make an equitable adjustment
        in  the delivery schedule, the estimated cost, the fee,
        or a combination thereof, and in any other terms of the
        contract that may  be affected, and the  contract shall
        be modified, in writing, accordingly, if--
             (1)  The stop-work order results in an increase in
        the  time required  for, or  in  the Contractor's  cost
        properly allocable to,  the performance of any  part of
        this contract; and
             (2)  The  Contractor  asserts  its  right  to  the
        adjustment within  30 days after the end  of the period
        of work  stoppage; provided, that,  if the  Contracting
        Officer  decides  the  facts justify  the  action,  the
        Contracting Officer may receive and act upon a proposal
        submitted at any  time before final payment  under this
        contract.
 
   Appeal File, Exhibits 1 at F-1; 2 at F-1; 3 at F-1; 4 at F-1.
 
        The  Holidays and  Administrative Leave  clause in  Contract
   Nos. 45, 54, and 155 provides, in pertinent part:
 
        When NOAA grants administrative leave to its Government
        employees, onsite  contractor personnel  shall also  be
        dismissed.  . . .  In each instance when administrative
        leave is granted to Contractor personnel as a result of
        inclement  weather,  potentially  hazardous conditions,
        explosions,  or other special circumstances, it will be
        without loss  to the Contractor.  The  cost of salaries
        and wages to the Contractor  for the period of any such
        excused absence as  a reimbursable item of  direct cost
        under  the contract for employees whose regular time is
        normally a  direct charge  and a  reimbursable item  of
        indirect  cost  in  accordance  with  the  Contractor's
        established accounting policy.
 
   Appeal File, Exhibits 1 at H-4; 3 at H-9; 4 at H-4 to H-5.
 
        The  Holidays and  Administrative Leave  clause in  Contract
   No. 29 provides, in pertinent part:
 
        When NOAA grants administrative leave to its Government
        employees, on-site  Contractor personnel shall  also be
        dismissed. . .  .  In each instance when administrative
        leave  is  granted  to the  Contractor  personnel  as a
        result  of  inclement  weather,  potentially  hazardous
        conditions, explosions, or other special circumstances,
        it  will be  without  loss  to  the  Contractor.    The
 
        contract shall  permit incurred  costs of salaries  and
        wages  to  the Contractor  for the  period of  any such
        excused absence as  a reimbursable item of  direct cost
        under  the contract for employees whose regular time is
        normally  directly charged.  The amount of any incurred
        indirect costs  shall be  reimbursed  for such  excused
        absences,  if  in   accordance  with  the  Contractor's
        established accounting policy.
 
   Appeal File, Exhibit 2 at H-5 to H-9.
 
        The contracts  also included Federal  Acquisition Regulation
   (FAR)  52.243-2,  "Changes  --  Cost  Reimbursement  (AUG  1987),
   Alternate I (APR 1984)," which provides:
 
             (a)  The  Contracting Officer may  at any time, by
        written order, and  without notice to the  sureties, if
        any,  make changes  within the  general  scope of  this
        contract in any one or more of the following:
             (1)  Description of services to be performed.
             (2)  Time of performance (i.e., hours of  the
             day, days of the week, etc.).
             (3)  Place of performance of the services.
             (b)  If  any such  change  causes  an increase  or
        decrease in the estimated cost of, or the time required
        for,  performance of  any part of  the work  under this
        contract,  whether  or  not changed  by  the  order, or
        otherwise  affects  any other  terms and  conditions of
        this contract,  the Contracting  Officer shall make  an
        equitable  adjustment   in  the  (1)   estimated  cost,
        delivery or completion schedule, or both; (2) amount of
        any  fixed fee; and (3)  other affected terms and shall
        modify the contract accordingly.
 
   Exhibits 1 at I-10; 2 at I-3; 3 at I-3; 4 at I-3.
 
        The Subcontracts
 
        HSTX  entered into subcontracts  under Contract No.  54 with
   Systems  Engineering & Security,  Inc. (SES) and  EG&G Washington
   Analytical  Services   Center,  Inc.   (EG&G).     Appeal   File,
   Exhibit 17[foot #] 2     at     28    and Exhibit     1;     Id.,
   Exhibit 19[foot #] 3 at 14-15 and Exhibit 1.
 
                                                                    
                   ----------- FOOTNOTE BEGINS ---------
 
        [foot #] 2 Exhibit 17 contains  the deposition of  Mahesh C.
   Mittal (July 2, 1998).
 
        [foot #] 3 Exhibit 19 contains the deposition of Dennis Hunt
   (July 28, 1998).
 
                   ----------- FOOTNOTE ENDS -----------
 
 
 
        HSTX entered into  a subcontract under Contract  No. 29 with
   SM  Systems and  Research  Corporation  (SMSRC).    Appeal  File,
   Exhibit 18[foot #] 4 at 23 and Exhibit 5.
 
   The Partial Government Shutdown
 
        Appropriations bills were not enacted by October 1, 1995, to
   fund  the activities  of the Federal  Government for  Fiscal Year
   1996.   On September 30, 1995, a Continuing Resolution was passed
   by  the  Congress and  signed  by  the President  which  provided
   funding  for  the  Federal Government  until  November 14.   Pub.
   L. No.  104-31,  109 Stat. 278  (1995).   On  November 20,  1995,
   Congress   passed,  and   the  President  signed,   a  Continuing
   Resolution which provided funding for federal agencies, including
   the  Department of  Commerce,  until  December 15.    Pub. L. No.
   104-56, 109 Stat. 548 (1995).  Subsequently, Congress passed H.R.
   2076, which would  have extended Fiscal Year  1996 appropriations
   to   the  Department   of   Commerce  past   December 15,   1995.
   Stipulations   6.  However, on  December 19, 1995,  the President
   vetoed H.R. 2076.   Id.  As a  result, no Fiscal Year  1996 funds
   were   available  to  pay   salaries  of  NOAA   employees  after
   December 15, 1995.  Id.   7.  NOAA employees continued to be paid
   until  December 21   with   funds  which   had  been   previously
   appropriated.  Id.
 
        Upon  the exhaustion  of this funding,  no Fiscal  Year 1996
   funds were available  to pay the salaries of  NOAA employees, and
   most    NOAA   operations    ceased.[foot #] 5       Stipulations
     7;  Appeal  File,   Exhibit 21[foot #] 6  at  24.     The  four
   contracts   had  previously-appropriated   funds  available   for
   performance  of task  order work  at  the time  of the  shutdown.
                                                                    
                   ----------- FOOTNOTE BEGINS ---------
 
        [foot #] 4 Exhibit  18  contains  the  deposition  of  Sarma
   Modali (July 28, 1998).
 
        [foot #] 5 Some   NOAA  employees   continued  to   work  as
   "excepted" employees, as defined in 31 U.S.C.   1342 -- employees
   from  whom the Federal  Government can accept  voluntary services
   for emergencies  involving  the  safety  of  human  life  or  the
   protection of property.   Appeal File, Exhibits 20 at 19; 23; 33.
   (Exhibit 20 contains the  deposition of Aileen Redding  (Aug. 31,
   1998).  Excepted employees can only be paid upon a special action
   of Congress.  Id., Exhibit 23.  Non-excepted NOAA employees  were
                 ___
   furloughed.   Declaration of  Contracting Officer  Aileen Redding
   (Sept. 30, 1998)   10; Appeal File, Exhibits 20 at 34-36; 12; 23.
   NOAA  employees' approved and  requested leave was  canceled when
   the furloughs  began  since  furlough  is by  definition  a  non-
   pay/non-duty status.   Memorandum from Deputy Under  Secretary of
   Commerce to  All NOAA  Employees (Dec. 20,  1995); (Appeal  File,
   Exhibit 30 at 45).
 
        [foot #] 6 Exhibit  21  contains the  deposition  of William
   Voitk (Aug. 31, 1998).
 
                   ----------- FOOTNOTE ENDS -----------
 
 
   Respondent's Record Submission  at 5.  Under  all four contracts,
   appellant's employees had to have access to Government facilities
   in  order to  perform  contract work.    Appeal File,  Exhibit 16
   [foot #] 7 at 35.
 
 
        On  December 21, when NOAA had exhausted its available funds
   and sent home non-excepted workers, stop-work notices were issued
   to HSTX  on Contract  Nos. 45 and  155, ordering  all work  to be
   stopped on  the two  contracts as of  December 22.   Appeal File,
   Exhibit 5.  These notices provided:
 
        Effective close of business of the date of this notice,
        NOAA has  shut down  except  for essential  operations.
        Until a Continuing Resolution is passed by Congress and
        approved by the President, you are hereby notified that
        you are to Stop Work for all but those positions/tasks,
        etc. set forth below:
 
                                  NONE
 
        In the  event  the  Continuing  Resolution  authorizing
        operation  of this Agency  is passed and  signed by the
        President, this notice is rescinded or canceled.
 
   Id.  That same day, partial stop-work notices were issued to HSTX
   on Contract Nos.  29 and 54, ordering  work to be stopped  on the
   contracts  and containing the same provisions quoted above except
   for the excluded  tasks and employees specified  in those orders.
   Id.,   Exhibit 16  at   16-19.[foot #] 8     HSTX   issued  stop-
   work notices  to its subcontractors  on December 22, 1995.   Id.,
   Exhibit 11,  Appendix H.  The  notices stated that  the stop-work
   order would "extend for the same time period as  the furlough for
   non-essential government personnel."  Id.
 
   Appellant's Response to the Shutdown
 
                                                                    
                   ----------- FOOTNOTE BEGINS ---------
 
        [foot #] 7 Exhibit  16  contains  the  deposition  of  David
   Sherry (July 29, 1998).
 
        [foot #] 8 Subsequently, a notice was sent  to HSTX ordering
   all work to  be resumed on Contract No.  45, effective January 3,
   1996.  Appeal File, Exhibit 6.  That notice provided:
 
             Due to the extended nature of the shutdown and the
             changes   to   the    National   Weather   Service
             requirements   for  spacecraft   support,  it   is
             necessary to  reactivate the  personnel previously
             furloughed from the subject contract.
 
   Id.
   ___
 
                   ----------- FOOTNOTE ENDS -----------
 
 
 
        Upon receipt  of the Government's stop-work order, appellant
   first  attempted  to  locate  alternative  assignments   for  its
   employees.   Appeal File, Exhibit 16  at 51.   Appellant diverted
   some of its employees who would have been  affected by the layoff
   to other work,  i.e., a bid  and proposal effort.   Appeal  File,
   Exhibit 26, Audit at 7.   Appellant also permitted some employees
   to  take   vacation  days.     Id.     Absent  either   of  these
   circumstances,  HSTX issued layoff  notices.  Id.,  Exhibit 16 at
   53, 83.  Appellant's vice president explained: 
 
        In order to minimize the exposure to the Government, we
        determined that using accrued  vacation or taking leave
        without pay  would only  extend or increase  our .  . .
        potential cost obligation,  and those  were not  viable
        options.    So  as  a last  resort,  we  did  temporary
        layoffs. 
 
   Id. at 53.
 
        HSTX did not issue layoff notices to its employees under the
   four  contracts until  stop-work  notices  were  issued  by  NOAA
   because the company's  policy is to avoid issuing  layoff notices
   until absolutely  necessary, and  it had  no previous  indication
   from  the Government  that work  would stop  on a  specific date.
   Appeal   File,  Exhibit 16  at  58-59.    HSTX's  vice  president
   explained:  "[W]e had nothing  concrete to indicate that the work
   would  be  stopping, and  we  did  not  issue layoff  notices  in
   anticipation  of what  might happen  in order  to avoid  employee
   morale  problems,   turnover  and   performance  problems   under
   contracts."   Id. at 59.   In appellant's vice  president's view,
   granting  leave without  pay would  not  have mitigated  the cost
   because  it would have  extended the employment  relationship and
   its associated fringe benefits,  management, severance, and other
   costs.  Id. at 53-54.
 
   Appellant's Layoff Notices
 
        Appellant issued layoff  memoranda dated December 21,  1995,
   to its  employees who were  affected by the  Government shutdown,
   stating, in pertinent part:
 
        As a result of the government shutdown and a suspension
        of work  under your  project, you  are hereby  notified
        that effective December 22, 1995, you are  being placed
        on  temporary  lay-off  status.    In  accordance  with
        Company  policy, you  are  entitled to  up  to 2  weeks
        severance pay,  in lieu  of advanced  notice, depending
        upon  the  length  of the  Government  shutdown.   This
        severance will  be paid  out on the  normal pay  cycle.
        During this  two week  severance period,  as a  special
        exception to company policy, your benefits  will remain
        intact (i.e. health, 401k, life insurance, etc.).
 
        Please  note that during  this severance period,  it is
        your responsibility to  stay abreast of changes  in the
        Government  status,  as  it is  anticipated  that  your
        employment   will   be  immediately   reinstated   upon
        reopening of  the Government  facilities.   The Company
        will  make every reasonable  attempt to contact  you at
        your home  to advise you  of reinstatement.  If  we are
        unable to  contact you  and you do  not report  to work
        concurrent  with the Government  reopening, you will be
        required to use vacation or Leave Without Pay (L[W]OP).
 
   Appeal File, Exhibit 11, Appendix B.
 
        HSTX  employees under the NOAA  contracts who were not given
   alternate  work assignments  were paid  their  full salaries  and
   benefits by HSTX  for the period that the  stop-work notices were
   in  effect,  although they  did  not perform  services  under the
   contracts.     Appeal  File,  Exhibit 16  at  70-75,  80,  84-85,
   Exhibits 5-11.   HSTX established special "furlough"  accounts to
   accumulate the costs associated  with the stop-work orders.   Id.
   at 78; Appeal File, Exhibit 26, Audit at 3.
 
        Holidays  during the furlough were charged to HSTX's holiday
   indirect expense  account, and  snow days  immediately after  the
   furlough   were  charged  to   other  accounts.     Appeal  File,
   Exhibit 26, Audit  at 7.   All employees  were subject  to HSTX's
   layoff  policy.   HSTX employees  who actually reported  for work
   during the furlough and worked on other projects properly charged
   their time to  such other projects.   Id.   No amounts for  other
   work performed during the furlough were included in HSTX's claim.
   Id.   HSTX  employees who  worked  during the  furlough on  other
   projects charged a  total of 487 hours  for a cost of  $10,605 to
   those  other  accounts.     HSTX  employees whose  salaries  were
   charged  full time to  furlough accounts remained  at home during
   the furlough period.  Id.
 
   HSTX's Layoff Policy
 
        According to its Layoff and Recall Policy, HSTX was required
   to provide  either two  weeks' written notice  of a layoff  to an
   employee or two weeks' pay in lieu  of notice.  HSTX's Layoff and
   Recall Policy provides:
 
        Policy
 
        It is the policy of the Company to stabilize employment
        so  that employees  may be  provided  with regular  and
        continuous  work.   Although every  effort  is made  to
        avoid   layoffs,   changing   business   and   economic
        conditions may occasionally necessitate  them.  In  the
        event  that  a  reduction  in  the   workforce  becomes
        necessary, employees will be selected for layoff in the
        following manner.
 
        Definitions
 
        Layoff--Personnel action resulting in the release of an
        employee because of a lack  of work or elimination of a
        position.
 
        Discussion
 
        Layoffs will be made:
 
             On the  basis of work  availability; employees for
             whom no work is available may be laid off first.
 
        . . . .
 
        Procedure
 
             An employee who is being laid off will be notified
             in writing by the Human Resources Manager at least
             2 weeks in advance of  the layoff.  Two weeks' pay
             may be provided in lieu of notice.  Only the Human
             Resources Manager has the  authority to make  this
             notification.   The reason for the layoff, as well
             as  the employee's  chances  for  recall, will  be
             given.
 
   Appeal File, Exhibit 11, Appendix G.
 
        On  December 21  and  22,   1995,  appellant  notified   its
   subcontractors, SMSRC, EG&G, and SES, of the stop-work order from
   NOAA and directed  that each of the subcontractors  stop work for
   all   non-essential   employees.      Appeal  File,   Exhibit 11,
   Appendix H.
 
   The Subcontractors' Actions in Response to the Shutdown
 
        SES
 
        Appellant's  subcontractors SES  and  EG&G continued  to pay
   full salaries and benefits to their employees during the shutdown
   period.  Appeal  File, Exhibit 17 at 11-13, Exhibits 6-9;  Appeal
   File, Exhibit 19  at 18, 25-26.   These employees could  not work
   during the shutdown because their place of work was inaccessible.
   Id, Exhibit 17. at 12.
 
        SES  sent a  temporary layoff  notice to  each of  its three
   affected employees stating, in pertinent part:
 
             In response to  the Government  shutdown, we  have
        received official  notice through  NOAA contracts  that
        selected  tasks may  continue  uninterrupted, and  that
        others must be cancelled as of 22 December  1995.  Your
        task is among those which are to be cancelled.  You are
 
        hereby notified that you will  be placed in a temporary
        lay-off status effective today, 22 December 1995.
 
             I am concerned with the impact of this shutdown on
        you   and  the  other  members  of  our  project  team,
        especially during this holiday season.   But to a great
        extent, most of this is beyond our control and is based
        on specific direction from our customer.  Since you are
        in  a temporary lay-off status, you become eligible for
        severance benefits  in accordance with  company policy.
        Our  lay-off policy  provides for  one  (or two)  weeks
        basic salary  as a severance  benefit, and I  hope this
        severance  pay will ensure continuity of income for you
        throughout  this  difficult period.    We  believe this
        shutdown  will be of short duration, and the Government
        has indicated their intention to renew your task at the
        conclusion  of  the  furlough period.    We  anticipate
        recalling everyone back to  work within a few days  and
        hope   this   severance   benefit  will   ensure   your
        availability to return to work when recalled.
 
   Appeal  File,  Exhibit 17,  Exhibits 3-5.    SES  segregated  the
   salaries  it paid  to its  employees during  the shutdown  into a
   separate account designated NWS-F.   Id. at 33.  Pay for holidays
   and vacations was not included in SES' claim.  Id. at 40-41, 43.
 
        SES paid its employees  during the shutdown pursuant to  its
   severance policy, which provides: 
 
        Severance Pay
 
        All full time staff are eligible for severance pay upon
        involuntary termination  of employment based  on length
        of service with the company.  
 
        -    No Severance Pay During First 3 Months.
 
        -    1 week of  basic salary for less than  1 year (but
             more than 3 months with the company).
 
        -    2 weeks basic salary for more than 1 year with the
             company.
 
   Appeal  File, Exhibit 17 at  25-26, Exhibit 15, SES  Policies and
   Procedures (November 1993) at 3.
 
        SES used this  section of the  employment policy to  provide
   its employees with a severance benefit, as it was the only policy
   that could  have been  applied.  Appeal  File, Exhibit 17  at 71.
   SES did not terminate its employees because "if we had terminated
   them  and the  furlough ended  twenty-four  hours or  forty-eight
   hours later,  we  would be  in  noncompliance with  the  contract
   because  these people  would have  left,  and they  would not  be
   available to  work."  Id.   SES' president and  CEO believed that
   his  company was  obligated to  pay its  employees under  company
   policies during the Government shutdown  as the place of work was
   inaccessible to them, and absent such payment the employees might
   not have chosen to remain employed at SES.  Id. at 85-86.
 
 
        SES   claimed costs totaled $4078, representing direct labor
   costs of three employees for  184 hours plus overhead and general
   and  administrative expenses (G&A)  during the shutdown.   Appeal
   File, Exhibit 26, Audit Report, Attachment 2  at 2-4.  No fee was
   claimed.  Id. at 2.
 
        EG&G
 
        Thirteen  of  EG&G's  fifteen  employees   assigned  to  its
   contract with HSTX  were affected by the furlough.   Appeal File,
   Exhibit 19  at 16.   Upon  receipt of  the stop-work  order, EG&G
   continued to pay  full salary to its affected  employees, and set
   up  a special  stop-work order  account to capture  its personnel
   costs.  Id. at 23-26.  EG&G did not exercise either its severance
   or layoff policy  during the Government shutdown.   Id. at 16-17.
   EG&G's decision  not to exercise  its severance or  layoff policy
   was based  on its  efforts to mitigate  costs to  the Government.
   Id. at 17, 41-43.  EG&G assigned some employees who were affected
   by  the shutdown work to other projects  during that period.  Id.
   at 44-46.  
 
        Some  EG&G  employees  charged their  time  to  vacation and
   holiday accounts  and not  the stop-work  account.   Appeal File,
   Exhibit 19 at 18, 44-45.  EG&G's mitigation efforts reduced costs
   that  would otherwise have been charged  to the stop-work account
   by approximately $17,000.   Id. at 44, 46.  EG&G s  claimed costs
   in this appeal  total $26,782, representing the  dollars affected
   employees would have charged to the contract during the shutdown.
   Id. at 18.
 
        SMSRC
 
        SMSRC  orally notified its  affected employees of  the stop-
   work order and told them to  stay at home until they were  called
   back.        Appeal    File,    Exhibit 18    at    27.[foot #] 9
   SMSRC's affected employees  were kept on the payroll and received
   their benefits but  no salary during the shutdown;  they were not
   laid off.   Id. at  39.  SMSRC's  president had  an understanding
   with the  employees that  if SMSRC were  paid by  NOAA for  their
   salaries during the  shutdown, SMSRC would be obliged  to pay the
   employees.  Id. at  17.  SMSRC advised  its employees that  "they
   [would] not receive the  salary [for the shutdown  period] unless
                                                                    
                   ----------- FOOTNOTE BEGINS ---------
 
        [foot #] 9 The  SMSRC layoff  policy  provided:    "In  most
   layoffs, SMSRC  will give  the employee two  weeks notice  of the
   action.  However,  in some cases, two  weeks pay may be  given in
   lieu of the notice." Appeal File, Exhibit 26, Audit, Attachment 2
   at 13.
 
                   ----------- FOOTNOTE ENDS -----------
 
 
   the government  pays for those hours."  Id.  at 27; see also, id.
   at 46.   
 
 
        SMSRC  sent an invoice for estimated salary payments for the
   period to  appellant, which was passed on  to NOAA.  Appeal File,
   Exhibit 18  at  14-17;  id.,  Exhibit 11,  Appendix L.    SMSRC s
   invoice was  for  total estimated  cost plus fee  for   time lost
   due to Government shutdown" for  464 hours plus 5.5% fee totaling
   $14,792.17.   Id.   SMSRC's time sheets  for the  shutdown period
   show  only forty-eight  hours  for one  employee  charged to  the
   furlough  or  Stop-Work Order  account,  but that  was  a mistake
   because SMSRC  advised its employees  not to make any  entries on
   their time  sheets for the  furlough.  Id., Exhibit 18  at 32-33.
   Other  than the  erroneous time  sheet, there  are no  SMSRC time
   sheets in the record which evidence hours actually charged to the
   furlough.   There is no  persuasive evidence that SMSRC  made any
   effort to mitigate salary costs it now claims.
 
   The End of the Shutdown
 
        Fiscal  Year  1996  funding again  became  available  to the
   Department  of Commerce on January 6, 1996, when Congress passed,
   and  the President signed,  a Continuing  Resolution, temporarily
   funding  the  Department  of Commerce  and  other  agencies until
   January 26, 1996.   Pub. L. No. 104-92, 110 Stat. 16 (1996).   By
   their terms, the stop-work notices which had been sent by NOAA to
   its contractors  were rescinded  as of that  date.   Appeal File,
   Exhibit 11, Appendix A. 
 
   Payment of Federal Employees
 
        Payment  for  NOAA  employees for  the  shutdown  period was
   provided by Congress in Pub. L. 104-92.   Section 301 of that Act
   provided authority for agencies to use appropriated  funds to pay
   the  salaries  of  excepted employees  for  the  shutdown period.
   Section 310,  in   turn,  designated  all  federal  employees  as
   excepted  employees,  thus  allowing payment  of  salary  for any
   federal employee  impacted by  a shutdown  of agency  operations.
   Appeal   File,    Exhibit 20    at    35-36.[foot #] 10        In
   effecting payment of  federal employees for the  shutdown period,
   Congress   did   not  designate   their   employment  status   as
   "administrative leave."  Id. at 35.
 
   The Claims
 
        On June 13,  1996, HSTX  submitted a  Request for  Equitable
   Adjustment  (REA) to  the  contracting  officer.    Appeal  File,
   Exhibit 11.  The  REA cited two bases for  entitlement:  (1) NOAA
                                                                    
                   ----------- FOOTNOTE BEGINS ---------
 
        [foot #] 10 This    legislation   did    not   include    an
   authorization  for the  expenditure of  funds  to pay  contractor
   employees  who did  not work  during  the period  of the  partial
   shutdown of NOAA operations. 
 
                   ----------- FOOTNOTE ENDS -----------
 
 
   employees  had been  placed on  administrative  leave during  the
   shutdown and HSTX  should be reimbursed  under the "Holidays  and
   Administrative Leave" clause  of the contracts, and  (2) HSTX had
   issued "severance pay" to its  employees, and this cost should be
   reimbursed under the contracts.  
 
 
        Under  the REA, HSTX sought reimbursement for (1) 4497 hours
   of direct  labor for its  employees who  did not work  during the
   partial  shutdown of  NOAA operations,  (2) an  overhead rate  of
   35.5% applied to the hourly direct rate, (3) subcontractor claims
   submitted  by SES,  SMSRC, and  EG&G  for the  salaries of  their
   employees  who had  not  worked during  the shutdown,  (4) G&A of
   12.27% applied  to the  combined figures for  (1)-(3) above,  and
   (5) a  fee of  7%  applied to  the entire  claim.   Appeal  File,
   Exhibit 11,  unpaginated Worksheet following  page 12.   HSTX has
   not paid any  of its three  subcontractors for any part  of their
   claims.  Id., Exhibit 16 at 103.
 
        On  October 1, 1996, the contracting officer denied the REA.
   Appeal  File, Exhibit 12.   On February 21, 1997,  HSTX submitted
   its  certified claim for $196,994 for  the costs it had sought in
   the  REA.   Id., Exhibit 13.   On  June 9, 1997,  the contracting
   officer issued  her  final  decision denying  the  claim.    Id.,
   Exhibit 15.
 
   The Audit
 
        On December 24, 1997,  NOAA requested  the Defense  Contract
   Audit Agency  (DCAA) to  audit the instant  claim.   Appeal File,
   Exhibit 19 at 14,  26.  DCAA reviewed the claimed costs under the
   FAR and  the Cost  Accounting Standards (CAS).   Id.  at 2.   The
   auditors   concluded   that    HSTX   and   SES[foot #] 11    had
   adequate accounting and timekeeping systems, verified the claimed
   costs against the contractors' and subcontractors' books, sampled
   time  sheets,  compared  time  charged  prior  to  and  after the
   furlough, and interviewed a  sample of employees to determine  if
   the time charged was consistent  with their activities during the
   furlough.  Id., Exhibit 26 at 3.  DCAA issued its  original audit
   report on  February 9, 1998, and  a supplemental audit  report on
   August 27, 1998, which added findings on subcontractor SES, which
   had not  been received  in time  to be  included in  the original
   report. Id.
 
        The audit further concluded that the claimed labor costs for
   HSTX,  SES, and  EG&G were  based  on costs  charged to  specific
   subaccounts for  the furlough and  that labor charges  were input
   from employee time sheets.  Appeal File, Exhibit 26; Affidavit of
   Daniel Allemeier  (Second Allemeier Affidavit)  (Sept. 29, 1998),
                                                                    
                   ----------- FOOTNOTE BEGINS ---------
 
        [foot #] 11 SES  acquired the assets  of SMSRC subsequent to
   the   submission  of  the   claim.    Appeal   File,  Exhibit 26,
   Attachment 2 at 2.  The auditors considered SMSRC s claim as part
   of SES  claim.
 
                   ----------- FOOTNOTE ENDS -----------
 
 
   Attachment.[foot #] 12      The   results  of   the   audit  were
   as follows:   
 
 
          Elements               Contractor's        Questioned
        of Proposal                 Proposal             Cost      
              Differences 
 
        Direct Labor        $  86,432      $    603       $  85,829
        Overhead               30,554           213          30,341
        Subcontract Costs      46,999        14,471          32,528
           Subtotal         $ 163,985      $ 15,287       $ 148,698
        G & A                  20,122         1,876          18,246
           Total Cost       $ 184,107      $ 17,163       $ 166,944
        Fee                    12,887        12,887                
           Total Cost Plus Fee
                            $ 196,994      $ 30,050       $ 166,944
                              _______        ______         _______
 
   Appeal File, Exhibit 26 at 3.
 
        The questioned $603 in HSTX's direct labor costs represented
   $506  in furlough  salary for  a  part-time employee  and $97  in
   furlough  salary for  an  employee who  resigned.   Appeal  File,
   Exhibit 26 at 3.   The $97 represented eight  hours charged by an
   employee for December 22,  the first day  of the furlough,  which
   was also  this employee's last  day of  work.  Id.   The  $213 in
   questioned overhead represented the overhead attributable to this
   questioned direct labor at  the proposed/audit-determined rate of
   35.35%.  Id. at 4.
 
        The  questioned subcontractor costs in the amount of $14,471
   were calculated as  follows:  $2118 was an error  in HSTX's claim
   overstating SES'  claim; $12,045  was questioned   because  these
   costs have not been  paid by SMSRC; and $308 in  EG&G costs under
   Contract No. 29 were questioned  because that amount could not be
   verified by  the auditors.   Appeal File,  Exhibit 26 at  5; Id.,
   Attachment 2 at  3.   The hours supporting  the claim  of $12,045
   were  not recorded  on the  SMSRC employees'  time sheets.   Id.,
   Attachment 2  at  4.    Appellant has  not  offered  any  factual
   rebuttal to the audit report except for the declaration of EG&G's
   Contract Manager and Operations Manager, Silver Spring,  Maryland
   (Contract  Manager).   Appellant's  Record  Submission at  50-55;
   Affidavit of Dennis  Hunt (Sept. 25, 1998)   7.   EG&G's Contract
   Manager testified in his affidavit:
 
        I  have  reviewed  the  Defense  Contract Audit  Agency
        (DCAA) verification  of EG&G's  labor costs,  which was
        provided to NOAA  via a March 12, 1998  memorandum, and
        do  not  concur with  their findings.   The  DCAA audit
        claims  that for the  period covered by  Invoice Number
                                                                    
                   ----------- FOOTNOTE BEGINS ---------
 
        [foot #] 12 The DCAA's  verification of  EG&G's labor  costs
   dated March 12,  1998, was  not included in  the audit  report in
   Appeal File, Exhibit 26,  but was submitted  as an attachment  to
   the Second Allemeier Affidavit.
 
                   ----------- FOOTNOTE ENDS -----------
 
 
 
        43, Exhibit Hunt 5, that  only 406.26 hours and $13,071
        should  have  been  allocated  to  the shutdown  charge
        numbers.   Exhibit  pages  90 through  92, 94,  and 105
        through  108, which  reflect the  time  sheets for  the
        period, substantiate  our claim  that 414.25  hours and
        $13,789.44 should be  allocated to the contract.   Also
        the DCAA audit claims for the period covered by Invoice
        Number 44,  Exhibit Hunt  6, that  $13,404 should  have
        been allocated to the shutdown charge numbers.  Exhibit
        pages 173 through 175, 182, 191, and 192 and Attachment
        2 (pages of  Invoice Number 44 not included  in my copy
        of the deposition) substantiate our claim of [sic] that
        only $12,993.53 should be allocated to the contract.
 
   Id.   Appellant  did not  submit  the EG&G  employee time  sheets
   referenced in  the declaration into  the record in this  case, or
   offer any additional substantiation of its position.
 
                               Discussion
 
   Appellant's Motion to Strike is Denied
 
        By agreement of the parties,  this case was submitted on the
   record with  no evidentiary hearing.   Appellant moved  to strike
   section IIB   of   respondent's   reply  brief   which   contains
   respondent's objections to several exhibits offered by appellant.
    For the reasons stated below, the motion is denied.
 
        Respondent objects to Exhibits 68, 75, and  78 through 80 on
   the grounds of relevance.  Respondent also objects to Appellant's
   Supplemental Appeal File, Exhibits 44  through 47, 70 (portions),
   73,  74, and  77  on the  grounds that  these documents  were not
   produced in discovery and are  irrelevant.  Respondent's Reply at
   9-11.   Appellant contends  that, with the  possible exception of
   Exhibit 77,  the  documents   were  produced  in  discovery   and
   respondent's objections, raised for  the first time in the  reply
   brief, are too late and have been waived.  Affidavit of Daniel R.
   Allemeier (Nov. 6, 1998)    3, 5; Appellant's Motion to Strike.
 
        As  reflected  in  the Board's  conference  memorandum,  the
   parties  agreed among themselves that respondent would supplement
   the  Appeal File  by September 18  and appellant  would do  so by
   September 25.  Further, "[t]he parties agreed that any deposition
   transcripts  or documents exchanged in discovery [could] be filed
   as exhibits, but reserved the  right to argue their relevance and
   raise   other  objections  to  these  exhibits  in  their  record
   submissions."       Conference   Memorandum    (Aug. 27,   1998).
   Appellant's proposed  exhibits, filed on  September 25, contained
   hundreds  of pages of  documents.  Under  the parties  agreement,
   approved by  the Board,  initial record  submissions were due  on
   September 30 and replies on October 30.   Neither party sought an
   enlargement of time within which to raise objections to exhibits.
   Counsel  for respondent  did not understand  that by  agreeing to
   this schedule  (which gave  appellant an  additional week  within
   which  to object to respondent's exhibits), respondent would have
   to file  its objections  simultaneously with  its initial  record
   submission -- only three working days later -- or have waived all
   objections.  Declaration of Fred Kopatich (Nov. 20, 1998)   5.
 
 
        Several factors cause us to conclude that respondent did not
   waive its  objections:  (1) the  lack of clarity in  the parties'
   agreement as to  whether objections had to be  filed with initial
   or  reply  submissions,  (2) the  voluminous  exhibits  filed  by
   appellant just days  before initial record submissions  were due,
   (3)  the short time frame for  respondent's objection if required
   in the initial record  submission, and (4) respondent's counsel's
   understanding of the parties' agreement.
 
        The record contains squarely conflicting testimony regarding
   whether  the disputed documents  were produced  during discovery.
   As  such, the  party with  the burden  of proof,  respondent, has
   failed to demonstrate that any  exhibits must be excluded on this
   ground.  We  conclude that the documents at  Exhibits 70, 73, and
   74  are relevant  and  respondent's  objections  to  these  three
   exhibits are overruled.
 
        Documents  44 through  47 relate  to another  agency,  not a
   party  to  this dispute,  and  how  that  agency dealt  with  the
   shutdown.  Exhibit 68 relates to  a suspension of work on another
   contract due to a bid protest.  Exhibit 75 relates to a different
   contract with a  different contractor.  Exhibit 77,  according to
   appellant,  "merely  establishes  that  there   were  no  unusual
   reductions in payments for the November 1995 through January 1996
   time frames on one of appellant's [National Aeronautics and Space
   Administration]  contracts."   Exhibits 78 through  80 deal  with
   contracts between NOAA and third-party contractors, and appellant
   has not addressed respondent's objections to these exhibits.  
 
        In this appeal,  the Board must determine  whether appellant
   may be  reimbursed for costs  incurred due to the  shutdown under
   appellant's contracts  with NOAA  or whether  the sovereign  acts
   doctrine  bars  recovery.    We  need  not  look  to  nonparties'
   contracts or conduct in resolving the instant dispute.  The Board
   concludes that Exhibits 44 through 47,  68, 75, and 77 through 80
   lack probative value and are irrelevant.
 
   The Subcontractor Portion of the Claim is not Summarily Denied
 
        Respondent argues  that the entire subcontractor  portion of
   the  claim  should  be  summarily denied  because  no  basis  for
   subcontractor entitlement  was ever presented to  the contracting
   officer and HSTX merely passed along subcontractor invoices which
   did  not include  any contractual  or legal  basis for  the costs
   sought.  Respondent's  Reply at 27-28.  Respondent cites Contract
   Cleaning  Maintenance, Inc. v.  United States, 811 F.2d  586, 592
   (Fed. Cir.   1987),  for   the  proposition   that  the   minimum
   requirements for submission  for a valid certified  claim include
   "a clear  and unequivocal  statement that  gives the  contracting
   officer adequate  notice of the  basis and amount of  the claim."
   Respondent's Reply at 27-28.  Applying this standard, we conclude
   that the  claim sought employee  salary or layoff  costs incurred
   during the  shutdown period and  set forth a sum  certain, giving
   the  contracting officer adequate notice  of the basis and amount
   of the claim.
 
   The Sovereign Acts Doctrine Does Not Bar Government Liability
 
 
        Respondent contends that the Government shutdown constituted
   a sovereign act for which no recovery is permitted.  Respondent's
   Posthearing  Brief at 22-24.  Under  the sovereign acts doctrine,
   the United States Government,  when sued as a  contractor, cannot
   be  held  liable for  an  obstruction  to  the performance  of  a
   particular contract  resulting from  the Government's public  and
   general acts as a sovereign.  Horowitz v. United States, 267 U.S.
   458, 461 (1925); Yankee Atomic Electric Co. v. United States, 112
   F.3d 1569,  1574 (Fed. Cir. 1997).  cert. denied, 118  S.Ct. 2365
   (1998).   The  Supreme Court  in Horowitz,  adopting the  earlier
   reasoning of  the Court  of Claims in  Jones v.  United States, 1
   Ct. Cl. 383, 384 (1865), explained:
 
        The  two characters which the Government possesses as a
        contractor and as a sovereign cannot be thus fused; nor
        can the United States while  sued in the one  character
        be made  liable in damages  for their acts done  in the
        other.   Whatever acts the  Government may do,  be they
        legislative or executive, so long as they be public and
        general, cannot be deemed  specially to alter,  modify,
        obstruct or violate the particular contracts into which
        it enters with private persons.
 
   267 U.S. at 461.
 
        As the Supreme Court more recently recognized, the sovereign
   acts  doctrine attempts to  "balance [the] Government's  need for
   freedom to legislate  with its obligation to  honor its contracts
   by asking whether the  sovereign act is properly  attributable to
   the  Government as contractor."  United  States v. Winstar Corp.,
   518    U.S.    839    (1996).[foot #] 13       This    balancing,
   according  to the United States Court  of Appeals for the Federal
   Circuit, "is not a hard and fast rule, but rather a case specific
   inquiry that focuses on the scope of the [Governmental act] in an
   effort to determine whether on balance that [act] was designed to
   target prior  governmental contracts."   Yankee  Atomic Electric,
 
                                                                    
                   ----------- FOOTNOTE BEGINS ---------
 
        [foot #] 13 In Winstar the Court analyzed the sovereign acts
                       _______
   doctrine  in four separate opinions,  with none of these analyses
   carrying  a majority.   However,  as the  United States  Court of
   Appeals  for the Federal  Circuit recognized, the  concurring and
   dissenting Justices  agreed with  this general  statement of  the
   doctrine.  Yankee Atomic Electric, 112 F.3d at 1585 n.5.
              ______________________
 
                   ----------- FOOTNOTE ENDS -----------
 
 
   112  F.3d at 1575.  Thus, we  begin by examining the scope of the
   governmental act in question.
 
 
        The shutdown resulted  from the failure of the  Congress and
   the President  to enact  appropriations legislation  and was  not
   specifically targeted to  any Government contracts.   Rather, the
   shutdown   was  of   general  applicability,   broadly  impacting
   governmental  functions and services.  See generally Appeal File,
   Exhibit 24.   Here,  as in  Horowitz,  the governmental  action's
   impact upon specific public contracts is merely incidental to the
   accomplishment       of       a        broader       governmental
   objective.[foot #] 14      As   such,    the   shutdown   was   a
   public and  general act.   E.g., Granite  Construction Co.,  IBCA
   947-1-72, 72-2 BCA   9762 (an act of the President in withholding
   funds as part of an overall plan to halt national inflation was a
   public and  general act  in the exercise  of sovereign  power for
   which the Government was not liable).
 
        This does not, however,  end  our inquiry.  As our appellate
   authority  has recognized,  the  Government  can  enter  into  an
   express or  implied agreement to  pay a contractor the  amount by
   which its costs are increased by a sovereign act.  The  court has
   explained: 
 
        It  has long  been established  that  while the  United
        States cannot be held liable directly or indirectly for
        public  acts  which  it performs  as  a  sovereign, the
        Government  can agree  in a  contract that  it if  does
        exercise  a  sovereign  power, it  will  pay  the other
        contracting party  the amount  by which  its costs  are
        increased by  the Government's sovereign act,  and that
        this agreement  can be  implied as  well as  expressed.
        Amino Bros. v. United States, 372 F.2d 485, 178 Ct. Cl.
        515, cert denied, 389 U.S.  846 . . . (1967);  Ottinger
        v.  United States,  88 F. Supp. 881,  116  Ct.  Cl. 282
        (1950).
 
   D&L Construction Co. & Associates v. United States, 402 F.2d 990,
   999  (Ct. Cl. 1968); See also  Hughes Communications Galaxy, Inc.
   v.   United  States,   998 F.2d  953,   959   (Fed.  Cir.   1993)
   ("[C]ontracts  routinely  contain provisions  shifting  financial
   responsibility to the Government for  events which might occur in
   the  future.   That  some of  these  events may  be triggered  by
   sovereign   Government  action  does   not  render  the  relevant
   contractual  provisions   any  less   binding  than   those  that
   contemplate  third party acts, inclement weather, and other force
                                                                    
                   ----------- FOOTNOTE BEGINS ---------
 
        [foot #] 14 The questionable benefit  of a  public act  does
   not alter the  applicability of the sovereign acts  doctrine.  As
   Justice Souter, writing  for the plurality in  Winstar, observed,
                                                  _______
   "an intent to benefit the public can no more serve as a criterion
   of  a  'public and  general'  sovereign act  than  its regulatory
   character can." 518 U.S. at 903.
 
                   ----------- FOOTNOTE ENDS -----------
 
 
   majeure."); Hills  Materials Co. v.  Rice, 982 F.2d 514,  516 n.2
   (Fed. Cir. 1992) ("The sovereign acts doctrine certainly does not
   prevent the government as  contractor from affirmatively assuming
   responsibility   for   specified  sovereign   acts.");   Rockwell
   International Corp., EBCA  C-9509187, et al., 99-1 BCA    30,345,
   at  150,061-2 (agency  not  barred  from  agreeing  to  reimburse
   contractor  for  costs  incurred  due to  sovereign  acts  in the
   absence of specific statutory or regulatory limitations).
 
 
        In D&L  Construction Co.,  402 F.2d  at 999,  the Government
   closed the access  roads to a construction site  due to a strike,
   and  the court  held that,  to the  extent  this blockade  of the
   access roads  resulted in  additional costs,  the sovereign  acts
   doctrine  would not  bar recovery  because full  access  had been
   warranted  in the contract.   The  court relied  on Gerhardt   F.
   Meyne  Co.  v.  United States, 76  F. Supp.  811  (Ct. Cl. 1948).
   There, the specifications had provided that the truck entrance to
   a  site  would be  a  road  which was  later  closed by  military
   authorities,  forcing the  contractor  to  construct a  temporary
   road.    The   Court  of  Claims   held  that  the   Government's
   representation that certain roads would be available carried with
   it the  implied promise "that  if they were not,  defendant would
   stand the increased cost."  76 F. Supp. at 815. 
 
        Analyzing the  instant contracts under  these principles, we
   conclude  that  the Government's  representation  that Government
   facilities  would be accessible to the contractor for performance
   "carried  with it the implied promise that if they were not, [the
   Government] would  stand the  resulting cost."   Gerhardt  Meyne,
   76 F. Supp.  at 815.    The  contracts  expressly  provided  that
   appellant's   personnel would  perform their  work at  Government
   facilities  which were closed by  the Government through no fault
   of appellant. 
 
        Our  resolution of  this case  does not  rest solely  on the
   Government's       obligation        to       provide        site
   access.[foot #] 15         Rather,    the    fact     that    the
   contracts at issue were  cost-reimbursement type contracts, which
   contained  Stop-Work  Order  clauses  providing  for  payment  of
   increased  allocable costs  incurred while  such  orders were  in
   effect,  further supports a conclusion that the Government should
 
                                                                    
                   ----------- FOOTNOTE BEGINS ---------
 
        [foot #] 15 In its reply brief, respondent contends that the
   Board should only consider the bases for entitlement presented to
   the contracting officer  in appellant's certified claim.  This is
   erroneous.    It  is  well established  that  the  Board  reviews
   contracting officer decisions under the de novo standard.  Wilner
                                                              ______
   v.   United  States,  24  F.3d  1397,  1401-02  (Fed. Cir.  1994)
   ___________________
   (en banc).
 
                   ----------- FOOTNOTE ENDS -----------
 
 
   bear  the  increased  costs of  performance  attributable  to the
   shutdown.[foot #] 16      As   Professors    Cibinic   and   Nash
   have recognized: 
 
 
        The most significant feature  of the cost-type contract
        is  that   the   contractor   assumes   no   risk   for
        nonperformance.    In 20  Comp.Gen. 632,  635 (B-15593)
        (1941) the  Comptroller General observed that this type
        of  contract "contemplates the actual costs of the work
        and  the  risks  thereof  are  to  be  assumed  by  the
        Government; that is, that the contractor is to come out
        whole, regardless  of contingencies, in  performing the
        work in accordance with the contract."
 
   John  Cibinic, Jr.  &  Ralph  C.  Nash,  Jr.,  Cost-Reimbursement
   Contracting, at 17 (2nd ed.  1993);  see generally  United States
   Steel Corp.  v. United States,  367 F.2d  399, 408 (Ct. Cl. 1966)
   ("Generally [cost-plus-fixed-fee] agreements are designed to give
   businessmen  the  expenses  of operating  that  portion  of their
   enterprise dedicated  during the  contract  period to  Government
   work together  with a reasonable  profit. . . .   [K]ey drawbacks
   from  the  Government's   standpoint  are  that  the   'risk'  of
   variations in allowable costs is borne entirely by it . . . .").
 
        The  contracts' Stop-Work  Order  clauses provided  that the
   contracting officer would make an equitable adjustment if a stop-
   work order  resulted in  an increase  in  the "contractor's  cost
   properly  allocable  to  the  performance  of  any  part  of  the
   contract(s)."[foot #] 17         Here,  there   is   no  question
   that the Government issued stop-work orders on all four contracts
   covering  the period  of NOAA's  shutdown.   An issue  is whether
   appellant incurred increased costs  allocable to  the performance
   of the contracts as a direct result of the shutdown.  
 
        FAR 31.201-4, Allocability of Costs, provides:
                                                                    
                   ----------- FOOTNOTE BEGINS ---------
 
        [foot #] 16 Appellant contends  that it was required  to pay
   employees   for  one  day,  December 22,  under  the  Fair  Labor
   Standards Act  of 1938  (FLSA), 29 U.S.C.    201  et seq.  on the
   ground  that salaried personnel who  are exempt from the overtime
   provisions of the  FLSA are entitled to a full week's pay for any
   part of a  week's work.  Appellant's Record  Submission at 31-32.
   It appears that  this is an  alternative argument since  salaries
   (or  layoff  pay)  for December 22  are  included  in appellant's
   overall claim.  We need not reach this basis of recovery since we
   grant entitlement under the Stop-Work Order clause.  Nonetheless,
   we note that  appellant has not stated the amount it would be due
   under the FLSA and failed to marshal any factual support for this
   argument.
 
        [foot #] 17 We   do  not   rely   upon   the  Holidays   and
   Administrative Leave clauses or the Changes clause, given that we
   view this as a classic stop-work order case.
 
                   ----------- FOOTNOTE ENDS -----------
 
 
 
        A cost is  allocable if it is  assignable or chargeable
        to one or more cost objectives on the basis of relative
        benefits  received  or  other  equitable  relationship.
        Subject  to the  foregoing, a  cost  is allocable  to a
        Government contract if it--
        (a) Is incurred specifically for the contract;
        (b) Benefits both the contract and other  work, and can
        be  distributed to them in reasonable proportion to the
        benefits received; or
        (c)  Is necessary  to  the  overall  operation  of  the
        business,  although  a   direct  relationship  to   any
        particular cost objective cannot be shown.
 
   As  the Armed Services Board  of Contract Appeals has recognized,
   the provisions of this regulation  are stated in the disjunctive,
   and  thus the cost  need meet only  one of the  three criteria in
   order to  be allocable.   Northrop  Worldwide Aircraft  Services,
   Inc., ASBCA 45877, et al., 95-1 BCA   27,503, at 113,504 (quoting
   Hayes International Corp., ASBCA 18447, 75-1 BCA   11,076).
 
        HSTX,  SES,  and  EG&G paid  affected  employees  during the
   shutdown  to retain them and maintain the necessary capability to
   perform the contracts  immediately after the shutdown ended.  The
   costs incurred are the direct salaries of the employees who could
   not work due to the shutdown,  and who were assigned full-time to
   the contracts at  issue at the time  of the shutdown.   Under the
   circumstances,  the  costs  of salaries  or  layoff  pay, however
   characterized,  can be viewed as being "incurred specifically for
   the  contracts."   As such,  HSTX's, SES',  and EG&G's  costs are
   allocable to the contracts at issue.
 
        SMSRC,  however, never  incurred the  costs  it is  claiming
   since it has not paid its employees for the shutdown period.  Nor
   has  appellant proven that  SMSRC assumed a  bona fide liability,
   debt, or legal obligation for  the salary costs.  Rather, SMSRC's
   president has candidly  and consistently stated that  SMSRC would
   not pay its employees unless HSTX were to  prevail in this appeal
   and  NOAA  were  to  pay   the  amount  claimed.    In  analogous
   circumstances,  tribunals   have  denied  reimbursement   for  an
   unincurred  cost.   E.g., Universal  American Enterprises,  Inc.,
   ASBCA 22562, 81-1  BCA     14,942, at  43,285    ("Appellant  has
   expressed an intent  to pay additional salaries  depending on the
   outcome  of  this  appeal,  in   effect,  the  occurrence  of   a
   contingency, but the ASPR (DAR) cost principles incorporated into
   the contract  do not permit reimbursement for an unincurred cost.
   See Norman M. Giller  & Associates v. United States,  210 Ct. Cl.
   80, 535 F.2d 37 (1976); affirming . . . ASBCA No. 14696, 73-1 BCA
      10,016.    Compare  Seven  Sciences  Industries,  ASBCA 23337,
   80-2 BCA        14,518.").[foot #] 18      See    also,   Worsham
                                                                    
                   ----------- FOOTNOTE BEGINS ---------
 
        [foot #] 18 The   board   relied  on   Defense   Acquisition
   Regulation (DAR)  15.205.7(c), which  provided that  costs to  be
                                                      (continued...)
 
                   ----------- FOOTNOTE ENDS -----------
 
 
   Construction Co., Inc., ASBCA 25907, 85-2 BCA   18,016, at 90,376
   ("Amount claimed is no  more than a contingent cost to the extent
   of  any  recovery  permitted  by  the  Board  and   is  therefore
   unallowable under DAR 15-205.7.") (citation omitted).
 
 
        Nor has  appellant demonstrated  that SMSRC  is entitled  to
   recover  its unpaid potential  salary costs  under the  other two
   subsections of FAR 31.201-4.   There is  no indication that  such
   salaries  would   be  proportionally  distributed   between  this
   contract  and other  work or  that the  potential payments  would
   benefit the contracts  at issue or were necessary  to the overall
   operation of  the business.   The United States Court  of Appeals
   for  the  Federal  Circuit  recently  recognized  in  Caldera  v.
   Northrop  Worldwide  Aircraft Services,  Inc.,  No. 98-1500 (Fed.
   Cir. Sept. 10, 1999),  "[i]n order to demonstrate that  a cost is
   allocable, the contractor must show  a benefit to the  Government
   work from an expenditure of a cost that it claims is necessary to
   the overall  operation of its business." (citations omitted).  In
   the instant  case, appellant has  not attempted to show  that its
   potential  expenditure of  these salaries  is  necessary for  the
   operation of its business.  In fact, given that appellant has not
   paid these  costs to  date and will  not pay  these costs  absent
   reimbursement from NOAA, it is apparent that reimbursement is not
   "necessary"  for the  overall operation  of  its business,  which
   continued after the shutdown.  We conclude that appellant has not
   demonstrated that SMSRC's unpaid salary costs are allocable under
   the FAR cost principles.
 
        The  Stop-Work   Order  clause   also  requires  that   "the
   contractor take all  reasonable steps to minimize  the incurrence
   of costs allocable  to the work covered  by the order during  the
   period  of work  stoppage."   Appeal File,  Exhibits 1-4  at F-1.
   Appellant, EG&G,  and SES  minimized the  costs allocable  to the
   stop-work  order  in  two  respects.    They used  some  affected
   employees to  perform work  charged  to other  cost accounts  and
   allowed  employees to take  vacations during this  period without
   charging  those  costs to  the  contract.   However,  the  record
   contains  no  evidence  that  SMSRC  attempted  to  minimize  the
   incurrence  of  costs  allocable  to  the  work  covered  by  the
   suspension order.   Unlike  the other  contractors, SMSRC  simply
   told its workers to stay home and did not attempt to charge their
   work to other accounts.
 
        Appellant  must also demonstrate that the claimed costs were
   "allowable"   within  the  meaning  of  the  cost  principles  in
   FAR 31.201-2,  which  adds   the  requirement  that  a   cost  be
 
                                                                    
                   ----------- FOOTNOTE BEGINS ---------
 
        [foot #] 18 (...continued)
   incurred on the basis of  contingencies, including the results of
   pending  litigation, are not generally allowable since such costs
   have   not  been  incurred.    FAR 31.205-7  contains  a  similar
   provision.
 
                   ----------- FOOTNOTE ENDS -----------
 
 
   reasonable     and     reiterates      the     requirement     of
   allocability.[foot #] 19  
 
 
        FAR 31.201-3, Reasonableness of Costs, provides:
 
        (a) A cost is reasonable  if, in its nature and amount,
        it does  not exceed that  which would be incurred  by a
        prudent person  in the conduct of competitive business.
        Reasonableness of specific costs must be  examined with
        particular  care  in  connection with  firms  or  their
        separate divisions that may not be subject to effective
        competitive    restraints.       No   presumption    of
        reasonableness shall be  attached to the  incurrence of
        costs by  a contractor.   If an  initial review  of the
        facts results in a challenge  of a specific cost by the
        contracting  officer   or  the   contracting  officer's
        representative, the burden  of proof shall be  upon the
        contractor to establish that such cost is reasonable.
 
        (b)  What is  reasonable  depends  upon  a  variety  of
        considerations and circumstances, including-
        (1) Whether it is the type of cost generally recognized
        as  ordinary and  necessary  for  the  conduct  of  the
        contractor's business or the contract performance;
        (2) Generally accepted sound business practices, arm's-
        length  bargaining,  and  Federal and  State  laws  and
        regulations;
        (3)   The   contractor's    responsibilities   to   the
        Government,  other   customers,  the   owners  of   the
        business, employees, and the public at large; and
        (4)  Any significant  deviations from  the contractor's
        established practices.
 
        In the instant case, the salary costs paid by HSTX, SES, and
   EG&G  during the  shutdown are  reasonable in  that they  are the
   actual salary rates  normally paid to these  employees performing
   these contracts.  E.g., TRC Mariah Associates, Inc., ASBCA 51811,
   99-1 BCA   30,386,  at 150,187 ("Under ordinary  circumstances an
                                                                    
                   ----------- FOOTNOTE BEGINS ---------
 
        [foot #] 19 FAR 31.201-2,  Allowability of  Costs, provides,
   in pertinent part:
 
             (a)  The factors to  be considered  in determining
             whether a cost is allowable include the following:
             (1) Reasonableness.
             (2) Allocability.
             (3) Standards  promulgated by  the  CAS Board,  if
             applicable;    otherwise,    generally    accepted
             accounting principles and practices appropriate to
             the particular circumstances.
             (4) Terms of the contract.
             (5) Any limitations set forth in this subpart.
 
                   ----------- FOOTNOTE ENDS -----------
 
 
   employee's salary  would form the basis  for the rate  at which a
   prudent  employer   would   incur  costs   for  that   employee's
   services.").
 
 
        Respondent  contends that these employee salary costs do not
   meet the  test of  reasonableness or  allocability because  these
   costs provided no benefit to the Government  during the shutdown,
   since  the  employees   performed  no  work  on   the  contracts.
   Respondent s  Reply  at  14-18.   We  disagree  for  two reasons.
   First,  maintaining skilled  scientists and  computer technicians
   capable  of performing these contracts did benefit the Government
   by ensuring that  these individuals remained available  under the
   contracts after the  shutdown was over.  Second,  labor costs for
   an idled workforce during a Government-caused suspension or delay
   have been recoverable in similar  circumstances.  For example, in
   Stroh Corp. v. General Services Administration, GSBCA 11029, 96-1
   BCA   28,265, at 116,019, the Board recognized:
 
        [another  allowable cost  is  the  cost  of  labor  and
        equipment that has  remained idle or  is underutilized,
        subject to reasonable efforts to  mitigate the expense.
        Laburnum Construction Co., 325 F.2d 451 (Ct. Cl. 1963);
        Hardeman-Monier-Hutcherson (JV), ASBCA  11785, 67-1 BCA
          6210, at 28,748-49.
 
   Similarly, in Tayag Brothers Enterprises, Inc.,  ASBCA 42097, 94-3
   BCA    26,962, aff'd. on reconsideration,  95-1 BCA   27,599,  the
   board awarded wage costs for electricians and an  air conditioning
   technician who  were on standby  due to  Government-caused delays.
   In AST  Anlagen-Und Sanierungstechnik GmbH,  ASBCA 42118, 92-2 BCA
      24,961,  at 19,135,  the  board  held that  salaries  of  idled
   workers during a suspension due to a bid  protest were recoverable
   under the Protest After  Award clause.  The board  stated: ". .  .
   the  proven  actual  costs  for  the idled  employees'  wages  and
   overhead during  the  stop  work  period are  recoverable."    See
   generally  Stanwick  Corp., ASBCA 18083,  76-2  BCA    12,114,  at
   51,637 (decision to retain or  release employees above  productive
   need must be that  of a prudent businessman  and must consider the
   needs of his customers including the Government).
 
        Respondent  also  contends  that   the  layoff  pay  paid  to
   appellant's  employees during  the shutdown  was discretionary and
   not  required  by  HSTX's  policy,  and  thus  not  reasonable  or
   allocable to  the contracts.  This  issue of whether "layoff  pay"
   was  required  or  not  under  appellant's  employment  policy  is
   something  of a  red herring  in that  appellant has  demonstrated
   that  the amounts  it, SES,  and  EG&G paid  to workers  on  these
   contracts during the  shutdown were required  in order to maintain
   a  capability  to  perform,  regardless  of  internal   contractor
   policies  and whether  those amounts  are characterized  as salary
   costs, layoff pay, or idle time costs.
 
        Nonetheless,  even  applying  HSTX's  Employment  Policy,  we
   would  conclude  that  the  layoff  payments  here  were required.
   HSTX's Employment  Policy provides that an  employee who is  being
   laid  off  will be  given  two  weeks' advance  notice  or  may be
   provided two weeks' pay  in lieu of notice.   We read this  policy
   as requiring  that HSTX give  its employees  either notice of  the
   layoff, or  the pay,  if notice  could not  be given.   Respondent
   claims that  notice could  have been  given two  weeks before  the
   then-existing Continuing Resolution was to expire on  December 15,
   1996,  because  appellant  was   fully  aware  of  NOAA's  funding
   situation and  should have anticipated  that NOAA's  funding would
   end.   The evidence of record,  however, shows that the  political
   circumstances preceding  the shutdown were volatile and uncertain,
   and  that neither  appellant  nor the  media  knew or  could  have
   reasonably anticipated whether there would  be a NOAA  shutdown or
   what  the  dates  of   any  shutdown  would  be.    Appeal   File,
   Exhibits 16 at  65-67; 24.   As such, notice  of potential  layoff
   was not feasible, and  once the layoff was instituted without  the
   requisite notice, pay was required.
 
   Quantum
 
 
        In this appeal, HSTX seeks $196,994.  The  Board has reviewed
   the audit  reports prepared by DCAA  and notes that neither  party
   has effectively  challenged the factual  conclusions in  the audit
   reports, even though EG&G's contract manager "does not  concur" in
   the audit's findings  with respect to EG&G.   Hunt Affidavit    7.
   The  audit   reports  reflect   a   review  of   HSTX's  and   the
   subcontractors' accounting systems, books,  and records and of the
   claimed  costs  for  verification   and  the  consistency  of  the
   charges.   Based upon the  audit, the  Board agrees that  $30,050,
   which includes SMSRC's claim of $12,045, may not be paid.  
 
        Specifically, as the  auditors correctly noted,  HSTX's part-
   time  employee  and  terminated  employee  salary  costs  are  not
   properly included  as furlough  costs.    Further, the  terminated
   employee  was  not  retained  in  order  to  perform  the  instant
   contracts  and  was  dismissed  for   reasons  unrelated  to   the
   furlough.  The overhead  and G&A associated with those costs  were
   also properly denied.  
 
        Appellant has provided no  factual evidence to counter DCAA's
   finding  that SES'  claim was  overstated by  $2118.   Appellant's
   Record Submission at  51-54.  Nor has appellant demonstrated  that
   EG&G is  entitled to  additional  compensation  disallowed by  the
   auditors.  Appellant has  the burden of proof, and the  conclusory
   statements in the affidavit of  EG&G's Contract Manager  submitted
   after   his    deposition   and   without   adequate    supporting
   documentation,  such  as  the  underlying  time  sheets,  does not
   constitute sufficient proof that  the hours are properly allocable
   to the  furlough account.  See Hunt Affidavit   7 and Attachments;
   Appeal     File,  Exhibit 19  and   Exhibits;  Appellant s  Record
   Submission  at 51-54;  Appellant s Reply  at 22    As such,  these
   costs are disallowed.
 
        Although  we   have  denied   the   portion   of  the   claim
   attributable to SMSRC's unpaid salary costs as to entitlement,  we
   note that  SMSRC's quantum  claim also  fails for  lack of  proof.
   Appellant admittedly  submits this  portion  of  the claim  as  an
   "estimate,"  because SMSRC did not pay the  salaries, and adequate
   documentation was not submitted to support these costs.
 
        The auditors questioned  the entire fee claimed in the amount
   of $12,887 because  allowing this fee  would result  in increasing
   the  fee  negotiated for  these  contracts.   We  agree  with  the
   auditors.   In  these  cost-plus-fixed-fee contracts,  the parties
   negotiated an estimated cost  of performance and pre-established a
   fee to be  paid to the contractor for performing the work.  Appeal
   File, Exhibits 1-3.  This  fee is a fixed amount of dollars  which
    will vary only if the contractor is required to perform work  not
   included  in  the  original  contract.   Cibinic  and  Nash, Cost-
   Reimbursement   Contracting,   supra,   at   75;   see   generally
   FAR 16.306(a).    Here,  there  admittedly  is  no  additional  or
   changed work, but rather  the absence of work for which  appellant
   is  nonetheless  being  paid.  As  such,  it  is   clear  that  no
   additional fee is payable.  Similarly, Contract No.  54, the cost-
   plus-award-fee  contract,  does  not  permit  awarding  a  fee for
   layoff  pay  during the  shutdown period.    Rather,  the contract
   provides that appellant's  fee will be determined by a  subjective
   evaluation   by  the   Government  based   upon  the   quality  of
   performance.    Appeal  File,  Exhibit 3  at  B-6;  see  generally
   FAR 16.405-2(a); Cibinic  & Nash, Cost-Reimbursement  Contracting,
   supra, at 102-05.   Further, because we grant this claim under the
   Stop-Work  Order clause,  a fee  is not  recoverable.   Cf.  Stroh
   Corp. v.  General Services Administration, GSBCA 11029, 96-1 BCA  
   28,265, at 116,022 ( Under the  Suspension of Work  Clause, profit
   is not allowable. ).   
 
   Appellant's Claim for Delay Damages is Dismissed
 
        For the first time in its record submission, appellant raised
   a  claim for  what  it termed  "delay  damage"  in the  amount  of
   $3084.24.  Appeal File, Exhibit 16  at 97; Appellant's Response to
   Interrogatory  No. 23; Appellant's  Record  Submission  at  54-55.
   This claim includes "direct costs diverted from these contracts to
   other  work,"  and  overhead  and G&A  shifted  from  the  instant
   contract  to  appellant s   bid  and  proposal  effort,   when  it
   reassigned employees to mitigate salary costs.  Id.  However, this
   claim  is  wholly  separate from  appellant's  certified  claim of
   $196,994 at issue,  was never presented to a  contracting officer,
   and  was   not  audited.    Appeal   File,  Exhibit 16  at  97-99.
   Presentation  of  a   claim  to   a  contracting   officer  is   a
   jurisdictional prerequisite to proceeding at the Board.  41 U.S.C.
     605  (1994).  Because HSTX  failed to present its  delay damages
   claim  to  a  contracting  officer for  final  decision,  we  lack
   jurisdiction to consider this  claim.  E.g., Buckner & Moore, Inc.
   v.  General  Services  Administration,  GSBCA 13403,  96-1  BCA   
   28,021.
 
                                Decision
 
        Appellant's  motion  to strike  section  IIB  of respondent's
   reply brief  is DENIED.   Respondent's  objections to  Exhibits 44
   through 47,  68,  75, and  77 through  80  are SUSTAINED.    These
   documents are not part of the record in this appeal.  
 
        Appellant's  claim for $3084.24 for delay damage is DISMISSED
   FOR LACK OF JURISDICTION.
 
        Appellant's claim for $12,045 representing salary costs which
   SMSRC has not paid its employees is DENIED.  
 
        Appellant's  claim for  salary  or layoff  costs paid  to its
   employees and those of EG&G and SES  during the shutdown period is
   GRANTED IN PART, in the amount of $166,944.
   ________________________________
 
                                      MARY ELLEN COSTER WILLIAMS
                                      Board Judge
 
   We concur:
 
 
 
   ________________________________
   ________________________________
   ANTHONY S. BORWICK            ALLAN H. GOODMAN
   Board Judge                             Board Judge