                     NOTE: This disposition is nonprecedential.

 United States Court of Appeals for the Federal Circuit
                                     2008-1450

                      TOTAL PROCUREMENT SERVICE, INC.,

                                                    Appellant,

                                          v.

                   Robert M. Gates, SECRETARY OF DEFENSE,

                                                    Appellee.


      Donnie Dac Ho, South Coast Law Center, of Santa Ana, California, for appellant.

       Courtney E. Sheehan, Trial Attorney, Commercial Litigation Branch, Civil
Division, United States Department of Justice, of Washington, DC, for respondent. With
her on the brief were Jeanne E. Davidson, Director, and Reginald T. Blades, Jr.,
Assistant Director. Of counsel on the brief was JoAnn W. Melesky, Defense Information
Systems Agency/Defense Information Technology Contracting Organization, United
States Department of Defense, of Scott Air Force Base, Illinois.

Appealed from: Armed Services Board of Contract Appeals

Administrative Judge Robert T. Peacock
                      NOTE: This disposition is nonprecedential.
 United States Court of Appeals for the Federal Circuit


                                      2008-1450



                      TOTAL PROCUREMENT SERVICE, INC.,

                                                              Appellant,

                                           v.

                    Robert M. Gates, SECRETARY OF DEFENSE,

                                                               Appellee.


         Appeal from the Armed Services Board of Contract Appeals in nos.
         54163 and 55821, before Administrative Judge Robert T. Peacock.

                          ____________________________

                              DECIDED: July 17, 2009
                          ____________________________


Before MICHEL, Chief Judge, NEWMAN, and DYK, Circuit Judges.

PER CURIAM.


      This case concerns damages for a breach of contract by the United States. Total

Procurement Services, Inc. (“TPS”) was a party to the contract. TPS argues that, due to

the government’s contractual breach, it suffered damages of $69,855,022. The Armed

Services Board of Contract Appeals (“Board”) upheld the denial of the claim, ruling that

TPS had not proven damages resulting from the breach. Because the Board’s decision

was supported by substantial evidence, we affirm.
                                I.     BACKGROUND

       We write mainly for the parties and therefore provide only a brief summary of the

facts, which are sufficiently set forth in the Board’s opinion.       See In re Total

Procurement Servs., Inc., ASBCA Nos. 54163 and 55821, 08-1 BCA ¶ 33,843 (Mar. 24,

2008) (“Board Decision”).      In July 1993, the Department of Defense (“DoD”)

commenced a study which recommended ways to use electronic commerce to improve

its acquisition process. An ultimate recommendation from the study was the creation of

a DoD infrastructure utilizing a multiple value-added network (“VAN”) approach. VANs

were to provide the distribution of electronic transactions to customers based

internationally.   As contemplated, the government would create an infrastructure

comprising DoD distribution points, or hubs, that would make covered DoD procurement

actions accessible only to VANs that executed the standardized VAN licensing

agreement (“VLA”).

       TPS was incorporated in July 1992. During 1993 and 1994 and prior to the VLA,

TPS’s business involved providing procurement information to its customers in paper

format, entitled Sales Opportunity Reports (“SORs”).     TPS created the SORs from

procurement data reformatted into a more “user friendly” format for TPS’s clients. If a

TPS client was interested in a particular solicitation, the client submitted its bid (or

quotation or proposal) directly to the government.       TPS did not send customer

information back to the government. TPS’s business grew to about 100 customers and

continued through the year 2000.

       Sometime prior to 1995, TPS decided to become certified as a VAN under the

DoD’s plan. In early 1995, TPS determined that it could pass the necessary testing



2008-1450
                                       -2-
requirements pursuant to the VLA. In July 1995, the VLA signed by TPS became

effective when it was executed by the contracting officer. The VLA was structured as a

“no cost” to the government contract. Accordingly, VAN providers would earn revenues

from fees charged to vendors or trading partners. TPS expected that VANs operating

pursuant to the VLA would be the mandatory conduits for DoD electronic procurement

transactions and that TPS’s customer base would dramatically increase.

      The implementation of the program did not proceed as originally expected.

Traffic through the infrastructure declined in 1996 as the use of internet websites,

electronic bulletin boards, and other alternative means increased. The complexity of the

system also impeded a satisfactory implementation by the government. In January

1999, the government notified TPS that the government was exercising its right under

Article 2 of the VLA to terminate the license agreement.       The termination became

effective February 15, 1999.

      TPS seeks to recover compensation based on two categories of damages based

on the government’s breach before the termination.       First, TPS claims anticipatory

profits resulting from the alleged loss of customers and potential customers. Second,

TPS asks for recovery of software programming costs allegedly incurred by TPS in its

effort to comply with the requirements of the VLA. The Board found that TPS had not

met its burden of proving its claim for either type of damages. For the reasons set forth

below, we affirm the Board’s decision.

                                 II.      DISCUSSION

      This appeal involves only factual issues, and “[a]s to questions of fact, if

substantial evidence supports the Board’s factual findings, this court will uphold them



2008-1450
                                         -3-
absent some indication that the decision is ‘fraudulent, arbitrary, capricious, or so

grossly erroneous as to necessarily imply bad faith.’” Grumman Aerospace Corp. v.

Wynne, 497 F.3d 1350, 1356 (Fed. Cir. 2007) (quoting 41 U.S.C. § 609 (2006));

see also Fruin-Colnon Corp. v. United States, 912 F.2d 1426, 1428-29 (Fed. Cir. 1990).

       With respect to TPS’s first category of alleged damages, “[a] claim for an

attenuated loss resulting from a breach, like a lost profits claim, must not be speculative

and must be supported by evidence providing a reasonable basis for the amount of

damages.” Fifth Federal Lincoln Bank v. United States, 518 F.3d 1308, 1319 (Fed. Cir.

2008). TPS does not challenge the legal standard relied upon by the Board, but mainly

challenges the factual findings upon which the Board concluded that TPS had not met

its evidentiary burden.

       As the Board explained, “the VLA was a ‘no cost’ license involving an untried,

high risk venture in an unstable, rapidly evolving market without minimum guarantees.”

Board Decision at 167,496. Relying in part on its previous decisions in In re CACI

International, Inc., ASBCA Nos. 53058 and 54110, 05-1 BCA ¶ 32,948 (Apr. 29, 2005),

aff’d 177 F. App’x 83 (Fed. Cir. 2006), and In re Simplix, ASBCA No. 52570, 06-1 BCA ¶

33,240 (Mar. 14, 2006), aff’d sub nom. Imagination & Information, lnc. v. Gates,

216 F. App’x 990 (Fed. Cir. 2007), the Board concluded that “TPS has failed to establish

the requisite causal link between the government’s breach and the claimed lost profits

or prove that they were a reasonably foreseeable consequence of the breach given the

nature of the VLA and attendant circumstances.”        Board Decision at 167,497.      On

appeal before us, TPS has not sufficiently explained why the Board’s decision with




2008-1450
                                        -4-
respect to causation and foreseeability was lacking substantial evidentiary support or

otherwise erroneous.

       Furthermore, the Board found that TPS’s evidence of lost clients did not meet the

“reasonable certainty” requirement. Of particular note is the Board’s finding that “TPS

deleted, destroyed or failed to properly maintain virtually all documentation and records

that might have provided some evidence of damages experienced.” The Board also

found that, despite TPS’s claim of losing 1,474 clients, the evidence did not show that

TPS either had or lost that many clients during the relevant time period, or that “any

VAN customer terminated any agreement with TPS as a result of the breach.”

Moreover, the Board found that “no billing records, subscription forms, invoices to

customers or other corroborating documentation were produced” to support TPS’s

allegation that it lost VAN customers.

       On appeal, TPS does little more than quarrel with the Board’s factual findings.

For instance, TPS argues that “[n]o evidence was ever submitted by either side that a

client list ever existed,” which, in TPS’s view, undermines the Board’s reliance on its

finding that TPS failed to offer any client list to the Board.        We understand TPS’s

position to be that it never had a physical, written client list. That may be, but if so, what

TPS misunderstands is the Board’s need for client information that could have

substantiated TPS’s claim of 1,474 lost clients. Moreover, in the very next sentence in

its brief, TPS cites testimony of its own witness, who stated that “[t]he client list is in the

computer and is in the database that covers clients.” Thus, as the Board found, TPS at

one time possessed the identities of its alleged clients. Before the Board, however,

TPS offered little to no evidence as to which companies, entities, or persons were



2008-1450
                                          -5-
affected TPS clients during the relevant time period. According to the Board’s finding,

all TPS offered to support its claim of 1,474 lost customers was a crude calculation

based on assumptions and a “client number”:

              TPS determined that it lost a total of 1,474 clients. It derived
              this number by obtaining the last client “number” (2574)
              allegedly assigned by its computer system to new clients
              over the period 1992 to 2003. It then subtracted the
              beginning number of 1000 to determine that TPS’s services
              had been used by a total of 1,574 clients during that time.
              Finally, it subtracted the number of clients that still used
              TPS’s services of “approximately 100” as of 2003 to derive
              the number of clients of 1,474 that were allegedly lost as a
              result of the government’s breach.

Board Decision at 167,492. As sufficiently explained by the Board, such a calculation

does not in this case rise to the level of “reasonable certainty” as to either accuracy or

causation. TPS’s other disagreements with the Board’s lost profits findings and analysis

are equally without merit.

       As to TPS’s claim for software development costs, the Board’s factual findings

are likewise supported by substantial evidence. TPS sought approximately $120,000

which it purportedly paid to its employees for writing computer programs relating to the

VLA.   The Board found that the sole documentary evidence relied upon by TPS—

namely, employee W-2 forms for the tax years 1994 through 1996—was unsegregated,

questionable, and uncorroborated. TPS submitted “[n]o canceled checks, accounting or

bank records or other documentation [to] support or verify that the amounts claimed

were incurred” on the VLA project.        TPS also claimed $36,000 paid to contract

programmers, but the Board similarly found this claim to be unsupported. The Board

noted that TPS submitted no documentation demonstrating that the contract

programmers were in fact paid. The only programmer who testified stated he was paid


2008-1450
                                        -6-
“at best a few thousand,” and TPS admitted that it did not prepare or file the pertinent

forms with the IRS covering the alleged payments to the contract programmers. The

Board also concluded that TPS made no effort to explain how the purported

programming costs were necessary for, reasonable, and allocable to the VLA, as

opposed to TPS’s other commercial work or other governmental work unrelated to the

VLA. On appeal, TPS fails to demonstrate that the Board’s findings are unsupported by

substantial evidence.

      Accordingly, we affirm the Board’s decision.




2008-1450
                                       -7-
