Interest on Equity Capital

On federal contracts, courts and boards have routinely disallowed recovery of this form of interest. Energy Nw. v. United States, 641 F.3d 1300, 1312 (Fed. Cir. 2011); Gevyn Construction Corp. v. United States, 827 F.2d 752 (Fed.Cir.1987); Dravo Corporation v. United States, 219 Ct.Cl. 416 (1979); Framlau Corporation v. United States, 215 Ct.Cl. 185 (1977); Appeal of Aoki Corp., ENGBCA No. PCC-62, 91-2 BCA ¶ 23848; Hewitt Contracting Company, ENGBCA Nos. 4596, 4597, 83-2 BCA ¶ 16,816; E.L. David Construction Co., Inc., ASBCA Nos. 29225, 34387, 89-3 BCA ¶ 22,140. One reason recovery has been denied is because, unlike the situation with borrowed capital (where the cost to the contractor of borrowing money can be determined clearly), the cost and value to the contractor of the use of equity capital are not readily ascertainable. Appeal of Aoki Corp., ENGBCA No. PCC-62, 91-2 BCA ¶ 23848.

Updated: August 2, 2018