However, FAA officials in Oklahoma City and Fort Worth subsequently notified TAIT that some delay, demobilization and startup costs incurred by Cinnabar between the funding shortfall in December 2002 and the resumption of the program in September 2003 were not eligible for federal reimbursement.
"There was nothing illegal or diverting of funds," Hough said. "The mistake was getting ahead and awarding contracts that were worth more than the FAA funds available."
Parmele said the parties had agreed to the $350,000 letter of credit and the withholding of $350,000 from future Cinnabar management fees until the dispute with the FAA was resolved.
But that agreement dissolved with the board's rejection of Cinnabar's contract extension.