Accounting, Cost, & Pricing
We regularly assist clients with the cost principles of the Federal Acquisition Regulation (FAR) (and other agency-specific regulations), as well as the Cost Accounting Standards (CAS). We cover virtually all aspects of accounting cost and pricing, including counseling on the allowability or reasonableness of costs, interpreting the CAS to assure compliance, assisting in the response and resolution of Defense Contract Audit Agency (DCAA) audits, addressing issues involving disclosure of cost or pricing data under the Truthful Cost or Pricing Data Act (formerly TINA), dealing with indirect cost rates, or litigating these issues before the Board of Contract Appeals or the Court of Federal Claims. We interact regularly with corporate CFOs, accounting and actuarial consultants, the DCAA, and the Defense Contract Management Agency.
- ACADEMI, LLC in securing a favorable settlement through an Alternative Dispute Resolution (ADR) proceeding involving penalties for allegedly expressly unallowable costs, imposition of unilateral rate determinations, and allowability of certain direct costs. The issues spanned three fiscal years. ACADEMI LLC, ASBCA Nos. 60886 et al., (March 1, 2022).
- Telos in securing a favorable settlement in a matter involving the government’s issuance of a unilateral rate determination that challenged two underlying cost accounting practices. Telos Corp., ASBCA No. 62950 (Dec. 16, 2021).
- Major defense nonprofit organization in a False Claims Act investigation, including DCIS and CID subpoenas, arising out of alleged unallowable costs charged to government contracts (plus substantial penalties alleged for expressly unallowable costs) in a Defense Contract Audit Agency audit report. We successfully represented the client throughout the investigation and settled with the U.S. Attorney on a non-False Claims Act basis for an amount that was a fraction of the unallowable costs alleged.
- ACADEMI Training Center LLC in securing a successful resolution, by alternative dispute resolution, on a contractor claim of approximately US$12 million and a government claim of approximately US$3.6 million involving the interpretation of purported caps on G&A, ODC, and fringe rates. ACADEMI Training Center LLC, ASBCA Nos. 61977, 62296 (April 2, 2021).
- Telos in securing a judgment in favor of Telos involving the government's refusal to reimburse upward adjustments arising from finalized indirect rates on an Air Force contract under government theories of Limitation of Cost and Limitation of Funds clause. Telos Corp., ASBCA No. 62600 (March 3, 2021).
- L3Harris Technologies in the successful resolution of a contract dispute involving a change in cost accounting practice through alternative dispute resolution. L3Harris Technologies, ASBCA No. 62474 (Feb. 9, 2021).
- Booz Allen Hamilton in the successful resolution of a dispute involving a government claim for adjustment of fee with the full withdrawal of the government claim. Booz Allen Hamilton, ASBCA No. 62570 (Jul. 23, 2020).
- ACADEMI LLC in the successful representation against government claims of unallowable costs and unilateral rate designations. ACADEMI LLC, ASBCA Nos. 60886 et al.
- University of Maryland involving claims for recovery of various types of leave expenses and a government counterclaim involving vacation leave expenses under a contract with the Maryland Procurement Office. University of Maryland, ASBCA Nos. 60223, 60224. (resolved through negotiation (March 2019)).
- Raytheon Company against a government claim that the company failed to comply with CAS 415 and CAS 403 involving forfeitures under its deferred compensation plan. Raytheon Company, ASBCA No. 58849. (resolved through negotiation (Jan. 2017)).
- Raytheon Company against a government claim alleging defective pricing under the Truth in Negotiations Act. Raytheon Co., Integrated Defense Sys., ASBCA No. 60784 (resolved through negotiation (Dec. 2017).
- Raytheon Company against government claims involving cost impacts for changes in cost accounting practices. In a precedent-setting decision, the ASBCA held that the government's long-standing practice of counting decreases on fixed price contracts as increased costs paid by the government was an impermissible double counting under the CAS statute and "the very definition of a windfall." The ASBCA also permitted offsets, prior to 2005, for increased costs against decreased costs for multiple changes made on the same day. Raytheon Company, Space & Airborne Systems, ASBCA Nos. 57801 et al., 15-1 BCA ¶ 36024. In a subsequent decision, the ASBCA held that the government abused its discretion in failing to find cost impacts.
- Raytheon Company against a government claim that the company failed to comply with CAS 405 and that the company was liable for penalties under FAR 42.709-7 for inclusion of expressly unallowable costs in incurred cost submissions. Arnold & Porter secured a precedent-setting decision that narrowly construed an "expressly unallowable cost." The ASBCA held that bonus and incentive compensation are not expressly unallowable costs under the cost principles involving advertising, organization, and lobbying costs (FAR 31.205-1, -22, and -27). Although the ASBCA did not find estoppel, it did provide for resurrection of the Doctrine of Retroactive Disallowance. This was a considerable decision in an area of law that has broad implications for industry. Raytheon Co., ASBCA Nos. 57576 et al., 15-1 BCA ¶ 36043.
- Triple Canopy, Inc. against a government claim that the company improperly included US$62 million of subcontractor costs for dog handlers under the labor categories per the 2005 version of FAR 52.232-7, Time and Materials. The contractor included a Maropakis-style counterclaim asserting entitlement to US$64 million pursuant to the terms of the contract and proposal. Triple Canopy, Inc. v. United States, C-291 (Fed. Cl., Jul. 29, 2015) (dismissed).
- Raytheon Company against a government claim of US$17 million for an alleged failure to comply with a disclosed cost accounting practice. The board ruled that the Contract Disputes Act Statute of Limitations barred the claim. The board issued a seminal ruling outlining a number of precepts under the statute of limitations: The burden of proof rests with the party assert jurisdiction, not the party invoking the statute of limitations; the constructive knowledge element of claim accrual is subject to an "inherently unknowable" test; a DCAA audit report does not delay claim accrual; the government cannot avert claim accrual by insulating the contracting officer from knowledge; claim accrual "is not suspended simply because the government hay have been delayed in appreciating the implications of what [the contractor] had disclosed." Raytheon Missile Systems, ASBCA No. 58011, 13 BCA ¶ 35,241.
- Raytheon Company in a government claim regarding the allowability of more than US$25 million of Voluntary Compliance Resolution costs incurred to preserve the tax status of a defined benefit pension plan. In a seminal case, the Court of Federal Claims ruled that the Contract Disputes Act Statute of Limitations barred the government's claim. The court specifically held that a DCAA audit report does not postpone accrual of a government claim. Raytheon Company v. United States, 104 Fed. Cl. 327, recon denied, 105 Fed. Cl. 351 (2012).
- Raytheon Company against a government claim alleging defective pricing under the Truth in Negotiations Act. The government rescinded its contracting officer's final decision upon a demonstration that it exceeded the statute of limitations. Raytheon Company, ASBCA No. 58012 (June 5, 2013).
- Raytheon Company in an appeal before the ASBCA, whereby Raytheon contested a government claim for US $40.7 million (plus compound daily interest) for increased costs in the aggregate due to a change in accounting practice involving the measurement of pension costs. The ASBCA ruled in favor of Raytheon as a matter of law and denied the government's claim in full. Raytheon Company, ASBCA No. 56701, 11-1 BCA ¶ 34,735.
- Raytheon Company in an appeal before the ASBCA involving a government claim of noncompliance with CAS 412-50(d)(2) and (d)(4) and FAR 31.205-6(j)(1)(i) regarding funding requirements for defined applicable to certain defined benefit pension plans. The parties reach a resolution through ADR. Raytheon Company, ASBCA No. 55764 (April 2011) (dismissed).
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