The Armed Services Board of Contract Appeals has issued its annual report for FY 2023, shedding light on how often contractor appeals reach a successful result, and what agencies are most frequently involved in contract litigation.Continue Reading ASBCA Issues Annual Report, Providing Data on How Often Contractors Prevail
In Honeywell International, Inc., the ASBCA declined to dismiss a roughly $151 million claim by DCMA alleging a violation of CAS 410, holding that the government’s allegations were sufficient to state a claim for improper treatment of G&A expenses. The Board’s decision provides guidance on how to interpret CAS 410 — a topic that is often addressed by auditors, but has rarely been the subject of written opinions by the courts or boards of contract appeals.Continue Reading ASBCA: Government Can Pursue $151 Million Claim Under CAS 410
Contractors often assume that government auditors have special authority to interpret the Cost Accounting Standards. That assumption is easy to understand — auditors frequently take the position that there is just one “right” way for a company to do its contract cost accounting, based on how other companies do things. But contractors should know that CAS is flexible and generally gives them options about how to comply, based on the circumstances of their business. In short, a contractor’s business judgment matters, and contractors can use it to push back on auditors who take an overly rigid view of CAS.Continue Reading So the Auditor Says You Violated CAS? Remember, Your Business Judgment Matters When Determining Compliance
Earlier this week, the Federal Circuit issued a decision in The Boeing Company v. United States that clears the way for resolution of Boeing’s substantive challenge to a controversial FAR provision that can give the government windfall recoveries in Cost Accounting Standards (CAS) matters. The Federal Circuit decision is notable for three reasons. First, in rejecting the government’s argument that Boeing had waived its right to attack the relevant FAR provision, the court clarified the circumstances in which a contractor will be found to have waived its rights to object to FAR provisions. Second, in concluding that the Court of Federal Claims had jurisdiction to consider the dispute, the court provided a useful primer on the three different kinds of jurisdiction available under the Tucker Act.
Finally, the Federal Circuit’s remand means the Court of Federal Claims will now address Boeing’s substantive challenge to FAR 30.606, which directs contracting officers to ignore offsets that save the government money when calculating the impact of changes to a contractor’s cost accounting practices. Boeing’s argument that this provision amounts to a breach of contract and an illegal exaction will now be resolved on the merits.Continue Reading Federal Circuit Rejects Government’s Waiver and Jurisdiction Defenses, Paving the Way for a CAS Showdown at the Court of Federal Claims
Section 820 of the National Defense Authorization Act for Fiscal Year 2017, Pub. L. No. 114-238, 130 Stat. 2000 (NDAA), makes three significant changes to the federal government’s future method of conducting audits and implementation of Cost Accounting Standards (CAS). First, it empowers contractors to avoid Defense Contract Audit Agency (DCAA) audits by employing private auditors to audit their indirect rates. Second, it provides new requirements intended to reinvigorate the federal government’s existing CAS Board. Finally, it creates a new and independent Defense Cost Accounting Standards (DCAS) Board to implement the Cost Accounting Standards across the Department of Defense (DoD). All of these provisions are due to take effect on October 1, 2018.
Continue Reading 2017 NDAA’s Impact on Audits and Cost Accounting Standards