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In Voxtel, Inc., ASBCA No. 60129 (March 9, 2023), the Armed Services Board of Contract Appeals (ASBCA) issued a decision that presents a primer on the resolution of indirect cost rate disputes.  The ASBCA granted the contractor’s appeal in part, finding that its claimed executive compensation and independent research and development (IR&D) costs were allowable, but that certain rental costs related to the “fit-up” of a leased facility were unallowable.

The Defense Contract Audit Agency (DCAA) performed “adequacy” and “nomenclature” reviews of Voxtel’s indirect cost rate proposals (or incurred cost proposals, “ICPs”) for fiscal years 2007 to 2009, but did not conduct audits.  The Contracting Officer (CO) then issued a final decision unilaterally setting indirect rates and finding that the ICPs included unallowable executive compensation, IR&D, and rental costs.  The contractor appealed. …

Continue Reading If At First You Don’t Succeed: Contractor Successfully Challenges Disallowed IR&D and Compensation Costs

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In General Atomics Aeronautical Systems, Inc., ASBCA Nos. 61633, 61731 (Feb. 8, 2023), released March 14, 2023, the Armed Services Board of Contract Appeals (ASBCA) considered, but declined to answer, the existential question of whether intracompany lease payments are “costs.”  The ASBCA denied the Government’s motion for summary judgment, finding that material facts about the…

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This week’s episode covers annual reports from GAO and the ASBCA, a proposed rule regarding disclosure of greenhouse gas emissions and climate-related financial risk, and new requirement to refer any suspected instances of human trafficking to suspension and debarment officials, and is hosted by Peter Eyre and Yuan Zhou. Crowell & Moring’s “Fastest 5 Minutes”…

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On November 1, 2022, the Armed Services Board of Contract Appeals (ASBCA) published its FY 2022 Report of Transactions and Proceedings, which provides statistics regarding the adjudication of appeals between contractors and the Army, Navy, Air Force, Corps of Engineers, Central Intelligence Agency, National Aeronautics and Space Administration, Defense Logistics Agency, Defense Contract Management Agency…

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In Doubleshot, Inc., ASBCA No. 61691 (July 19, 2022), the Armed Services Board of Contract Appeals (“ASBCA”) granted the contractor’s motion for partial summary judgment, denying the Government’s claim for unallowable costs to the extent that it was based on missing or unsigned employee time cards.  The ASBCA held that the contractor was not required to maintain time card records to support the allowability of labor charges beyond the retention period specified in the contractor’s cost-plus-fixed-fee contracts (including applicable time extensions). 

The contracts incorporated both the Audit and Records – Negotiation clause (FAR 52.215-2) and the Allowable Cost and Payment clause (FAR 52.216-7), which grant the Government the right to examine the contractor’s records reflecting all claimed costs and reduce payments for amounts that are unallowable.  Following the contractor’s delayed submission of two final indirect cost rate proposals, the Defense Contract Audit Agency (“DCAA”) did not begin auditing the proposals until eight months after the contractual obligation to maintain records had expired.  DCAA then questioned the contractor’s labor costs for which there was no time card support, even though the contractor was able to demonstrate that it paid its employees.  The Government’s claim and the contractor’s appeal followed. …

Continue Reading Too Late: Government’s Failure to Timely Audit Did Not Extend the Contractor’s Document Retention Obligations

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In Lockheed Martin Aeronautics Company, ASBCA No. 62209, the Armed Services Board of Contract Appeals (“Board”) denied the Air Force’s motion for summary judgment, which had argued that the “measured mile” approach to calculating disruption was legally untenable.  In its decision, the Board noted that it has “accepted the measured mile approach as an…

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In Ology Bioservices, Inc., ASBCA No. 62633 (May 20, 2021), the Armed Services Board of Contract Appeals (the Board) held that the Government could not assess a penalty on the contractor’s fiscal year (FY) 2013 compensation costs for being expressly unallowable when the Government delayed publishing the compensation cap for FY 2013 by more…

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In URS Federal Services, Inc., ASBCA No. 62475 (March 23, 2021), the Board dismissed a contractor’s three-count complaint for lack of jurisdiction on one count and for failure to state a claim on the other two.  The Board first addressed Count III, which alleged that the Government had breached the implied duty of…

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In GSC Constr., Inc., ASBCA No. 62530 (Mar. 1, 2021), the Armed Services Board of Contract Appeals (the Board) denied the Government’s motion to dismiss for lack of jurisdiction.  The contractor submitted a certified claim to the contracting officer (CO) that included costs associated with a change order, and then subsequently filed an appeal…

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In L3 Technologies, Inc., ASBCA Nos. 61811, et al. (Mar. 1, 2021), the Armed Services Board of Contract Appeals (Board) granted the Government’s motion to dismiss the appeal, over the contractor’s objection, following the Contracting Officer’s (CO) unequivocal withdrawal of its cost disallowance claims. The contractor argued that its case was not moot despite…