American Bar Association Section of Public Contract Law

AMERICAN BAR ASSOCIATION – SECTION OF PUBLIC CONTRACT LAW ACCOUNTING, COST & PRICING COMMITTEE

Agenda for February 9, 2016 Meeting

The Accounting, Cost & Pricing Committee is pleased to invite you to a meeting on the subject of “Cost Issues in M&A Transactions” on Tuesday, February 9, 2016, at 12:00 noon (eastern).

Meeting Location: We will meet at the Washington, DC office of Mayer Brown. Their office is located on the lobby level of 1999 K Street NW, Washington, DC 20006 (the corner of 20th and K Streets). The location is three blocks from the Farragut North metro station on the red line and 2 blocks from the Farragut West metro station on the blue, silver, and orange lines. Garage parking is very limited in the area. For those who cannot attend in person, there is a dial-in number: 1-888-299-9913; passcode: 2778803. We will connect the phone link at about 12:10 PM. For those who attend in person, lunch will be provided for a contribution of $10. If you plan to attend in person, please RSVP to Anne Degnan at [email protected] no later than February 4, 2016.

I. Meeting Subject

Please join the ABA Accounting, Cost & Pricing Committee for a panel discussion on Cost Issues in M&A Transactions led by Stephen J. Kiraly of LitCon Group, LLC. The panelists will include Jeremy C. Silverman of Dentons US LLP, Jonathan Kirkland of Houlihan Lokey, Inc., and Richard J. Meene of PricewaterhouseCoopers LLP. The panel will discuss the relevance of cost issues across the deal continuum from both a buy-side and sell-side perspective, with a particular focus on key considerations for due diligence and purchase agreement provisions.

II. Recent Regulatory Items of Interest

 Department of Defense (DoD), Defense Federal Acquisition Regulation Supplement (DFARS); Promoting Voluntary Post-Award Disclosure of Defective Pricing (DFARS Case 2015-D030) (80 FR 72669): On November 20, 2015, DoD issued a proposed rule at https://www.gpo.gov/fdsys/pkg/FR-2015-11-20/pdf/2015-29555.pdf, amending the DFARS to stipulate that DoD contracting officers shall request a limited- scope audit when a contractor voluntarily discloses defective pricing after contract award, unless a full-scope audit is appropriate for the circumstances, in the interest of promoting voluntary contractor disclosure of defective pricing. Comments were due January 19, 2016.

 Department of Veterans Affairs (VA); Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards; Updating References (80 FR 74965): On December 1, 2015, VA issued a final rule at https://www.gpo.gov/fdsys/pkg/FR-2015-12-01/pdf/2015-30346.pdf, adopting the interim final rule amending its regulations governing the Office of Management and Budget (OMB) citations and references for federal grant programs. The amendment was necessary to replace obsolete OMB references in VA regulations. The effective date was December 1, 2015.

 Department of Housing and Urban Development (HUD); Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards: Conforming Amendments (80 FR 75931): On December 7, 2015, HUD issued a final rule at https://www.gpo.gov/fdsys/pkg/FR-2015-12-07/pdf/2015-29692.pdf, conforming its regulations to OMB’s rule, revising cross references within affected HUD regulations, and making other conforming changes and corrections. The effective date was January 6, 2016.

 Gulf Coast Ecosystem Restoration Council; Federal Awarding Agency Regulatory Implementation of OMB’s Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (80 FR 76355): On December 9, 2015, the Gulf Coast Ecosystem Restoration Council issued a final rule at https://www.gpo.gov/fdsys/pkg/FR-2015-12-09/pdf/2015-30922.pdf, adopting, without change, the joint interim final rule published with the OMB for all Federal award-making agencies that implemented guidance on Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). This rule was necessary to incorporate into a regulation and thus bring into effect the Uniform Guidance as required by OMB for the Gulf Coast Ecosystem Restoration Council. The effective date was January 8, 2016.

 DoD, Defense Acquisition Regulations System, DFARS; Evaluating Reasonableness of Price for Commercial Items (DFARS Cases 2013-D034): On December 7, 2015, DoD closed DFARS Case 2013-D034 into DFARS Case 2016-D006, Procurement of Commercial items available at http://www.acq.osd.mil/dpap/dars/opencases/dfarscasenum/dfars.pdf.

 Department of Transportation; Regulatory Implementation of OMB’s Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (80 FR 78649): On December 17, 2015, the DOT issued a final rule at https://www.gpo.gov/fdsys/pkg/FR-2015-12-17/pdf/2015-31076.pdf, adopting the joint interim final rule implementing the Uniform Guidance. The effective date was December 17, 2015.

 DoD, Information Collection Requirements; DFARS; DFARS Part 242, Contract Administration and Related Clause in DFARS 252 (80 FR 79033): On December 18, 2015, DoD issued a notice at https://www.gpo.gov/fdsys/pkg/FR-2015-12-18/pdf/2015- 31848.pdf, requesting comments regarding a proposed extension of an approved information collection requirement. DFARS 242.11 requires DoD contract administration personnel to perform production surveillance to monitor contractor progress and identify any factors that may delay performance. The Government relies on the production progress reports provided by the contractor in the performance of this function. DFARS 252.242-7004 requires a contractor to establish and maintain a material management and accounting system for applicable contracts, provide results of system reviews, and disclose significant changes in its system. OMB approved this information collection requirement for use through April 30, 2016 and DoD proposes that OMB extend its approval for three additional years. DoD invites public comments on: (a) whether the proposed collection of information is necessary for the proper performance of the function of DoD, including whether the information will have practical utility; (b) the accuracy of the estimate of the burden of the proposed information collection; (c) ways to enhance the quality, utility, and clarity of the information to be collected; and (d) ways to minimize the burden of the information collection on respondents, including the use of automated collection techniques or other forms of information technology. Comments are due February 16, 2016.

 DoD, Information Collection Requirements; DFARS; Contract Financing (80 FR 79034): On December 18, 2015, DoD issued a notice at https://www.gpo.gov/fdsys/pkg/FR-2015-12-18/pdf/2015-31846.pdf, requesting comments on the collection of information under DFARS Part 232, Contract Financing, and DFARS 253.232-7002, Progress Payments for Foreign Military Sales (FMS) Acquisitions. Section 22 of the Arms Export Control Act (22 U.S.C. 2762) requires the Government to use foreign funds, rather than U.S. appropriated funds, to purchase military equipment for foreign governments. To comply with this requirement, the Government needs to know how much to charge each relevant country. DFARS 252.232-7002 requires each contractor whose contract includes FMS mandates to submit a separate progress payment request for each progress payment rate, and to submit a supporting schedule that clearly distinguishes the contract’s FMS requirements from the U.S. requirements. The Government uses this information to determine how much of each country’s funds to disburse to the contractor. Comments were due January 19, 2016.

 Department of Labor (DOL), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards Technical Amendments (80 FR 81439): On December 30, 2015, DOL issued a final rule at https://www.gpo.gov/fdsys/pkg/FR-2015-12-30/pdf/2015-32725.pdf, implementing technical amendments to its adoption of the Uniform Guidance. The effective date was December 30, 2015.

 Small Business Administration (SBA), Federal Awarding Agency Regulatory Implementation of OMB’s Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (81 FR 1115): On January 11, 2016, the SBA issued a final rule at https://www.gpo.gov/fdsys/pkg/FR-2016-01-11/pdf/2015- 33168.pdf, adopting, with one change, a joint interim final rule published with the OMB for all Federal award-making agencies that implemented the Uniform Guidance. The effective date is February 10, 2016.

 DoD, General Services Administration (GSA), National Aeronautics and Space Administration (NASA); Information Collection; Contractors’ Purchasing Systems Reviews (81 FR 3135): On January 20, 2016, DoD, GSA, and NASA issued a notice at https://www.gpo.gov/fdsys/pkg/FR-2016-01-20/pdf/2016-00989.pdf, requesting public comments regarding an extension to an existing OMB clearance requirement concerning contractors’ purchasing systems reviews. Comments are due March 21, 2016.

 DoD, GSA, and NASA, Federal Acquisition Regulation: Contractor Employee Internal Confidentiality Agreements (81 FR 3763): On January 22, 2016, DoD, GSA, and NAS issued a proposed rule at https://www.gpo.gov/fdsys/pkg/FR-2016-01- 22/pdf/2016-01050.pdf, amending the FAR to implement a section of the Consolidated and Further Continuing Appropriations Act, 2015, which prohibits the use of funds, appropriated or otherwise made available, for a contract with an entity that requires employees or subcontractors to sign an internal confidentiality agreement that restricts such employees or subcontractors from lawfully reporting waste, fraud, or abuse to a designated Government representative authorized to receive such information. Comments are due March 22, 2016.

III. Recent Cases of Interest  Alion Sci. & Tech. Corp., ASBCA No. 58992 (November 10, 2015) available at http://www.asbca.mil/Decisions/2015/58992%20Alion%20Science%20and %20Technology%20Corporation%2011.10.15.pdf. On March 31, 2006, Alion submitted its Fiscal Year (FY) 2005 final indirect cost rate proposal. On August 13, 2013, the Defense Contract Management Agency administrative contracting officer issued a final decision asserting a $338,921 claim for penalties for the alleged inclusion of expressly unallowable costs in the proposal. Alion appealed, asserting the affirmative defense that the Government’s claim was time barred by the Contract Disputes Act’s six-year statute of limitations. In addressing Alion’s motion for summary judgment, the Board first determined that liability for penalties was fixed when Alion submitted a final indirect cost rate proposal containing expressly unallowable indirect costs. The Board then examined the evidence to determine whether it was “reasonably knowable” from the March 31, 2006 submission that Alion’s final indirect cost rate proposal included the specific costs that the Government alleged were expressly unallowable. The Board held that there was a genuine issue of material fact as to whether it was “reasonably knowable” that the March 31, 2006 submission included the alleged expressly unallowable costs at issue. The Board denied Alion’s motion for summary judgment.

IV. Other Items of Interest

 None

V. Additional Business

As always, if you have ideas for upcoming meetings, guest speakers, special programs, etc. we want to hear from you. Please feel free to contact any of the Co-Chairs to discuss.

Agenda for April 12, 2016 Meeting

The Accounting, Cost & Pricing Committee is pleased to invite you to a meeting on the subject of “Cost Issues in M&A Transactions” on Tuesday, April 12, 2016, at 12:00 noon (eastern).

Meeting Location: We will meet at the Washington, DC office of Dentons US LLP. Their office is located on the lobby level of 1900 K Street NW, Washington, DC 20006 (the corner of 19th and K Streets). The location is two blocks from the Farragut North metro station on the red line and 1½ blocks from the Farragut West metro station on the blue and orange lines. Garage parking is very limited in the area. For those who cannot attend in person, there is a dial-in number: (866) 225-1342; Conference code, 4368593529. We will connect the phone link at about 12:10 PM. For those who attend in person, lunch will be provided for a contribution of $10. If you plan to attend in person, please RSVP to Anne Degnan at [email protected] no later than April 7, 2016.

I. Meeting Subject

Please join the ABA Accounting, Cost & Pricing Committee for a panel discussion on Cost Issues in M&A Transactions led by Stephen J. Kiraly of LitCon Group, LLC. The panelists will include Jeremy C. Silverman of Dentons US LLP, Jonathan Kirkland of Houlihan Lokey, Inc., and Richard J. Meene of PricewaterhouseCoopers LLP. The panel will discuss the relevance of cost issues across the deal continuum from both a buy-side and sell-side perspective, with a particular focus on key considerations for due diligence and purchase agreement provisions.

 Department of Defense (DoD), Defense Federal Acquisition Regulation Supplement (DFARS); Independent Research and Development Expenses (DFARS Case 2016- D017) (81 FR 6488): On February 8, 2016, DoD issued an advance notice of proposed rulemaking at https://www.gpo.gov/fdsys/pkg/FR-2016-02-08/pdf/2016-02396.pdf, seeking information that will assist in the development of a revision to the DFARS to ensure that substantial future independent research and development (IR&D) expenses, as a means to reduce evaluated bid prices in competitive source selections, are evaluated in a uniform way during competitive source selections. A public meeting was held on March 3, 2016. Comments are due April 8, 2016.

 DoD, General Services Administration (GSA), National Aeronautics and Space Administration (NASA); Information Collection; Cost Accounting Standards Administration (81 FR 7343): On February 11, 2016, DoD, GSA, and NASA issued a notice at https://www.gpo.gov/fdsys/pkg/FR-2016-02-11/pdf/2016-02812.pdf, requesting comments regarding an extension to an existing Office of Management and Budget (OMB) clearance concerning cost accounting standards administration. Comments are due April 11, 2016.

 Department of Agriculture; Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (81 FR 7695): The Office of the Chief Financial Officer, Farm Service Agency, Commodity Credit Corporation, National Institute of Food and Agriculture, Rural Utilities Service, Rural Business-Cooperative Service, and Rural Housing Service issued a final rule at https://www.gpo.gov/fdsys/pkg/FR-2016-02-16/pdf/2016-02473.pdf, finalizing their portion of the uniform federal assistance rule and amending specific regulations to reference the conforming changes published by OMB. The effective date was February 16, 2016.  DoD, DFARS; Enhancing the Effectiveness of Independent Research and Development (DFARS Case 2016-D002) (81 FR 7721): On February 16, 2016, DoD issued a proposed rule at https://www.gpo.gov/fdsys/pkg/FR-2016-02-15/pdf/2016- 03039.pdf, amending the DFARS to improve the effectiveness of IR&D investments by the defense industrial base that are reimbursed as allowable costs. The rule proposes to revise DFARS 231.205-18, IR&D and Bid and Proposal Costs, to require that proposed new IR&D efforts be communicated to appropriate DoD personnel prior to the initiation of these investments, and that results from these investments should also be shared with appropriate DoD personnel. Comments are due April 18, 2016.

 DoD, GSA, NASA; Federal Acquisition Regulation (FAR); Prohibition on Reimbursement for Congressional Investigations and Inquiries (81 FR 8031): On February 17, 2016, DoD, GSA, and NASA issued a proposed rule at https://www.gpo.gov/fdsys/pkg/FR-2016-02-17/pdf/2016-03044.pdf to amend FAR to implement section 857 of the Carl Levin and Howard P. “Buck” McKeon National Defense Authorization Act for Fiscal Year 2015. This section provided additional requirements relative to the allowability of costs incurred by a contractor in connection with a congressional investigation or inquiry. Comments are due April 18, 2016.

 Depart of Labor (DoL); Establishing Paid Sick Leave for Federal Contractors (81 FR 13306): On March 14, 2016, DoL extended the period for filing written comments at https://www.gpo.gov/fdsys/pkg/FR-2016-03-14/pdf/2016-05410.pdf on the proposed rulemaking Establishing Paid Sick Leave for Federal Contractors. DoL took this action in order to provide interested parties additional time to submit comment. Comments are due April 12, 2016.

 OMB, Office of Federal Procurement Policy; Determination of Statutory Formula Benchmark Compensation Amount for Certain Executives and Contractor Employees: On March 15, 2016, OMB issued a notice at https://www.gpo.gov/fdsys/pkg/FR-2016-03-15/pdf/2016-05766.pdf announcing that the “benchmark compensation amount” for certain executives and contractor employees in terms of costs allowable under Federal Government covered contracts during the contractor’s fiscal years 2013 and 2014 is $980,796 and $1,144,888, respectively. As explained by OMB, this notice sets forth the benchmark compensation amount for certain employees of Federal Government contractors as required by Section 39 of the Office of Federal Procurement Policy (OFPP) Act, as amended (41 U.S.C. 1127, otherwise known as the statutory formula cap) for the cost allowability purposes of section 4304(a)(16) of title 41 and section 2324(e)(1)(P) of title 10 for covered contracts awarded before June 24, 2014. For covered contracts awarded on or after June 24, 2014, a new cap applies pursuant to section 702 of the Bipartisan Budget Act of 2013 (BBA), Pub. L. 113–67, December 26, 2013.  DoD, DFARS; Costs Related to Counterfeit Electronic Parts (DFARS Case 2016– D010) (81 FR 17055): On March 25, 2016, DoD issued a proposed rule at https://www.gpo.gov/fdsys/pkg/FR-2016-03-25/pdf/2016-06728.pdf to amend the DFARS to implement section 885(a) of the National Defense Authorization Act for Fiscal Year 2016, which provides additional requirements regarding the allowability of costs of counterfeit electronic parts or suspect counterfeit electronic parts and the costs of rework or corrective action that may be required to remedy the use or inclusion of such parts. Comments are due May 24, 2016.

 DoD, DFARS; Instructions for the Wide Area WorkFlow Reparable Receiving Report (DFARS Case 2016–D004) (81 FR 17051): On March 25, 2016, DoD issued a proposed rule at https://www.gpo.gov/fdsys/pkg/FR-2016-03-25/pdf/2016-06726.pdf to amend the DFARS to add instructions for utilizing the Wide Area WorkFlow Reparable Receiving Report. Comments are due May 24, 2016.

 DoD, DFARS; Prohibition on Use of Any Cost-Plus System of Contracting for Military Construction and Military Family Housing Projects (DFARS Case 2015– D040) (81 FR 17050): On March 25, 2016, DoD issued a proposed rule at https://www.gpo.gov/fdsys/pkg/FR-2016-03-25/pdf/2016-06725.pdf to amend the DFARS to implement a section of the National Defense Authorization Act for Fiscal Year 2012 that amended title 10 of the United States Code by prohibiting any form of cost-plus contracting for military construction projects or military family housing projects. Comments are due May 24, 2016.

III. Recent Cases of Interest  BAE Sys. San Francisco Ship Repair, ASBCA No. 58809 (January 11, 2016) available at http://www.asbca.mil/Decisions/2016/58809%20BAE%20Systems%20San%20Francisco %20Ship%20Repair%201.11.16.pdf. Four weeks before contract completion, the Army directed BAE to replace 24 cloverleafs and issued a unilateral modification for the amount of the Army’s estimate for the extra work. BAE submitted a claim based upon the costs recorded in the separate charge number it set up in its Job Order Accounting System for the cloverleaf replacement work. The DCAA audit report did not question any of the claimed cloverleaf costs. BAE contended that it should be awarded the entire amount claimed simply because the DCAA audit report and the auditor’s testimony were “uncontradicted.” The Board found that the DCAA audit did not constitute an admission on the part of the Government; instead it was only one piece of evidence in determining damages. The Board held that BAE was entitled to the overtime costs incurred in replacing the cloverleafs. The Board found that BAE was allowed to recoup costs of labor performed in areas where it needed to repeat work. The Board, however, disallowed all labor charges claimed after the cloverleaf completion date, except for the environmental labor. Further, the Board determined that a supervisor had other responsibilities and since he was not physically involved with the cloverleaf removal and installation, the Board disallowed 6 out of every 8 hours claimed for his time.  Vistas Constr. Of Illinois, Inc., ASBCA Nos. 58479, 58480, et al. (January 12, 2016) available at http://www.asbca.mil/Decisions/2016/58479,%2058480,%2058481,%2058482,%205848 3,%2058486,%2058487,%2058488%20Vistas%20Construction%20of%20Illinois, %20Inc.%201.12.16.pdf. The Army Corps of Engineers awarded Vistas a $14.6 million contract to enlarge a levee in Louisiana. Vistas sought $17 million in damages for changed work and delays. The Board found that Vistas did not establish that it was allowed to retroactively use a value-added base instead of its historical use of a total cost input base. Further, the Board held that Vistas was not entitled to an interest penalty under the Prompt Payment Act due to the Government’s failure to pay an amount greater than the contract price. The Board also denied Vistas’ claim for interest payments resulting from increased borrowing during the contract, because the contract disallowed the costs under DFARS 252.243-7001 and FAR 31.205-20. Finally, the Board held that Vistas was not entitled to the majority of consultant costs related to a DCAA audit. The Board determined that Vistas failed to prove damages under FAR 31.205-33(f) as it did not show that the costs were reasonable and allowable, it did not provide any agreement of scope of work, it did not supply invoices that sufficiently detailed the time expended and the nature of the actual services provided, and it did not provide work product to substantiate the hours of claimed. The Board found that Vistas was entitled to $35,000 for one consultant, but only in the amount of its agreement of 400 hours, not the full 2,300 hours claimed. The Board determined that there was a serious question as to whether Vistas was in a litigation posture the entire time, which would preclude it from recovering its $1.3 million claim for its Request for Equitable Adjustment (REA) preparation costs. As a jury verdict, the Board held that Vistas was entitled to $50,000 for its REA preparation costs, which represented 25 percent of the claimed amount for one consultant.

 Kellogg Brown & Root Serv., Inc., ASBCA No. 58583 (January 19, 2016) available at http://www.asbca.mil/Decisions/2016/58583%20Kellogg%20Brown%20&%20Root %20Services,%20Inc.%201.19.15.pdf. In this appeal, KBRS claimed that the Government breached its contractual obligation to provide adequate force protection to KBRS and its subcontractors performing contract services in support of the war effort in Iraq. Prior to December 2014, the Government moved to dismiss KBRS’ appeal on the basis that the claim had not been filed within the Contract Disputes Act’s (CDA’s) six- year statute of limitations (SOL). In December 2014, the Federal Circuit held that the CDA’s six-year SOL was not jurisdictional (Sikorsky Aircraft Corp. v. United States, 773 F.3d 1315 (Fed. Cir. 2014)). The Board denied the Government’s motion to dismiss for lack of jurisdiction. The Board determined that the Government may still assert that KBRS’ claim is time-barred as an affirmative defense, but it bears the burden of proof on the issue.  SupplyCore, Inc., ASBCA No. 58676 (February 17, 2016) available at http://www.asbca.mil/Decisions/2016/58676%20SupplyCore,%20Inc.%202.17.16.pdf. The Army gave notice to SupplyCore 51 days before contract expiration that it was not going to exercise the fourth option for warehousing services in Kuwait. SupplyCore filed a claim because it was required under Kuwaiti Labor Law to give its employees 90 days’ notice before terminating their employment. The amount SupplyCore claimed represented what it paid its employees for 39 days after the contract ended. The Board found that the Army complied with FAR 52.217-9, the option clause in the contract. The Board determined that given the Government’s broad discretion in determining whether to exercise an option, any expectation SupplyCore had that the contract would continue was patently unreasonable. The Board granted the Army’s motion for summary judgment, finding that it was not required to pay the excess labor costs and that it did not breach its duty of good faith and fair dealing.

 Ralph Muhammad v. Department of Justice, CBCA 5188 (February 24, 2016) available at http://www.cbca.gsa.gov/files/decisions/2016/LESTER_02-24- 16_5188__RALPH_MUHAMMAD_V_DOJ.pdf. The Department of Justice (DoJ) terminated for cause Ralph Muhammad’s contract for prison chaplaincy services. The notice of termination indicated that the reason for termination was due to a violation of security without further explanation. Mr. Muhammad represented that DoJ never detailed the reason for the termination. The Board directed the Government to file the complaint in this appeal because it was in a far better position to provide fair notice of the basis of and grounds supporting the termination decision than Mr. Muhammad, who was before the court pro se.

 DCAA MRD 16-PPD-001(R), January 7, 2016, “Audit Guidance on the Impact of the National Defense Authorization Act on DCAA’s Audit Support to Non- Defense Agencies” (available at http://www.dcaa.mil/mmr/16-PPD-001.pdf)

 DCAA MRD 16-PPS-003(R), February 3, 2016, “Audit Alert on Updated Independent Reference Review Checklist and Procedures” (available at http://www.dcaa.mil/mmr/16-PPS-003.pdf)  DCAA MRD 16-PPD-004(R), February 11, 2016, “Updated Audit Guidance on the Treatment of Overdue Indirect Rate Proposals” (available at http://www.dcaa.mil/mmr/16-PPD-004.pdf)

 DCAA MRD 16-PSP-005(R), February 19, 2016, “Audit Alert on DCMA Implementation Guidance on Blended Compensation Caps” available at http://www.dcaa.mil/mmr/16-PSP-005.pdf)

Agenda for June 14, 2016 Meeting

The Accounting, Cost & Pricing Committee is pleased to invite you to a meeting on the subject of “Trends and Developments in IR&D Cost Allowability” on Tuesday, June 14, 2016, at 12:00 noon (eastern).

Meeting Location: We will meet at the Washington, DC office of Dentons US LLP. Their office is located on the lobby level of 1900 K Street NW, Washington, DC 20006 (the corner of 19th and K Streets). The location is two blocks from the Farragut North metro station on the red line and 1½ blocks from the Farragut West metro station on the blue, silver, and orange lines. Garage parking is very limited in the area. For those who cannot attend in person, there is a dial- in number: 1-866-225-1342; passcode: 4368593529. We will connect the phone link at about 12:10 PM. For those who attend in person, lunch will be provided for a contribution of $10. If you plan to attend in person, please RSVP to Anne Degnan at [email protected] no later than June 9, 2016.

I. Meeting Subject

Please join the ABA Accounting, Cost & Pricing Committee for a panel discussion on recent trends and developments impacting the use of and allowability of independent research and development (“IR&D”) costs under government contracts. Specifically, the panel will focus on current industry IR&D practices and the impact the Department of Defense’s proposed IR&D regulatory changes will have on contractor decisions to invest in the development of new and improved technology through IR&D projects. The panel will be hosted by Steve Masiello (Dentons) and will include the following panelists: Tom Lemmer (Dentons), Mark Smith (Rolls- Royce) and James McEwen (Sikorsky). .

 Department of Defense (DoD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA); Information Collection; Right of First Refusal of Employment (81 FR 19606): On April 5, 2016, DoD, GSA, and NASA issued a notice at https://www.gpo.gov/fdsys/pkg/FR-2016-04-05/pdf/2016- 07742.pdf, requesting public comments regarding an extension to an existing OMB clearance concerning the Right of First Refusal of Employment. As prescribed in FAR 7.305(c), the clause at FAR 52.207-3, Right of First Refusal of Employment, deals with adversely affected or separated Government employees resulting from the conversion of work from in-house performance to performance by contract. The clause requires the contractor to give these employees an opportunity to work for the contractor who is awarded the contract. Comments were due June 6, 2016.

 DoD, GSA, and NASA; Submission for Office of Management and Budget (OMB) Review; Contractors’ Purchasing Systems Reviews (81 FR 19605): On April 5, 2016, DoD, GSA, and NASA issued a notice at https://www.gpo.gov/fdsys/pkg/FR-2016-04- 05/pdf/2016-07743.pdf, requesting public comments regarding an extension to an existing OMB clearance concerning contractors’ purchasing systems reviews. The objective of a contractor purchasing system review (CPSR), as discussed in FAR Part 44, is to evaluate the efficiency and effectiveness with which the contractor spends Government funds and complies with Government policy when subcontracting. The review provides the administrative contracting officer (ACO) a basis for granting, withholding, or withdrawing approval of the contractor’s purchasing system. Comments were due May 5, 2016.

 DoD, GSA, and NASA; Information Collection; Contract Funding—Limitation of Costs/Funds (81 FR 21873): On April 13, 2016, DoD, GSA, and NASA issued a notice at https://www.gpo.gov/fdsys/pkg/FR-2016-04-13/pdf/2016-08400.pdf, requesting public comments regarding an extension to an existing OMB clearance regarding Contract Funding. Firms performing under incrementally funded Federal contracts are required to notify the contracting officer in writing whenever they have reason to believe a contract’s costs will exceed 75 percent of the estimated cost of the contract and when they believe that the total cost for performance of the contract will be greater or substantially less than estimated. Comments were due June 13, 2016.

 DoD, GSA, and NASA; Information Collection; Notification of Ownership Changes (81 FR 21871): On April 13, 2016, DoD, GSA, and NASA issued a notice at https://www.gpo.gov/fdsys/pkg/FR-2016-04-13/pdf/2016-08401.pdf, requesting public comments regarding an extension to an existing OMB clearance regarding changes in ownership. Allowable costs of assets are limited in the event of change in ownership of a contractor. Contractors are required to provide the Government adequate and timely notice of this event per the FAR clause at 52.215-19, Notification of Ownership Changes. Comments were due June 13, 2016.

 DoD, GSA, and NASA; Submission for OMB Review; Change Order Accounting (81 FR 21872): On April 13, 2016, DoD, GSA, and NASA issued a notice at https://www.gpo.gov/fdsys/pkg/FR-2016-04-13/pdf/2016-08447.pdf, requesting public comments regarding Change Order Accounting. FAR 43.205 allows a contracting officer, whenever the estimated cost of a change or series of related changes under a contract exceeds $100,000, to assert the right in the clause at FAR 52.243-6, Change Order Accounting, to require the contractor to maintain separate accounts for each change or series of related changes. Comments were due May 13, 2016.

 Government Accountability Office (GAO), Administrative Practice and Procedure, Bid Protest Regulations, Government Contracts (81 FR 22197): On April 15, 2016, GAO issued a proposed rule at https://www.gpo.gov/fdsys/pkg/FR-2016-04-15/pdf/2016- 08622.pdf, to amend its Bid Protest Regulations, promulgated in accordance with the Competition in Contracting Act of 1984, to implement the requirements in Sec. 1501 of the Consolidated Appropriations Act for Fiscal Year 2014 and to make certain administrative changes. Comments were due May 16, 2016.

 NASA, Clarification of Award Fee Evaluations and Payments (NFS Case 2016– N008) (81 FR 23667): On April 22, 2016, NASA issued a proposed rule at https://www.gpo.gov/fdsys/pkg/FR-2016-04-22/pdf/2016-09356.pdf, to clarify NASA’s award fee process by incorporating terms used in award fee contracting, guidance relative to final award fee evaluations, release of source selection information, and the calculation of the provisional award fee payment percentage in NASA end-item award fee contracts. Comments are due June 21, 2016.

 NASA, Federal Regulation Supplement: Revisions to Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards (NASA Case 2015–N030) (81 FR 24735): On April 27, 2016, NASA issued a proposed rule at https://www.gpo.gov/fdsys/pkg/FR-2016-04-27/pdf/2016-09625.pdf, to amend the NASA regulation, titled Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards, to modify the requirements related to information contained in a Federal award for commercial firms with no cost sharing requirement and to add new or modify existing terms and conditions related to indirect cost charges and access to research results. Comments are due June 27, 2016.  DoD, Defense Federal Acquisition Regulations Supplement (DFARS): Disclosure to Litigation Support Contractors (DFARS Case 2012-D029) (81 FR 28724): On May 10, 2016, DoD issued a final rule at https://www.gpo.gov/fdsys/pkg/FR-2016-05- 10/pdf/2016-10822.pdf, adopting, with changes, an interim rule amending the DFARS to implement a section of the National Defense Authorization Act for Fiscal Year 2012 that provides DoD the authority to allow its litigation support contractors access to “sensitive information” subject to certain restrictions. The effective date was May 10, 2016.

 DoD, DFARS: Display of Hotline Posters (DFARS Case 2016-D018) (81 FR 28816): On May 10, 2016, DoD issued a proposed rule at https://www.gpo.gov/fdsys/pkg/FR- 2016-05-10/pdf/2016-10829.pdf, to amend the DFARS to consolidate the multiple hotline posters into one poster that delineates multiple reportable offenses. Comments are due July 11, 2016.

 DoD, GSA, and NASA; Submission for OMB Review; Indirect Cost Rates (81 FR 28872): On May 10, 2016, DoD, GSA, and NASA issued a notice at https://www.gpo.gov/fdsys/pkg/FR-2016-05-10/pdf/2016-10943.pdf, requesting comments regarding an extension to an existing OMB clearance concerning Indirect Cost Rates. The contractor’s proposal of final Indirect Cost Rates is necessary for the establishment of rates used to reimburse the contractor for costs of performing under the contract. The supporting cost data are the cost accounting information normally prepared by organizations under sound management and accounting practices. Comments were due June 9, 2016.

 DoD, DFARS: Rights in Technical Data (DFARS Case 2016–D008) (81 FR 28812): On May 10, 2016, DoD issued a proposed rule at https://www.gpo.gov/fdsys/pkg/FR- 2016-05-10/pdf/2016-10827.pdf, to amend the DFARS to implement a section of the National Defense Authorization Act for Fiscal Year 2016 that addresses rights in technical data relating to major weapon systems, expanding application of the presumption that a commercial item has been developed entirely at private expense. Comments are due July 11, 2016.

 DoD, GSA, and NASA; Federal Acquisition Regulation (FAR): Administrative Cost to Issue and Administer a Contract (81 FR 29514): On May 12, 2016, DoD, GSA, and NASA issued a proposed rule at https://www.gpo.gov/fdsys/pkg/FR-2016-05- 12/pdf/2016-11177.pdf, to amend the FAR to revise the estimated administrative cost to award and administer a contract for the purpose of evaluating bids for multiple awards. The adjustment from $500 to $1,000 is to reflect a realistic estimate of the cost to the Government to issue and administer a contract. Comments are due July 11, 2016.  DoD, GSA, and NASA FAR: Basic Safeguarding of Contractor Information Systems (81 FR 30439): On May 13, 2016, DoD, GSA, and NASA issued a final rule at https://www.gpo.gov/fdsys/pkg/FR-2016-05-16/pdf/2016-11001.pdf, to amend the FAR to add a new subpart and contract clause for the basic safeguarding of contractor information systems that process, store, or transmit Federal contract information. The effective date is June 15, 2016.

 DoD, GSA, and NASA; Submission for OMB Review; Prompt Payment (81 FR 31241): On May 18, 2016, DoD, GSA, and NASA issued a notice at https://www.gpo.gov/fdsys/pkg/FR-2016-05-18/pdf/2016-11687.pdf, requesting public comments regarding an extension to an existing OMB clearance concerning prompt payment. Comments are due June 17, 2016.

 Environmental Protection Agency (EPA); Environmental Protection Agency Acquisition Regulation; Clause for Level of Effort—Cost Reimbursement Contract (81 FR 31865): On May 20, 2016, EPA issued a final rule at https://www.gpo.gov/fdsys/pkg/FR-2016-05-20/pdf/2016-11970.pdf, amending the EPA Acquisition Regulation (EPAAR) to update policy, procedures, and contract clauses. This final rule updated the EPAAR clause Level of Effort—Cost Reimbursement Contract to make the clause more prescriptive in describing the EPA’s responsibilities when the Agency orders less level of effort (LOE) than the maximum LOE specified in the subject clause; e.g., if the clause specifies 100,000 hours for a given period of performance but the contractor only provides 70,000 hours. The clause provides that a downward equitable adjustment will be made to reduce the fixed fee by the percentage by which the total expended LOE is less than 100% of that specified in the LOE clause; e.g., the fixed fee amount will be reduced by 30% using the same 100,000/70,000 hours example. The effective date is June 20, 2016.

III. Recent Cases of Interest

 Air Servs. Inc., ASBCA No. 59843 (March 17, 2016) available at http://www.asbca.mil/Decisions/2016/59843%20Air%20Services,%20Inc. %203.17.16.pdf. Air Services sought costs incurred for additional time its project manager, superintendent, and laborers worked on the contract beyond the contract expiration date due to HVAC steel and electric panel concerns that delayed performance of the contract. The Board found that Air Service was entitled to additional costs for the project manager and superintendent to be on the job past the contract expiration date, finding that the delay caused extra work for these individuals. The Board, however, denied additional costs related to the general laborers, finding there was no evidence that they performed any extra work because of the delay.  AeroVironment Inc., ASBCA No. 58599 (March 30, 2016) available at http://www.asbca.mil/Decisions/2016/58598,%2058599%20AeroVironment,%20Inc. %203.30.16.pdf. AeroVironment appealed two ACO final decisions regarding costs that exceeded the executive compensation cap, misallocated taxes, and expressly unallowable penalties. The parties executed partial settlement agreements. AeroVironment paid the settlement amounts and made a subsequent payment for the full amount demanded and claimed in the penalty decision. AeroVironment filed a motion to dismiss the appeals with prejudice on the basis that all claims pending before the Board were resolved. The Government opposed AeroVironment’s motion and moved to amend its answer to increase the amount of executive compensation disallowed and the associated penalty. The Board concluded that the proposed amendments constituted new claims because they were premised on a fundamentally different interpretation of the executive compensation limitations than what was the basis of the ACO’s final decisions. The Board held that it lacked jurisdiction to address these new claims. The Board granted AeroVironment’s motion to dismiss and denied the Government’s motion to amend.

 Sys. Mgmt. & Research Tech. Corp. v. Department of Energy, CBCA 4068 (April 6, 2016) available at http://www.cbca.gsa.gov/files/decisions/2016/LESTER_04-06- 2016_4068_SYSTEMS_MANAGEMENT_AND_RESEARCH_TECHNOLOGIES_CO RPORATION.pdf. DOE awarded SMARTECH a contract that included FAR 52.216-8, the Fixed Fee clause which expressly directed that the Government shall pay the Contractor the fixed fee specified. The contract also contained FAR 52.232-7, the T&M Payments clause which required profit to be included in the contractor’s hourly rates. The parties disputed whether the fixed fee agreed to in the contract was a sum certain to be paid annually or whether it was limited to 8 percent of the direct productive labor hourly rate. Based upon the plain language of the contract and DOE’s express direction in the RFP to offerors to segregate the fixed fee from the hourly rates, the Board held that SMARTECH was to be paid the annual fixed fee agreed to in the contract. The Board found that although the contract was a mixture of different contract types (a portion of a T&M contract and a portion of a fixed fee contract), it was not an illegal contract type because under FAR 16.102(b) contracts may be of a type or combination of types that will promote the Government’s interest. The Board denied SMARTECH’s claim for Prompt Payment Act interest for the denied fee payments and its claim that DOE improperly diverted work away from the contract during the last year of performance.

 L-3 Communications Integrated Sys., L.P., ASBCA Nos. 60431, 60432 (April 25, 2016) available at http://www.asbca.mil/Decisions/2016/60431,%2060432%20L- 3%20Communications%20Integrated%20Systems,%20L.P.%204.25.16.pdf. L-3 appealed two contracting officer’s final decisions (COFDs) demanding payment for unallowable costs paid to L-3. Contracting officers rescinded the COFDs and the Government moved to dismiss the appeals as moot. L-3 opposed dismissal where the Government failed to state its intention not to reassert the rescinded claims in the future. The Board held that the appeals were moot because the COFDs were unequivocally rescinded. The Board determined that in view of the presumption that contracting officers act in good faith, it saw no reason to doubt that the rescission of the claims was unequivocal and that they would not be reasserted.

 Fed. Builders, LLC-The James R. Belk Trust, GAO B-409952.3 (May 6, 2016) available at http://gao.gov/assets/680/677001.pdf. In September 2014, GAO sustained Federal Builders’ protest. GAO, however, did not see a basis to terminate the lease because it did not include a termination for convenience clause. As a result, GAO recommended that Federal Builders be reimbursed its proposal preparation costs, as well as the costs of filing and pursuing its protest, including reasonable attorneys’ fees. Federal Builders submitted a certified claim and the Agency waited 10 months to answer. GAO recommended that the Agency reimburse Federal Builders a total of $259,488.52, including proposal preparation costs of $47,242, $182,922.10 in attorneys’ fees for filing and pursuing the protest, $7,746.92 for the time spent by Federal Builders’ manager in assisting counsel in preparing and pursuing the protest, and $21,577.50 for the cost of pursuing its claim for reimbursement. Notably, GAO agreed with the Agency that it should not pay for the amount requested by Federal Builders for expenses related to the manager’s wife’s attendance at the market survey meeting because she was not a company employee.

 Pub. Warehousing Co., K.S.C., ASBCA No. 59020 (May 2, 2016) available at http://www.asbca.mil/Decisions/2016/59020%20Public%20Warehousing%20Company, %20K.S.C.%205.2.16.pdf. On December 5, 2011, PWC submitted a certified claim seeking late payment interest penalties due pursuant to the Prompt Payment Act (PPA) and the terms of its contracts. The Government moved for summary judgment on the bases that the PPA did not apply to military contingency operations contracts and that part of the claim was barred by the Contract Disputes Act’s six-year statute of limitations (SOL). The Board held that because the Government contractually agreed to make payments under the contracts in accordance with the terms and conditions of the PPA without exception, the regulatory exemption for military contingency operations did not bar PWC’s claims. The Board also held that “the Government has an obligation to pay the [PPA] interest penalty for late payments automatically and that the government breaches this obligation by failing to pay the interest penalty upon paying the underlying invoice, thus creating a claim for the interest penalty not paid.” The Board noted that since interest penalties were tied to specific payments, claim accrual would be determined on an invoice-by-invoice basis. The Board held that summary judgment on the Government’s affirmative defense that the CDA’s six-year statute of limitations barred a portion of PWC’s claim was inappropriate because the Government failed to introduce invoice-specific facts.  Kellogg Brown & Root Servs., Inc. v. Army, CAFC No. 2015-1148 (May 18, 2016) available at http://www.cafc.uscourts.gov/sites/default/files/opinions-orders/15- 1148.Opinion.5-13-2016.1.PDF. Under KBRS’s cost-reimbursable Army LOGCAP contract, KBRS terminated a dining facility subcontract. On September 12, 2003, subcontractor performance ended and the subcontractor submitted a termination settlement proposal. Litigation ensued. In January 2005, KBRS and the subcontractor executed a settlement agreement for (i) $17.4 million and (ii) additional costs incurred. In August 2006, the subcontractor submitted a claim to KBRS for these additional costs. In May 2012, KBRS filed a certified claim with the Army for these additional subcontractor costs. The Board granted the Government’s motion to dismiss for lack of subject matter jurisdiction, holding that the claim accrued on September 12, 2003, the date that performance ended because, on that date, KBRS had actual knowledge of the events that fix the alleged liability of the Government. The Court held that the Board erred in holding that the KBRS claim for the additional costs accrued on September 12, 2003. The Court determined that claim accrual in accordance with FAR 33.201 did not occur until KBRS requested, or reasonably could have requested, a sum certain from the Army. The Court also held that under FAR 33.201, KBRS’s claim for these additional costs did not alternatively accrue when KBRS and the subcontractor executed the settlement agreement because the sum certain was not known when the agreement was entered on January 24, 2005. The Court reversed the Board’s dismissal and remanded for determination on the merits of the claim.

 U.S. Department of Defense, Inspector General Report No. DODIG-2016-070, March 31, 2016, “Section 847 Requirements for Senior Defense Officials Seeking Employment with Defense Contractors” (available at http://www.dodig.mil/pubs/documents/DODIG-2016- 070.pdf).

 U.S. Department of Defense, Inspector General Report No. DODIG-2016-092, May 19, 2016, “Independent Auditor’s Report on Agreed-upon Procedures for DoD Compliance with Service Contract Inventory Compilation and Certification Requirements for FY 2014” (available at http://www.dodig.mil/pubs/documents/DODIG-2016-092.pdf).

 The Senate Armed Services Committee has recommended establishment of a new Cost Accounting Standards Board to be housed within DoD. See National Defense Authorization Act for Fiscal Year 2017, S. Rept. No. 114-255 § 811 (2016) (available at http://www.armed-services.senate.gov/imo/media/doc/S2943%20-%20Committee-Passed %20NDAA.pdf).

Agenda for October 11, 2016 Meeting

The Accounting, Cost & Pricing Committee is pleased to invite you to a meeting on the subject of “Trends and Developments in IR&D Cost Allowability” on Tuesday, October 11, 2016, at 12:00 noon (eastern).

Meeting Location: We will meet at the Washington, DC office of Dentons US LLP. Their office is located on the lobby level of 1900 K Street NW, Washington, DC 20006 (the corner of 19th and K Streets). The location is two blocks from the Farragut North metro station on the red line and 1½ blocks from the Farragut West metro station on the blue, silver, and orange lines. Garage parking is very limited in the area. For those who cannot attend in person, there is a dial- in number: 1-866-225-1342; passcode: 4368593529. We will connect the phone link at about 12:10 PM. For those who attend in person, lunch will be provided for a contribution of $10. If you plan to attend in person, please RSVP to Alyson Kate McCoy at [email protected] no later than October 7, 2016.

I. Meeting Subject

Please join the ABA Accounting, Cost & Pricing and Intellectual Property Committees for a panel discussion on recent trends and developments impacting the use of and allowability of independent research and development (“IR&D”) costs under government contracts. Specifically, the panel will focus on current industry IR&D practices and the impact the Department of Defense’s proposed IR&D regulatory changes will have on contractor decisions to invest in the development of new and improved technology through IR&D projects. The panel will be hosted by Steve Masiello (Dentons) and will include the following panelists: Tom Lemmer (Dentons), Mark Smith (Rolls-Royce) and James McEwen (Sikorsky).

 Department of Defense (“DoD”), General Services Administration (“GSA”), and National Aeronautics and Space Administration (“NASA”); Federal Acquisition Regulation (“FAR”): Removal of Regulations Relating to Telegraphic Communication (81 FR 36245): On June 6, 2016, DoD, GSA, and NASA issued a proposed rule at https://www.gpo.gov/fdsys/pkg/FR-2016-06-06/pdf/2016-13189.pdf to amend the FAR to delete the use of “telegram”, “telegraph”, and related terms. The objective is to delete reference to obsolete technologies no longer in use and replace with references to electronic communications. Comments were due August 5, 2016.

 GSA; Rewrite of General Services Administration Acquisition Regulation (“GSAR”) Part 515, Contracting by Negotiation (81 FR 36423): On June 6, 2016, GSA issued a final rule at https://www.gpo.gov/fdsys/pkg/FR-2016-06-06/pdf/2016- 13114.pdf to amend the GSAR to clarify and update the contracting by negotiation GSAR section. The rule was effective July 6, 2016.

 DoD; Defense Federal Acquisition Regulation Supplement (“DFARS”): Rights in Technical Data and Validation of Proprietary Data Restrictions (81 FR 39482): On June 16, 2016, DoD issued a proposed rule at https://www.gpo.gov/fdsys/pkg/FR-2016- 06-16/pdf/2016-14266.pdf to amend the DFARS to implement a section of the National Defense Authorization Act for Fiscal Year 2012 that revises the sections of title 10 of the United States Code that address technical data rights and validation of proprietary data restrictions. Comments are due September 30, 2016.

 DoD, GSA, and NASA; FAR: Acquisition Threshold for Special Emergency Procurement Authority (81 FR 39882): On June 20, 2016, DoD, GSA, and NASA issued a proposed rule at https://www.gpo.gov/fdsys/pkg/FR-2016-06-20/pdf/2016- 14413.pdf to amend the FAR to raise the simplified acquisition threshold for special emergency procurement authority. Comments were due August 19, 2016.

 DoD, GSA, and NASA; FAR: Strategic Sourcing Documentation (81 FR 39883): On June 20, 2016, DoD, GSA, and NASA issued a proposed rule at https://www.gpo.gov/fdsys/pkg/FR-2016-06-20/pdf/2016-14412.pdf to amend the FAR to require that the contract file contain certain documentation if the Government makes a purchase of supplies and services offered under the Federal Strategic Sourcing Initiative (“FSSI”), but the FSSI is not used. Comments were due August 19, 2016.

 GSA; GSAR: Transactional Data Reporting (81 FR 41104): On June 23, 2016, GSA issued a final rule at https://www.gpo.gov/fdsys/pkg/FR-2016-06-23/pdf/2016-14728.pdf amending the GSAR to include clauses that require vendors to report transactional data from orders placed against certain Federal Supply Schedule (FSS) contracts, Government-wide Acquisition Contracts (GWACs), and Government-wide Indefinite- Delivery, Indefinite-Quantity (IDIQ) contracts. The rule was effective June 23, 2016.

 NASA; NASA Federal Acquisition Regulation Supplement (“NFS”): Removal of Grant Handbook References (81 FR 41238): On June 24, 2016, NASA issued a final rule at https://www.gpo.gov/fdsys/pkg/FR-2016-06-24/pdf/2016-14851.pdf to amend the NFS to remove references to NASA’s Grant and Cooperative Agreement Handbook, NASA Procedural Requirements (NPR) 5800.1, NASA Grant and Cooperative Agreement Handbook, and Office of Management and Budget (OMB) Circulars A–21 for educational institutions and A–122 for nonprofit organizations. The rule was effective July 25, 2016.

 DoD; DFARS: Defense Contractors Performing Private Security Functions (81 FR 42559): On June 30, 2016, DoD issued a final rule at https://www.gpo.gov/fdsys/pkg/FR-2016-06-30/pdf/2016-15247.pdf to amend the DFARS to consolidate all requirements for contractors performing private security functions outside the United States applicable to DoD contracts in the DFARS and to make changes regarding applicability and high-level quality assurance standards. The rule was effective June 30, 2016.

 DoD; DFARS: Deletion of Supplemental Coverage for the Definition of “Simplified Acquisition Threshold” (81 FR 42556): On June 30, 2016, DoD issued a final rule at https://www.gpo.gov/fdsys/pkg/FR-2016-06-30/pdf/2016-15236.pdf to amend the DFARS to delete the supplemental coverage for the definition “simplified acquisition threshold.” The rule was effective June 30, 2016.

 DoD; DFARS: Pilot Program on Acquisition of Military Purpose Nondevelopmental Items (81 FR 42557): On June 30, 2016, DoD issued an interim rule at https://www.gpo.gov/fdsys/pkg/FR-2016-06-30/pdf/2016-15256.pdf to amend the DFARS to implement a section of the National Defense Authorization Act for Fiscal Year 2016 that changes the criteria for the pilot program on acquisition of military purpose nondevelopmental items. The rule was effective June 30, 2016.

 DoD; DFARS: Contract Financing (81 FR 42607): On June 30, 2016, DoD issued a proposed rule at https://www.gpo.gov/fdsys/pkg/FR-2016-06-30/pdf/2016-15246.pdf to amend the DFARS provisions regarding the use of customary contract financing, other than loan guarantees and advance payments, on certain fixed-price contracts. Comments were due August 29, 2016.

 DoD, GSA, and NASA; FAR: Small Business Subcontracting Improvements (81 FR 45833): On July 14, 2016, DoD, GSA, and NASA issued a final rule at https://www.gpo.gov/fdsys/pkg/FR-2016-07-14/pdf/2016-16245.pdf amending the FAR to implement regulatory changes made by the Small Business Administration, which provide for a Government-wide policy on small business subcontracting. The rule is effective November 1, 2016.

 DoD, GSA, and NASA; FAR: Revision to Standard Forms for Bonds (81 FR 45855): On July 14, 2016, DoD, GSA, and NASA issued a final rule at https://www.gpo.gov/fdsys/pkg/FR-2016-07-14/pdf/2016-16248.pdf to amend five Standard Forms prescribed by the FAR for contracts involving bonds and other financial protections. The revisions are aimed at clarifying liability limitations and expanding the options for organization types. The rule was effective August 15, 2016.

 Small Business Administration (“SBA”); Small Business Mentor Protégé Programs (81 FR 48558): On July 25, 2016, SBA issued a final rule at https://www.gpo.gov/fdsys/pkg/FR-2016-07-25/pdf/2016-16399.pdf establishing a Government-wide mentor-protégé program for all small business concerns, consistent with the SBA’s mentor-protégé program for participants in SBA’s 8(a) Business Development (BD) program. The rule was effective August 24, 2016.

 NASA; NFS: Contractor Financial Reporting of Property (81 FR 48726): On July 26, 2016, NASA issued a proposed rule at https://www.gpo.gov/fdsys/pkg/FR-2016-07- 26/pdf/2016-17559.pdf to amend the NFS to add a monthly reporting requirement for contractors having custody of $10 million or more in NASA-owned Property, Plant and Equipment (PP&E). Comments were due September 26, 2016.

 NASA; NFS: Clarification of Award Fee Evaluations and Payments (81 FR 50365): On August 1, 2016, NASA issued a final rule at https://www.gpo.gov/fdsys/pkg/FR- 2016-08-01/pdf/2016-17844.pdf to amend the NFS to clarify NASA’s award fee process by incorporating terms used in award fee contracting; guidance relative to final award fee evaluations; release of source selection information; and the calculation of the provisional award fee payment percentage in NASA end-item award fee contracts. The rule was effective August 31, 2016.

 DoD; DFARS: Detection and Avoidance of Counterfeit Electronic Parts—Further Implementation (81 FR 50635): On August 2, 2016, DoD issued a final rule at https://www.gpo.gov/fdsys/pkg/FR-2016-08-02/pdf/2016-17956.pdf amending the DFARS to implement a requirement of the National Defense Authorization Act for Fiscal Year 2012, as modified by a section of the National Defense Authorization Act for Fiscal Year 2015, that addresses required sources of electronic parts for defense contractors and subcontractors. The rule was effective August 2, 2016.

 DoD; DFARS: Amendments Related to Sources of Electronic Parts (81 FR 50680): On August 2, 2016, DoD issued a proposed rule at https://www.gpo.gov/fdsys/pkg/FR- 2016-08-02/pdf/2016-18194.pdf to amend the DFARS to implement a section of the National Defense Authorization Act for Fiscal Year 2016 that makes contractors and subcontractors subject to approval (as well as review and audit) by appropriate DoD officials when identifying a contractor-approved supplier of electronic parts. Comments are due October 3, 2016.

 DoD; DFARS: Procurement of Commercial Items (81 FR 53101): On August 11, 2016, DoD issued a proposed rule at https://www.gpo.gov/fdsys/pkg/FR-2016-08- 11/pdf/2016-18704.pdf to amend the DFARS to implement sections of the National Defense Authorization Acts for Fiscal Years 2013 and 2016 relating to commercial item acquisitions. Comments are due October 11, 2016.

 DoD, GSA, and NASA; FAR: Fair Pay and Safe Workplaces (81 FR 58562): On August 25, 2016, DoD, GSA, and NASA issued a final rule at https://www.gpo.gov/fdsys/pkg/FR-2016-08-25/pdf/2016-19676.pdf amending the FAR to implement Executive Order 13673, Fair Pay and Safe Workplaces, which is designed to increase efficiency and cost savings in Government contracting by improving contractor compliance with labor laws. The Department of Labor is simultaneously issuing final guidance to assist Government agencies in implementation of the Executive Order in conjunction with the FAR final rule. The rule is effective October 25, 2016.

 DoD; DFARS: Costs Related to Counterfeit Electronic Parts (81 FR 59510): On August 30, 2016, DoD issued a final rule at https://www.gpo.gov/fdsys/pkg/FR-2016-08- 30/pdf/2016-20475.pdf amending the DFARS to implement a section of the National Defense Authorization Act for Fiscal Year 2016 that amends the allowability of costs of counterfeit electronic parts or suspect counterfeit electronic parts and the cost of rework or corrective action that may be required to remedy the use or inclusion of such parts. The rule was effective August 30, 2016.

 DoD; DFARS: Instructions for the Wide Area WorkFlow Reparable Receiving Report (81 FR 59515): On August 30, 2016, DoD issued a final rule at https://www.gpo.gov/fdsys/pkg/FR-2016-08-30/pdf/2016-20474.pdf amending the DFARS to add instructions for utilizing the Wide Area WorkFlow Reparable Receiving Report. The rule is effective September 29, 2016.

 DoD; DFARS: Pilot Program for Streamlining Awards for Innovative Technology Projects (81 FR 59594): On August 30, 2016, DoD issued a proposed rule at https://www.gpo.gov/fdsys/pkg/FR-2016-08-30/pdf/2016-20477.pdf to amend the DFARS to implement a section of the National Defense Authorization Act for Fiscal Year 2016 that provides exceptions from the certified cost and pricing data requirements and from the records examination requirement for certain awards to small businesses or nontraditional defense contractors. Comments on the rule are due October 31, 2016.

 DoD, GSA, and NASA; FAR: Audit of Settlement Proposals (81 FR 63158): On September 14, 2016, DoD, GSA, and NASA issued a proposed rule at https://www.gpo.gov/fdsys/pkg/FR-2016-09-14/pdf/2016-22070.pdf to amend the FAR to raise the dollar threshold requirement for the audit of prime contract settlement proposals and subcontract settlements from $100,000 to $750,000. Comments on the rule are due November 14, 2016.

 DoD; DFARS: Prohibition on Use of Any Cost-Plus System of Contracting for Military Construction and Military Family Housing Projects (81 FR 65563): On September 23, 2016, DoD issued a final rule at https://www.gpo.gov/fdsys/pkg/FR-2016- 09-23/pdf/2016-22569.pdf to implement a section of the National Defense Authorization Act for Fiscal Year 2012 that amended title 10 of the United States Code to prohibit any form of cost-plus contracting for military construction projects or military family housing projects. The rule was effective September 23, 2016.

 DoD; DFARS: Rights in Technical Data (81 FR 65565): On September 23, 2016, DoD issued a final rule at https://www.gpo.gov/fdsys/pkg/FR-2016-09-23/pdf/2016- 22570.pdf to amend the DFARS to implement a section of the National Defense Authorization Act for Fiscal Year 2016 that addresses rights in technical data relating to major weapon systems, expanding application of the presumption that a commercial item has been developed entirely at private expense. The rule was effective September 23, 2016.  DoD; DFARS: Amendment to Mentor-Protégé Program (81 FR 65610): On September 23, 2016, DoD issued a proposed rule at https://www.gpo.gov/fdsys/pkg/FR- 2016-09-23/pdf/2016-22574.pdf to amend the DFARS to implement a section of the National Defense Authorization Act for Fiscal Year 2016 that provides amendments to the DoD Pilot Mentor-Protégé Program. Comments on the rule are due November 22, 2016.

 DoD; DFARS: Temporary Extension of Test Program for Comprehensive Small Business Subcontracting Plans (81 FR 65606): On September 23, 2016, DoD issued a proposed rule at https://www.gpo.gov/fdsys/pkg/FR-2016-09-23/pdf/2016-22573.pdf to amend the DFARS to implement a section of the National Defense Authorization Act for Fiscal Year 2015 and a section of the National Defense Authorization Act for Fiscal Year 2016, both of which provide revisions to the Test Program for Negotiation of Comprehensive Small Business Subcontracting Plans. Comments on the rule are due November 22, 2016.

III. Recent Cases of Interest

 Coherent Logix, Inc., ASBCA No. 59725 (May 25, 2016) available at http://www.asbca.mil/Decisions/2016/59725%20Coherent%20Logix,%20Inc. %205.25.16.pdf. Following its audit of Coherent’s 2007 final indirect rate proposal, the Defense Contract Audit Agency (DCAA) questioned claimed patent legal costs under FAR 31.205-30. The Administrative Contracting Officer (ACO) issued a final decision and assessed a penalty under FAR 42.709-5(c). In a prior decision in this appeal, the Board held that the Government’s claim was not barred because Coherent failed to meet its burden of proving that the claim accrued on August 13, 2008 or at any other time before DCAA received underlying General Ledger detail in 2013. Also, the Board upheld the ACO’s refusal to waive the penalty on the ground that the patent legal costs were inadvertently incorporated in Coherent’s 2007 proposal. In addressing Coherent’s motion for reconsideration, the Board denied Coherent’s motion because it did not show a compelling reason why the Board should alter its decision. Regarding the assessed penalty, the Board held that even if Coherent had identified its unallowable patent legal costs in its 2005 and 2006 submissions and the Government had unaccountably approved them for payment, this would not allow Coherent to escape the penalty for including the costs in its 2007 submission. The Board stated that Congress enacted the penalty provisions specifically to ensure that contractors bear the burden of assuring that their submissions do not contain expressly unallowable costs.

 Supreme Foodservice GmbH, ASBCA Nos. 57884, 58666, et al. (March 17, 2016, released on June 10, 2016) available at http://www.asbca.mil/Decisions/2016/57884%20et%20al.%20Supreme%20Foodservice %20GmbH%203.17.16.pdf; Supreme Foodservice GmbH, ASBCA Nos. 57844, 58666, et al. (June 21, 2016 released on July 12, 2016) available at http://www.asbca.mil/Decisions/2016/57884%20et%20al.%20Supreme%20Foodservices %20GmbH%206.21.16.pdf. These appeals involve alleged fraud in delivering food and other products to the U.S. military and other customers in Afghanistan under a Subsistence Prime Vendor (SPV) contract. Between December 2005 and December 2013, Supreme received $8.8 billion from DLA. The Contracting Officer unilaterally set Premium Outbound Transportation (POT) pricing. Supreme appealed for money owed for delivery of food and other products to the U.S. military and other Government customers in Afghanistan and DLA responded with affirmative defenses that the contract was void ab initio, seeking a monetary recovery. While acknowledging that it may not impose penalties and forfeitures for fraud, the Board held that to the extent that fraud- related matters are relevant to a contract’s formation or administration, it had jurisdiction to entertain DLA’s claim and affirmative defense that the SPV contract was void ab initio due to fraud in the inducement. In particular, the Board stated that it had jurisdiction to determine whether a contractor submitted false payment requests, resulting in a material breach of contract. The Board also determined that it had jurisdiction to entertain DLA’s claim and affirmative defense that the SPV contract was void ab initio due to a conflict- of-interest. The Board indicated that its focus was not upon criminality but upon determining whether there were conflict-of-interest violations that tainted the contract and rendered it void ab initio. With regard to DLA’s conflict-of-interest claims under 18 USC §§ 207(a)(1), 207(a)(2), and 208(a), the Board held that the claims were barred by the CDA’s SOL because DLA did not assert the claims within six years from the accrual date.  BAE Sys. San Francisco Ship Repair, ASBCA Nos. 58810, 59642 (June 13, 2016) available at http://www.asbca.mil/Decisions/2016/58810,%2059642%20BAE %20Systems%20San%20Francisco%20Ship%20Repair%206.13.16.pdf. The Government issued Delivery Order No. 2 under Contract No. W912SU-04-U0005 to BAE to overhaul an Army Logistics Support Vessel (LSV-5). During performance, BAE’s subcontractor discovered that the piping systems existing on the vessel were not as depicted on the contract drawings. BAE submitted a claim for these unexpected and additional piping costs and the Contracting Officer’s final decision partially granted BAE’s claim. In determining the quantum owed BAE, the Contracting Officer used a “benefit of the bargain” approach were she compared the originally anticipated materials amount to what she found to be substantiated and then applied this same factor to the labor costs. On appeal, the Board disallowed the labor hours claimed outside the performance period. The Board found that the CO knew that BAE would require overtime (OT) and charge OT differential to assist in completing the piping-related work. Under these circumstances, the Board held that the Government was bound by BAE’s interpretation that payment of OT differential, to the extent incurred and consistent with the requirements of FAR 31.201, was allowable. The Board concluded resorting to the “benefit of the bargain” approach was unnecessary and inappropriate because the actual cost method could be used to determine quantum. The Board held that the per diem costs were allowable under FAR 31.205-46(a)(1) because the costs claimed was less than the amounts permitted by Federal Travel Regulation. Since the Government asserted that the costs BAE claimed were unreasonable, the Board examined FAR 31.201-2 and 31.201-3 and determined that BAE, through documents kept in the ordinary course of business, such as time sheets, Job Labor Status Reports, Labor Distribution Reports, Material Status Reports and material invoices, established the costs incurred which were close to the estimated costs. Also, the Government used BAE’s pipe and fittings data in soliciting proposals for a sister ship (LSV-3). The Board found that the Government must have considered that the piping runs and fittings ultimately installed on LSV-5 were reasonable and would not mislead the LSV-3 bidders. The Board concluded that BAE established a prima facie case that the costs it incurred were reasonable and that the Government failed to contest or rebut the reasonableness of the costs shown to have been incurred. The Board held that BAE was entitled to $975,641.17.

 Kellogg Brown & Root Servs., Inc., ASBCA Nos. 58518, 59005 (June 16, 2016) available at http://www.asbca.mil/Decisions/2016/58518,%2059005%20Kellogg%20Brown%20& %20Root%20Services,%20Inc.%206.16.16.pdf. On August 14, 2012, the Divisional Administrative Contracting Officer (DACO) issued a final decision asserting that the contractor did not properly allocate certain risk management insurance costs in compliance with the Cost Accounting Standards (CAS). On October 29, 2012, the DACO issued a final decision demanding repayment of $8.8 million in alleged overcharging. KBRSI appealed, asserting the affirmative defense that the Government’s claim was time barred by the Contract Disputes Act’s six-year statute of limitations. In denying KBRSI’s motion for summary judgment, the Board held that KBRSI failed to show that the documents it relied upon established undisputed material facts sufficient for it to conclude that the Government’s August 14, 2012 nonmonetary claim was untimely. The Board concluded that that the Government’s declarations from the DACO, DCAA auditor, and DCMA insurance/pension specialist controverted KBRSI’s evidence. The DCAA auditor’s declaration indicated that KBRSI did not provide the necessary information to conclude that payroll was not a compliant base until it responded to DCAA’s questions on April 26, 2010 and May 4, 2010. The Board also noted that KBRSI did not submit its General Dollar Magnitude until September 27, 2012.

 Gov’t Serv. Corp., ASBCA No. 60367 (June 20, 2016) available at http://www.asbca.mil/Decisions/2016/60367%20Government%20Services%20Corp. %203.20.16.pdf. GSC submitted a certified claim in the amount of $100,000 under a DLA contract, alleging that a negative rating it received via the Contractor Performance Assessment Report System (CPARS) constituted bad faith and a breach of the duty of good faith and fair dealing. In response to the contracting officer’s request for detailed substantiating records for the claimed amount, GSC responded that the calculation of the $100,000 was derived by a simple mathematical formula of estimating the future expense that was expected to counter the Government’s actions in the CPARS. On appeal, the Board denied the Government’s motion to dismiss for failure to include a sum certain, holding that the use of estimated or approximate costs in determining the value of a claim was permissible so long as the total overall demand was for a sum certain.  Cascadian Am. Enter.—Costs, B-412208.6 (July 5, 2016) available at http://www.gao.gov/assets/680/678241.pdf. GAO sustained CAE’s protest and recommended that the Army reimburse CAE’s costs of filing and pursuing the protest. CAE submitted an invoice for 321 hours spent, at a rate of $150 per hour, and provided generalized statements to support the costs. The Army requested CAE’s tax returns or other official documentation to support the hourly rate claimed. CAE responded that because the company was a sole proprietorship, its owner did not pay himself an hourly wage and there was nothing in the tax return that would show an hourly wage. GAO denied CAE’s claim for reimbursement as not adequately documented. GAO provided that although it recognized that the requirement for documentation may sometimes entail certain practical difficulties, it did not consider it unreasonable to require a protester to document in some detail the amount and purposes of its claimed efforts, and to establish that the claimed hourly rates reflected actual rates of compensation.

 St. Tammany Parish Gov’t, CBCA No. 3872-FEMA (July 5, 2016) available at http://www.cbca.gsa.gov/files/decisions/2016/CHADWICK_07-05-16_3872- FEMA__ST_TAMMANY_PARISH_GOVERNMENT.pdf. The Parish sought reimbursement of the costs of hiring lawyers and accountants to analyze, defend, and ultimately settle claims against the Parish by debris removal contractors. The Parish maintained that the claimed expenses were reimbursable under the Robert T. Stafford Disaster Relief and Emergency Assistance Act (Stafford Act), which authorized FEMA to provide grant assistance “to a State or local government for the repair, restoration, reconstruction, or replacement of public facility damaged or destroyed by a major disaster and for associated expenses incurred by the government.” The CBCA Arbitration Panel held that the Parish’s legal and accounting fees are allowable in principle under FEMA’s regulations and may be reimbursed if the guidelines in OMB Circular A-87 were otherwise satisfied. In providing guidance regarding the sort of evidence that would help the CBCA Arbitration Panel assess whether the fees claimed were appropriately incurred and reasonable in amount, the Panel provided that “the parties may find case law on the reimbursement of legal and other professional expenses under the FAR cost principles instructive by analogy, although not directly applicable.”  Coast Prof’l, Inc. v. U.S., CAFC No. 2015-5077 (July 12, 2016) available at http://www.cafc.uscourts.gov/sites/default/files/opinions-orders/15-5077.Opinion.7-8- 2016.1.PDF. In 2009, Dept. of Education awarded Task Orders (TOs) that contained FAR 52.217-9, Option to Extend the Term of the TO, and FAR 52.217-8, Option to Extend Services. The TOs included the “H. 4 Award Term Extension” clause that specified that “any award term extensions awarded under this clause will be executed in the form of a new Task Order issued by the Contracting Officer under the Contractor’s then current GSA schedule contract.” On appeal, the Government argued that the new TOs resulting from the award-term extensions were akin to options and not new contracts. The Court held that the award-term extension issued in the form of a new TO was not an option governed by the CDA; rather, the new TO that arose from an award- term extension was a new contract.

 GSC Constr., Inc., ASBCA Nos. 59046, 59957 (July 12, 2016) available at http://www.asbca.mil/Decisions/2016/59046,%2059957%20GSC%20Construction, %20Inc.%2007.12.2016.pdf. GSC moved for summary judgment, seeking to recover $468,808.43 related to its performance on a construction contract. The Board held that GSC had failed to substantiate its claimed amount, noting that the only support GSC provided for its position was a three-page claim submitted to the Contracting Officer without any accounting or other calculation of the amount allegedly due to GSC.

 Laguna Constr. Co., Inc. v. Carter, CAFC No. 2015-1291 (July 15, 2016) available at http://www.cafc.uscourts.gov/sites/default/files/opinions-orders/15-1291.Opinion.7-13- 2016.1.PDF. Laguna filed an appeal with the ASBCA for the reimbursement of claimed subcontract costs that the Government refused to pay. After several of Laguna’s employees and officers were indicted or entered guilty pleas for crimes related to kickbacks from a subcontractor, the Government alleged it was not liable to Laguna for the claimed amounts where Laguna had committed a material breach by accepting the subcontractor kickbacks, thereby excusing the Government’s nonperformance. The Board granted the Government’s motion for summary judgment and held that insofar as Laguna’s subcontract vouchers to the Government were improperly inflated to include the payment of kickbacks, its vouchers did not reflect allowable and reimbursable contract costs, which breached the Allowable Cost and Payment contract clause. On appeal, the Court affirmed that the Board properly asserted jurisdiction where the Board did not have to make any factual findings of fraud since it relied upon a criminal conviction. The Court also held that Government’s affirmative defense of fraud was not a “claim” that required a decision by the Contracting Officer. The Court further found that the CDA did not displace the common law prior material breach rule. The Court affirmed the Board’s grant of the Government’s summary judgment motion on the grounds that Laguna’s prior material breach of the Allowable Cost and Payment clause excused the Government’s nonperformance.  CACI Int’l & CACI Tech., Inc., ASBCA No. 60171 (July 18, 2016) available at http://www.asbca.mil/Decisions/2016/60171%20CACI%20International,%20Inc.%20& %20CACI%20Technologies,%20Inc.%207.18.16.pdf. CACI paid its employees danger pay based upon their salaries, which reflected the 72 and 84-hour work weeks required by the task orders. The Contracting Officer demanded repayment for the danger pay overpayment attributable to the hours greater than 40 per week. The Board concluded that the contract required the payment of danger pay to be computed based upon the employee’s basic pay, which was an employee’s pay for normal work hours. The Board concluded that the work weeks in excess of 40 hours were not overtime under the contract. The Board held that under the terms of the contract, the Government may not require CACI employees to work 72 or 84-hour weeks as a matter of course, not subject to overtime pay, and then assert that the proportionate amount of their salary for hours greater than 40 per week should be considered additional compensation, for which danger pay is inapplicable.

 Safe Haven Enter., LLC, CBCA 3871, 3912 (July 25, 2016) available at http://www.cbca.gsa.gov/files/decisions/2016/LESTER_07-25-16_ %203912__SAFE_HAVEN_ENTERPRISES_LLC_V_DEPARTMENT_OF_STATE.pd f. After Safe Haven Enterprises’ (SHE’s) Vice President (VP) submitted a complete release of claims to the Department of State (DOS), it sought payment for the ten-percent retainage on Task Order (TO) 2 under an indefinite delivery/indefinite quantity contract. SHE sought payment of the deobligated amounts on TO 3. On cross-motions for summary relief, the Board addressed whether the VP had authority to sign the release. The Board concluded that it could not state that there was no scenario under which SHE could prevail on its authority argument. The Board denied DOS’s motion for summary relief on the effectiveness of the release and provided that any further proceedings regarding the release would focus on whether the VP possessed actual or apparent authority to execute it. With regard to the issue of whether the ten-percent retainage had already been paid, the Board could not determine what the final total fixed price under the TO was or whether DOS paid SHE less than that amount. The Board held that SHE bore the burden of proving that the TO fixed price was greater than what SHE had already been paid. With regard to the deobligated amounts on TO 3, the Board held that the record was too sparse and it ordered the parties to develop a more thorough record regarding what the original TO 3 price was, whether the parties were aware of a mistake in the originally identified price, and if and how post-award task order modifications affected the original price.  BAE Sys. Tactical Vehicle Sys. LP, ASBCA Nos. 59491, 60433 (July 25, 2016) available at http://www.asbca.mil/Decisions/2016/59491,%2060433%20BAE%20Systems %20Tacticle%20Vehicle%20Systems%20LP%207.25.16.pdf. The Government claimed that BAE provided defective cost or pricing data to the Army in connection with 2008 negotiations to definitize a contract award for trucks and trailers. DoJ filed a False Claims Act (FCA) case in federal district court based upon defective pricing allegations. The Government moved to extend the stay or suspend proceedings until the FCA case was resolved. The Board denied the Government’s motion. The Board held that while there are overlapping facts relevant to both cases, there were differences between the FCA case and these appeals such that a stay was not warranted. The Board found that the issue of whether the Government correctly claimed that BAE did not meet its contractual duty to disclose current, accurate, and complete cost or pricing data was a concern that was within its expertise and its statutory mandate and as such, it held that BAE was entitled to a decision. In balancing the harm, the Board concluded that the Government failed to demonstrate a clear case of hardship or inequity in being required to go forward. Since the Government did not represent that the stay would be of any duration other than indefinite, the Board determined that BAE could be harmed by a further delay due to the risk of loss of witnesses and evidence, in addition to the deprivation of its right to an expeditious and inexpensive adjudication of a contract dispute.

 Kellogg Brown & Root Serv., Inc., ASBCA Nos. 57530, 58161 (July 25, 2016) available at http://www.asbca.mil/Decisions/2016/57530,%2058161%20Kellogg%20Brown%20& %20Root%20Services,%20Inc.%207.25.16.pdf. After the Government had already been granted a three-year dismissal, it sought a second dismissal without prejudice or a stay because its FCA case had not progressed passed the discovery stage. The Board denied the Government’s motion where the Government acknowledged that proceeding would not compromise the Government’s FCA case and where dismissal would prejudice KBR.  King Aerospace, Inc., ASBCA No. 57057 (July 26, 2016) available at http://www.asbca.mil/Decisions/2016/57057%20King%20Aerospace,%20Inc. %207.26.16.pdf. The Army awarded Contract No. W58RGZ-05-C-0302 to King for the maintenance of a fleet of aircraft. King sought additional compensation due to the aircraft condition, unavailable or unserviceable Government-furnished property (GFP), negligently estimated number of mechanics required, and changed flight schedule. The Board held that King was entitled to additional compensation for aircraft maintenance and repair that was required because the condition of the aircraft was inferior to that represented by the contract. The Board found that King was entitled to additional compensation related to GFP. The Board, however, held that King did not present its negligent estimate claim to the Contracting Officer and, thus, the Board did not possess jurisdiction to entertain that claim. The Board also concluded that King was not entitled to additional compensation for flight schedule changes. Notably, the Government contended that King was not entitled to additional compensation because its actual labor hours were fewer than it proposed when bidding the contract. The Government’s position was that in performing the contract King spent less than it expected it would and, therefore, it was not entitled to any additional compensation. The Board disagreed. The Board found that King performed work it should not have expected to perform and the measure of recovery for such work was the cost of that work.

 East Coast Repair & Fabrication, LLC v. United States, Case No. 2:14cv606, U.S. Dist. Ct., E.D. VA, Norfolk Div. (August 9, 2016) available on PACER. East Coast Repair (ECR) filed a claim alleging that it suffered damages as a result of the Government’s failure to provide compensation for alleged change order work under Contract No. N50054-11-C-1107, a vessel repair, maritime contract. Pursuant to CDA § 7201(d), appeals of a Contracting Officer’s Final Decision arising out of a maritime contract are governed by the Suits in Admiralty Act and the District Court has jurisdiction. The Court’s lengthy decision is highly factual and this summary solely addresses issues relevant to the ABA ACP committee. The Court found that the use of the “jury verdict” method on a claim-by-claim basis was appropriate because it will provide a sufficiently reliable damage calculation. In concluding that the jury verdict method was appropriate, the Court considered many factors that contributed to ECR’s inability to present evidence of actual costs at trial. One of the factors considered was the parties’ course of dealings under the contract where throughout performance estimates of the cost were used. Even near the end of the contract when the Government and ECR attempted to negotiate change orders for work that had already been performed, the parties used estimates rather than actual costs. Another factor considered was the Government’s failure to request cost tracking under FAR 52.243-6 which was expressly incorporated by reference into the contract. ECR sought to recover the costs incurred to investigate, prepare, and submit its Request for Equitable Adjustment (REA). The Court rejected ECR’s contention that the REA costs were automatically recoverable because they were incurred before a claim was perfected through the issuance of the Contracting Officer’s final decision (COFD). The Court found that the applicable legal standard under FAR 31.205-47(f)(1) required it to make a case-specific inquiry into the objective reason why the contractor incurred the cost. In applying this “objective reason” test, the Court stated that it must take into account all case-specific facts, including the timing of the REA submittal, the timing of the CDA claim submittal, the timing of the COFD, and the negotiating posture of ECR and the Government before, at the time, and after the REA was submitted. The Court used the jury verdict method to award the majority of the REA costs claimed.

 Lockheed Martin Corp. v. U.S., CADC No. 14-5302 (August 19, 2016) available at https://www.cadc.uscourts.gov/internet/opinions.nsf/F7776DB3E279BF5585258014004 E9664/$file/14-5302-1631150.pdf. This dispute involves the environmental cleanup of three Lockheed facilities in California. In 2000, the parties entered into an agreement which authorized Lockheed to charge these indirect cleanup costs to Government contracts via a Discontinued Operations Pool. In 2008, Lockheed filed a CERCLA claim to recover the Government’s share of the costs of cleanup. In response, the Government invoked CERCLA’s Section 114(b) double-recovery bar to oppose what it saw as Lockheed’s effort to obtain from it under CERCLA “the same removal costs” it had already recovered from the Government as contract overhead. The Government also contended that Lockheed was barred from recovery because the Government had already paid its share of cleanup costs, such that cost collection under CERCLA would be inequitable under CERCLA’s Section113(f). On appeal, the Court addressed whether the Government had a valid claim that the particular mechanism by which the Government would pay its share of the costs of environmental remediation under CERCLA interacts with the parties’ agreed-upon contract-based reimbursement method in a way that impermissibly required the Government to make double payment. The Court concluded that the Government’s claim failed. The Court declined to evaluate the interplay of Government contracting law and CERCLA Section 114(b).

 Raytheon Co., Space & Airborne Sys., ASBCA No. 58068 (August 9, 2016, released on September 9, 2016) available at http://www.asbca.mil/Decisions/2016/58068%20Raytheon%20Company,%20Space %20&%20Airborne%20Systems%208.9.16%20(REDACTED%20VERSION).pdf. Raytheon revised its Cost Accounting Standards Disclosure Statement due to three changes in its cost accounting practices. The Government sought to recover the increased costs arising from Raytheon’s unilateral cost accounting changes. The Board found that it was not entirely clear that the CAS Board intended the materiality regulation at 48 C.F.R § 9903.305 to apply to increased costs arising from voluntary accounting changes. The Board held that FAR 30.602 required the use of the criteria in 48 C.F.R § 9903.305 when determining if increased costs were material. The Board held that the contracting officer violated FAR 30.602 by failing to consider the criteria in 48 C.F.R. § 9903.305 in determining whether the amounts at issue were material. The Board concluded that the contracting officer abused her discretion in failing to analyze the materiality of the cost impacts. The Board held that the Government could not recover the cost impact.  Exelis, Inc., ASBCA No. 60131 (August 29, 2016) available at http://www.asbca.mil/Decisions/2016/60131%20Exelis,%20Inc.%208.29.16.pdf. Based upon DCAA’s audit recommendations, the Administrative Contracting Officer issued a final decision asserting that Exelis improperly accounted for a building lease as an operating lease when it should have been treated as a capital lease. The final decision determined that Exelis was non-compliant with CAS 404 and FAR 31.205-11(h). In addressing Exelis’ motion to sustain the appeal and dismiss the Government’s claim, the Board interpreted CAS 404 based upon its plain language and held that CAS 404 applied to tangible assets which are assets with physical substance. The Board found that even if the language of CAS 404 was not clear, the preamble confirmed that the CAS Board intended to allow the contractor to determine whether a lease should be treated as a capital lease or an operating lease and that CAS 404 would only apply in the event that the contractor elected to treat the lease as a capital lease. The Board held that the contracting officer’s final decision failed to state a CAS claim upon which relief may be granted regarding a purported violation of CAS 404 where Exelis elected to treat the lease as an operating lease..

 DCAA MRD 16-PPD-006(R), May 27, 2016, “Audit Guidance on Revised Policy and Procedures for Low-Risk Incurred Cost Proposal Less Than $250 Million in ADV” (available at http://www.dcaa.mil/mmr/16-PPD-006.pdf)  DCAA MRD 16-PSP-007(R), June 30, 2016, “Audit Alert on Handling Incurred Cost Proposals Using a Blending Approach of Compensation Caps” (available at http://www.dcaa.mil/mmr/16-PSP-007.pdf)

As always, if you have ideas for upcoming meetings, guest speakers, special programs, etc. we want to hear from you. Please feel free to contact any of the Co-Chairs to discuss. Agenda for December 14, 2016 Meeting

The Accounting, Cost & Pricing and Contract Claims and Disputes Resolution Committees are pleased to invite you to a meeting on the subject of “Proving Quantum Claims Before the Courts and Boards” on Wednesday, December 14, 2016, from 12:00 noon to 1:30 p.m. (eastern).

Meeting Location: We will meet at the Washington, DC office of Gibson Dunn & Crutcher LLP. Their office is located at 1050 Connecticut Avenue, NW, Washington, DC 20036-5306 (near the corner of 18th and L Streets). The meeting will be held in the Potomac Conference Room. The location is about one block from the Farragut North metro station on the red line and 2½ blocks from the Farragut West metro station on the blue, silver, and orange lines. Garage parking is very limited in the area. For those who cannot attend in person, there is a dial-in number: (866) 747-5969; passcode: 2029558536. We will connect the phone link at about 12:10 PM. For those who attend in person, lunch will be provided for a contribution of approximately $10. If you plan to attend in person, please RSVP to Cheryl Pitt at [email protected] or (202) 887-3645 no later than December 7, 2016.

I. Meeting Subject

Please join the ABA Accounting, Cost & Pricing and Contract Claims and Disputes Resolution Committees for a panel discussion on proving quantum claims before the U.S. Court of Federal Claims and the Boards of Contract Appeals. Panelist will offer practical tips and best practices for presenting quantum cases. The panel will be moderated by Greg Bingham (President, The Kenrich Group) and will feature the following distinguished panelists: the Honorable Thomas Wheeler (Judge, U.S. Court of Federal Claims), the Honorable Lynda O’Sullivan (Judge, Armed Services Board of Contract Appeals), Joseph D. West (Partner, Gibson Dunn) and Michael Chiaparas (Chief Trial Attorney, DCMA Contract Disputes Resolution Center).

 Department of Labor (“DoL”), Wage and Hour Division: Establishing Paid Sick Leave for Federal Contractors (81 FR 67598): On September 30, 2016, DoL issued a final rule at https://www.gpo.gov/fdsys/pkg/FR-2016-09-30/pdf/2016-22964.pdf implementing Executive Order 13706, “Establishing Paid Sick Leave for Federal Contractors.” The rule was effective November 29, 2016.

 Department of Defense (“DoD”), General Services Administration (“GSA”), and National Aeronautics and Space Administration (“NASA”); Federal Acquisition Regulation (“FAR”): Amendment Relating to Multi-Year Contract Authority for Acquisition of Property (81 FR 67773): On September 30, 2016, DoD, GSA, and NASA issued a final rule at https://www.gpo.gov/fdsys/pkg/FR-2016-09-30/pdf/2016- 23201.pdf amending the FAR to implement a section of the National Defense Authorization Act (“NDAA”) for Fiscal Year (“FY”) 2016 to require that “significant” savings would be achieved by entering into a multi-year contract. The rule was effective October 31, 2016.  DoD, GSA, and NASA; FAR: Consolidation and Bundling (81 FR 67763): On September 30, 2016, DoD, GSA, and NASA issued a final rule at https://www.gpo.gov/fdsys/pkg/FR-2016-09-30/pdf/2016-23199.pdf to amend the FAR to implement sections of the Small Business Jobs Act of 2010 and regulatory changes made by the Small Business Administration (“SBA”), which provide for a Government wide policy on consolidation and bundling. The rule was effective October 31, 2016.

 DoD, GSA, and NASA; FAR: Contractors Performing Private Security Functions (81 FR 67776): On September 30, 2016, DoD, GSA, and NASA issued a final rule at https://www.gpo.gov/fdsys/pkg/FR-2016-09-30/pdf/2016-23203.pdf amending the FAR to remove the DoD-unique requirements for contractors performing private security functions outside the U.S. and to provide a definition of “full cooperation” within the associated clause. The rule was effective October 31, 2016.

 DoD, GSA, and NASA; FAR: Limitation on Allowable Government Contractor Employee Compensation Costs (81 FR 67778): On September 30, 2016, DoD, GSA, and NASA issued a final rule at https://www.gpo.gov/fdsys/pkg/FR-2016-09- 30/pdf/2016-23204.pdf adopting as final, with changes, an interim rule amending the FAR to implement a section of the Bipartisan Budget Act of 2013. The final rule revises the allowable cost limit relative to the compensation of contractor and subcontractor employees. Also, the final rule implements the narrowly targeted exception to this allowable cost limit for scientists, engineers, or other specialists upon an agency determination that such exceptions are needed to ensure the agency has continued access to needed skills and capabilities. The rule was effective September 30, 2016.

 DoD, GSA, and NASA; FAR: New Designated Countries—Ukraine and Moldova (81 FR 67774): On September 30, 2016, DoD, GSA, and NASA issued a final rule at https://www.gpo.gov/fdsys/pkg/FR-2016-09-30/pdf/2016-23202.pdf amending the FAR to add Ukraine and Moldova as new designated countries under the World Trade Organization Government Procurement Agreement (WTO GPA). The rule was effective October 31, 2016.

 DoD, GSA, and NASA; FAR: Non-Retaliation for Disclosure of Compensation Information (81 FR 67732): On September 30, 2016, DoD, GSA, and NASA issued an interim rule at https://www.gpo.gov/fdsys/pkg/FR-2016-09-30/pdf/2016-23196.pdf amending the FAR to implement Executive Order 13665, “Non-Retaliation for Disclosure of Compensation Information,” and an associated final rule issued by the DoL. The rule was effective September 30, 2016 and comments were due November 29, 2016.

 DoD, GSA, and NASA; FAR: Prohibition on Contracting with Corporations with Delinquent Taxes or a Felony Conviction (81 FR 67728): On September 30, 2016, DoD, GSA, and NASA issued a final rule at https://www.gpo.gov/fdsys/pkg/FR-2016- 09-30/pdf/2016-23194.pdf adopting as final, without changes, an interim rule amending the FAR to implement sections of the Consolidated and Further Continuing Appropriations Act of 2015 to prohibit the Government from entering into a contract with any corporation having a delinquent Federal tax liability or a felony conviction under any Federal law, unless the agency has considered suspension or debarment of the corporation and has made a determination that this further action is not necessary to protect the interests of the Government. The rule was effective September 30, 2016.

 DoD, GSA, and NASA; FAR: Sole Source Contracts for Women-Owned Small Businesses (81 FR 67735): On September 30, 2016, DoD, GSA, and NASA issued a final rule at https://www.gpo.gov/fdsys/pkg/FR-2016-09-30/pdf/2016-23197.pdf adopting as final, with a minor edit, an interim rule amending the FAR to implement regulatory changes made by the SBA that provide for authority to award sole source contracts to economically disadvantaged women-owned small business concerns and to women-owned small business concerns eligible under the Women-Owned Small Business (WOSB) Program. The rule was effective September 30, 2016.

 DoD, GSA, and NASA; FAR: Unique Identification of Entities Receiving Federal Awards (81 FR 67736): On September 30, 2016, DoD, GSA, and NASA issued a final rule at https://www.gpo.gov/fdsys/pkg/FR-2016-09-30/pdf/2016-23198.pdf amending the FAR to redesignate the terminology for unique identification of entities receiving Government awards. The change to the FAR removes the proprietary standard or number. The rule was effective October 31, 2016.

 DoD, GSA, and NASA; FAR: Updating Federal Contractor Reporting of Veterans’ Employment (81 FR 67731): On September 30, 2016, DoD, GSA, and NASA issued a final rule at https://www.gpo.gov/fdsys/pkg/FR-2016-09-30/pdf/2016-23195.pdf adopting as final, without change, an interim rule amending the FAR to implement a final rule issued by the DoL’s Veterans’ Employment and Training Service (VETS) that replaced the VETS-100 and VETS-100A Federal Contractor Veterans’ Employment Report forms with the VETS-4212, Federal Contractor Veterans’ Employment Report form. The rule was effective September 30, 2016.  DoD, Office of the Chief Information Officer: DoD’s Defense Industrial Base (“DIB”) Cybersecurity (“CS”) Activities (81 FR 68312): On October 4, 2016, DoD issued a final rule at https://www.gpo.gov/fdsys/pkg/FR-2016-10-04/pdf/2016-23968.pdf implementing mandatory cyber incident reporting requirements for DoD contractors and subcontractors who have agreements with DoD. In addition, the rule modifies eligibility criteria to permit greater participation in the voluntary DIB CS information sharing program. The rule was effective November 3, 2016.

 DoD; Defense Federal Acquisition Regulation Supplement (“DFARS”): Display of Hotline Posters (81 FR 73005): On October 21, 2016, DoD issued a final rule at https://www.gpo.gov/fdsys/pkg/FR-2016-10-21/pdf/2016-25317.pdf amending the DFARS to consolidate the multiple hotline posters into one poster that delineates multiple reportable offenses. The rule was effective October 21, 2016.

 DoD; DFARS: Network Penetration Reporting and Contracting for Cloud Services (81 FR 72986): On October 21, 2016, DoD issued a final rule at https://www.gpo.gov/fdsys/pkg/FR-2016-10-21/pdf/2016-25315.pdf adopting as final, with changes, an interim rule amending the DFARS to implement a section of the NDAA for FY 2013 and a section of the NDAA for FY 2015, both of which require contractor reporting on network penetrations, as well as DoD policy on the purchase of cloud computing services. The rule was effective October 21, 2016.

 DoD; DFARS: Undefinitized Contract Action Definitization (81 FR 73007): On October 21, 2016, DoD issued a proposed rule at https://www.gpo.gov/fdsys/pkg/FR- 2016-10-21/pdf/2016-25332.pdf to amend the DFARS to provide a more transparent means of documenting the impact of costs incurred during the undefinitized period of an undefinitized contract action on allowable profit. Comments on the rule are due December 20, 2016.

 DoD; DFARS: Use of Government Property Clause (81 FR 73002): On October 21, 2016, DoD issued a proposed rule at https://www.gpo.gov/fdsys/pkg/FR-2016-10- 21/pdf/2016-25316.pdf to amend the DFARS to expand the prescription for use of the FAR Government property clause. Comments on the rule are due December 20, 2016.

 NASA; Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (81 FR 74657): On October 27, 2016, NASA issued a final rule at https://www.gpo.gov/fdsys/pkg/FR-2016-10-27/pdf/2016-26014.pdf to amend its regulations, titled “Uniform Administrative Requirements, Cost Principles, and Audit Requirements” for Federal Awards to revise the requirements related to information contained in a Federal award for commercial firms with no cost sharing requirement and to add new or modify existing terms and conditions related to indirect cost charges and access to research results. The rule was effective November 28, 2016.

 DoD, Office of the Under Secretary of Defense for Acquisition, Technology, and Logistics: Withholding of Unclassified Technical Data and Technology from Public Disclosure (81 FR 75352): On October 31, 2016, DoD issued a proposed rule at https://www.gpo.gov/fdsys/pkg/FR-2016-10-31/pdf/2016-26236.pdf to establish policy, assign responsibilities, and prescribe procedures for the dissemination and withholding of certain unclassified technical data and technology subject to the International Traffic in Arms Regulations (ITAR) and Export Administration Regulations (EAR). The rule applies to DoD components and their contractors and grantees and is meant to control the transfer of technical data and technology contributing to the military potential of any country or countries, groups, or individuals that could prove detrimental to U.S. national security or critical interests. Comments on the rule are due December 30, 2016.

 NASA; NASA Federal Acquisition Regulation Supplement (“NFS”): Removal of Engineering Change Proposals Clause (81 FR 75344): On October 31, 2016, NASA issued a final rule at https://www.gpo.gov/fdsys/pkg/FR-2016-10-31/pdf/2016-26174.pdf amending the NFS to remove the Engineering Change Proposals (ECPs) basic clause with its Alternate I & II and associated information collection from the NFS. The rule was effective November 30, 2016.

 DoD; DFARS: Enhancing the Effectiveness of Independent Research and Development (81 FR 78008): On November 4, 2016, DoD issued a final rule at https://www.gpo.gov/fdsys/pkg/FR-2016-11-04/pdf/2016-26366.pdf amending the DFARS seeking to improve the effectiveness of independent research and development (“IR&D”) investments by the defense industrial base by requiring contractors to engage in technical interchanges with DoD before costs are generated. The rule was effective November 4, 2016.

 DoD; DFARS: Independent Research and Development Expenses (81 FR 78014): On November 4, 2016, DoD issued a proposed rule at https://www.gpo.gov/fdsys/pkg/FR-2016-11-04/pdf/2016-26369.pdf to amend the DFARS seeking to ensure that substantial future IR&D expenses, as a means to reduce evaluated bid prices in competitive source selections, are evaluated in a uniform way during competitive source selections. Comments on the rule are due January 3, 2017.

 DoD; DFARS: Offset Costs (81 FR 78015): On November 4, 2016, DoD issued a proposed rule at https://www.gpo.gov/fdsys/pkg/FR-2016-11-04/pdf/2016-26377.pdf amending the DFARS to implement a section of the NDAA for FY 2016 related to costs associated with indirect offsets under foreign military sales agreements. Comments on the rule are due January 3, 2017.

 DoD, GSA, and NASA; FAR: Clarification of Requirement for Justifications for 8(a) Sole Source Contracts (81 FR 80012): On November 15, 2016, DoD, GSA, and NASA issued a proposed rule at https://www.gpo.gov/fdsys/pkg/FR-2016-11- 15/pdf/2016-27245.pdf to amend the FAR to clarify the guidance for sole-source 8(a) contract awards exceeding $22 million. Comments on the rule are due January 17, 2017.

 DoD, GSA, and NASA; FAR: Public Disclosure of Greenhouse Gas Emissions and Reduction Goals—Representation (81 FR 83092): On November 18, 2016, DoD, GSA, and NASA issued a final rule at https://www.gpo.gov/fdsys/pkg/FR-2016-11- 18/pdf/2016-27686.pdf amending the FAR to establish a representation for offerors to indicate if and where they publicly disclose greenhouse gas emissions and greenhouse gas reduction goals or targets. The rule is effective December 19, 2016.

 DoD, GSA, and NASA; FAR: Removal of Regulations Relating to Telegraphic Communication (81 FR 83097): On November 18, 2016, DoD, GSA, and NASA issued a final rule at https://www.gpo.gov/fdsys/pkg/FR-2016-11-18/pdf/2016-27684.pdf amending the FAR to delete the use of “telegram,” “telegraph,” and related terms. The rule is effective December 19, 2016. III. Recent Cases of Interest

 Am Pierce & Assoc. Inc., B-413128; B-413128.2, (August 22, 2016) available at http://www.gao.gov/assets/690/680278.pdf. In Am Pierce & Associates Inc.’s (“AMP’s”) protest, AMP challenged the cost realism evaluation of its proposal. The RFP directed offerors to provide three years of historical or actual indirect rates and the most current DCAA billing rates or DCAA forward pricing rate agreement. With regard to direct labor rates, offerors were required to submit labor rates for proposed personnel and to provide payroll verification for employees and contingent offer letters for prospective employees. AMP argued that the Agency unreasonably relied upon its historical indirect rates, as provided by DCAA, rather than its proposed indirect rates in upwardly adjusting the cost of its proposal. AMP also argued that the payroll verification was not a reasonable way to verify proposed costs and that the use of a median rate to calculate the most probable direct labor costs in the option years was unreasonable. GAO held that in conducting a cost realism analysis in a negotiated procurement, the Agency reasonably used AMP’s actual indirect rates from the prior fiscal year, instead of AMP’s significantly lower proposed rates, where DCAA had not verified the proposed rates and, accordingly, the Agency could not determine the proposed rates were realistic. GAO further held that the Agency reasonably used labor rates for current employees when evaluating AMP’s labor costs where the solicitation advised offerors that the Agency would determine the degree to which the proposed direct labor costs were based upon named employees. GAO determined that the possibility of personnel changes did not negate the fact that the actual rates currently being paid to personnel were the most realistic rates available. GAO denied AMP’s protest.

 ThinkGlobal Inc. v. Dep’t of Commerce, CBCA 4410 (September 9, 2016) available at http://www.cbca.gsa.gov/files/decisions/2016/DRUMMOND_09-09- 16_4410__THINKGLOBAL_INC.pdf. In April 2004 and September 2009, respectively, Commerce awarded ThinkGlobal Inc. (“TGI”) two no-cost contracts to publish Commercial News USA (CNUSA). On July 25, 2014, TGI submitted a certified claim asserting breaches of the contracts. Commerce moved to dismiss TGI’s claims as untimely under the Contract Disputes Act’s (CDA’s) six-year statute of limitations. The Board held that in a breach of contract action claim accrual generally occurs at the time of the breach. Further, the Board determined that when Commerce failed to provide the required information upon contract award that TGI needed to perform the respective contracts, TGI knew or should have been aware of the basis of any claims it had relating to Commerce’s failure to fulfill its contractual obligations. The Board found that TGI’s breach claims relating to the 2004 contract were untimely where they accrued upon contract award (April 2004), which was more than six years before TGI submitted its claim in July 2014. The Board held that the 2009 contract breach claim was separate and distinct from the causes of action arising out of TGI’s 2004 contract. The Board denied Commerce’s motion to dismiss the 2009 breach of contract claim as untimely where it could not have accrued before contract award in September 2009, which is less than six years before TGI submitted its claim. The Board held that TGI was entitled to attempt to prove that Commerce breached the 2009 contract and that the breach caused TGI damage.

 Alaska Aerospace Corp., ASBCA No. 59794 (September 13, 2016) available at http://www.asbca.mil/Decisions/2016/59794%20Alaska%20Aerospace%20Corporation %209.13.16.pdf. The contracting officer issued a final decision disallowing $302,637 in employee pension plan contributions that were paid by the State of Alaska on Alaska Aerospace Corporation’s (“AAC’s”) behalf. The contracting officer demanded payment based upon FAR 52.242-3(d), Penalties for Unallowable Costs. The employee pension plan contributions were included in AAC’s FY2008 Incurred Cost Proposal and they were not a part of any invoices that were paid by the Government. Since the Government was seeking recoupment of money, this was a Government claim and it had the burden of proof. The Board found that the Government proffered no evidence that it reimbursed AAC any amount for the FY2008 employee pension plan contributions which were paid by the State of Alaska. Accordingly, the Board held that the Government failed to meet its burden of proof and the Board sustained the appeal.

 Avant Assessment, LLC, ASBCA Nos. 58986, 59713 (September 22, 2016) available at http://www.asbca.mil/Decisions/2016/58986.%2059713%20Avant%20Assessment, %20LLC%209.22.16.pdf. In September 2010, the Government award Avant a contract to deliver foreign-language test items. The contract included FAR 52.212-4, Contract Terms and Conditions—Commercial Items. The Government terminated the contract for cause. Avant appealed the termination and sought breach damages for the allegedly improper rejection of test items (in a prior decision, the Board converted the termination to one of convenience of the Government). Avant also appealed the contracting officer’s separate final decision that sought repayment of advance payments for undelivered test items. After the Board converted the termination to one of convenience, Avant abandoned its claim to breach damages, because it maintained that it was entitled to “reasonable charges the Contractor can demonstrate to the satisfaction of the government using its standard record keeping system” under FAR 52.212-4. The Board dismissed Avant’s breach of damages appeal as moot. The Board held that the Government’s overpayment claim included a component for interest, which made it an independent claim that did not merge into Avant’s subsequent termination for convenience settlement proposal. The Board held that the Government overpaid Avant and was entitled to reimbursement.

 HCS, Inc., ASBCA No. 60533 (September 20, 2016) available at http://www.asbca.mil/Decisions/2016/60533%20HCS,%20Inc.%209.20.16.pdf. The Navy unilaterally modified a contract’s scope of work to require a contractor to cap a leaking 4” pipeline that perpendicularly intersected an 8” pipeline instead of replacing “up to 60 feet” of the 8” pipeline deemed originally by the Navy to be the source of a water leak. After completion of all contract work, the Navy unilaterally reduced the price of the contract by more than 50 percent. HCS sought its original fixed-price for the contract, less an adjustment for materials bid that it was not required to use and new materials added to the contract as a result of the Navy’s unilateral change. The Board found that, with respect to a change that deleted contract work, the Government was entitled to a downward adjustment in contract price to the extent of the savings flowing to the contractor. The Board determined that the Government had the burden of proving the amount of cost savings due to deletion of work. The Board wrote that it was not aware of any authority allowing the Navy to delete work from a contract after work performance and then to refuse to pay for the work initially specified and performed, nor did the Navy cite any authority. The Navy did not challenge the reasonableness of any of the dollar amounts presented by HCS. The Board found that the Navy did not carry its burden of proof. Since the Government failed to demonstrate entitlement to a contract price reduction for deleted work, the Board granted HCS’ appeal and directed the Navy to pay HCS its full claim, plus interest.

 Contrack Int’l, Inc., ASBCA No. 59917 (October 19, 2016) available at http://www.asbca.mil/Decisions/2016/59917%20Contrack%20International,%20Inc. %2010.19.16.pdf. The Army Corps of Engineers awarded Contrack a contract for the design and construction of Afghanistan National Army (“ANA”) 2/205 RCC/MP/Transient and Base Additions. As observed during the site visit, vehicles owned by ANA occupied a portion of the work area. Contrack suffered a 52-day delay because these vehicles were not timely removed from the work site. The Government extended the performance period by 52 days but provided no additional compensation. Contrack sought damages consisting of extended job site overhead, insurance, attorney/consultant fees, and profit. In addressing Contrack’s motion for summary judgment, the Board held that there were material factual disputes as to whether the Government had the authority to move the vehicles from the work site and as to whether the Government made appropriate attempts to facilitate movement of the vehicles. Accordingly, the Board denied Contrack’s motion with respect to its theories that the Government breached its duty to cooperate and that relocation of the vehicles was solely the Government’s responsibility. In addressing Contrack’s theory that the Government warranted access to the site, the Board stated that the Government cannot be held liable for delays of third parties absent unmistakable contract language to the contrary. The Board found that Contrack was on notice of the potential vehicle problem at the time of contract execution and accepted the risk that ANA would not provide access in a timely manner. The Board denied Contrack’s motion where there was no basis on which it could grant Contrack summary judgment for delays caused by the ANA.

 Seven Seas Shipchandlers, LLC, ASBCA No. 60602 (October 25, 2016) available at http://www.asbca.mil/Decisions/2016/Seven%20Seas%20Shipchnadlers%20LLC %2010.25.16.pdf. Seven Seas delivered supplies and was entitled to payment. The Government disbursed the payment to an individual who disappeared with Seven Seas’ money. Seven Seas submitted claims seeking payment for these supplies. The Government disputed Seven Seas’ claims on the ground that Seven Seas had already been paid. In a prior decision, Seven Seas Shipchandlers, LLC, ASBCA No. 57875 et al., 15-1 BCA ¶ 35,908, the Board sustained the appeals, holding that the Government failed to prove that it had paid Seven Seas and that appellant was entitled to $240,579.90 plus applicable interest. The Government paid Seven Seas $261,262.25, which included the $240,579.90 in contract payments plus $20,682.35 in CDA interest. In addition, Seven Seas submitted a claim seeking payment of Prompt Payment Act (“PPA”) interest from the date the Government received the invoices. The Board held that Seven Seas’ claim for PPA interest fell squarely within the PPA exception which provided that no PPA interest was due if the nonpayment was “because of a dispute between the head of an agency and a business concern over the amount of payment or compliance with the contract.” The Board determined that the dispute centered on which party bore the risk of theft of the money. The Board held that Seven Seas was not entitled to PPA interest after it had received payment plus CDA interest.

 Mission Support Alliance, LLC v. Dep’t of Energy, CBCA 4985 (November 8, 2016) available at http://www.cbca.gsa.gov/files/decisions/2016/SOMERS_11-08- 16_4985__MISSION_SUPPORT_ALLIANCE_LLC_V_DOE.pdf. In April 2009, DOE awarded Mission Support Alliance (“MSA”) a performance-based cost-plus-award-fee contract to provide support services for the Hanford Site environmental cleanup mission. After award, MSA applied for designation as a seller of Qualified Anti-Terrorism Technology (“QATT”) pursuant to the Support Anti-Terrorism by Fostering Effective Technologies Act (SAFETY Act). The contract did not require MSA to receive a QATT designation and MSA charged $1,364,806.72 to the contract for the initial and annual premiums for the Safety Act insurance. The contracting officer disallowed the costs as unreasonable where they were not required by the contract’s terms, pursuant to FAR 31.201-2. The contracting officer also found that the costs of the insurance were not ordinary among DOE contracts under FAR 31.201-3. On appeal, MSA sought reimbursement for the SAFETY Act insurance costs. On the parties’ cross-motions for summary judgment, the Board held that the insurance costs were unallowable because MSA failed to obtain contracting officer approval for its SAFETY Act insurance policy, in violation of contract terms. The Board concluded that the costs were unallowable because they were not reasonable under FAR 31.201-3(a) and (b) since MSA failed to demonstrate that SAFETY Act insurance was generally recognized as ordinary and necessary for the contractor’s business or the contract performance. The Board denied MSA’s motion and granted DOE’s motion for summary relief.

 Boarhog, LLC v. United States, COFC No. 16-678C (November 14, 2016) available at https://ecf.cofc.uscourts.gov/cgi-bin/show_public_doc?2016cv0678-14-0. On September 18, 2014, the Navy awarded a contract to Boarhog which incorporated by reference FAR 52.212-4, entitled “Contract Terms and Conditions – Commercial Items.” On September 24, 2014, two days before the scheduled start of performance, the Navy terminated the contract for convenience in response to an agency protest. Boarhog filed a bid protest. To resolve Boarhog’s protest, six months later on March 10, 2015, the Navy took corrective action and awarded a second contract to Boarhog which was identical to the terminated contract in terms of performance period and price. Boarhog submitted a claim alleging breach of contract and demanding payment for damages since performance was delayed for six months due to the bid protests. In addressing the Government’s motion to dismiss, the Court determined that to recover damages for breach of contract under the CDA based upon improper termination for convenience, a contractor must present clear and convincing evidence of the Government’s misconduct. The Court granted the Government’s motion to dismiss because Boarhog did not show or allege that the Government acted in bad faith or abused its discretion in terminating the contract. The Court also provided that, had Boarhog established the Navy’s termination for convenience was improper, it still did not suffer an injury justifying an award of damages. The Court determined that Boarhog did not perform any work under the terminated contract and as such, Boarhog could not point to any incurred costs as a basis for recovery. Under the formula established by FAR 52.212-4, Boarhog’s percentage of the work performed prior to termination was zero, and its recovery therefore was zero. The Court held that Boarhog may not recover loss of anticipated profits or consequential damages because neither the contract nor applicable case law permitted such recovery.

 DCAA MRD 16-PPD-008(R), September 30, 2016, “Update – Audit Guidance on the Impact of the National Defense Authorization Act on DCAA’s Audit Support to Non- Defense Agencies” (available at http://www.dcaa.mil/mmr/16-PPD-008.pdf)