ASBCA 62165

ARMED SERVICES BOARD OF CONTRACT APPEALS Appeal of - ) ) Northrop Grumman Corporation ) ASBCA No. 62165 ) Under Contract No. F33657-01-C-4600 ) APPEARANCES FOR THE APPELLANT: Thomas A. Lemmer, Esq. K. Tyler Thomas, Esq. Dentons US LLP Denver, CO APPEARANCES FOR THE GOVERNMENT: Arthur M. Taylor, Esq. DCMA Chief Trial Attorney Kara M. Klaas, Esq. Trial Attorney Defense Contract Management Agency Chantilly, VA OPINION BY ADMINISTRATIVE JUDGE STINSON ON APPELLANT’S PARTIAL MOTION TO DISMISS FOR LACK OF JURISDICTION Pending before the Board is a partial motion to dismiss for lack of jurisdiction or, in the alternative, motion to strike, filed by appellant Northrop Grumman Corporation (NGC). Previously, NGC and respondent, the Defense Contract Management Agency (DCMA), filed cross-motions for partial summary judgment on a government claim regarding the disallowance of appellant’s pension costs pursuant to Federal Acquisition Regulation (FAR) 31.201-6, Accounting for Unallowable Costs. 1 The government’s cross-motion for partial summary judgment and opposition to appellant’s partial motion for summary judgment includes the argument that NGC’s pension costs are unallowable as unreasonable costs pursuant to FAR 31.201-3 (gov’t cross-mot. at 7-8). According to appellant, the Board lacks jurisdiction to consider the government’s reasonableness challenge based upon FAR 31.201-3, because that issue was not first addressed in a final decision and “has never been part of the cost disallowance at issue in this appeal” (app. mot. dis. at 1). NGC requests that the Board dismiss the government’s FAR 31.201-3 reasonableness challenge for lack of jurisdiction and strike any reference to that argument from the government’s briefing. In the alternative, NGC requests that the 1 By Order dated February 11, 2021, the Board granted appellant’s motion to stay proceedings on the parties’ cross-motions for partial summary judgment, pending resolution of appellant’s partial motion to dismiss. Board strike the government’s FAR 31.201-3 reasonableness challenge because of its alleged prejudicial effect on NGC in this litigation. (App. mot. dis. at 16) For the reasons stated below, we deny NGC’s motion. STATEMENT OF FACTS (SOF) FOR PURPOSES OF THE MOTION 1. In Fiscal Year (FY) 2012, NGC performed flexibly-priced contracts which contained FAR 52.216-7, Allowable Cost and Payment (JSUMF ¶ 1). 2 NGC’s Incurred Cost Submission (ICS) for FY 2012, dated June 27, 2013, included pension costs incurred pursuant to certain NGC nonqualified defined-benefit pension plans, which for government contract purposes, accounted for such costs on a pay-as-you-go basis (JSUMF ¶¶ 2-4, 7). 2. Certain pension plan participants who received pension benefits in FY 2012 earned compensation during their working years in excess of the limitation or cap set forth in FAR 31.205-6(p). NGC included as a compensation factor in its Retirement Benefit Formulas, amounts in excess of the applicable FAR 31.205-6(p) limitation in a given year, as part of participants’ earned salary and bonus. (JSUMF ¶ 15) 3. On June 7, 2019, Elizabeth Imhoff, DCMA’s corporate administrative contracting officer (CACO), issued a final decision disallowing certain of NGC’s pension costs contained in its 2012 ICS (JSUMF ¶¶ 16-17; R4, tab 6). 4. The government’s disallowance was based upon the premise that the pension costs were unallowable pursuant to FAR 31.201-6 as “directly associated costs” of unallowable compensation costs as specified in the limitation on allowability of compensation set forth in FAR 31.205-6(p). The final decision stated that some plan participants who received a benefit in FY 2012, earned compensation in excess of the applicable FAR 31.205-6(p) limitation during their working years that was not excluded 2 “JSUMF” refers to the parties’ October 9, 2020, Joint Stipulation of Undisputed Material Facts submitted in support of the parties’ cross-motions for partial summary judgment; “app.