ASBCA 60416

ARMED SERVICES BOARD OF CONTRACT APPEALS Appeal of -- ) ) Sparton DeLeon Springs, LLC ) ASBCA No. 60416 ) Under Contract Nos. N00164-0l-D-0027 ) NOO 167-04-D-0024 ) APPEARANCES FOR THE APPELLANT: Nicole J. Owren-Wiest, Esq. Gary S. Ward, Esq. Wiley Rein LLP Washington, DC APPEARANCES FOR THE GOVERNMENT: E. Michael Chiaparas, Esq. DCMA Chief Trial Attorney Gregory T. Allen, Esq. Trial Attorney Defense Contract Management Agency Chantilly, VA OPINION BY ADMINISTRATIVE JUDGE MCILMAIL ON APPELLANT'S MOTION FOR JUDGMENT ON THE PLEADINGS, AND ALTERNATIVELY FOR SUMMARY JUDGMENT Appellant, Sparton DeLeon Springs, LLC (Sparton), timely appeals from a 26 October 2015 contracting officer's final decision demanding the reimbursement of an alleged overpayment of certain direct costs. Appellant requests judgment on the pleadings, or summary judgment that the government's claim is time-barred. The appeal is governed by the Contract Disputes Act (CDA), 41 U.S.C. §§ 7101-7109. STATEMENT OF FACTS FOR PURPOSES OF THE MOTION The following is not in dispute. In 2001, Sparton's predecessor, Sparton Electronics Florida, Inc. (SEFI), and the government entered into Contract No. N00164-01-D-0027 (Contract 27) for research and development related to sonobuoys (answer at 2, ~ 4). By 2005, the government had issued Delivery Orders 4, 8, 14, 15, and 16 to Contract 27 (id. at 2-3, ~~ 5-9). In 2004, SEFI and the government entered into Contract No. N00167-04-D-0024 (Contract 24) for engineering and technical services related to repair and maintenance of submarine acoustics (id. at 3 ~ 10). By 2006, the government had issued Delivery Orders 2 and 3 to Contract 24 (id. at 4, ~~ 11-12). Contract 27 incorporated by reference Federal Acquisition Regulation (FAR) clause 52.216-7' ALLOWABLE COST AND PAYMENT (MAR 2000); Contract 24 incorporated by reference the December 2002 version of the same clause (answer at 4,, 13). Both versions provide the following: (g) Audit. At any time or times before final payment, the Contracting Officer may have the Contractor's invoices or vouchers and statements of cost audited. Any payment may be- ( 1) Reduced by amounts found by the Contracting Officer not to constitute allowable costs; or (2) Adjusted for prior overpayments or underpayments. By 10 January 2007, the government had paid interim vouchers that SEFI had submitted that included breakdowns of certain intra-company "Jackson Engineering Support Costs" (Jackson costs) that SEFI allegedly incurred at its Jackson, Michigan plant, and that are the subject of this appeal (gov't resp. at 4,, 1, at 6,, 6, at 8, ,, 12-13). On 5 March 2007, Sparton submitted to the government its final indirect cost rate proposal for its fiscal year 2006 (FY 06); on 29 January 2008, Sparton submitted its final indirect cost rate proposal for its fiscal year 2007 (FY 07) (id. at 8-9,, 14). Both proposals included a "Schedule I," which the government also calls a "Cumulative Allowable Cost Worksheet-('CACWS')" (id. at 9,, 15, at 11,, 20, at 14-15,, 27). In neither proposal (more specifically, in neither Schedule I) did Sparton include the Jackson costs (id. at 9,, 15). During subsequent Defense Contract Audit Agency (DCAA) audits of the indirect cost rate proposals, Sparton submitted revisions of those proposals (gov't resp. at 10,, 17). Sparton submitted the revision of the FY 06 proposal on 25 August 2011, and the revision of the FY 07 proposal on 30 July 2013 (answer at 4-5, ,, 14-15). The revised proposals did not include the Jackson costs (gov't resp. at 10, , 17). In September 2013, DCAA issued audit reports on those indirect cost rate proposals, noting that the proposals did not include the Jackson costs (answer at 5-6, ,, 16-17). The parties eventually executed final indirect cost rate agreements for FY 06 and FY 07, and Sparton provided updated Schedule I forms reflecting the agreed-upon rates (gov't resp. at 10-11, ,, 19-20). On 2 April 2014, Sparton provided an updated Schedule I for FY 06; on 23 May 2014, it provided an updated Schedule I for FY 07 (answer at 6,, 19; · gov't resp. at 15, , 30).