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COFC issues decision on Cost Accounting Standards and ‘offsetting’

June 20, 2019 By Andrew Smith

The Boeing Company v. United States, Civil No. 17-1969C (May 29, 2019) reveals the Court of Federal Claims’ (COFC) interpretation of the Cost Accounting Standards (CAS) statute as primarily benefiting the government, and directs contractors challenging the Federal Acquisition Regulation (FAR) 30.606(a)(3)(ii) prohibition on offsetting the impact of simultaneous cost accounting practice changes to raise those challenges in a pre-award protest or risk waiver.  Importantly, the court’s decision could have broad implications, requiring contractors to protest the applicability and interpretation of any extra-contractual FAR provisions—not just those involving the CAS statute—that expound upon a FAR Part 52 contract clause.

Adopting a novel theory rooted in the US Constitution, The Boeing Company (Boeing) filed an action under the Contract Disputes Act (CDA) alleging that the FAR 30.606 offset prohibition is an “illegal exaction” in violation of the CAS statute, which specifically prohibits windfalls to the government resulting from changes to a contractor’s cost accounting practices.  Boeing also claimed that FAR 30.606 was “extra-contractual” and therefore, should not preclude Boeing from offsetting changes that increase costs to the government from those that decrease costs.  The COFC dismissed Boeing’s constitutional claim for lack of subject matter jurisdiction and concluded that Boeing had effectively waived its contract claims upon failing to raise them in a pre-award protest or during negotiations with the government.

Continue reading at:  Arnold & Porter

Filed Under: Contracting News Tagged With: CAS, COFC, cost accounting standards, Court of Federal Claims, FAR

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