Feds Lose $14M Claim Against Lockheed

     (CN) -The federal government is not entitled to a $14.7 million claim against Lockheed Martin Corp. for a price increase on F-22 fighter planes, the Federal Circuit ruled.

     The appeals court in Washington, D.C., upheld a ruling by the Armed Services Board of Contract Appeals in a case that resulted from a “rephasing” of the more that $9 billion F-22 contract.
     The government argued that it was entitled to recover a portion of the contract’s negotiated price increase on the grounds that it resulted from a change in Lockheed’s accounting practices and could not lawfully be charged against the contract price.
     The board ruled for Lockheed, concluding that the F-22 contract was not an “affected contract” within the meaning of the applicable regulations and so was not required to be included in Lockheed’s cost impact study.
The government appealed, but the Federal Circuit agreed with the board.
     “The Board did not determine that additional accounting costs were tacked on to the contract estimate; it found that the parties created a wholly new cost estimate incorporating all of the additional expenses,” wrote Judge William Bryson. “Because those costs were consistently estimated and accrued, the Board concluded that the F-22 contract was not an ‘affected contract.’
     “Based on the Board’s detailed findings and analysis of the rephase negotiations and the rules applicable to changes in accounting practices, we uphold the Board’s conclusion that the statutory and regulatory provisions governing ‘affected contracts”‘ were inapplicable to the rephased F-22 contract.”

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