Sikorsky Aircraft Corporation v. United States 09-844c &
110 Fed. Cl. 210
| Fed. Cl. | 2013Background
- Post-trial decision in US Court of Federal Claims on government’s claim that Sikorsky misallocated indirect costs under CAS 418, seeking about $80 million plus interest.
- Sikorsky contends CAS 418 compliance and raises six-year CDA statute-of-limitations and accord-and-satisfaction defenses.
- Court previously described CAS framework and distinctions between CAS 418-50(d) and (e); issues centered on allocation of materiel overhead between direct labor, direct materiel, and management costs.
- Sikorsky changed its materiel overhead allocation method in 1999 to a direct labor base; DCAA issued audits from 1999–2004; 2006 reformulation adopted a new method.
- 2004 DCAA finding flagged potential noncompliance; 2006 government contracting officer later pursued CAS 418 noncompliance claim; Sikorsky challenged accrual timing under CDA.
- Court ultimately held government failed to prove a CAS 418 violation; judgment entered for Sikorsky; no costs awarded.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Did the CDA six-year accrual clock bar the claim? | Sikorsky argues accrual occurred later, not by 2002. | Government contends accrual fixed liability when CAS 418 noncompliance became knowable, earlier than 2002. | Accrual within six-year period; claim timely. |
| Does CAS 418-50(d) or (e) control Sikorsky’s materiel overhead? | Sikorsky argues 50(e) applies because pools were homogeneous and management costs were insignificant. | Government contends a 50(d) analysis applies due to material management costs. | CAS 418-50(e) controls; pools are homogeneous with insignificant management costs. |
| Was direct labor a valid surrogate under CAS 418-50(e) for mat overhead? | Sikorsky relied on direct labor as surrogate since it correlates with mat overhead. | Government urged direct materiel or alternative surrogates; challenged proportionality. | Direct labor surrogate was acceptable; showed proportional variation with mat overhead. |
| Did government prove Sikorsky violated CAS 418 between 1999–2005? | Sikorsky asserts no material noncompliance occurred; cost data supports compliant allocation. | Government argued noncompliance due to base and pooling structure. | Government failed to prove a CAS 418 violation by a preponderance of the evidence. |
Key Cases Cited
- Sikorsky Aircraft Corp. v. United States, 102 Fed. Cl. 38 (2011) (framework for CAS 418; accrual and 50(d)/(e) analysis)
- Sikorsky Aircraft Corp. v. United States, 105 Fed. Cl. 657 (2012) (Sikorsky II; CDA accrual and defenses)
- Sikorsky Aircraft Corp. v. United States, 106 Fed. Cl. 571 (2012) (Sikorsky III; CAS 418 framework and accrual)
- Raytheon Co. v. United States, 104 Fed. Cl. 327 (2012) (accrual and notice principles in CDA context)
- Franconia Assocs. v. United States, 536 U.S. 129 (2002) (general contract-law accrual principles for government claims)
- FloorPro, Inc. v. United States, 680 F.3d 1377 (2012) (objective accrual standard; knowledge determined by reasonableness)
- Holmes v. United States, 657 F.3d 1303 (2011) (reasonableness of claimant actions in accrual analysis)
- Chevron U.S.A., Inc. v. United States, 467 U.S. 837 (1984) (administrative deference in interpreting CAS; regulatory framework)