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Dismissal of CAS Noncompliance Appeal Denied

The government's motion to dismiss an appeal involving noncompliance with Cost Accounting Standards was denied by the Armed Services Board of Contract Appeals because there was an appealable and justiciable issue regarding whether the contractor's accounting practice complied with CAS 403. The corporate administrative contracting officer made a final determination the contractor was noncompliant with CAS 403. In accordance with FAR 52.230-6, the CACO directed the contractor to correct the noncompliance, submit a proposed change to its accounting practices, report if existing contracts were affected by the noncompliance, and submit a general dollar magnitude proposal calculating the impact of the alleged noncompliant practice. After the contractor submitted a cost impact analysis showing no adverse impact to government contracts, the government contended there was no longer any dispute for the board to decide and moved to dismiss the appeal without prejudice.

Live Dispute

FAR Part 30 sets out the procedures for administrating CAS. Implicit in these CAS regulations is the concept that an immaterial cost impact determination does not resolve the underlying CAS noncompliance determination; i.e., should the cost impact become material in the future, the underlying CAS noncompliance determination remains viable as support for a government claim for cost adjustment. In addition, the CAS clause at FAR 52.230-2 explicitly recognizes that failure to agree on "whether the [c]ontractor or a subcontractor has complied with an applicable CAS" is a dispute justiciable under the Contract Disputes Act. The government acknowledged it "still maintain[ed] that [the contractor] is noncompliant with CAS 403 and must correct the noncompliance by submitting a compliant revision to its Disclosure Statement." Thus, under the circumstances, there was a "live dispute" between the parties ripe for resolution. (CACI, Int'l., Inc., ASBCA, 93,461)




(The news featured above is a selection from the news covered in the Government Contracts Report Letter, which is published weekly and distributed to subscribers of the Government Contracts Reporter. )


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