Secretary of Defense v. Northrop Grumman Corp., No. 18-1945 (Fed. Cir. 2019)
Annotate this CaseThe Federal Acquisition Regulation permits contractors such as Northrop to seek reimbursement from the federal government for “allowable” post-retirement benefit (PRB) costs. The Armed Services Board of Contract Appeals found that the government improperly disallowed certain retirement benefits costs that Northrop asserted. Certain retirement benefit costs were unallowable under the applicable regulations because they were calculated using an improper accounting method but Northrop never claimed and will never claim any of the disputed benefits. The Federal Circuit affirmed. Substantial evidence supported the Board’s factual findings that the unallowable costs were not charged to the government by virtue of being excluded from Northrop’s transition obligation by Northrop’s negative amendment to its PRB plans. The factual findings are, therefore “final and conclusive,” 41 U.S.C. 7107 (2012). The government’s disallowance of the disputed $253,361,512 of Northrop’s PRB costs was improper.
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