ARMED SERVICES BOARD OF CONTRACT APPEALS 
Appeals of -­
Raytheon Company 
Under Contract No. FA8675-13-C-0003 
APPEARANCES FOR THE APPELLANT: 
APPEARANCES FOR THE GOVERNMENT: 
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ASBCA Nos. 60448, 60785 
Donald G. Featherstun, Esq. 
Giovanna A. Ferrari, Esq. 
Seyfarth Shaw LLP 
San Francisco, CA 
Jeffrey P. Hildebrant, Esq. 
Air Force Deputy Chief Trial Attorney 
Lawrence M. Anderson, Esq. 
Maj Darren S. Gilkes, USAF 
Jason R. Smith, Esq. 
Caryl A. Potter III, Esq. 
Colby L. Sullins, Esq. 
Trial Attorneys 
OPINION BY ADMINISTRATIVE JUDGE SCOTT 
ON THE GOVERNMENT'S MOTION TO AMEND ANSWER 
Raytheon Company has appealed from the contracting officer's (CO's) denial of its 
$48,195,181 claim for extra Systems Engineering and Program Management (SEPM) 
services under the subject "Lot 27" contract to provide missiles, telemetry units, other 
deliverables and SEPM (ASBCA No. 60448), and from the CO's denial of its supplemental 
$48,311,385 claim for additional SEPM services under the contract (ASBCA No. 60785). 
On 20 February 2018, about two months before the hearing, which is set to commence on 
24 April 2018, the government moved to amend its answer to add the following affirmative 
defense: 
"Unclean Hands" - The firm-fixed-price contract for 
Lot 27 was the latest production contract in a "house of cards" 
knowingly constructed by Raytheon to sell more missiles to 
the United States than otherwise could be paid for by the fund 
amount certified as available to the Air Force for the Lot 27 
contract when signed. Raytheon's complicity in such 
unfunded contract actions, prohibited by the Anti-Deficiency 
Act (31 U.S.C. 1341) and FAR Subpart 32.7 (Contract 

Funding), bars all of Raytheon's claims in this appeal under 
the "unclean hands" doctrine. 
(Mot. at 1) Briefing was complete on 2 April 2018, when the Board received appellant's 
sur-reply in opposition to the motion. 
THE PARTIES' CONTENTIONS 
Appellant first contends that the Board does not have jurisdiction to entertain the 
government's proposed affirmative defense because the government did not submit it, in 
the form of a claim, to the CO. Appellant further alleges that the motion should be denied 
as unjust because the government did not justify the defense or its delay in raising it. 
Appellant avers that Air Force personnel have consistently claimed that the Lot 27 
contract was fully funded. Appellant also alleges that it would be prejudiced if the 
amendment were allowed because it has not had the opportunity to conduct discovery on 
the defense; it would need to make complex funding and budget inquiries; and it would 
require expert evidence on the new defense. However, appellant opposes any extension 
of the hearing date or re-opening discovery. Appellant asserts that the prejudice to it 
would carry over to multiple contracts and any subsequent proceedings involving the 
Anti-Deficiency Act because the doctrine of res judicata would apply to any adverse fact 
findings related to the new affirmative defense. 
The government replies that it is not shifting from its consistent position that the 
Lot 27 contract was fully funded when the parties entered into it. It alleges that the Board 
has jurisdiction to consider the proposed affirmative defense because the government is 
not seeking to void the contract or to adjust any of its terms or to obtain any monetary 
relief. Rather, the latest round of government depositions of Raytheon personnel revealed 
that it had an undisclosed pre-award plan to complete the Lot 27 contract work ·'with 
future appropriated funds siphoned away from future missile production contracts that 
Raytheon hoped to obtain on an annual basis" (gov't reply at 1-2). The government 
alleges that it is seeking to apply its unclean hands defense to force Raytheon to honor the 
contract instead of allowing it to implement its undisclosed plan. The government also 
asserts that permitting it to amend its answer will not require any more discovery and no 
expert evidence is needed. Like appellant, the government does not seek to extend the 
hearing date, which has already been extended twice at one or both parties' requests. 
In its sur-reply appellant asserts that the government has not justified its "eleventh 
hour" motion, which it brought in bad faith, because the government's own documents, 
dating back to 2013, and its own witnesses, in deposition testimony in June 2017, 
demonstrate that the COs responsible for awarding the Lot 27 contract were well aware, 
prior to contract award, of the bidding practices about which the government claims to 
have learned only in late January 2018 ( app. sur-reply at 1, 6). Appellant also contends 
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that the Board should deny the government's motion to amend on the ground of "futility 
of amendment" because the government has not demonstrated how its assertions satisfy 
the "unclean hands" doctrine (id. at 10). Appellant alleges that it will be prejudiced by 
the lack of discovery on the government's affirmative defense. 
DISCUSSION 
Jurisdiction 
Appellant's contention that the Board lacks jurisdiction to consider the 
government's motion to amend is mistaken because there is no need for the government 
to submit a claim to the CO regarding its proposed affirmative defense if, like here, it is 
not seeking money or an adjustment of the contract's terms. Securiforce International 
America, LLC v. United States, 879 F .3d 13 54, 1362-63 (Fed. Cir. 2018); Laguna 
Construction Co. v. Carter, 828 F.3d 1364, 1368 (Fed. Cir. 2016); Kellogg Brown & Root 
Services, Inc., ASBCA No. 56358 et al., 17-1 BCA ,r 36,779 at 179,246-47. 
Thus, the Board has jurisdiction to entertain the government's proposed 
affirmative defense. 
Criteria for Amendment of Answer 
Board Rule 6(d) provides that "[t]he Board may permit either party to amend its 
pleading upon conditions fair to both parties." The Rule does not contain any time limit 
for amendment of a pleading.* We may also look to the Federal Rules for guidance. FED. 
R. Crv. P. 15( a)( 1) provides for pleading amendments as a matter of course before trial, 
with various 21-day time limits. Under FED. R. Crv. P. 15(a)(2), when the time for 
amending a pleading as a matter of course has passed, a party may amend its pleading 
with the opposing party's consent or the court's leave. The Rule advises that "[t]he court 
should freely give leave when justice so requires." The United States Supreme Court has 
instructed that "this mandate is to be heeded." Foman v. Davis, 371 U.S. 178, 182 
(1962). The Court elaborated: 
In the absence of any apparent or declared reason - such as 
undue delay, bad faith or dilatory motive on the part of the 
movant, repeated failure to cure deficiencies by amendments 
previously allowed, undue prejudice to the opposing party by 
• Rule 6( d) also provides that, if a party objects to evidence at a hearing on the 
ground that it is not within the issues raised by the pleadings, it may be admitted 
within the proper scope of the appeal, provided that the objecting party may be 
granted an opportunity to meet the evidence 
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Id. 
virtue of allowance of the amendment, futility of amendment, 
etc. - the leave sought should, as the rules require, be "freely 
given." Of course, the grant or denial of an opportunity to 
amend is within the discretion of the [Court]. 
Undue Delay, Bad Faith, Futility of Amendment, Prejudice to Appellant 
The parties dispute when the government had enough information to assert its 
proposed affirmative defense. Although the government's motion to amend, regrettably, 
comes close to the commencement of the hearing, there is insufficient information for the 
Board to conclude that the government delayed unduly in raising the defense. There is 
also insufficient evidence to establish bad faith on the part of the government, which 
appellant bears the burden to prove. See Am-Pro Protective Agency, Inc. v. United States, 
281 F.3d 1234, 1239 (Fed. Cir. 2002) (presumption that government officials act in good 
faith may only be overcome by clear and convincing evidence). 
Similarly, there is insufficient information for the Board to decide whether the 
amendment would be futile on the ground that the government has not established a basis 
for its assertion that appellant's claims are barred under the doctrine of unclean hands. 
That doctrine arises in equity and has been described by the Board as follows: 
"[O]ne who seeks equity must do equity." Shockley v. Arcan. 
Inc., 248 F.3d 1349, 1361 (Fed. Cir. 2001) quoting 
Manufacturer's Finance Co. v. McKey, 294 U.S. 442 (1935). 
Thus, the unclean hands doctrine "closes the door of a court 
of equity to one tainted with inequitableness or bad faith 
relative to the matter in which he seeks relief." ABF Freight 
System, Inc. v. NLRB, 510 U.S. 317,329 (1994). 
Eurasia Heavy Industries. Inc., ASBCA No. 52878, 01-2 BCA ,i 31,574 at 155.916. In 
other words, to prove '·unclean hands'· requires a showing of inequitable conduct involving 
the subject matter of the claims at issue. Id. at 155.917 (citing Ciba-Geigy Corp. v. !Jolar 
Pharmaceutical Co., 747 F.2d 844,855 (3d Cir. 1984). cert. denied, 471 U.S. 1137 (1985)). 
Lastly, to resolve any prejudice to appellant due to its stated need for expert 
evidence and more discovery in view of the government's new affirmative defense, while 
the Board will not extend the hearing commencement date, it will afford appellant the 
opportunity for further discovery and/or record submissions both before and after the 
current scheduled hearing. At the conclusion of the hearing, if appellant requires more 
discovery, the Board will keep the record open for both parties for a period of time upon 
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which they agree, or which the Board sets, in order that they can conduct discovery on the 
issues raised in the government's new affirmative defense. If further testimony is required 
as a result of the discovery, the Board will set a date(s) and place for it to be heard. 
DECISION 
The government's motion to amend its answer is granted. The government is to 
serve its amended answer upon appellant by email, and to file it with the Board, as 
promptly as possible, but no later than 16 April 2018. 
Dated: 9 April 2018 
I concur 
~KLEFORD 
Administrative Judge 
Acting Chairman 
Armed Services Board 
of Contract Appeals 
dministrative Judge 
Armed Services Board 
of Contract Appeals 
I concur 
J. REID PROUTY 
Administrative Judge 
Vice Chairman 
Armed Services Board 
of Contract Appeals 
I certify that the foregoing is a true copy of the Opinion and Decision of the Armed 
Services Board of Contract Appeals in ASBCA Nos. 60448, 60785, Appeals of Raytheon 
Company, rendered in conformance with the Board's Charter. 
Dated: 
5 
JEFFREY D. GARDIN 
Recorder, Armed Services 
Board of Contract Appeals