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ARMED SERVICES BOARD OF CONTRACT APPEALS
Appeals of — )
)
Raytheon Company, Space & ) ASBCA Nos. 57801, 57802
Airborne Systems ) 57804,57833
)
Under Contract No. F04701-03-C-0008 )
APPEARANCES FOR THE APPELLANT: Paul E. Pompeo, Esq.
Stuart W. Turner, Esq.
Steffen G. Jacobsen, Esq.
Arnold & Porter
Washington, DC
APPEARANCES FOR THE GOVERNMENT: E. Michael Chiaparas, Esq.
DCMA Chief Trial Attorney
Arthur M. Taylor, Esq.
Senior Trial Attorney
Defense Contract Management Agency
Manassas, VA
OPINION BY ADMINISTRATIVE JUDGE GRANT
ON APPELLANT'S MOTION TO DISMISS FOR LACK OF JURISDICTION
Appellant Raytheon Company, Space & Airborne Systems (Raytheon) moves for
a declaratory judgment that the Board lacks jurisdiction over the government's claims in
these four docketed appeals on the basis that the government did not assert its claims
within the six-year statute of limitations period of the Contract Disputes Act (CDA),
41 U.S.C. §§ 7101-7109. The government argues that the claims are timely, based on
when the government knew or should have known of the accrual of the claims, and thus
the Board has jurisdiction. The Board informed the parties on 28 August 2012 that it
would treat the motion for a declaratory judgment as a motion to dismiss for lack of
jurisdiction. For the reasons stated below, Raytheon's motion is denied as to ASBCA
No. 57801, and granted as to ASBCA Nos. 57802, 57804, and 57833.
STATEMENT OF FACTS (SOF) FOR PURPOSES OF THE MOTION
1. On 21 February 2003, Raytheon was awarded Contract No. F04701-03-C-0008,
the contract that is the subject of the government's claims in these appeals. The contract
contained FAR clause 52.230-2, COST ACCOUNTING STANDARDS (APR 1998), which,
among other things, requires the contractor to amend its Cost Accounting Standards (CAS)

Disclosure Statement when making changes to its accounting practices. Specifically, the
clause states that "[i]f the contract price or cost allowance of this contract is affected by \
such changes, adjustment shall be made in accordance with subparagraph (a)(4) or (a)(5) '^Jf
of this clause, as appropriate." FAR 52.230-2(a)(2). (R4, tab 1 at G-14)
2. The contract also contained FAR clause 52.230-6, Administration of Cost
Accounting Standards (Nov 1999). Among other things, this clause requires the
contractor to report its accounting practice changes to the contracting officer (CO), and
identify the total potential impact of the change on contracts containing a CAS clause.
Further, the contractor is required to specify a general dollar magnitude (GDM) of the
change which identifies the potential shift of costs between CAS-covered contracts by
contract type and other contractor business activity, and, for CAS covered contracts,
"identify the potential impact on funds of the various Agencies/Departments." FAR
52.230-6(a).1 (R4, tab 1 at G-14)
Revision 1 (ASBCANo. 57801)
3. On 10 February 2004, Raytheon submitted to the Defense Contract
Management Agency (DCMA) Revision (Rev.) 1 to Raytheon's CAS Disclosure
Statement. Rev. 1 changed four accounting practices and incorporated clarifications to
accounting practice descriptions. One of these accounting changes related to property
accounting/property management, transferring these two functions from the [
REDACTED ] cost pool to the [ REDACTED ] pool (property accounting),
and the El Segundo [ REDACTED ] (property management). The other three
accounting changes concerned the [ REDACTED
REDACTED ]. These changes in cost accounting practice were
effective 1 January 2004. (R4, tab 3)
4. In its 10 February 2004 notice concerning Rev. 1, Raytheon did not identify the
total potential dollar impact of any of the four changes, or even state in general whether
the changes would cause a positive or a negative impact on the government. As to a
GDM, Raytheon did not specify the potential shift of costs between CAS-covered
contracts by contract type, nor address the impact on funds from the various departments
and agencies affected. Rather, Raytheon advised that a GDM analysis would be
"submitted at a later date," the delay being attributable to "the forward pricing rate
proposal...and SAP implementation processes taking place simultaneously" with the
preparation of Rev. 1. (R4, tab 3)
1 In their briefs, the parties appear to address the 2010 clause; however, the contract
clause in question here was the November 1999 vers
requirements from the clause discussed in the briefs.
clause in question here was the November 1999 version, with different "\

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5. In an audit report dated 7 February 2005,2 the Defense Contract Audit Agency
(DCAA) commented that a GDM for these changes had not yet been submitted, that
Raytheon had "committed" to submitting GDM analyses at a later date, and that DCAA
would not try to estimate the cost impact because the full GDM analysis "should be
forthcoming from the contractor" (R4, tab 8 at G-121).
6. On 15 February 2005, Raytheon notified the government of a dollar impact
concerning one of the four Rev. 1 changes, specifically the [ REDACTED ]. The
dollar impact for this change, which Raytheon described as "immaterial," was an
increased cost allocation of less than $1,000 to flexibly priced contracts, and a $15,000
decreased cost allocation to firm fixed-priced (FFP) contracts. This 15 February 2005
notice did not mention the property accounting/property management change, or the other
two Rev. 1 changes, or provide any cost impact related to them. (R4, tab 9)
7. Raytheon notified the government of the dollar cost impact of the Rev. 1
property accounting/property management change on 3 April 2006. This notice reported
a $313,200 increased cost impact on flexibly priced contracts, and a $281,100 decreased
cost impact on FFP contracts. Raytheon described this impact as "immaterial" in relation
to its total G&A base. (R4, tab 13)
8. On 7 July 2011, the DCMA divisional administrative contracting officer issued
a final decision (CO's final decision) as to Rev. 1, demanding $1,176,600.86 from
Raytheon, consisting of $772,590 in alleged increased costs for the Rev. 1 "Property
Accounting and Capital Management" changes, plus $404,010.86 in compound interest
(R4, tab 45).
Revision 3 (ASBCANo. 57802)
9. On 19 November 2004, Raytheon submitted to DCMA Rev. 3 to its CAS
Disclosure Statement, changing two accounting practices and incorporating clarifications
to accounting practice descriptions. The two changes were (1) transferring IT Finance
from [REDACTED] to the [ REDACTED ] Pool, and
(2) transferring Enterprise Resources Planning (ERP) from the [REACTED] pool to
Raytheon's [REDACTED] pool. The 19 November 2004 notice stated that these changes
would be effective 1 January 2005. (R4, tab 5)
10. In the 19 November 2004 notice, Raytheon reported a cost impact for the ERP
transfer of an increased cost allocation of $367,100 to flexibly priced contracts, and a
decreased cost allocation of $298,300 to FFP contracts. Raytheon described this change
2 The audit report is dated 7 February 2004, but the year should be 2005 (gov't opp'n at
25).

as "immaterial" in relation to "total cost input." (R4, tab 5) On 15 February 2005,
Raytheon submitted what it described as a revised GDM to DCMA for the ERP ^ \
accounting change resulting from Rev. 3, again asserting the impact was "immaterial" but n^F
adjusting the previous numbers downward slightly ($346,500 increased cost allocation to
flexibly priced contracts and $281,500 decreased cost allocation to FFP contracts) (R4,
tab 9 at 2).
11. In a 28 September 2005 audit of Rev. 3, DCAA reported that "[fjor the ERP
change, a GDM analysis was submitted by the contractor. Our office is in the process of
evaluating the ERP GDM...." (R4, tab 11 at G-144)
12. Raytheon provided the government with a revised calculation of the cost
impact of the Rev. 3 ERP change on 3 April 2006. Raytheon reported that there was a
$613,300 increased cost impact on flexibly priced contracts, and a decreased cost impact
of $515,900 on FFP contracts. Raytheon asserted the impact was "immaterial" in relation
to Raytheon's annual total G&A base. (R4, tab 13 at G-158-59)
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13. DCMA issued a CO's final decision as to Rev. 3 on 7 July 2011, demanding
$2,137,234.94 from Raytheon, consisting of $1,467,960 in alleged increased costs for
accounting changes related to ERP, plus $669,274.94 in compound interest (R4, tab 46).
Revision 4 (ASBCA Nos. 57804. 57833)
14. On 24 November 2004, Raytheon submitted to DCMA Rev. 4 to its CAS
Disclosure Statement, describing eleven changes. Only Changes 5, 6, and 11 are relevant
to these appeals. Change 5 affected how labor rates were calculated, changing from
[REDACTED] and thus "including] [REDACTED] in labor rate calculation"; it was to
be effective 24 January 2005. Raytheon estimated that this change would increase the
labor rates by [REDACTED] cents, but that a special module would "compensate" for the
variance, making any impact immaterial. (R4, tab 6 at G-107, -109)
15. Rev. 4, Change 6 was also reported by Raytheon to DCMA in this
24 November 2004 notice. Change 6 concerned the accommodation fringe rate
(changing from a [ REDACTED ] rate to an [REDACTED] rate); like Change 5, it too
was to be effective 24 January 2005. Raytheon reported that Change 6 would result in an
increased cost allocation to flexibly priced contracts of $170,000, and a decreased cost
allocation to FFP contracts of $173,000. Raytheon also noted that it considered this
impact "immaterial." (R4, tab 6 at G-107, -110)
16. Rev. 4, Change 11 was also reported by Raytheon to DCMA in this
24 November 2004 notice. Change 11 eliminated the application of [REDACTED] to
[REDACTED] inter-organizational transfers (IOTs); this change had gone into effect \

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1 January 2004. Raytheon reported that this would result in an increased cost allocation
to flexibly priced contracts of $123,000, and a decreased cost allocation to FFP contracts
of $124,000. Raytheon described the cost impact of these two changes as "immaterial."
(R4,tab6atG-108,-110)
17. On 3 April 2006, Raytheon provided additional information to DCMA about
Rev. 4, Change 6. Specifically, Raytheon reported an increased cost impact on flexibly
priced contracts of $174,600, and a decreased cost impact on FFP contracts of $184,500,
again considering the impact of the change to be immaterial. (R4, tab 13 at G-158-59)
18. DCMA issued a CO's final decision as to Rev. 4, Changes 6 and 11, on
22 August 2011, demanding $3,708,039.12 from Raytheon, consisting of $2,463,399 in
alleged increased costs flowing from those two changes, plus $1,244,640.12 in compound
interest (R4, tab 50).
19. DCMA issued a CO's final decision as to Rev. 4, Change 5, on 11 October
2011, demanding $1,744,135 from Raytheon, consisting of $1,189,326 in alleged
increased costs from that change, plus $554,809 in compound interest (R4, tab 54).
20. Earlier in 2011, before the four CO's final decisions were issued in these
appeals, DCAA issued a memorandum to designated staff (dated 18 January 2011)
concerning a joint DCAA-DCMA "Cost Recovery Initiative" (CRI). This initiative
focused on timely prioritizing and resolving outstanding audit issues. (R4, tab 30) On an
attachment listing outstanding Raytheon audit matters, one column was labeled "Est.
Accrual of Claim Date," setting out 1 January 2005 as the designated date for Revs. 1, 3,
and 4 (gov't opp'n, ex. G-2 at 2, 3).
DECISION
Although each of the four docketed appeals will be decided separately, the same
standard as to claim accrual applies to all four. The CDA requires a contract claim to be
submitted "within 6 years after the accrual of the claim." 41 U.S.C. § 7103(a)(4)(A).
A claim accrues when "all events, that fix the alleged liability...and permit assertion of
the claim, were known or should have been known," and some injury has occurred.
FAR 33.201; Gray Personnel, Inc., ASBCA No. 54652, 06-2 BCA \ 33,378 at
165,475-76. The events fixing liability should have been known when they occurred
unless they can be reasonably found to have been either concealed or inherently
unknowable at that time. Raytheon Missile Systems, ASBCA No. 58011, 2013 ASBCA
LEXIS 11, at *8 (28 Jan. 2013). The "concealed or inherently unknowable" test is
interchangeable with the "knew or should have known" test which includes a
reasonableness component. The statute of limitations will not begin to run until the
claimant "learns or reasonably should have learned" of his cause of action. Holmes v.

United States, 657 F.3d 1303, 1320 (Fed. Cir. 2011) (quoting Japanese War Notes
Claimants Ass 'n of the Philippines, Inc. v. United States, 373 F.2d 356, 359 (Ct. Cl. \
1967)) (emphasis in original). >*~
To evaluate when the claimed liability was fixed, we look to the legal basis of the
claim. Gray Personnel, 06-2 BCA \ 33,378 at 165,475-76. Here, the government claims
are monetary claims to recover the increased costs to the government caused by various
Raytheon accounting changes. The basis for these claims is FAR clause 52.230-2, which
requires a monetary adjustment if the contract price or cost allowance of the contract is
affected by a change in accounting practices (SOF \ 1). Thus the issue is: when did the
government know, or reasonably should have known, that it had a basis to seek a cost
adjustment because of the accounting changes?
Revision 1. Property Accounting/Property Management (ASBCA No. 57801): Timely
As to Rev. l's property accounting/property management change, Raytheon
argues the statute of limitations was triggered on 10 February 2004, when Raytheon gave
the government notice of that change and that it was effective 1 January 2004.
Alternatively, Raytheon argues that the trigger date is 15 February 2005, when Raytheon
notified the government of a specific cost impact of one of the other four accounting
changes caused by Rev. 1. Using either date, the government's 7 July 2011 claim would
be untimely. (App. mot. at 15-16) The government argues that neither date triggers the
statute of limitations, because Raytheon did not say whether the change would result in
cost increases in its 10 February 2004 notice, and the cost impact information Raytheon
did provide on 15 February 2005 did not concern the property accounting/property
management change, which is the subject of the government's claim. In the
government's view, the earliest the claim accrued was 3 April 2006 when Raytheon first
provided cost impact information as to the property accounting/property management
claim, and that since the CO's 7 July 2011 final decision was within six years of this date,
the government's claim is timely. (Gov't opp'n at 25-27)
Analyzing this issue under the "claim accrual" standard articulated above, looking
to the nature of the claim and the reasonableness component, the government's claim did
not accrue until 3 April 2006. Although Raytheon notified the government on
10 February 2004 about the four Rev. 1 accounting changes, nothing in that notice
indicated whether or not there would be an adverse impact; indeed, Raytheon stated it
would provide a GDM analysis about that later (SOF ffl| 3, 4). When, a year later,
Raytheon provided DCMA with three cost impact assessments, only one involved Rev. 1,
and that one did not pertain to the property accounting/property management change
(SOF \ 6). It was not until 3 April 2006 that Raytheon provided a cost impact assessment
relating to the property accounting/property management part of Rev. 1 (SOF \ 7).

QRaytheon argues that the government should have known of the existence of the
claim on 10 February 2004 because the government had access to Raytheon's accounting
system and could verify that Raytheon had implemented the changes and was billing the
government pursuant to the changed practices (app. mot. at 15). However, as discussed
above, the "knew or should have known" standard contains an element of reasonableness
as part of the analysis. Here, the government did not know it had a claim because
Raytheon did not report that there would be an adverse impact, and stated instead that its
analysis would be provided later. Although the government knew of the fact of the
change, it did not know the consequences (i.e., it did not know if it had a cause of action),
nor do we think it reasonable for the government to have to pursue this on its own,
especially in light of the affirmative duty FAR 52.230-6(a) places on the contractor to
submit a GDM. Once Raytheon provided cost impact information to the government on
3 April 2006, the statute of limitations began to run. That adverse impact information
served as the basis for the government's claim, and as a result, the CO's 7 July 2011 final
decision was timely.
The absence of contractor-provided information in this case stands in contrast to
decisions where an early claim accrual date was found because of more specific
information provided to the government. For example, in Raytheon Co. v. United States,
104 Fed. Cl. 327, 329, aff'don motion for recons., 105 Fed. Cl. 351 (2012), Raytheon
provided specific cost information to the government in the 1999 Advance Agreement for
the government to review and analyze, triggering an early claim accrual date. In
Raytheon Missile Systems, 2013 ASBCA LEXIS 11, at *9-12, the government had
information, provided by Raytheon, that Raytheon was expanding the application of a
special burden to a broader group of major subcontracts but that a Lockheed Martin
subcontract was not receiving a special burden. Because the contractor had provided
relevant facts, the government's delay in assessing them could not serve to delay the
claim accrual date. These situations are distinguishable from the case at hand, where
Raytheon only reported the fact of a change, not the implications of it or other data from
which the government should reasonably conclude it had a claim.
As a final note, the conclusion that this claim accrued on 3 April 2006 is not
altered by the government's 2011 CRI prioritization report, referring to 1 January 2005 as
the "Est. Accrual of Claim Date" for Rev. 1 (SOF120). Labels contained in a
government document dated in 2011 do not substitute for a proper claim accrual analysis
as to whether, years earlier, the government knew or reasonably should have known of
the legal basis for its claim.
Revision 3. ERP (ASBCA No. 57802): Untimely
O Concerning the government's Rev. 3 ERP claim, Raytheon argues that the statute
of limitations began to run on 1 January 2005, based on the 19 November 2004 notice

that changes with specified cost impacts would be effective on 1 January 2005, thereby
making the 7 July 2011 final decision untimely (app. mot. at 17). Alternatively, \
Raytheon argues that the statute of limitations would start to run at the latest on s*r
15 February 2005, when the change was already in effect and a revised cost impact
provided, and thus the claim would still be outside the six-year statute of limitations (app.
reply br. at 15). The government disagrees, asserting, among other things, that Raytheon
did not provide enough supporting data as to cost impact, described the cost impact as
immaterial, and revised the numbers later, thereby making the proper trigger date 3 April
2006 and the final decision timely (gov't opp'n at 27-32).
Under the claim accrual standard set forth above, this claim is untimely. On
19 November 2004, the government knew that adverse cost impacts would start to occur
on 1 January 2005 (SOF ffl[ 9, 10). The statute of limitations is triggered when all events
that fix the alleged liability and permit assertion of the claim were known (or should have
been known) and some injury has occurred. FAR 33.201; Gray Personnel, 06-2 BCA
f 33,378 atl65,475-76. Raytheon's 15 February 2005 notice provided updated cost
impact information (SOF 110), and the government admits it was evaluating Raytheon's
GDM information (SOF f 11). Here, no later than .1 January 2005, the government knew
that Rev. 3/ERP change had created a cost impact adverse to the government and that
injury was now occurring; the statute of limitations had thus started to run.
The government argues that Raytheon did not submit the level of information and
supporting data required by FAR 52.230-6. However, Raytheon did notify the
government of a dollar cost impact from the accounting change, which is enough to
trigger the statute of limitations. Claim accrual does not depend on the degree of detail
provided, whether the contractor revises the calculations later, or whether the contractor
characterizes the impact as "immaterial." It is enough that the government knows, or has
reason to know, that some costs have been incurred, even if the amount is not finalized or
a fuller analysis will follow. McDonnell Douglas Services, Inc., ASBCA No. 56568,
10-1 BCA f 34,325 at 169,528 ("When monetary damages are alleged, some extra costs
must have been incurred before liability can be fixed and a claim accrued, but there is no
requirement that a sum certain be established."). As of 1 January 2005, the government
should have known that at least some adverse costs impacts were occurring, and certainly
this was so by 15 February 2005; the final decision dated 7 July 2011 is thus untimely.
Revision 4, Changes 6 and 11 (ASBCA No. 57804^): Untimely
Concerning the government's Rev. 4/Changes 6 and 11 claim, Raytheon argues
that the statute of limitations began to run on 24 January 2005, the effective date provided
in Raytheon's earlier notice to DCMA on 24 November 2004 of the impending change
and of a cost impact (app. mot. at 18). The government argues it did not have enough
information to know whether or not it had a claim and that Raytheon had reported that \

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any cost increase from these changes was immaterial. At the earliest, the government
asserts the claim accrued on 3 April 2006, making the 22 August 2011 final decision
timely. (Gov't opp'n at 33-36)
Following the analysis set forth in ASBCA No. 57802, this claim is untimely.
Regarding the portion of the claim that concerns Change 6 (fringe rate), Raytheon
notified the government of a specific, adverse cost impact on 24 November 2004, noting
the change would go into effect 24 January 2005 (SOF U 15). Thus, this part of the claim
accrued 24 January 2005, and the final decision asserting it on 22 August 2011 is
untimely. Regarding the portion of the claim that concerns Change 11 (IOTs), Raytheon
notified the government of a specific, adverse cost impact flowing from Change 11
(IOTs) on 24 November 2004, noting the change had gone into effect 1 January 2004
(SOF f 16). This part of the claim accrued on 24 November 2004,3 and the final decision
asserting it on 22 August 2011 is untimely as to this change.
Revision 4, Change 5 (ASBCA No. 57833): Untimely
Concerning the government's Rev. 4/Change 5 claim, Raytheon argues that the
claim accrued on 24 January 2005, when that change went into effect, after Raytheon's
earlier notice to DCMA on 24 November 2004 of the impending change and of a cost
impact of 15 cents increase in labor rates (app. mot. at 18). The government argues this
information was inadequate to trigger claim accrual because Raytheon reported that a
special module would "compensate" for the variance. Presumably considering 3 April
2006 as when the claim accrued, the government argues that the 11 October 2011 claim is
timely. (Gov't opp'n at 35-36)
Following the analysis set forth in ASBCA No. 57802, this claim is untimely.
Raytheon reported on 24 November 2004 that Change 5 was to "include [REDACTED]
in labor rate calculation." The government knew that additional costs [REDACTED]
were now going to be incorporated into [REDACTED] labor rates, and that this change
would go into effect 24 January 2005. (SOF f 14) Raytheon's statement that there
would be an automatic adjustment "which will compensate for this variance" does not
negate the disclosure of additional costs being included in labor rate calculations. The
events fixing potential liability had occurred once this change was implemented on
24 January 2005; the government reasonably should have known of the basis for a cause
of action at this point. Because the government's claim as to Rev. 4/Change 5 accrued on
24 January 2005, the CO's 11 October 2011 decision is untimely.
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3 Even if both parts of this claim are deemed to have accrued on the later date (24 January
2005), the government's final decision would still be untimely.

CONCLUSION
For the reasons stated above, Raytheon's motion to dismiss for lack of jurisdiction
is denied as to ASBCA No. 57801. Raytheon's motion is granted as to ASBCA
Nos. 57802, 57804, 57833; the government claims underlying these three appeals are
untimely and invalid, and the appeals are dismissed for lack ofjurisdiction.
Dated: 22 April 2013
J
JETH M. GRANT
Administrative Judge
Armed Services Board
of Contract Appeals
I concur I concur
MARKN. STEMPLER
Administrative Judge
Acting Chairman
Armed Services Board
of Contract Appeals
*LX
EUNICE W. THOMAS
Administrative Judge
Vice Chairman
Armed Services Board
of Contract Appeals
j
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. 57801, 57802, 57804,
57833, Appeals of Raytheon Company, Space & Airborne Systems, rendered in
conformance with the Board's Charter.
Dated:
JEFFREY D. GARDIN
Recorder, Armed Services
Board of Contract Appeals
10