morning your honor please the court i'm calling burton hearing on me having united states this court should reverse the summary judgment entered below and remand for further proceedings because the trial court made two fundamental errors of first in interpreting the credits provision in the federal acquisition regulation to allow payment by a hypothetical third party cost reductions and second in holding that the segment closing adjustment that cost accounting standard for thirteen cars must be made upon all of the close segments assets and liabilities without regard to whether the seller keeps one hundred percent of the surplus transfers one hundred percent of the surplus or transfers part but not all of the surplus in this case the stipulated and undisputed facts show that directv retain almost sixty million dollars of pension surpluses they seem to dispute that i don't pages eighteen and nineteen there's no dispute that directv retains surplus allocable to the segment of approximately sixty million dollars what directv is subtracting from that sixty million to arrive at the lower amount is surplus there was an allocatable to the segment but was transferred to the buyers anyway and our contention is that it's it it's quite clear under the plain language of cost accounting standard cast thirteen that it's only the assets and liabilities of the segment that are alex above the segment that can properly figure in the segment closing can't be late and so our position is that on that sixty million dollars the undisputed percentage shares of the government adds up to about four and a half million dollars plus interest the government is in title of this amount is entitle to be paid this amount by a cash refund or by an actual cost reduction meaning a subtraction from the order to duction from the cost of the contract or otherwise could legitimately charge the government  was the birth of a question as to which of cash or mccloy was it the old form or the amended form for thirty yes the amended i'm sorry it's the original version hundred seventy seven and that's because the all of the surplus that accrued in these pension plans arose under are due to contributions are allocated to contracts that pplicable regulation is the original cast for thirteen even if the agreements provided or any amendments made a for thirty be applicable shamed in the transaction agreements reversed if that were the case i'm not aware that they did so provide but if the parties had agreed well the difficulty is the transaction agreements in this arose the court will recall that in the allegheny teledyne case the court held this court held that affirmed the trial court on the point that the we're simply applying that that was addressed to the situation with tween no caps for thirteen and all in the original cast and were simply applying that logic to the situation between yes it would mean there's not a difference in outcome but it's certainly easier to reach the result under the nine hundred ninety five amendments it's quite clear that the segment closing adjustment is made only upon the pension surplus contractor retains the right argument is that that was a mere clarification of the prior role in the prior understanding and that in fact it is the the clear intent of the cast forward as we set out in our brief to both the original cast for words to require a second closing adjustment only when you needed to in the only time you needed to was when the link between the contracts the segment contracts and the surplus of the segment is broken by a segment closing one of three contracts and the surplus or part of the surplus is transferred to the buyer and the link is not broken as to that portion of the surplus and there's no need for the second closing it just like to reach the conclusion you'd have us reach as i understand it i have to construe class for thirteen subsection twelve i have to construe the word segment as limited to m l retained by directv right i mean that because it just says segment through well it doesn't they retain the amount of the segment it's a segment so the only way i can get there it seems is if i'm willing should the house what does the word segment in cast for thirteen mean the word segment means the the business segment it's a defined term in the caps what does it mean does it mean the entire male transferred or does pension assets and liabilities in pension plans that are allocated to it and what we would say is that hold on i am not sure i understand your answer does the government argue that the word segment means the entire amount the logic of what the cast board said in the one nine hundred seventy seven preamble would say yes and we would say yes but that's the only required a segment closing adjustment when the link between the contracts and the surplus broken it's not broken when partial surpluses transfer any more of their and you don't require a segment closing adjustment as to surplus it's alec of zero two contracts are entered into before the original cast for thirteen was probably good in that just excluded from all of for thirteen the amount they transferred and haven't you now conceded that you have no right to the surplus in the amount that has been transferred because the statute or the regulation by your proposed construction would not cover will you start off with the entire assets and the entire liabilities of the segment but then you subtract the assets and the liabilities that were transferred in the same way that you transfer that  segment and each time you're using the word segment as i understand it you're referring to the entire a moral that's a starting point or are also the government's definition of the word segment then is the entire amount it's not simply the amount court's question the point i wanted to make was that under the subtle president of this court the trial court's entire segment approach comes to late in the day there are deductions from the assets the liabilities of the of the entire segment and those deductions have been specifically approved by this court so there's no reason for the the this court or the court below to have found that the  entire segment approach precludes recognizing that when surplus is transferred there's no reason to have a second closing adjustment and if i could very briefly address the credits provision portion the the credits provision portion amounts to the contractor the argument that the contractors have made is amounts to  arguing that because they didn't charge the government is not charged cost by the virus that constitutes a cost reduction but an actual cost reduction which is what the the regulation had in mind is  in the amount of cost at the contractor who was legally entitled to charge it's not a hypothetical cost reduction in the same way perhaps a somewhat simpler example if the contractor gets a discount and doesn't pay list price for a on the item of supplies or services that it needs to perform a cost reimbursement contract the contractor it's could not be clear is the contract there can only charge the government price that the contractor actually paid the actual incurred cost in the contractor can't point to the cost reduction and say we might have paid less price but since we paid the discount that was a cost reduction and we're entitled to treat that as an offset to a payment obligation that we have under this contract and that that makes no sense whatsoever but what the trial court found in effect is that the virus not charging pension costs at the buyers had no right to charge the government constitutes a cost reduction and what i've been saying the government  that's not an actual cost reduction that's a hypothetical cost reduction and it's not cognisable under the credits provision and we sent out in our brief and at length the the court's construction below was absolutely on the president never heard of before contrary to the understanding of the government contract community that cost reduction means i did option a subtraction and it's a write off of part of a bill that's otherwise due and owing and that's not that cannot be a cost reduction that is equal and to a cash refund the credits provision requires two things require as either a cash refund well there were liabilities associated with the portions of the business that weren't sold so yes there were pension there was still a pension plan at directv following the following  trying to transfer the entire surplus but it's this is not an easy calculation that one can do immediately so what happened here is actually quite innocent that what happened is what we were trying to transfer the entire s accidentally innocently did why don't you do it now i don't think we can go back i think there's a risk issues with going transferring circus that that's not i think a solvable problem in that way  here what we have shown is that the government has received a benefit that far exceeds the amount that we would have had to pay had we paid cash and transferred no surplus so the government is benefiting from three point two five billion dollars of assets in the hands of great and boeing collect and they have and the evidence is undisputed undisputed that they have received a benefit that is greater than two hundred seventy three million which is their share of the national party entitled to the benefit on the other stuff i mean the government is sort of like an investor here right they gave you the money you invested it and now you want to tell them yeah we agreed that we would share the proceeds of the investment if it was successful but we're actually not going to share loss so no i don't think that's the way to look at the government's share under teledyne is eight percent so the government has an entitle me yes to two hundred seventy three million dollars it doesn't have an entitle went to every single penny in the directv plans on the dates of the close so we can satisfy that in a number of different ways and we can say and we satisfy that by transferring vastly over transferring the amount of surplus necessary to make sure that they got two hundred seventy three million dollars and that in the evidence again undisputed in this record is that on the day of the if you look at the transfer  transfer that as it occurred on that day you look back at it you say was it predictable that the government would receive its share it sure is not the whole thing it's not an investment the whole share is eight percent of th i stipulated so was it predictable that the government would get that share and the answer is unequivocal yes we put in the record it was a very simple calculation but if you would never sell the never transferred when the government be in a better position than it is now because they would have had some portion some entitlement to a portion of what you've attained i think that's impossible so whether they would be in a better position then they then they are now they would have had because you have a you have a different contractor operating the plan so i mean that the contract so i don't think i can just remove that but it but there is six million dollars  time and and the actuary figures out what percentage of the estimated liabilities is being transferred to the buyer that was about seventy five percent and then you've got to value the assets and you have to find seventy five percent of the assets in transfer seventy percent yes that's what was done and then the same thing happened next time and just so happened like when sentence was also about seventy five percent so the end of the day it was you know one one quarter and then one quarter of one quarter so you wound up with one sixteenth or roughly of what had been in the plan before these two trends did directv keep any of the liabilities and the age of they transfer all over cabinet some of these other cases you have that issue so then you have to sort of try to parse whether sort of somehow the government being unfairly treated by by the contractor keeping some liabilities like stock and barrel we went to boeing turns out in hindsight when our actuary was forced to recalculate it by virtue of this ongoing litigation that there was a infinitesimal difference i mean three million dollars on three this and that's why the costs reductions are so obvious and and inevitable and then what's left over is a directive in three years later there's a second transaction and the same thing so directv only had employees and retirees were part of the plan so we had that and then if you look at it in hindsight we would say that we we have we kept six million dollars of surplus  that was within one hundred percent of surplus if we were trying to achieve some safe harbor transfer there is a safe harbor in in the nuke as there was no safe harbor in the ok so fall into the new path of this transaction did you agree that you would amendment simply clarified rights that already existed and then it even goes on to say regardless even if the amendments only clarify rights under the original gaz it does not follow that the amendments merely interpret that provision so distractions no one knew exactly what the rules were and there was no effort to retain anything in fact the government conceded not in the court below but in its briefs here the government conceded that if direct t transferred in transferred what it thought was one hundred percent of the surplus at the time the government have no client well there's no dispute actually over that issue we did transfer what we thought was one hundred percent of the claim and it's only because the t claim that was asserted by the contracting officer that we originally started litigate so i tell the difference here was on the theory that not that we transferred less because of you know because of something it was it was that we had did it entirely wrong that we should have segment accounting for separate segments and the government recognized that they can prevail and so the we were sort of hauled into court on a theory the theory turns out to be completely false the government advan dearie but between tween the time that we're all in the court and the time that the government abandons the theory our actuaries do what they're supposed to do which is a recalculation calculation for purposes of the court for the person of evidence in the c and that shows a as three million dollar in each so six million dollars total surplus and that's the only sort costs around and i just want to emphasize that the point here is that as just carson said the government is asking for the evidence not disputed in the record is that it as of two thousand and seven it was one point two eight billion dollars that they had benefit as compared to their share which is two hundred seventy three so they have a protected will interest in two hundred seventy three million dollars they've gotten one point two eight billion already and here they're asking they're trying to take they're trying to ask for a double payment for a sliver of a no it's not double  the surplus which is eight percent so eight percent of you know roughly three billion dollars is is is their share and that is that is what they're entitled with us and we could've kept yeah i mean this they so you have to you have to put yourself back into the the the mindset of one hundred ninety seven years you're in a world where the where the economy and the stock market has done really well you don't know what the rules are you've got a surplus in your pension plan and if you don't transfer it you have an obligation that comes out of your out of your general and you don't know what that obligation is you have no idea what it is because the laws of their taliban hasn't been decided against the raytheon has been decided none of the cases that inform the rulings of what ought to be done have been the site so  directv made a conservative decision and they said look let's just transfer all the surplus and if we transfer all the circus we can arly be chris we're here but that's what we're trying to do if you got the benefit and one interesting thing up close with this is that if you if you if you look at the record one zero two and one i want to one or two and for fifty eight or fifty nine or sixty one and for sixty two what it revealed is that not only government the now i do have a question of just my own curiosity if in fact to find benefit land had a billion dollars deficit with the government need to believe briefly your are with respect to whether it was sixty million or six million i would invite the court's attention to the stipulation of the parties at age eighty three zero five b and c which makes clear that assets were transferred it didn't belong to the segment and they cannot properly figure in the second closing calculation the question was raised why did not direct t v keep more of the surplus in the real world companies cannot transfer three point two billion dollars of surplus and get nothing in return there's nothing in the record on on this but to transfer that amount to get nothing in return would raise questions of waste of corporate assets so it's not in the record i think that before the contrary to what my friend mr wilde said the test is not what was it predictable that the government would be paid at the time of the transaction the test is whether the government was paid was it paid by cash impose upon the government the burden of waiting ten years to see an actuarial study that occupies close to seven hundred pages in this appendix you know to determine whether it had been paid or not the way the credits provision works is you pay by  check or you pay by i'm knocking the amount off of an invoice so the government can look at the invoice and say i say we've been paid you know not supposed to wait ten years and bring in the actually where east to to review complicated hypothetical percent of the surplus that there would be no liability what we said was that they had to transfer one hundred percent that's an objective standard it's not a subjective standard and we did argue also below in our briefs that the the absurd result if you transfer one hundred percent the seller has no liability if you transfer ninety nine point five percent of the trial court's reading the seller has to make a segment closing just one upon the entire amount