ARMED SERVICES BOARD OF CONTRACTAPPEALS
Appeal of

-- ) ) Exelis, Inc. ) ) Under Contract Nos. N65236-07-C-5876 ) FA8532-12-C-0002 )

APPEARANCES FOR THE APPELLANT:

APPEARANCES FORTHE GOVERNMENT: ASBCA No. 60131

Steven M. Masiello, Esq. Joseph G. Martinez, Esq.

Dentons US LLP Denver, CO

E. Michael Chiaparas, Esq.

DCMA ChiefTrial Attorney Samuel W. Morris, Esq.

Trial Attorney Defense Contract Management Agency Chantilly, VA

OPINION BYADMINISTRATIVEJUDGE D'ALESSANDRIS ON APPELLANT'S MOTION TO SUSTAIN THE APPEAL AND DISMISS THE GOVERNMENT'S CLAIM
Appellant, Exelis Inc. (Exelis) appeals from a contracting officer's final decision asserting a government claimpursuant to Cost Accounting Standard (CAS) 404, pertaining to Exelis' purportedly noncompliant accounting for the costs ofa building lease. The parties do not dispute that Exelis is subject to the CAS by virtue ofits performing over $50 million per year in government contracts. See 48 C.F.R. §§ 9901.306, 9903.201. As a contractor subject to the CAS, Exelis is required to measure its indirect costs in accordance with the CAS and its disclosed cost accounting practices. One ofthese indirect costs is Exelis' cost ofleasing office space that is then allocated to Exelis' government contracts. The government asserts that Exelis improperly accounted for the lease costs by treating the lease as an operating lease rather than a capital lease. According to the government, this mischaracterization ofthe lease resulted in Exelis overchargingthe government for the indirect cost ofthe building lease in each ofExelis' government contracts, both flexibly-priced and fixed-price. Here, the record contains a costtype contract, N65236-07-C-5876 (R4, tab 2) and a firm-fixed-price contract, FA8532-12-C-0002 (R4, tab 13) that the government contends are representative ofExelis' government contracts (R4, tab 11 at 149).

In 2007, the Defense ContractAudit Agency (DCAA) released its audit ofExelis' calendaryear 2004 final indirect cost rates (R4, tab 3). In the audit report, DCAA questioned Exelis' lease costs, finding that the building lease was a capital lease, and that Exelis could only include building depreciation in its indirect cost pool rather than theentire lease cost (id. at 81). Fallowing submissions ofadditional information from Exelis, and further auditing by DCAA, in June 2015, the Defense ContractManagement Agency (DCMA) contracting officer found that Exelis had improperly treated the building lease as an operating lease, ratherthan a capital lease, pursuantto Federal Acquisition Regulation (FAR) 31.205-11(m) (1998). 1 Based upon the purported FAR violation, DCMA determinedthat Exelis' accounting treatmentwas not in compliance with CAS 404, and asserted a government claim in the amount of$3,821,534 due to increased costs purportedly paid by the government on Exelis' contracts from 2003 through the date ofthe final decision. Pendingbefore the Board is Exelis' motion to sustain the appeal and to dismiss the government's claim for failure to state a claim upon which reliefcan be granted. Exelis asserts that the government cannot state a claim for a CAS 404 violation, even assuming that the government is correct that Exelis improperly accounted for the building lease. Next, Exelis argues that the final decision asserts a sum certain with regard to the purported CAS violation, but did not assert a sum certain with regard to the purported FARviolation, and; therefore, once the CAS claim is dismissed, the Board must dismiss the government's claim in its entirety for failure to assert a sum certain. The DCMA opposes Exelis' motion. We grant Exelis' motion in part and deny the motion in part. Even ifthe government is correctthat Exelis' accounting for the building lease is in violation ofthe FAR, we holdthatthe government cannot establish a CAS violation. However, we hold that the FARviolation and the CAS violation rely upon the same operative facts and therefore that the government is asserting the "same claim" for purposes ofthe ContractDisputes Act (CDA) and deny Exelis' motion to dismiss the government's claim for failure to assert a sum certain.

STATEMENT OF FACTS (SOF) FORPURPOSES OF THE MOTION

1. Exelis, through apredecessor in interest, leased the Summit Park Building in Fort Wayne, Indiana, in 1997 (compl. 

### ii 6, answer

### ii 6).

2. Pursuant to Generally Accepted Accounting Principles (GAAP), Exelis had to characterizethe lease as either an operating lease or a capital lease for financial accounting purposes. Pursuantto Statement ofFinancial Accounting Standards (FAS) No. 13, Accounting for Leases (Nov. 1976), a lease must be treated as a capital lease if any one offour tests is satisfied: (1)the lease transfers ownership ofthe property to the lessee bythe end ofthe lease term; (2) the lease contains a purchase option; (3) the lease term is equal to 75 percent or more ofthe estimated economic life ofthe leasedproperty;
or (4) the present value, atthe beginning ofthe lease, ofthe minimum lease payments, subject to certain adjustments, equals or exceeds 90 percent ofthe fair market value of the property, again subjectto certain adjustments. FAS No. 13, 

### ii 7.

1FAR 31.205-11(m) has been revised andreworded and is now codified at 31.205-11(h). The changes are not relevant to the resolution ofthis motion. 23. Exelis accumulated and reported its lease costs for the SummitPark Building
as an operating lease (compI. 

### ii 8, answer

### ii 8).

4. FAR 31.205-1 l(m) (1998) provides that:

48 CFR9904.404, Capitalization ofTangible Assets, applies to assets acquired by a '"capital lease" as defined in Statement ofFinancial Accounting Standard No. 13 (FAS-13), Accounting for Leases, issued by the Financial Accounting Standards Board (FASB). Compliance with 48 CFR9904.404 and FAS-13 requires that such leased assets (capital leases) be treated as purchased assets; i.e., be capitalized and the capitalized value ofsuch assets be distributed overtheir useful lives as depreciation charges, or overthe leased life as amortization charges as appropriate. Assets whose leases are classified as capital leases under FAS-13 are subject to the requirements of31.205-11 while assets acquired under leases classified as operating leases are subjectto the requirements
on rental costs in 31.205-36. The standards offinancial accounting and reporting prescribed by FAS-13 are incorporated into this principle and shall govern its application, except as provided in subparagraphs (1), (2), and (3) below.
(1) Rental costs under a sale and leaseback arrangement shall be allowable up to the amount that would have been allowed had the contractorretained title to the property.
(2) Capital leases, as defined in FAS-13, for all real and personal property, between any related parties are subject to the requirements ofthis subparagraph 31.205-1l(m). Ifit is determinedthat the terms ofthe lease have been significantly affected by the fact that the lessee and lessor are related, depreciation charges shall not be allowed in excess of those which would have occurred ifthe lease contained terms consistent with those found in a lease between unrelated parties.
(3) Assets acquired under leases that the contractor must capitalize under FAS-13 shall not be treated as purchased assets for contractpurposes ifthe leases are covered by 3 l.205-36(b)-(4).

35. CAS 404 Capitalization ofTangible Assets, provides:

This Standardrequires that, for purposes ofcost measurement, contractors establish and adhere to policies with respect to capitalization oftangible assets which satisfy criteria set forth herein. Normally, cost measurements are based on the concept ofenterprise continuity; this concept implies that major asset acquisitions will be capitalized, so that the cost applicable to current and future accounting periods can be allocated to cost objectives ofthose periods. A capitalization policy in accordance with this Standard will facilitate measurement ofcosts consistently overtime.

48 C.F.R. §9904.404-20. CAS 404 further defines the term "tangible capital asset"
as "an asset that has physical substance, more than minimal value, and is expectedto be held by an enterprise for continueduse orpossessionbeyond the current accounting period for the service it yields." 48 C.F.R. §9904.404-30(a)(4).

6. Preamble A to CAS 404 provides inpart:
(7)Accounting for assets acquiredby lease. Many commentators suggested to the Board various methods of accounting for assets acquired by lease. This problem is not a new one. Tangible assets can be acquired by various kinds of business transactions and relationships. The accounting principles related to capitalization are most readily applied in connection with purchases. Some lease agreements provide to the user ofan asset many ofthe attributes ofownership. The accounting profession has long been cognizant of difficulties related to determining when assets acquired by lease shouldbe treated as purchases. The Board agrees that assets actually purchased should (ifotherwise appropriate for capitalization) be capitalized
even when the purchasetransaction is in the form ofa lease agreement. This same determination must be made for other accounting purposes. The accountingprofession is now guided, in this regard, primarily by opinions ofthe Accounting Principles Board; it is ourunderstanding that the Financial Accounting Standards Board will soon undertake to provide a new statement for the profession on this issue. This Board will carefully consider all authoritative statements of accounting principles to the extent that it can do so while

4maintaining progress toward its ownprimary goal ofincreased uniformity and consistency in cost accounting for contracts. Those lease acquisitions which are treated as purchases will be subjectto this standard; those which are treated as leases will for the time beingbe subjectto the existing procurement regulations which deal with rental costs. The Board is, therefore, willing that the contractor determine, for each acquisition, whether it is a purchase and hence subject to this capitalization policy (which must comply with the criteria established in this Standard) or a rental transaction and hence subject to established regulations on rental costs. In either case, determination ofthe reasonableness ofthe lease costs remains the responsibility ofthe procurement agencies and is not dealt with here by the Cost Accounting Standards Board.

Cost Accounting Standards Guide, Regulation, CostAccounting Standards Board, Preamble A, 38 Fed. Reg. 5318-19 (Feb. 27, 1973).

7. In a final decision dated 3 June 2015, the DCMA divisional administrative contracting officer, Lisa Lunceford, asserted a government claim for $3,821,534 against Exelis (R4, tab 11). The final decision found that Exelis improperly accounted for the Summit Park Building lease as an operating lease when it should have been treated as a capital lease because the present value ofthe lease payments, at the inception ofthe lease,
was greaterthan 90 percent ofthe fair marketvalue ofthe building. The final decision determined that Exelis was non-compliantwith CAS 404 and FAR31.205-11(h). The final decision determinedthat, due to the finding ofCAS non-compliance, the government paid increased costs of$3,015,813 from calendaryear 2003 through the date ofthe final decision, and that the government was entitled to $805,721.34 in compound interest. The final decision attributed $2,586,354 ofthe $3,015,813 in increased costs to Exelis' firm-fixed-price contracts. (Id.)
8. Exelis timely appealed to the Board from the final decision.

DECISION

I. Standard ofReview

The Board will grant a motion to dismiss for failure to state a claim when the complaint fails to allege facts '"plausibly suggesting (not merely consistent with)' a showing of entitlement to relief." Cary v. UnitedStates, 552 F.3d 1373, 1376 (Fed. Cir. 2009) (quotingBellAtlantic Corp. v. Twombly, 550 U.S. 544, 557 (2007));American General Trading & Contracting WLL, ASBCANo. 56758, 12-1 BCAi134,905 at 171,640. The allegation "mustbe enoughto raise a right to reliefabove the speculative level." Cary, 552 F.3d at 1376. In addition, the "complaint must contain sufficient factual matter,


### 5accepted as true, to 'state a claim to reliefthat is plausible on its face."' Ashcroftv. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 570).

II. The Final Decision does Not Assert a CAS Violation upon which Reliefmay be Granted

Exelis asks the Board to sustain its appeal and dismiss the government's claim for failure to state a claim upon which reliefmay be granted. According to Exelis, even assuming all facts in favor ofthe government, at mostthe government could establish that Exelis was non-complaint with the FAR, and cannot state a claim for a CAS violation. Exelis asserts that CAS 404, by its terms applies only to "tangible capital assets" and does not applyto a lease because a lease is an intangible asset. Exelis additionally argues that the regulatory history ofCAS 404 demonstrates that it does not apply to a contractor's characterization oflease, and that, at most, the mischaracterization ofa capital lease as an operating lease would create a FAR allowability issue. The government, in opposing Exelis' motion, argues that, properly interpreted, CAS 404 applies to Exelis' lease.

A. The Plain Language ofCAS 404
Interpretation ofthe CAS is an issue oflaw. Rumsfeldv. United Technologies Corp., 315 F.3d 1361, 1369 (Fed. Cir. 2003). We interpret regulations, such as the CAS, the same way statutes are interpreted. See, e.g., GeneralDynamics Corp., ASBCA No. 31359, 92-1BCAif24,698 at 123,255. By its terms, CAS 404 applies to "Tangible Assets" (SOF if 5). The CAS defines "tangible capital asset[s]" as "asset[s] that [have] physical substance, more than minimal value, and [are] expectedto be held by an enterprise for continued use orpossession beyond the current accounting period for the services it yields" (id.). Thus, the plain language ofthe CAS provides that CAS 404 applies to tangible assets which are assets with physical substance. A lease is an "intangible"ratherthan a tangible asset becausethe lease itselfis a legal right to use and occupy the building and does not have "physical substance." See, e.g., RichardS. Miller & Sons, Inc. v. UnitedStates, 210 Ct. Cl. 431, 450 (1976) (defining goodwill as the aggregate ofintangible assets ofa business, including leases). This interpretation is consistent with FAS 141 which provides that leases are "contractbased intangible assets." Statement ofFinancial Accounting Standards No. 141, Business Combinations ifA.14(d) (June 2001); Statement ofFinancial Accounting Standards No. 141, Revised 2007, Business Combinations ifA.46(c) (Dec. 2007). In interpreting the CAS, accounting terms are construed consistent with accounting standards. See, e.g., BAESys. Information & Electronic Systems Integration, Inc., ASBCA No. 44832, 01-2 BCA if 31,495 at 155,523 (interpreting "purchase method ofaccounting" and "business

6combinations" consistent with Accounting Principles BulletinNumber 16 because they
are "terms ofart" or "technicalterms").

The government argues unconvincingly that the plain language ofCAS 404 supports requiring Exelis totreat the Summit Park Building lease as a capital lease. According to the government, permitting Exelis totreat the building lease as an operating lease would be contrary to the purpose ofCAS 404 and the fundamental requirements of CAS 404-40. The government asserts that the purpose ofCAS 404 is that "major asset acquisitions will be capitalized" (gov't opp'n at 3 (quoting CAS 404-20)), and that the "Fundamental requirement"provision ofthe standardprovides that "[t]he acquisition cost oftangible capital assets shall be capitalized" (id. (quoting CAS 404-40(a))). The government asserts that the buildinghas "physical substance," is ofmore than minimal value, and is expectedto be held for "continueduse" and thus, the lease is subjectto CAS 404 so long as the lease is an acquisition (id.). The governmentthen interprets the word "acquisition" in isolation in an attempt to demonstrate that Exelis acquired the Summit Park Building by means ofthe lease (id. at 3-4).
We interpret CAS 404 based upon its plain language. See, e.g., Johns-Manville Corp. v. UnitedStates, 855 F.2d 1556, 1559 (Fed. Cir. 1988). In addition, weread the regulation as a whole, attempting to "fit, ifpossible, all parts into an harmonious whole." Nielson v. Shinseki, 607 F.3d 802, 807 (Fed. Cir. 2010) (quotingFTCv. MandelBrothers, Inc., 359 U.S. 385, 389 (1959)). Here, the government's interpretation ofindividualwords in isolation would create a nonsensical interpretation ofthe regulation as a whole. As noted above, the lease itselfis an intangible asset and itselfdoes not have "physical substance." RichardS. Miller, 210 Ct. Cl. at 450. Thebuilding has "physical substance" but Exelis has not acquired the building, it has an intangible right to use and occupythe building. Moreover, the government's proposed interpretation does notrecognize a distinction between capital leases and operating leases. Thus, ifthe government's interpretation were correct, contractors would needto capitalize all long-term leases, including not only building leases, but also leases ofvehicles, and equipment.

B. The Preamble To CAS 404

Becausethe plain language ofCAS 404 is clear, we do not need to lookto the legislative history ofthe standard. See, e.g., Snyder v. Nicholson, 489 F.3d 1213, 1217 (Fed. Cir. 2007). However, we note thatthepreamble to CAS 404 provides thatthe CAS Board is "willingthat the contractor determine, for each acquisition, whetherit is a purchase and hence subjectto this capitalizationpolicy (which must comply with the criteria established in this Standard) or a rental transaction and hence subjectto established regulations on rental costs" (SOF**~** 6). The CAS Board's interpretation, as stated in the preamble, is entitledto deference. Perry v. Martin Marietta Corp., 47 F.3d 1134, 1138 (Fed. Cir. 1995). Thus, even ifthe language ofCAS 404 were not clear, the appropriate interpretative aid, the preamble, confirms that the CAS Board intended to allowthe contractorto determine whether a lease should be treated as a capital lease oran operating

7lease, and that CAS 404 would only apply in the eventthat the contractorelected to treat the lease as a capital lease. Thus, the CAS Board clearly did not intend that all leases be considered "tangible capital assets."

C. OtherInterpretative Aids

The government asserts that the proper interpretation ofCAS 404 is found in the 1992 "Statement ofObjective, Policies and Concepts." According to the government, the statementprovides that "uniformity" and "consistency" are primary objectives ofthe CAS Board. (Gov't opp'n at 5-6) We first note that the 1992 statementwas issued by a different CAS Boardthan the CAS Boardthat issued CAS 404. 2 The statement ofintent ofthe new CAS Board is not conclusive ofthe intent ofthe old CAS Board. See General Motors Corp. v. UnitedStates, 78 Fed. Cl. 336, 347 (2007). However, the original CAS Board issued its own "Restatement ofObjectives, Policies and Concepts" in May 1977. Reprintedin CostAccountingStandards Guide (CCH) 

### ii 2915 (1998). The wording of the two policy statements differ slightly, butthe difference is not material for the purpose ofresolvingthis motion.

The specific language in the preamble to CAS 404, providing that the CAS Board is "willing that the contractordetermine, for each acquisition, whether it is a purchase and hence subjectto this capitalizationpolicy (which must comply withthe criteria established in this Standard) or a rental transaction and hence subjectto established regulations on rental costs" (SOF 

### ii 6), is more useful in interpreting the standardthan the government's citationto general policies ofuniformity and consistence. Significantly, the preambleto CAS 404 recognized its primary "goal ofincreased uniformity and consistency in cost accounting for contracts," immediately before stating that "[t]hose lease acquisitions which are treated as purchases will be subjectto this standard; those which are treated as leases will for the time being be subjectto the existing procurement regulations which deal with rental costs." Thus the CAS Board recognized that uniformity and consistency could be addressed through the standard, but elected not to do so, stating that "determination ofthe reasonableness ofthe lease costs remains the responsibility ofthe procurement agencies and is not dealt with here by the Cost Accounting Standards Board." (SOF 

### ii 6)

The government additionally argues that Exelis misinterprets the preambleto CAS 404, and that the preamble actually stands for the propositionthat the contractor must

2The original CAS Boardwas established in 1970 as an agency ofCongress. Defense Production Act-Amendments_- Economic Stabilization, Pub. L. No. 91-379, 1970 U.S.C.C.A.N. (84 Stat.) 937. Afterthe original CAS Boardwent out of existence in 1980, a new CAS Boardwas established in 1988 as an Executive Branch agency in the Office ofManagement and Budget. Office ofFederal ProcurementPolicy ActAmendments of 1988, Pub. L. No. 100-679, 1988 U.S.C.C.A.N. (102 Stat.) 4055. 8account for leases in the same manner as the assets wouldbe accounted for pursuantto financial accounting under GAAP (gov't opp'n at 6-8). The government also asserts that its interpretation is supported by the hierarchy for interpretation ofCAS standards (id. at 10) because it is using the GAAP to fill-in a gap where the CAS is silent. Once again, we note that the plain language ofthe CAS is clear, and that it is not necessary to fill-in any gaps. However, to the extentthere is a gap, the government incorrectly attempts to use a GAAP provision to control the CAS when the hierarchy for interpretation ofCAS standards provides that the CAS controls.

As the government notes in its opposition, there is a recognized hierarchy for interpretation ofCAS provisions which places the CAS Board's standards, rules, and regulations at the top, followed by the FAR and agency FAR supplements, and then GAAP. United Technologies, 315 F.3d at 1373. Here the CAS with its rules and regulations, including the contemporaneous preamble, provides that the contractor can selectwhetherto treat the lease as a capital lease or an operating lease. These sources are at the top ofthe hierarchy. The government seeks to use GAAP, the lowest level ofthe hierarchy, to interpret the top level ofthe hierarchy because ofa purported "gap."

This CAS hierarchy means that the CAS concerns the measurement, assignment, and allocation ofcosts. However, the FAR, and not the CAS, determines the allowability ofthe costs. Thus, the fact that an accounting practice is CAS-compliant does not mean that the costs are allowable pursuant to the FAR and the fact that costs are unallowable does not mean that an accounting practice violates the CAS. Ifa contractor improperly accounts for a capital lease as an operating lease, this creates an allowability problem, in violation ofthe FAR, and not a CAS problem. "Therule is that any capital lease costs in
excess ofthe prescribed depreciation charges are unallowable." DARRELLJ. OYER, ACCOUNTING FOR GOVERNMENT CONTRACTS--COSTACCOUNTING STANDARDS 13-21 (Matthew Bendered., 2009). In sum, even ifwe were to consider legislative histories or other interpretative aids in construing CAS 404, it would not change ourdetermination that the government cannot establish a CAS 404 violation.

III. The Government's Claim for Violation ofthe FAR
Having determined that the final decision fails to state a CAS claim upon which reliefmay be granted, we turn to Exelis' request that the appeal be sustained in its entirety because the government failed to assert a sum certain in the final decision for a potential FARviolation. We deny this part ofExelis' motion because we find that the government could assert facts sufficientto establish entitlementto reliefbecause the FAR claim is based upon the same facts as the CAS claim and thus constitutes the same claim for CDApurposes. We note that Exelis filed a motion to dismiss, and not a motion for summaryjudgment, and neitherparty has supported their briefs with declarations or additional documentation.

9The Boardhas recognized that "[n]ewtheories or new damages arising from the same operative facts are not new claims." Conte!AdvancedSystems, Inc., ASBCANo. 50648 etal., 03-2 BCAii 32,277 at 159,696. Moreover, "[t]he test for what constitutes a 'new' claim is whether 'claims are based on a common orrelated set of operative facts."' Unconventional Concepts, Inc., ASBCA No. 56065 etal., 10-1 BCA ii 34,340 at 169,591 (quotingPlaceway Construction Corp. v. UnitedStates, 920 F.2d 903, 907 (Fed. Cir. 1990)). Here, the final decision asserted that Exelis violated FAR 31.205-11(h) and that the FARviolation constituted aviolation ofCAS 404. The relevant facts to determining either the FARorthe CAS claim include the terms ofthe lease for the SummitPark Building, Exelis' cost ofborrowing, and the market value of the building. Thus, the FAR and the CAS claims involve the same operative facts and are the same claim for CDApurposes.
Exelis asserts that the Board lacksjurisdiction because the final decision asserts a sum certain calculated based on a CAS violation, and did not assert a separate sum certain based upon a FARviolation. Unlike a CAS 404 violation, disallowed costs pursuantto a FARviolation would not entitle the government to an adjustment offixed-price contracts. Compare 48 C.F.R. § 9903.306(b) (providing for the calculation ofincreased costs on fixed-price contracts for CAS violations) with FAR 16.202-1 (firm-fixed-price contracts
are not adjustable based on contractor's cost experience). Exelis asserts, and the government admits, that $2,586,354 ofthe $3,015,813 in claimed increased costs pertain to fixed-price contracts (SOF ii 7; compl. ii 49, answerii 49). Thus, the sum certain involved in a FARviolation likely would be smallerthan with a CAS violation.

The sum certain requirement simply requires that a contractor, orthe government in the case ofa government claim, specify a dollar amount for the claim. "TheBoard has repeatedly held thatuse ofestimated or approximate costs in determining the value ofa claim is permissible so long as the total overall demand is for a sum certain." Government Services Corp., ASBCA No. 60367, 16-1BCAii36,411at177,537. The lack ofa sum certain deprives the contracting officer, or in this case the contractor, ofthe opportunity of meaningful consideration ofthe claim. Eaton ContractServices, Inc., ASBCA No. 52888 etal., 02-2 BCAii 32,023 at 158,267 (citingMetric Constr. Co. v. UnitedStates, 14 Cl. Ct. 177, 179 (1988)). Additionally, it is well recognized that a claim can be amendedto increase the asserted claim amount withoutrequiring a new claim. See, e.g., Tecom, Inc. v. UnitedStates, 732 F.2d 935, 937-38 (Fed. Cir. 1984). Thus, the fact thatthe government's
sum certain was apparently calculated based on apurported CAS violation, ratherthan on the basis ofapurported FARviolation, does notrenderthe claim improperbecause the purported CAS and FARviolations are the same claim for CDA purposes. Moreover, it would make little sense to permit a claim to be increased without requiring submission ofa new claim, but to create a new rule requiring a new final decision in the eventthatthe amount in dispute decreases. Because we hold that the final decision satisfies the sum certain requirement, we do not reach the government's alternative argument that the final decision is an interpretation ofa contractterm.

10CONCLUSION

Forthe reasons stated above, we grant Exelis' motion in part, holding thatthe government fails to state a claim upon whichreliefmay be granted regarding apurported violation ofCAS 404, but deny Exelis' motion to sustainthe appeal in its entirety because
we find thatthe final decision states a sum certain with regard to a FARviolation.

Dated: 29 August 2016

I concur

Administrative Judge Acting Chairman Armed Services Board ofContractAppeals DAYID D'ALESSANDRIS Administrative Judge Armed Services Board ofContractAppeals

I concur

RICHARD SHACKLEFORD Administrative Judge Vice Chairman Armed Services Board ofContractAppeals

I certify that the foregoing is atrue copy ofthe Opinion and Decision ofthe Armed Services Board ofContractAppeals in ASBCANo. 60131, Appeal ofExelis, Inc., rendered in conformance with the Board's Charter.

Dated:

11 JEFFREYD. GARDIN Recorder, Armed Services Board ofContractAppeals