United States Court of Appeals 

for the Federal Circuit 

__________________________ 

ROBERT M. GATES, SECRETARY OF DEFENSE, 

Appellant, 

v. 

RAYTHEON COMPANY, 

Appellee. 

__________________________ 

2008-1543 

__________________________ 

Appeal from the Armed Services Board of Contract 

Appeals in no. 54907, Administrative Judge Jack Delman. 

ON PETITION FOR REHEARING EN BANC 

__________________________ 

Before RADER, Chief Judge, NEWMAN, MAYER∗

, LOURIE, 

BRYSON, GAJARSA, LINN, DYK, PROST, MOORE, and 

O’MALLEY, Circuit Judges. 

PER CURIAM. 

GAJARSA, Circuit Judge, with whom LINN, PROST, and 

O’MALLEY, Circuit Judges, join, dissents from the denial 

of the petition for rehearing en banc. 

NEWMAN, Circuit Judge, dissents from the denial of 

the petition for rehearing en banc. 

 ∗

 Judge Mayer participated only in the decision 

on panel rehearing. 
DEFENSE v. RAYTHEON COMPANY 2

__________________________ 

 KAREN L. MANOS, Gibson, Dunn & Crutcher LLP, of 

Washington, DC, filed a petition for rehearing en banc for 

appellee. With her on the petition were CHRISTYNE K.

BRENNAN and DACE A. CALDWELL. 

 C. COLEMAN BIRD, Senior Trial Counsel, Commercial 

Litigation Branch, Civil Division, United States Department of Justice, of Washington, DC, filed a response to 

the petition for appellant. With him on the response were 

TONY WEST, Assistant Attorney General, JEANNE E.

DAVIDSON, Director, and KIRK T. MANHARDT, Assistant 

Director. 

RICHARD C. JOHNSON, Smith Pachter McWhorter PLC, 

of Vienna, Virginia, for amicus curiae National Defense 

Industrial Association. 

__________________________ 

O R D E R 

A petition for rehearing en banc was filed by Appellee, 

and a response thereto was invited by the court and filed 

by Appellant. The court granted leave to National Defense Industrial Association to file a brief amicus curiae in 

support of Appellee’s petition. 

The petition for rehearing was referred to the panel 

that heard the appeal, and thereafter the petition for 

rehearing en banc, response, and brief amicus curiae were 

referred to the circuit judges who are authorized to request a poll whether to rehear the appeal en banc. A poll 

was requested, taken, and failed. 

Upon consideration thereof, 

IT IS ORDERED THAT: 
3 DEFENSE v. RAYTHEON COMPANY

(1) The petition of Appellee for panel rehearing is denied. 

(2) The petition of Appellee for rehearing en banc is 

denied. 

(3) The mandate of the court will issue on March 8, 

2011. 

FOR THE COURT

March 1, 2011

Date 

/s/ Jan Horbaly 

Jan Horbaly 

Clerk 

cc: C. Coleman Bird, Esq. 

Karen L. Manos, Esq. 

Richard C. Johnson, Esq. 
United States Court of Appeals 

for the Federal Circuit 

__________________________ 

ROBERT M. GATES, SECRETARY OF DEFENSE, 

Appellant, 

v. 

RAYTHEON COMPANY, 

Appellee. 

__________________________ 

2008-1543 

__________________________ 

Appeal from the Armed Services Board of Contract 

Appeals in no. 54907, Administrative Judge Jack Delman. 

 GAJARSA, Circuit Judge, with whom LINN, PROST, and 

O’MALLEY, Circuit Judges, join, dissenting from the denial 

of the petition for rehearing en banc. 

__________________________ 

I respectfully dissent from the court’s denial of the request to rehear this case en banc. The refusal to rehear 

this case en banc is erroneous because it allows our precedent in Canadian Fur Trappers Corp. v. United States, 

884 F.2d 563 (Fed. Cir. 1989), to continue to be the law of 

this circuit. As a result, we are required to continue 

assessing compounded interest under 26 U.S.C. § 6622 

whenever a statute refers to the rate of interest calculated 

pursuant to 26 U.S.C. § 6621. This is not the result 

Congress intended. Because Canadian Fur was based on 

a misreading of the language in 19 U.S.C. § 1677g that 
DEFENSE v. RAYTHEON COMPANY 2

appears in many other statutes, this court should have 

taken the opportunity to correct our flawed precedent. 

Title 26 of the United States Code is the Tax Code. 

Section 6621 of title 26 states various rates of interest, 

including the rate of interest for amounts overpaid, 

amounts underpaid, and the federal short term rate. 26 

U.S.C. § 6621. Although § 6621 certainly provides the 

rate of interest applicable to amounts underpaid or overpaid under the Tax Code, its rate of interest does not only 

apply to tax matters. See, e.g., 15 U.S.C. § 1117(b) (referring to the rate of interest under § 6621 for the payment 

of prejudgment interest); 19 U.S.C. § 1677g (referring to 

the rate of interest under § 6621 for the underpayment of 

import duties owed); 29 U.S.C. § 1132(g) (referring to the 

rate of interest under § 6621 for unpaid interest on retirement plan contributions); 41 U.S.C. § 422(h)(4) (referring to the rate of interest under § 6621 for the 

underpayment of amounts owed on government contracts). 

Section 6621 does not specifically include a requirement that any interest calculated pursuant to the rate 

provided there must be compounded. Rather, the requirement to compound certain types of interest appears 

in § 6622 of title 26, which provides that “[i]n computing 

the amount of any interest required to be paid under this 

title or sections 1961(c)(1) or 2411 of title 28 . . . or any 

other amount determined by reference to such amount of 

interest, such interest and such amount shall be compounded daily.” Thus, the statutory language of § 6622 

requires that the amount of interest be compounded only 

when: (1) the amount of interest is required to be paid 

under title 26; (2) the amount of interest is required to be 

paid under sections 1961(c)(1) or 2411 of title 28; and (3) 

the amount of interest is calculated by reference to 
3 DEFENSE v. RAYTHEON COMPANY

amounts due under title 26 or sections 1961(c)(1) or 2411 

of title 28. 

In Canadian Fur, an appeal from the Court of International Trade (“CIT”), the plaintiffs underpaid the duties 

owed on certain imported goods under title 19. 884 F.2d 

at 566. Because of this underpayment, the plaintiffs had 

to pay the government the difference between the amount 

already paid and the amount owed, along with interest on 

that difference. Id. To calculate the rate of interest, the 

court looked to 19 U.S.C. § 1677g, which provides “[t]he 

rate of interest payable . . . is the rate of interest established under section 6621 of Title 26 for such period.” 

This court concluded that any interest due under 19 

U.S.C. § 1677g needed to be compounded. Canadian Fur, 

884 F.2d at 568. To reach this result, this court implicitly 

assumed that if a statute requires that the rate of interest 

be calculated pursuant to § 6621, that interest is “required” to be paid under title 26. That assumption, 

however, is inconsistent with the language of the statutes. 

In reality, the interest due in Canadian Fur was “required” to be paid under title 19, not title 26. Section 

1677g(a) of title 19 requires the payment of interest on 

the overpayment or underpayment of deposited merchandise. Id. (“Interest shall be payable on overpayments and 

underpayments of amounts deposited on merchandise 

entered, or withdrawn from warehouse . . . .”) Section 

1677g’s reference to the “rate of interest” under § 6621 

does not mean that the interest is required to be paid 

under title 26. It is due and payable under title 19—the 

Tariff Act of 1930—not title 26—the Tax Code. The 

Eleventh Circuit recognized this distinction, interpreting 

29 U.S.C. § 1132(g)(2)’s requirement that “interest on 

unpaid contributions shall be determined by using . . . the 

rate prescribed under section 6621 of Title 26” to mean 

that “the rate of interest is determined by § 6621, not the 
DEFENSE v. RAYTHEON COMPANY 4

method, formula, or procedure of the interest calculation.” 

Carriers Container Council, Inc. v. Mobile S.S. Ass’n, 948 

F.2d 1219, 1225 (11th Cir. 1991). The court concluded 

that “the compounding method or formula of § 6622 was 

inapplicable.” Id. 

This interpretation is consistent with how courts construe the reference to § 6621 in the Lanham Act. Section 

1117(b) of title 15 provides that the “the court [in counterfeit trademark actions] award[s] prejudgment interest . . . 

at an annual interest rate established under section 

6621(a)(1) of Title 26.” When assessing interest under 

§ 1117(b), courts have applied only the rate of interest 

under § 6621, not the compounding requirement of § 

6622. See, e.g., Philip Morris USA, Inc. v. U.S. Sun Star 

Trading, Inc., Case No. 08-CV-0068, 2010 WL 2133937 

(E.D.N.Y Mar. 11, 2010); Sherwood Brands of R. I., Inc. v. 

Smith Enters., Inc., Case No. 00-CV-287T, 2003 WL 

22061871 (D.R.I. Mar. 23, 2003). Properly construed, a 

statute’s reference to the rate of interest under § 6621 

means only that § 6621 must be used to calculate the rate 

of interest, not that the interest is due under title 26. 

Furthermore, the court in Canadian Fur violated the 

basic tenet that “[a] statute should be construed so that 

effect is given to all its provisions, so that no part will be 

inoperative or superfluous, void or insignificant . . . .” 

Corley v. United States, 129 S.Ct. 1558, 1556 (2009) 

(citation and internal quotation marks omitted). The 

statutory text of both §§ 1961(c)(1) and 2411 of title 28 

require that the rate of interest be calculated pursuant to 

§ 6621. Yet they are additionally referenced in § 6622 to 

require compounded interest. 26 U.S.C. § 6622 (“[T]he 

amount of any interest required to be paid under. . . 

sections 1961(c)(1) or 2411 of title 28, United States Code” 

must be compounded). By interpreting a statute’s reference to the rate of interest under § 6621 to make that 
5 DEFENSE v. RAYTHEON COMPANY

interest due under title 26, the court in Canadian Fur

rendered the reference in § 6622 to §§ 1961(c)(1) and 2411 

of title 28 superfluous. 

Even though Canadian Fur was erroneously decided, 

it was a precedential opinion and bound the panel in 

Raytheon to follow Canadian Fur. Section 422(h)(4) of 

title 41—the relevant statute in Raytheon—states that 

“[t]he interest rate applicable to any contract price adjustment shall be the annual rate of interest established 

under section 6621 of Title 26 for such period.” This 

language is nearly identical to the relevant language in 19 

U.S.C. § 1677g. Furthermore, title 41, like title 19, creates the requirement that interest be paid. 41 U.S.C. § 

422(h)(4) (“Such regulations . . . shall require contractors . 

. . to agree to a contract price adjustment, with interest, 

for any increased costs paid to such contractor or subcontractor by the United States . . . .”). Correctly interpreted, 

both 19 U.S.C. § 1677g and 41 U.S.C. § 422(h)(4) require 

that the rate of interest is the “rate of interest established 

under section 6621 under Title 26”—nothing more, nothing less. 

This erroneous statutory construction could have been 

corrected by rehearing this case en banc, the only method 

available to this court to correct its erroneous precedent. 

Thus, by failing to grant the petition for rehearing en 

banc, the court chooses to allow a plainly erroneous 

precedent to propagate itself, subjecting parties to pay 

compounded interest despite the fact that Congress did 

not intend that result. For these reasons, I dissent. 
United States Court of Appeals 

for the Federal Circuit 

__________________________ 

ROBERT M. GATES, SECRETARY OF DEFENSE, 

Appellant, 

v. 

RAYTHEON COMPANY, 

Appellee. 

__________________________ 

2008-1543 

__________________________ 

Appeal from the Armed Services Board of Contract 

Appeals in no. 54907, Administrative Judge Jack Delman. 

NEWMAN, Circuit Judge, dissenting from the denial of 

the petition for rehearing en banc. 

__________________________ 

I would have preferred to hear argument, with further 

briefing, to settle this question of statutory interpretation 

by the en banc court. The answer to the question does not 

appear to be as clear as suggested by my colleagues on 

both sides. 

As pointed out in the panel decision, our decision in 

Canadian Fur Trappers Corp. v. United States, 884 F.2d 

563 (Fed. Cir. 1989), did not explicitly reference 26 U.S.C. 

§6622, but can be read as binding the court as to the 

interpretation of that statute. The panel now suggests 

that Canadian Fur was wrongly decided, and cites the 

Eleventh Circuit’s contrary interpretation in Carriers 
DEFENSE v. RAYTHEON COMPANY 2

Container Council, Inc. v. Mobile S.S. Association, Inc., 

948 F.2d 1219 (11th Cir. 1991). In my view, these circumstances warrant review by the en banc court to either 

bring our precedent in line with our sister circuit or 

defend its correctness. 

The issue is whether the requirement to pay interest 

under any statute that specifies a rate of interest by 

reference to 26 U.S.C. §6621 necessarily includes the 

requirement in §6622 that such interest be compounded 

daily. Section 6622 of the Internal Revenue Code provides: 

(a) General rule.--In computing the amount of 

any interest required to be paid under this title or 

sections 1961(c)(1) or 2411 of title 28, United 

States Code, by the Secretary or by the taxpayer, 

or any other amount determined by reference to 

such amount of interest, such interest and such 

amount shall be compounded daily. 

26 U.S.C. §6622(a). My colleagues, in proposing en banc 

review, argue that §6622 governs only the computation of 

interest due or required to be paid under Title 26 or 28 

U.S.C. 1961(c)(1) or 2411. The Eleventh Circuit reasoned 

in Carriers Container that §6622 governed only “the 

method, formula, or procedure of the interest calculation,” 

948 F.2d at 1225, and thus a statute’s reference to the 

rate of §6621 did not implicate the “method or formula” of 

§6622. However, neither position gives weight to §6622’s 

requirement that “any other amount determined by 

reference to such amount of interest” must also be compounded daily. 

The statute under which Raytheon was required to 

pay interest, 41 U.S.C. §422(h)(4), provides: “The interest 

rate applicable to any contract price adjustment shall be 

the annual rate of interest established under section 6621 
3 DEFENSE v. RAYTHEON COMPANY

of Title 26 for such period.” There is no question that 

§422(h)(4) sets a “rate” of interest by reference to 26 

U.S.C. §6621, which provides interest rates for overpaid 

or underpaid taxes. The question is whether determining 

the amount of interest in this way constitutes determining an amount of interest by reference to “the amount of 

any interest required to be paid under [title 26] or sections 1961(c)(1) or 2411 of title 28, United States Code,” 

the antecedent basis for “such amount of interest” in the 

“any other amount” clause of §6622. Should “amount” 

here be interpreted to mean only a specific sum calculated 

under one of these provisions in specific circumstances, or 

does it refer to the overpaid or underpaid taxes referenced 

in §6621, which are required to be paid under Title 26? 

The legislative history of §6622 goes a long way in resolving ambiguity. The Senate Report states that 

“[u]nder present law, interest payable to or by the United 

States under the internal revenue laws is not compounded.” S. Rep. No. 97-494, vol. 1, at 305 (1982). The 

change in law is explained: 

Under the Committee bill, all interest payable 

under the internal revenue laws will be compounded daily. This adjustment will conform 

computation of interest under the internal revenue laws to commercial practice. The change will 

also offset any other amounts computed by reference to the interest rate provided for in the code.

Id. (emphasis added). Though the meaning of the word 

“offset” is unclear in this context, the Conference Report 

makes the point more clearly: 

All interest payable under the internal revenue 

laws would be compounded daily. The change 

would also affect any other amounts computed by 
DEFENSE v. RAYTHEON COMPANY 4

reference to the interest rate provided for in the 

Code. 

H.R. Rep. No. 97-760, at 595 (1982) (Conf. Rep.). Both 

reports state that §6622 is meant to affect any other 

amounts of interest computed in accordance with the rate 

in the Internal Revenue Code, including the rates provided in §6621. The concerns expressed in the Senate 

Report about failure to compensate the government and 

taxpayers for the value of money owed to them would 

apply to other contexts where the government is determined to owe interest to citizens or vice versa. Thus it is 

at least likely that reference to the interest rates provided 

in §6621 are intended to be computed as set forth in 

§6622. 

Raytheon’s argument, pressed by my fellow colleagues 

in dissent, is that this interpretation cannot be correct 

because it could be considered to render §6622’s reference 

to 28 U.S.C. §§1961(c)(1) & 2411 unnecessary. Superfluous language serves no purpose, but I can envision a 

legislative purpose in specifically referencing §§1961(c)(1) 

and 2411 in §6622 rather than relying on the catch-all 

provision alone to necessitate compounding. It would be 

permissible, for example, to require that interest under 

§§1961(c)(1) and 2411 be compounded whether or not 

those statutes continue to reference the rates provided in 

§6621. To resolve the uncertainties raised by litigants, 

the government, and my colleagues in dissent, en banc 

consideration is warranted. 

From the court’s determination not to examine this issue, I respectfully dissent.