Opinion ID: 477882
Heading Depth: 2
Heading Rank: 3

Heading: Prevailing Provision

Text: 25 Boeing contends that, assuming a conflict between CAS 412 and the DAR, the CASB promulgation of CAS 412 supersedes the DAR. As we pointed out above, just as in the 1982 Boeing case (involving CAS 403), because DOD in the instant case chose to incorporate a CAS (CAS 412) governing the assignment of pension costs into the DAR cost principles, we need not address any constitutional issue involving the separation of powers and the alleged authority of DOD over procurement matters. As the court in the 1982 Boeing case stated: 26 The reason is that the Department of Defense itself adopted CAS 403 [and CAS 412] and that Department had the independent authority to accept the standard on its own. Under the same general authority which grounded adoption of the Armed Services Procurement Regulations, the Defense Department could adopt or accept any permissible cost standard, no matter who the proposer. The Department did this in Defense Procurement Circular 99, establishing the relevant CASB standards (including CAS 403) [and CAS 412] as the Department's own. The Department was not deprived of its authority to adopt these standards because it may have assumed mistakenly (if plaintiff is right as to the legal ineffectiveness of the CASB and its productions) that the law compelled it to do so. Whatever the departmental motivation, that agency permissible established the standard and intended to do so. 27 Boeing Company v. United States, 680 F.2d 132, 141, 230 Ct.Cl. 663 (1982) (emphasis added). 28 As the Board found the requirements of CAS 412 are clear and straight forward. 85-3 BCA p 18,435, at 92,602. [T]here do not appear to be any conflicts or disputes over the essential requirements of CAS 412. Id. Nor does there appear to be any dispute as to [Boeing's] obligation to comply with CAS 412 and the fact that [Boeing's] SERP was in compliance with CAS 412 and 413. Id. DOD is not limited as to the sources from which it can pick its cost standards, so long as those standards are substantively proper. Boeing Company v. United States, 680 F.2d 132, 141, 230 Ct.Cl. 663 (1982). There being no dispute as to the substance of CAS 412 and 413 and Boeing's compliance therewith, we find no reason not to uphold the validity of these cost standards. 29 The Board found that the ALLOCABLE COST, FIXED FEE AND PAYMENT clause and the COST ACCOUNTING STANDARDS clause of the contract incorporate [the DAR] and CAS 412 as contract terms, thereby imposing contradictory cost accounting requirements on a contractor for measuring, assigning and allocating pension costs. 85-3 BCA p 18,435, at 92,607. In resolving this conflict, Boeing would have this court apply the principle of contra proferentem, while the government would have us defer to its reasonable and consistent administrative interpretation of its regulations. See Santa Fe Engineers, Inc. v. United States, 801 F.2d 379, 381 (Fed.Cir.1986), citing, Honeywell, Inc. v. United States, 661 F.2d 182, 186, 228 Ct.Cl. 591 (1981). We agree with the Board that a discussion of these principles of interpretation in the context of this case is inapposite. 85-3 BCA p 18,435, at 92,607. 30 In this case DOD has imposed contradictory cost accounting requirements on Boeing and DOD itself has indicated how such a problem is to be resolved. After promulgation in 1972 of Defense Procurement Circular 99, the ASPR Subcommittee stated that [s]hould there be a conflict with respect to allocability between the ASPR and the CAS, the former regulation will be superseded. ASPR Subcommittee 1975 Memorandum at 11. Resolving the conflict in this manner comports with the authority of DOD to promulgate rational procurement policies. To hold otherwise would force this court to sanction DOD exercising its procurement authority in an arbitrary and capricious manner by completely ignoring a particular cost accounting standard. That is not the law of this court. As Judge Davis stated in Westinghouse Electric Corp. v. United States, 782 F.2d 1017, 1020 (Fed.Cir.1986) in discussing DOD's financing authority under 10 U.S.C. Sec. 2307: That [financing] power exists independently and is not drawn from the statute creating and implementing the CASB, though exercise of that power may conceivably be defeated or modified by a particular cost accounting standard. Id.