Court Opinion

ID: 9486787
Source: CourtListenerOpinion
Date Created: 2023-08-05 12:00:09.549222+00
Date Added: 2024-06-11T17:51:56.126097
License: Public Domain

NIES, Circuit Judge,
concurring in part.
I concur on two points in the majority opinion. First, I agree that this Court has jurisdiction to hear the appeal. Second, I agree that the Board properly held that GM failed to disclose its 1975-79 method and that the undisclosed 1975-79 method caused increased costs to the government compared with the disclosed pre-1974 method. GM *1384must now rebate the difference between amounts received from the government and amounts that would have been paid using the pre-1974 method.
The Board held that the pre-1974 method is the correct method to measure the amount of Indiana taxes that GM paid and that GM’s failure to disclose the 1975-79 method caused increased cost to the government. Since we affirm the Board’s conclusion concerning increased costs due to the failure to disclose, we do not need to reach the issue of whether GM’s proposed claim method is correct or whether the disclosed pre-1974 method is correct. The regulations afford a contractor an opportunity to change its disclosed accounting method, but GM failed to follow that path.
Although the majority purports to reverse and remand, the result is that we are affirming on one of the grounds relied upon by the Board. Moreover, the damage calculation in the majority’s “reversal” is the same as the Board’s damage calculation. The Board also fixed the damages at the difference between the amounts received under the undisclosed 1975-79 method and the disclosed pre-1974 method.
GM argues that it is entitled to an upward cost adjustment because the regulations are mandatory on both the government and the contractor. GM believes that since it under-allocated its true tax cost, the regulations mandate an equitable adjustment in its favor. However, the fallacy in GM’s reasoning is that GM need not include any taxes in its costs if GM so chooses. The regulations are mandatory in the sense of setting the maximum amount. Here, GM included a smaller amount for taxes than, arguendo, it was entitled to charge. In that situation, the regulations require GM to “follow consistently the cost accounting practices disclosed” and to “agree to an adjustment of the contract price ... if [GM] fails ... to follow any practice disclosed ... and stock failure results in any increased costs paid by the United States.” Armed Services Procurement Regulations 7-104.83(a)(3) & (a)(5) (Jan. 1974) (emphasis added). GM failed to follow the accounting practices disclosed and, therefore, must remit any excess payments over the amount calculated under the disclosed accounting practice.