BAE Systems Tactical Vehicle Systems LP

CourtArmed Services Board of Contract Appeals
DecidedJuly 25, 2016
DocketASBCA No. 59491, 60433
StatusPublished

This text of BAE Systems Tactical Vehicle Systems LP (BAE Systems Tactical Vehicle Systems LP) is published on Counsel Stack Legal Research, covering Armed Services Board of Contract Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
BAE Systems Tactical Vehicle Systems LP, (asbca 2016).

Opinion

ARMED SERVICES BOARD OF CONTRACT APPEALS

Appeals of -- ) ) BAE Systems Tactical Vehicle Systems LP ) ASBCA Nos. 59491, 60433 ) Under Contract No. W56HZV-08-C-0460 )

APPEARANCES FOR THE APPELLANT: David Z. Bodenheimer, Esq. Brian Tully McLaughlin, Esq. Skye Mathieson, Esq. Crowell & Moring LLP Washington, DC

APPEARANCES FOR THE GOVERNMENT: Raymond M. Saunders, Esq. Army Chief Trial Attorney CPT Harry M. Parent III, JA Robert B. Neill, Esq. MAJ Julie A. Glascott, JA, Trial Attorneys

OPINION BY ADMINISTRATIVE JUDGE O'SULLIVAN ON THE GOVERNMENT'S MOTION TO STA Y OR AL TERNA TIVEL Y TO SUSPEND PROCEEDINGS

These appeals contest a government claim that appellant, BAE Systems Tactical Vehicle Systems LP (BAE TVS), provided defective cost or pricing data to the Army in connection with 2008 negotiations to definitize a contract award for 10,000 military trucks and trailers known as the Family of Medium Tactical Vehicles (FMTV). The amount claimed by the government in a contracting officer's final decision (COFD) dated 15 July 2014 is $56,386,953 (net of accepted offsets) plus interest. (R4, tab 240 at 1) On 14 August 2014, the Board docketed BAE TVS' s appeal from the COFD as ASBCA No. 59491. On 2 February 2016, the Board docketed BAE TVS's appeal from the contracting officer's (CO's) deemed denial of its revised offset proposal as ASBCA No. 60433.

On 28 March 2016, the government moved the Board to stay or alternatively suspend proceedings due to the pendency of a civil False Claims Act case in the federal district court for the Eastern District of Michigan. United States v. BAE Systems Tactical Vehicle Systems, LP, No. 15-CV-12225 (E.D. Mich.). The parties had completed written discovery in the Board proceedings and were engaged in taking depositions at the time the motion was filed. The Board suspended the remaining depositions through 3 1 July 2016 to allow time to decide the government's motion, but retained the existing dates for the hearing, which is scheduled to commence 17 January 2017. Briefing on the government's motion was completed at the end of May, 2016.

STATEMENT OF FACTS FOR PURPOSES OF THE MOTION

Contract No. W56HZV-08-C-0460 (the contract) was awarded to BAE TVS on 30 May 2008 by the U.S. Army TACOM LCMC, Warren, Michigan, as an undefinitized contractual action to procure FMTV vehicles (8,400 trucks and 1,600 trailers), 10,000 additional option vehicles and supporting kits, systems tactical support, and testing requirements. The current total value of the contract is $4,087,745,756.09. (R4, tab 1 at 1; answer ir 6) BAE TVS and its predecessor companies delivered FMTV vehicles under contract with the Army from the inception of the program ( 1991) through the last vehicle delivery in December 2013 (compl. 1 and answer ir 7). During the period 2006-2010, FMTV production rates rose to unprecedented levels due to the wars in Iraq and Afghanistan, and emerging threats from mines and improvised explosive devices led to major configuration changes, which in tum caused many engineering change proposals and unpriced contractual actions. (Compl. and answer ir 8)

The Defective Pricing Allegations

After the May 2008 award of the FMTV contract, the Army and BAE TVS commenced price negotiations, which were concluded on 22 September 2008. On 24 September 2008, BAE TVS executed a Certificate of Current Cost or Pricing Data stating that the cost or pricing data it provided the government during price negotiations were current, accurate, and complete as of 4 September 2008 (the effective certification date). (R4, tab 240 at 2) On 15 July 2014, following a post-award audit by the Defense Contract Audit Agency (DCAA), the Army CO issued a final decision finding defective pricing with respect to the FMTV contract and demanding repayment in the amount of $56,386,953 plus interest (id. at 1). The areas of defective pricing found were:

Vendor Quotations-$23,429,251 price adjustment. DCAA determined that BAE TVS received updated quotations for 40 different part numbers up to and including 4 September 2008 but failed to disclose these updated quotations to the government. (Id. at 2)

Purchase Orders-$1,096, 164 price adjustment. DCAA determined that, prior to 4 September 2008, BAE TVS issued purchase orders to vendors for 11 parts at lower prices than disclosed to the government. (Id. at 3)

1 All references to appellant's complaint herein are to its original complaint, filed 16 September 2014.

2 Currency Exchange Rates-$1,862,823 price adjustment. DCAA determined that BAE TVS did not use the most current exchange rate (USD to Euro) in the costs proposed with respect to two part numbers. BAE TVS used a rate of 1.5846 in its costs proposed in April of 2008. In August 2008 it had checked exchange rates online, at which time the rate was 1.467220, but it did not update the proposed costs for the two parts. (Id.)

FABSHOP Rates-price adjustment of $11,332,322. DCAA found that BAE TVS had not updated its proposed prices for 215 parts that BAE TVS planned to manufacture in house to reflect the labor rates agreed on in a recently finalized forward pricing rate agreement (FPRA). (Id.)

Historical Data-price adjustment of $227 ,523. DCAA found that BAE TVS did not disclose the most "relevant" historical data with respect to one part called a thrust washer, namely a purchase order issued before the certification date at a unit price considerably below BAE TVS's proposed unit prices for the part. (Id. at 3-4)

Parts Proposed in Excess of Contract Requirements-price adjustment of$12,427,129. DCAA reviewed engineering drawings that called out quantities of parts needed for the contract and determined that some of the parts proposed by BAE TVS were not required and others were required in a quantity less than that proposed. (Id. at 4)

Related Overhead and General and Administrative (G&A) Expense, Cost of Money and Profit Applicable to Defectively-Priced Direct Material-additional adjustment of $11,271,709, computed by applying the specified rates to the total of $50,375,212 in alleged defectively priced direct material. (Id. )[21

BAE TVS contests the government's defective pricing allegations in the following major respects: first, it contends that DCAA (and the CO, who adopted DCAA's determinations) used the wrong bill of material (BOM) as the baseline for the defective

2 The resulting total of $61,646,921 was reduced by $5,259,968 of accepted offsets to match the claimed amount of $56,386,953 (R4, tab 240 at 1).

3 pricing allegations. While DCAA used a BOM dated 11 September 2008 (which was generated after the effective certification date of 4 September 2008), it should have used the BOM generated when BAE TVS, at the direction of the CO, conducted a "sweep" of cost or pricing data that concluded on 24 September 2008 and incorporated the data from the sweep into a superseding BOM (hereinafter the "sweep BOM") that was disclosed to the Army by uploading it on 24 September 2008 to a file transfer protocol (FTP) website used to share data with the Army during price negotiations (compl. ~~ 13, 25-26, 50-53).

Second, BAE TVS contends, specifically with respect to the government's allegations regarding undisclosed more recent quotations and purchase orders showing lower prices, that (a) the government relies on vendor quotations and purchase order prices that are the same as, or higher than, the prices in the sweep BOM; (b) the government relies on quotations from unqualified vendors; and (c) the government relies on quotations received after the certification date ( compl. ~~ 54-56).

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