Raytheon Company

Material Facts

• Raytheon maintained the Raytheon Salaried Plan for salaried employees and used the Long Range Yield Method to calculate the plan's actuarial value of assets from 1978 to 1 January 2004.
• Raytheon proposed changing the actuarial asset valuation method to the 5-Year Smoothed Market Value Method with Phase-In and proposed a change in the plan's funding method.
• The CACO approved the proposed accounting practice changes and initially determined that no cost or price adjustments were necessary because there was no increased cost in aggregate to the Government.
• Raytheon implemented the accounting practice changes on 1 January 2004.
• Contract 0020 was a negotiated cost-plus-incentive-fee contract for specified services in connection with the Patriot missile system.
• Contract 0197 was a negotiated firm fixed-price contract for various electronic parts and services.
• Both representative contracts were CAS-covered and included the FAR 52.230-2 COST ACCOUNTING STANDARDS clause.
• The accounting change affected all of Raytheon's CAS-covered contracts in force on 1 January 2004.
• The DCAA audit evaluated Raytheon's General Dollar Magnitude estimate for the cost impact of the accounting change.
• The CACO's final decision adopted the DCAA audit's conclusion that the accounting change resulted in an increased cost to the Government in the aggregate.

Parties

Appellant

Raytheon Company

Contract Number

DAAHO 1-03-C-0020; DAAHO 1-03-C-0 197