Raytheon Company

Material Facts

• Raytheon's corporate home office used incentive compensation, restricted stock, and long-term performance plans as elements of employee compensation.
• Raytheon submitted overhead cost and final indirect cost rate materials identifying compensation-related costs among its incurred or proposed indirect costs.
• DCAA reviewed Raytheon's bonus plans, stock plans, long-term performance plan, overhead cost submissions, and forward pricing materials.
• DCAA's 29 September 2003 memorandum concluded that the CY 2002 bonus and incentive compensation costs were allowable under FAR 31.205-6(f).
• DCAA later asserted that Raytheon had failed to withdraw a proportionate share of compensation costs paid to employees engaged in expressly unallowable activities.
• The contracting officer asserted CAS 405 increased-cost claims and FAR penalties for CYs 2002-2009 in ASBCA No. 57576.
• The LTPP's TSR metric determined shares awarded in part by reference to changes in Raytheon's stock price.
• Raytheon did not include LTPP costs in its CY 2004 or CY 2005 overhead cost submissions because the costs were incurred only after a full three-year cycle.
• The contracting officer asserted FAR unallowable-cost and penalty claims concerning TSR/LTPP costs for CYs 2004-2006 in ASBCA No. 57679.

Parties

Appellant

Raytheon Company

Respondent Agency

Defense Contract Management Agency

Contract Number

N00019-06-C-0310; FA8807-06-C-0004