Kellogg Brown & Root Services, Inc.

Material Facts

• The contracts being performed in 2006 included cost-reimbursement and time-and-materials contracts.
• The applicable contracts contained Federal Acquisition Regulation 52.230-2, COST ACCOUNTING STANDARDS (APR 1998).
• The contractor allocated risk-management insurance costs and related expenses through multiple home-office, segment, and cost-objective allocation levels.
• DCAA questioned the contractor's insurance-cost allocation methods in 2006 as potentially noncompliant with CAS 401, CAS 403, CAS 416, and CAS 418.
• DCAA's 2010 audit characterized the contractor as noncompliant with CAS 416 and estimated that insurance costs had been misallocated during fiscal year 2006.
• The DCMA DACO's 14 August 2012 COFD concluded that the contractor was noncompliant with CAS 416 and required corrective action and a General Dollar Magnitude proposal.
• The contractor submitted a General Dollar Magnitude proposal on 27 September 2012.
• The DACO's 29 October 2012 COFD asserted that the contractor failed to comply with CAS 416 and CAS 403 in allocating insurance costs and related expenses.
• The government's evidence stated that additional information was needed to determine the contractor's allocation methodology and the monetary impact of the alleged noncompliance.
• The parties disputed whether earlier submissions gave the government sufficient information to know or should have known of the alleged CAS noncompliance.

Parties

Appellant

Kellogg Brown & Root Services, Inc.

Respondent Agency

Defense Contract Management Agency

Contracting Agency

Army

Contract Number

DAAA09-02-D-0007