Pratt & Whitney, a division of Raytheon Technologies Company

Material Facts

• Pratt acquired commercial engine parts from collaborators that shared in engine-program revenues and expenses.
• Pratt assigned collaboration parts MTC values for internal purposes and used MTC in its material overhead allocation base beginning January 1, 2005.
• Pratt paid collaborators net revenue share rather than MTC and did not make monthly payments of MTC for parts.
• Pratt discontinued crediting Drag to certain overhead pools beginning January 1, 2005.
• DCAA audits challenged Pratt’s use of MTC and its treatment of Drag credits under CAS 418 and FAR 31.201-5.
• The parties executed a Settlement Agreement and a separate APA on June 5, 2006.
• The APA addressed the 2005 Forward issues, stated that MTC was noncompliant but not presently material, waived certain cost impacts through the agreement date, and provided that the government would not require Drag credits prospectively subject to stated conditions.
• The APA was not incorporated into the captioned contract and did not specify its duration.
• A July 27, 2010 forward pricing audit report stated that the MTC noncompliance was significant enough to materially impact the material overhead rate.
• A September 22, 2011 CAS 418 noncompliance audit compared MTC to gross revenue share and concluded that MTC was not Pratt’s actual direct material cost.
• The December 24, 2013 COFD alleged that Pratt used MTC estimates instead of revenue share payments and asserted a claim of $210,968,414.
• Pratt continued to use MTC in its Manufacturing Operations material overhead pool as of the hearing.

Parties

Appellant

Pratt & Whitney, a division of Raytheon Technologies Company

Respondent Agency

Defense Contract Management Agency

Contracting Agency

Defense Contract Management Agency

Contract Number

N00019-10-C-0005