Raytheon Company and Raytheon Missile Systems

Material Facts

• Raytheon and its business segments submitted final indirect cost proposals for 2007 and 2008.
• DCAA audited the proposals and issued audit reports questioning costs as unallowable or expressly unallowable.
• Raytheon maintained policies, training, timekeeping procedures, and internal controls addressing lobbying and other unallowable costs.
• Raytheon’s Government Relations personnel recorded lobbying time through paper timesheets and an online Lobbying Compliance Tool.
• Corporate Development used a bright-line practice under which acquisition and divestiture costs became unallowable after specified transaction milestones.
• RMS treated invention-disclosure preparation and review costs as engineering overhead until a decision to pursue a patent.
• RMS charged outside legal costs, including patent-related costs, to its G&A expense pool and withdrew costs it classified as unallowable.
• Raytheon used standard coach airfare available to the general public as its airfare baseline during the period at issue.
• RMS provided documentation supporting recruiting travel, including hiring-event schedules, applicant records, expense statements, and travel invoices.
• Raytheon distributed logo-bearing items such as mouse pads, pens, pencils, coffee mugs, and possibly T-shirts at collegiate job fairs.
• Raytheon voluntarily withdrew 85% of its 2008 reminder-item costs.
• The contracting officers’ decisions included government claims for disallowed costs, penalties, interest, and alleged CAS 405 noncompliance.

Parties

Appellant

Raytheon Company and Raytheon Missile Systems

Respondent Agency

Defense Contract Management Agency

Contracting Agency

Defense Contract Management Agency

Contract Number

W15P7T-07-C-P207; W31P4Q-07-C-0159