Northrop Grumman Corporation

Material Facts

• Northrop Grumman’s OSERP was a defined-benefit, nonqualified pension plan for a small number of highly compensated employees.
• The OSERP was curtailed effective December 31, 2014.
• The OSERP’s costs were allocated to numerous government contracts that included FAR 52.215-15, FAR 52.230-2, and FAR 52.233-1.
• Northrop Grumman allocated 81.93% of the OSERP to government contracts for which the CAS calculations applied.
• Northrop Grumman used the RP-2014 mortality table for the curtailment calculation after previously using the RP-2000 table.
• Northrop Grumman adopted the RP-2014 table as part of a company-wide move to use updated mortality information.
• Northrop Grumman paid taxes on OSERP investment income before curtailment and did not receive reimbursement from the trust until after curtailment.
• The OSERP trust reimbursed Northrop Grumman for the estimated tax amount on June 7, 2017.
• DCAA issued an audit report asserting that Northrop Grumman’s reduction of projected investment income for taxes was noncompliant with CAS 412.
• The contracting officer denied Northrop Grumman’s certified claim even though she determined that the government owed Northrop Grumman an amount.
• The contracts at issue included cost-reimbursement contracts.

Parties

Appellant

Northrop Grumman Corporation

Respondent Agency

Defense Contract Management Agency

Contract Number

FA8620-13-D-3014 et al.