Northrop Grumman Corporation

Material Facts

• A class action lawsuit was filed in the U.S. District Court for the Eastern District of Virginia, and the parties reached a settlement approved by the court.
• Northrop informed DCMA that it believed the litigation and settlement costs were allowable and planned to claim them in forward pricing rates and incurred costs submissions.
• DCMA stated that the settlement costs were expenditures in connection with mergers and acquisitions and raising capital and that costs connected with defending or settling the lawsuit were unallowable as directly associated costs.
• DCMA directed Northrop to exclude the costs from its 2019-2023 Sector Home Office Allocation Submission and from billing, claims, or proposals applicable to a government contract.
• DCMA's letter did not advise Northrop that it was a final decision or notify Northrop of appeal rights under the applicable FAR provisions.
• Northrop filed a notice of appeal asserting that DCMA's letter was a final decision asserting a government claim concerning the unallowability of costs incurred defending and settling the litigation.

Parties

Appellant

Northrop Grumman Corporation

Respondent Agency

Defense Contract Management Agency

Contracting Agency

Defense Contract Management Agency

Contract Number

NNM07AA75C