Government’s Share of Segment Closing Costs Nearly $60 Million

The Court of Federal Claims released its third opinion in Raytheon Co. v. U.S., in which the court granted the contractor segment closing adjustments related to the sale of two business segments. The post-trial opinion, authored by Judge Firestone, found the contractor’s claims were not barred by waivers in novation agreements involving two closed segments. The court also found the contractor’s calculation of the government’s share of segment closing adjustments complied with the CAS 413-50(c)(5) requirements for “readily determinable data” and factually supported assumptions. However, the contractor erred as a matter of law for failing to follow CAS 413-50(c)(12) in allocating pension assets to one of the closed segments. With regard to any pension surplus associated with that closed segment, the court lacked jurisdiction to determine and set-off any surplus claimed by the government because the government did not provide a contracting officer’s decision on those claims.

The case will be covered in full in upcoming reports of Wolters Kluwer’s Government Contracts Reports and Cost Accounting Standards Guide.