               ARMED SERVICES BOARD OF CONTRACT APPEALS

Appeal of --                                 )
                                             )
Symetrics Industries, LLC                    )      ASBCA No. 59297
                                             )
Under Contract No. W58RGZ-07-C-0204          )

APPEARANCES FOR THE APPELLANT:                      David Z. Bodenheimer, Esq.
                                                    Jason C. Lynch, Esq.
                                                     Crowell & Moring LLP
                                                     Washington, DC

APPEARANCES FOR THE GOVERNMENT:                     Raymond M. Saunders, Esq.
                                                     Army Chief Trial Attorney
                                                    Robert B. Neill, Esq.
                                                     Trial Attorney

               OPINION BY ADMINISTRATIVE JUDGE MCILMAIL

                                  INTRODUCTION

       Appellant timely appeals from a contracting officer's final decision claiming
$121,824 plus interest accrued from the date of payment, for alleged defective pricing
under a contract for modem units. The parties have elected to waive a hearing and
submit their cases upon the record pursuant to Board Rule 11. We sustain the appeal.

                                FINDINGS OF FACT

        On 30 August 2007, the Department of the Army awarded a letter contract,
Contract No. W58RGZ-07-C-0204, to appellant, Symetrics Industries, LLC, for the
production of295 Improved Data Modem (IDM) 304 units, (Joint Statement of
Stipulated Facts (stip. 6)). Symetrics submitted a firm-fixed-price proposal (FFP) to
procuring contracting officer (PCO) Hanford Jones on 7 December 2007 (stip. 9).
PCO Jones negotiated the contract price on behalf of the Army, with the assistance of
contract specialist Johnny Coleman (stip. 43). The Defense Contract Audit Agency
(DCAA) assisted PCO Jones in the evaluation of the price proposal by conducting an
audit of the proposal (see stip. 14). DCAA Auditor Sherry Hepfuer conducted that
audit (stip. 14).

        Earlier, on 12 July 2007, the Defense Contract Management Agency (DCMA)
had approved an overhead rate of 179.20% and a General and Administrative (G&A)
rate of 25 .60% for Symetrics's contractor fiscal year (CFY) 2007 (stip. 45). On
7 January 2008, Symetrics submitted a Forward Pricing Rate Proposal (FPRP) to
DCMA (stip. 47). On 23 January 2008, Symetrics submitted to PCO Jones a revised
price proposal for the 295 IDM 304 units (stip. 13). The price proposal identified a
direct labor overhead rate of 182.45% for CFY 2008, a direct labor overhead rate of
186.47% for CFY 2009, and G&A rates of 18.24% for CFY 2008 and CFY 2009 (id.).

        On 4 February 2008, DCAA informed Symetrics that DCAA had been
requested to audit the FPRP, and that DCAA had to complete the audit by 24 February
2008, "for [the price] proposal being audited by Sherry Hepfner" (stip . 51 ). On
7 February 2008, Symetrics sent DCAA the FPRP (stip. 54). The FPRP proposed
overhead rates of 170 .3 8% and G&A rates of 17 .13 % for CFY 2008 and CFY 2009
(stip. 54), lower than the rates identified in the price proposal (stip. 13).

        DCAA Auditor Hepfner audited Symetrics's price proposal for the 295 IDM
304 units (stip. 14). By 21February2008, Auditor Hepfner was aware of the
7 February 2008 FPRP, was aware that the FPRP contained new overhead and G&A
rates (new, at least, since the approval of the CFY 2007 rates) (see stip. 27), and was
aware that the FPRP would likely lead to lower forward pricing rates (stips. 26, 27;
gov't br. at 13). Indeed, on 21February2008, Auditor Hepfner wrote to
ACO Gilmore:

             We are currently auditing the subject proposal for a
             quantity of 295 Improved Data Modem [IDM] 304. This is
             to advise you that on February 7, 2008, Symetrics
             submitted a new Forward Pricing Rate Proposal (FPRP),
             for CFYs 2008 and 2009. Symetrics priced the proposal
             with the new Overhead and General and Administrative
             (G&A rates). We have not audited the FPRP. Therefore,
             we recommend that a clause be included in the FFP
             contract, which will provide for a downward only
             adjustment for any savings that may result from the
             adjustment of the proposed rates after completion of our
             audit of the Symetrics FPRP for CFYs 2008 and 2009,
             direct labor and indirect rates and factors.

(Stip. 27) According to the government, that statement "plainly documents
Ms. Hepfner's mistaken belief at the time that the IDM 304 'proposal' that she was
then auditing was priced using [Symetrics' s] newly updated overhead and G&A rates"
(gov't reply at 9).

        Similar to Auditor Hepfner' s message to ACO Gilmore, on 25 February 2008,
DCAA issued an audit report (Auditor Hepfner is listed as a primary contact for the
report (R4, tab 22 at 11)) on the price proposal that noted that:


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             On February 7, 2008, Symetrics submitted a new Forward
             Pricing Rate Proposal (FPRP), for CFY s 2008 and 2009.
             Symetrics priced this proposal with the new overhead
             (OH) and G&A rates. Therefore, ... we recommend that a
             clause be included in the FFP contract, which will provide
             for a downward only adjustment for any savings that may
             result from the adjustment of the proposed rates after
             completion of our audit of the Symetrics FPRP for CFYs
             2008 and 2009, direct labor and indirect rates and factors.

(Stips. 28, 29) DCAA's report identified rates of 182.45% for CFY 2008 and 186.47%
for CFY 2009, and G&A rates of 18.24% for CFY 2008 and CFY 2009 (R4, tab 22 at 6).

        On 27 March 2008, the day that negotiations to definitize the contract price
commenced (stip. 37), Symetrics submitted its final price proposal revision to the PCO
(stip. 33). Like the 23 January 2008 price proposal and the DCAA audit report, the
27 March 2008 price proposal identified direct labor overhead rates of 182.45% for
CFY 2008 and 186.47% for CFY 2009, and G&A rates of 18.24% for CFY 2008 and
CFY 2009 (stips. 13, 33; R4, tab 22 at 6). Also on 27 March 2008, PCO Jones and
Contract Specialist Coleman memorialized their prenegotiation object"ive (R4, tab 34
at 1). Their prenegotiation memorandum expressly references both the 7 February
2008 FPRP and the DCAA audit report regarding overhead and G&A, but identifies
the overhead and G&A rates that appear in the price proposal (R4, tab 34 at 7). The
prenegotiation memorandum reflects that PCO Jones and Contract Specialist Coleman
erroneously believed that the price proposal used the FPRP rates:

             The contractor proposed the CFY 2008 and CFY 2009 OH
             and G&A rates recently submitted in its FPRP, dated
             February 7, 2008.



             ...DCAA compared the proposed indirect rates to the FPRP
             (as shown in the table below. [sic] DCAA also compared
             actual CFY 2007 OH and G&A rates ...to the indirect rates
             in the contractor's current FPRP and calculated the
             percent increases. No significant variances were noted in
             the evaluation. The results of the analysis of the
             contractor's proposed CFY 2008 to CFY 2009 indirect
             rates are presented in the table below.




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(R4, tab 34 at 7) (Emphasis added) The table referenced in the quotation depicts the
higher overhead and G&A rates for CFY 2008 and CFY 2009 that appear in the price
proposal, not the lower rates for those years that appear in the FPRP (compare R4,
tab 34 at 7 with stip. 54).

       Four days later, on 1 April 2008, the parties agreed to a price of $7,284,435 for
the 295 IDM 304 units (stip. 39). As of that date, Symetrics had not revised its price
proposal to reflect the FPRP overhead and G&A rates, nor had it transmitted those
rates directly to PCO Jones or Contract Specialist Coleman (stips. 41, 43). On 2 April
2008, Symetrics certified in a Certificate of Current Cost or Pricing data that:

              [T]he cost or pricing data ... submitted ... to the Contracting
              Officer or to the Contracting Officer's representative in
              support of Contract No. W58RGZ-07-C-0204 are accurate,
              complete, and current as of 01 April 2008. This
              certification includes the cost or pricing data supporting
              any advance agreements and forward pricing rate
              agreements between the offeror and the Government that
              are part of the proposal.

(Stip. 40)

        On 15 May 2008, the parties entered into Modification No. PZ0007,
definitizing the $7,284,435 price for the 295 IDM units (stip. 44). On 26 February
2014, by then Contracting Officer Coleman issued a contracting officer's final
decision demanding payment of $121,824 in "excess cost," plus interest (stip. 63).
This appeal timely followed on 27 May 2014.

                                       DECISION

        The government contends that Symetrics violated the Truth in Negotiations Act
(TINA), 10 U.S.C. § 2306(a), by failing to provide directly to PCO Jones or Contract
Specialist Coleman the overhead and G&A rates that it submitted to DCAA in its
FPRP. The government has the burden of proving that its personnel who participated
in the proposal evaluation or the negotiation of the contract were not clearly advised of
the relevant cost or pricing data and that they lacked actual knowledge thereof.
Whittaker Corp. (Straightline Manufacturing Division), ASBCA No. 17267,
74-2 BCA if 10,938 at 52,077. Here, the government does not meet that burden.

      As their prenegotiation memorandum expressly memorializes, PCO Jones and
Contract Specialist Coleman negotiated the contract price knowing of the 7 February
2008 FPRP and relying upon what they understood were the FPRP-proposed rates.
DCAA Auditor Hepfner evaluated the price proposal with the same knowledge and


                                            4
understanding. Although the three evidently (at least ultimately) misunderstood what
rates the FPRP proposed, the government points to no evidence that Symetrics
misrepresented the contents of the FPRP, and all PCO Jones, Contract Specialist
Coleman, and Auditor Hepfner had to do to confirm their understanding and discover
their mistake (see gov't reply at 9) was to double-check (or, perhaps, check in the first
place) what rates the FPRP actually proposed against their stated understanding. In
view of the foregoing, we find that the government was aware or should have been
aware of the FPRP-proposed rates; this being so, the government has not proven that
Symetrics did not disclose the FPRP rates within the meaning of the Truth in
Negotiations Act. Cf FMC Corp., ASBCA No. 30069, 87-1BCAiJ19,544 at 98,759
(no TINA violation proven where confractor' s data certification referenced its rate
revision submission, which PCO could have, but did not, check).

       Because the government has not proven a TINA violation, we need not address
the government's contention that Federal Acquisition Regulation (FAR) clause
52.215-10, PRICE REDUCTION FOR DEFECTIVE CERTIFIED COST OR PRICING DATA
(OCT 1997), or FAR 52.215-11, PRICE REDUCTION FOR DEFECTIVE CERTIFIED COST
OR PRICING DATA-MODIFICATIONS (OCT 1997), should be read into the contract
pursuant to the Christian doctrine.

        Explaining that " [i]n its specific pricing proposal for the 295 IDM 304 data
modems at issue here, as of the parties' agreement on price, April 1, 2008, Symetrics
did not transmit to PCO Hanford Jones the updated indirect proposal submission for
CFYs 2008 and 2009," the government contends that "it was Symetrics ' failure to
follow the requirement set out in FAR 15.407-3(a) to ' identify the latest cost pricing
data already submitted in accordance with the [forward pricing rate] agreement' in its
specific pricing proposal for definitization of its letter contract for 295 IDM 304 data
modems that resulted in Symetrics' failure to meaningfully disclose to the contracting
officer the cost or pricing data at issue in this appeal" (gov't mot. at 11 ).
FAR 15.407-3(a) provides:

              When certified cost or pricing data are required, offerors
              are required to describe any forward pricing rate
              agreements (FPRAs) in each specific pricing proposal to
              which the rates apply and to identify the latest cost or
              pricing data already submitted in accordance with the
              FPRA. All data submitted in connection with the FPRA,
              updated as necessary, form a part of the total data that the
              offeror certifies to be accurate, complete, and current at the
              time of agreement on price for an initial contract or for a
              contract modification.




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       The government's argument does not persuade us that Symetrics violated TINA
by not identifying the FPRP rates in its price proposal. We have said in the context of
TINA that:

              Disclosure is not confined to a formal , written submission.
              Instead the contractor' s disclosure obligation is fulfilled if
              the Government obtains the data in question in some other
              manner or had knowledge. It must be meaningful,
              regardless of the form it takes. Whether there has been
              meaningful disclosure depends upon application of a ·'rule
              of reason" to the particular circumstances of [J each case.

Appeal of Alliant Techsystems, inc., ASBCA Nos. 51280, 47626, 00-2 BCA ii 31 ,042
at 153,298-99 (internal citations and alterations omitted). The government cites no
judicial or Board authority that FAR 15.407-3(a) governs a TINA disclosure, even
though the regulation dates to 1997. 62 Fed. Reg. 51 ,224, 51 ,249-50 (Sept. 30, 1997).
(McDonnell Douglas Helicopter Systems, ASBCA No. 50341 , 99-2 BCA ii 30,546,
which the government cites immediately after if not in support of this argument (gov't
mot. at 12), does not address FAR 15.407-3.) On the facts of this case, where the
government personnel (including the contracting officer) who evaluated the price
proposal were all aware of the FPRP and expressly purported to rely upon it for rate
information in their evaluation of the price proposal, we are satisfied that the FPRP
rates at issue in this appeal were meaningfully disclosed to the government.

                                     CONCLUSION

       For all these reasons, we sustain the appeal.

       Dated: 13 August 2015




                                                 ~~Administrative Judge
                                                   Armed Services Board
                                                   of Contract Appeals

(Signatures continued)




                                             6
I concur                                         I concur




Administrative Judge
                                                 RJC~CKLEFORD
                                                 Administrative Judge
Acting Chairman                                  Vice Chairman
Armed Services Board                             Armed Services Board
of Contract Appeals                              of Contract Appeals


      I certify that the foregoing is a true copy of the Opinion and Decision of the
Armed Services Board of Contract Appeals in ASBCA No. 59297. Appeal of
Symetrics Industries, LLC, rendered in conformance with the Board's Charter.

       Dated:



                                                 JEFFREY D. GARDIN
                                                 Recorder, Armed Services
                                                 Board of Contract Appeals




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