                 ARMED SERVICES BOARD OF CONTRACT APPEALS

Appeal of --                                  )
                                              )
Alaska Aerospace Corporation                  )          ASBCA No. 59794
                                              )
Under Contract No. HQ0006-03-D-0043           )

APPEARANCES FOR THE APPELLANT:                           Max D. Garner, Esq.
                                                         Adam W. Cook, Esq.
                                                         Leila R. Kimbrell, Esq.
                                                          Birch Horton Bittner & Cherot
                                                          Anchorage, AK

APPEARANCES FOR THE GOVERNMENT:                         E. Michael Chiaparas, Esq.
                                                         DCMA Chief Trial Attorney
                                                        Arthur M. Taylor, Esq.
                                                         Trial Attorney
                                                         Defense Contract Management Agency
                                                         Chantilly, VA

                  OPINION BY ADMINISTRATIVE JUDGE MELNICK

        This appeal involves a contract awarded to appellant, Alaska Aerospace
Corporation (AAC), 1 for support services and use of the Kodiak Launch Complex in
Alaska. The government partially disallowed costs for employee pension plan
contributions in AAC's fiscal year 2008 (FY08) cost proposal and it seeks a total of
$302,637 to recover the disallowed costs. AAC has appealed the contracting officer's
final decision (COFD) demanding that amount. The parties have submitted the appeal for
decision on the written record pursuant to Board Rule I I. We sustain the appeal.

                                   FINDINGS OF FACT

       I. On 29 August 2003, the Missile Defense Agency awarded Contract
No. HQ0006-03-D-0043 to AAC for support services and use of the Kodiak Launch Complex
in Alaska. The contract was a cost-plus-fixed-fee, indefinite-delivery/indefinite-quantity
contract. (R4, tab I)

1
    The contract was originally awarded to the Alaska Aerospace Development Corporation
        (R4, tab I at G-I ). In 2009, the State of Alaska dropped the word "Development"
        from the name of the corporation (Bd. corr. Itr. dtd. I6 March 20I5). For purposes
        of this appeal, the Board need not determine the extent to which AAC is part of the
        State of Alaska.
       2. The contract incorporated by reference Federal Acquisition Regulation (FAR)
clause 52.216-7' ALLOWABLE COST AND PAYMENT (DEC 2002), which allows for the
reimbursement of contributions to employee pension plans (R4, tab 1 at G-21 ).

       3. On 18 December 2008, AAC submitted its FY08 Incurred Cost Proposal (R4,
tab 12 at G-92). The proposal included costs for employee pension plan contributions that
were paid by both AAC and the State of Alaska for AAC's employees (R4, tab 8 at G-80). 2

       4. By letter dated 16 December 2014, the contracting officer issued a COFD
disallowing $302,637 in employee pension plan contributions that were paid by the State
of Alaska on AAC's behalf, in concurrence with conclusions in an underlying audit report
prepared by the Defense Contract Audit Agency (DCAA). The contracting officer then
demanded payment of$302,637 based on FAR clause 52.242-3(d), PENALTIES FOR
UNALLOW ABLE COSTS (MAY 2001 ). The COFD did not state that the government had
previously paid AAC, only that the contracting officer was imposing a penalty. (R4,
tab 15 at G-117-18) However, the DCAA audit report states that the questioned costs in
AAC's FY08 proposal are not subject to penalty and that "AAC did not claim any indirect
rates or costs in FY 2008" (R4, tab 12 at G-94).

        5. AAC timely appealed to this Board on 14 January 2015.

                                       DECISION

        Although the COFD demanded $302,637 from AAC under the Penalties for
Unallowable Costs clause (finding 4), the government admitted in its answer that penalties
are not an issue in this appeal (answer if 3). Instead, the government argues that it is
entitled to recover that amount because the government paid that amount to AAC as
reimbursement of employee pension plan contributions and AAC did not incur those
charges since the State of Alaska made the contributions, not AAC. AAC counters that it
did incur those charges since AAC is a corporation run by the State of Alaska.
Furthermore, AAC argues that the government is not entitled to recovery as it never paid
any of the claimed amount to AAC. AAC states that the employee pension plan
contributions were included at the end of FY08 in AAC's Incurred Cost Proposal and
were not a part of any invoices that were paid by the government.

        Because the government is seeking recoupment of money it allegedly paid to AAC,
this is a government claim. See Brunswick Corp., ASBCA No. 26691, 83-2 BCA
if 16,794 at 83,483. As such, the government bears the burden of proof. See Eaton Corp.,
ASBCA No. 34355, 93-2 BCA if 25,743 at 128,096, ajf'd, 26 F.3d 140 (Fed. Cir. 1994)


2
    Neither the government nor AAC introduced the actual FY08 Incurred Cost Proposal
        into the record.

                                            2
(table). The government also has the burden of establishing that overpayments have been
made. Foreman Industries, Inc., ASBCA No. 23948, 80-2 BCA ~ 14,501at71,491.

        The government tries to assert that the COFD contains the necessary evidence to
allow recoupment but upon closer inspection, the COFD attempts to impose a penalty, not
recoupment as the basis for the demand for payment (finding 4). Even ifthe COFD
stated that the government paid the money to AAC that it now seeks to recover, the
findings of fact in the decision itself are not binding upon the parties and are not entitled
to any deference. Wilner v. United States, 24 F.3d 1397, 1401 (Fed. Cir. 1994) (en bane);
Precision Specialties, Inc., ASBCA No. 48717, 96-1BCA~28,054 at 140,087 (final
decision has no presumptive evidentiary weight and is not binding on the Board);
41 U.S.C. § 7103(e). The government has proffered no evidence that it reimbursed AAC
any amount for FY08 employee pension plan contributions which were paid by the State
of Alaska on AAC's behalf. 3 The government has not met its burden of proving its claim.

        The appeal is sustained.

        Dated: 13 September 2016



                                                  MARK A. MELNICK
                                                  Administrative Judge
                                                  Armed Services Board
                                                  of Contract Appeals

I concur                                          I concur




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




3
    The Board expresses no opinion as to whether the pension plan contributions at issue in
        this appeal are allowable costs.

                                              3
       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. 59794, Appeal of Alaska Aerospace
Corporation, rendered in conformance with the Board's Charter.

      Dated:



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




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