              ARMED SERVICES BOARD OF CONTRACT APPEALS

Appeal of--                                  )
                                             )
Northrop Grumman Corporation                 )       ASBCA No. 57625
                                             )
Under Contract No. N68936-05-C-0059          )

APPEARANCES FOR THE APPELLANT:                      Stephen J. McBrady, Esq.
                                                    Terry L. Albertson, Esq.
                                                    J. Catherine Kunz, Esq.
                                                      Crowell & Moring LLP
                                                      Washington, DC

APPEARANCES FOR THE GOVERNMENT:                      E. Michael Chiaparas, Esq.
                                                      DCMA Chief Trial Attorney
                                                     Robert L. Duecaster, Esq.
                                                     Trial Attorney
                                                      Defense Contract Management Agency
                                                      Chantilly, VA

    OPINION BY ADMINISTRATIVE JUDGE DELMAN ON APPELLANT'S
                 MOTION FOR RECONSIDERATION

        Northrop Grumman Corporation (appellant or NGC) has filed a timely motion
seeking reconsideration of our decision denying this appeal on entitlement. Northrop
Grumman Corp., ASBCA No. 57625, 14-1BCA~35,501 (NGC). The government
has filed in opposition to this motion. Familiarity with our decision is presumed.

       InADTConstruction Group, Inc., ASBCA No. 55358, 14-1BCA~35,508
at 174,041, we recently stated the well settled law pertaining to the review of a motion
for reconsideration:

              [The moving party] must demonstrate a compelling reason
              for the Board to modify its decision. J.F. Taylor, Inc.,
              ASBCA Nos. 56105, 56322, 12-2 BCA ~ 35,125. In
              determining whether a party has done so, we look to
              whether there is newly discovered evidence or whether
              there were mistakes in the decision's findings of fact, or
              errors oflaw. Id. Motions for reconsideration are not
              intended to provide a party with an occasion to reargue
              issues that were previously raised and denied. West Wind
              Technologies, Inc., ASBCA No. 57436, 11-2 BCA
              ~ 34,859.


Applying these well established principles, we address appellant's motion below.

Interpretation of FAR 31.205-6(0)(2), (o)(3)

       Appellant alleges error in the Board's interpretation of FAR 31.205-6(0)(2) and
(o)(3) with respect to the allowablity of appellant's claimed costs, basically asserting
the same arguments considered and rejected in the Board's decision. For example,
appellant re-argues that under Section (o)(2) "a non-GAAP method could be used to
calculate PRB costs, but the amount calculated in accordance with GAAP would serve
as a ceiling on the amount that is allowable" (app. mot. at 3). The Board's decision
specifically addressed and rejected this interpretation as unsupported by the plain
language of the regulation. NGC, 14-1BCA~35,501 at 174,023.

       Appellant also expends considerable effort in its motion addressing what it did
and did not acknowledge in its brief, arguing that while it did acknowledge that the
DEFRA method it used to measure and assign the PRB costs did not comply with
GAAP, it did not acknowledge that Section (o)(2) of the regulation required that PRB
costs must be calculated in accordance with GAAP, that is, Section (o)(2) allows a
contractor to use a non-GAAP method to calculate PRB cost. This argument was just
another way of tendering the same interpretation above that the Board rejected as
being inconsistent with the plain language of the regulation. Appellant's repetition of
arguments in support of an interpretation that the Board has rejected is not a basis for
reconsideration.

Government Awareness of Use of DEFRA and "Assurances" of FAR Compliance

        Appellant alleges that the Board erred in failing to find that the government was
aware of appellant's use of DEFRA, yet repeatedly and consistently notified appellant
that there was no FAR noncompliance. Again, this contention was previously raised
by appellant and rejected in the Board's decision. We stated that the government's
written responses to appellant's Disclosure Statements did not represent or assure
appellant that its DEFRA practice was FAR compliant. To the contrary, the
government unequivocally put appellant on notice that its disclosed practices were not
approved:

              However, instances of noncompliance not detected during
              this review may be discovered during future review ofyour
              cost accounting practices. These disclosed practices shall




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              not by virtue ofsuch disclosure be deemed proper,
              approved or agreed to practices.... [Emphasis added]

 NGC, 14-1BCAif35,501at174,019. Appellant has established no basis for
reconsideration.

The GAO Review of 2002

        Appellant contends that the Board erred by failing to accord appropriate weight
to the 2002 GAO Review. The Board addressed the GAO Review in its decision,
finding that it was entitled to "little, if any, weight with respect to the allowability of
the costs in issue under the FAR." NGC, 14-1 BCA if 35,501at174,023. A party's
disagreement with the Board as to the weight accorded the evidence is not an
appropriate ground for reconsideration. JF. Taylor, Inc., ASBCA Nos. 56105, 56322,
12-2 BCA if 35, 125 at 172,454.

Course of Dealing

      Appellant contends that the Board erred in failing to find a "course of dealing"
between the parties in support of the appellant's FAR interpretation (app. mot. at 12).

        The Board denied any course of dealing, and the record supports this
conclusion. The record shows that neither the DCE nor the DCAA manifested any
agreement with appellant that its use of DEFRA to measure and assign PRB costs and
that its PRB funding practices were FAR compliant. Rather, as stated above, the DCE
clearly advised appellant that its disclosures in its Disclosure Statements, e.g., the use
of DEFRA to measure its PRB costs, should not be viewed as a government approval
of or agreement with such practices. The record is equally clear that the government
did not, at any time, agree to accept or allow the unfunded prior year PRB costs which
are the subject matter of appellant's claim.

       Appellant has not established any error in the Board's decision.

Claim of Estoppel Against the Government

       Appellant acknowledges that we correctly cited the governing law at this Board
with respect to a party's heavy burden to prove estoppel against the government,
SplashNote Systems, Inc., ASBCA No. 57403, 12-1BCAif34,899 at 171,609, recon.
denied, 12-1BCAif35,003. Appellant argues that it met the SplashNote test, and the
Board committed error by failing to so conclude.




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As we stated in SplashNote:

              Equitable estoppel requires a showing of: 1) misleading
              conduct leading another to reasonably infer that rights will
              not be asserted against it; 2) reliance on this conduct; and
              3) material prejudice as a result of this reliance. Mabus v.
              General Dynamics C4 Systems, Inc., 633 F.3d 1356, 1359
              (Fed. Cir. 2011). When estoppel is asserted against the
              government, a showing of affirmative misconduct is
              required in addition to these elements. United Pacific
              Insurance Co. v. Roche, 401 F.3d 1362, 1366 (Fed. Cir.
              2005). [Emphasis added]

SplashNote, 12-1BCAif34,899 at 171,609.

      The Board's decision addressed the SplashNote criteria. Appellant has not
persuaded us that the Board's analysis was in error.

       We stated that "appellant has not shown any government misleading conduct
with respect to the unfunded PRB costs in issue from which appellant could
reasonably infer that the government would not assert its rights against appellant with
respect to these costs." NGC, 14-1BCAif35,501 at 174,023. The record supports
this conclusion. The government did not misrepresent its position on the unfunded
PRB costs claimed by appellant here.

        With respect to appellant's use of DEFRA, appellant's constant refrain that the
government made "repeated representations to NGC that its practices were compliant"
(app. mot. at 13) and NGC relied upon "the Government's repeated approval of its
practice" (id. at 15) and the government "repeatedly assured NGC that its practices
were compliant" (id. at 18) is simply not supported by the record. Indeed, the reverse
is true. As we stated above, the DCE placed appellant on notice that its disclosed
practices were not approved. NGC, 14-1BCAif35,501at174,019.

       There is no evidence of misleading DCE conduct that would lead the contractor
to reasonably infer that government rights would not be asserted against it. The Board
did not err in concluding that appellant failed to meet the first prong of the SplashNote
test.

        Nor did the Board err in concluding that appellant failed to meet the last prong
of the SplashNote test, that is, proof of government affirmative misconduct. As we
stated in RGW Communications, Inc., d/b/a Watson Cable Company, ASBCA
Nos. 54495, 54557, 05-2 BCA if 32,972 at 163,335-36:



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             [C]ourts that have addressed the affirmative misconduct
             element have applied a "demanding definition." .. .In this
             instance, a showing of affirmative misconduct must
             overcome the presumption that the government has acted
             in good faith. That showing requires clear and convincing
             evidence ....

                    ...Even a false statement has been found not to
             constitute affirmative misconduct because the proponent of
             equitable estoppel had not shown a "deliberate lie" or a
             "pattern of false promises." [Citations omitted]

        To support its claim of affirmative government misconduct, appellant alleges
that the record establishes that government personnel who interacted with appellant,
presumably the DCAA auditor and the DCE, "deliberately and consciously decided to
conceal" from appellant (app. mot. at 14) their understanding of the regulation.
Assuming, for argument's sake only, that such conduct would meet the requirement of
affirmative government misconduct, the Board is not persuaded that the record
supports appellant's allegation. While the DCAA auditor was aware of appellant's use
of DEFRA in the 1990s, he did not question this methodology or the annual costs
charged related thereto because appellant was not claiming costs in excess of those
that were allowed under FAS 106 (tr. 2/9-10 ), which was consistent with
FAR 31.201-2(c). NGC, 14-1BCAif35,501 at 174,024. The DCE's communications
to NGC, above, were not shown to be intentionally deceiving or a deliberate
misstatement. See DeMarco Durzo Development Co. v. United States, 60 Fed. Cl.
632, 638 (2004) (dismissing count of complaint averring equitable estoppel against
government that did not allege intentional deception or deliberate misstatement).

      The record does not establish that the government was guilty of affirmative
government misconduct. No Board error has been shown.

       In a related vein, appellant argues that the government's "inaction" against
appellant was "in violation of regulatory requirements to identify the noncompliance"
pursuant in FAR 52.242-1, NOTICE OF INTENT TO DISALLOW COSTS (mot. at 15 n.16).
We fail to see how this clause helps appellant. Section (b) expressly provides:

                     (b) Failure to issue a notice under this Notice of
             Intent to Disallow Costs clause shall not affect the
             Government's rights to take exception to incurred costs.

        We reiterate that appellant failed to meet the requirements of the SplashNote
test for purposes of proving equitable estoppel against the government. Appellant has
not established any error in the Board's decision in this respect.


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                                   CONCLUSION

       We have reconsidered our decision based upon appellant's motion and the
arguments made therein. We conclude that appellant has failed to establish that our
decision was in error. Our decision is affirmed.

      Dated: 9 September 2014



                                              ~----
                                                  Administrative Judge
                                                  Armed Services Board
                                                  of Contract Appeals

I concur



~L~
                                       --------

Administrative Judge                              Administrative Judge
Acting Chairman                                   Acting 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. 57625, Appeal of Northrop
Grumman Corporation, rendered in conformance with the Board's Charter.

      Dated:



                                                  JEFFREYD. GARDIN
                                                  Recorder, Armed Services
                                                  Board of Contract Appeals




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