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Jenner & Block successfully defended Lockheed Martin Aeronautics (LM Aero) against the Air Force’s allegation that it had “defectively priced” a contract to manufacture retrofit kits for the F-16 aircraft. The Truth in Negotiations Act requires that contractors disclose all “cost or pricing data,” i.e., all factual data that may be relevant to contract pricing, to the Government before negotiations to put the parties on an equal negotiation footing. If all such data have not been submitted, the Government can unilaterally adjust the contract price to recover any overpricing caused by the non-disclosure. The Government claimed that the alleged non-disclosure of the price of an unrelated subcontract for mission computers had caused the price of the retrofit kit contract to be inflated by more than $17 million.
In a week-long hearing before the Armed Services Board of Contract Appeals (ASBCA), the Jenner & Block team proved that the allegedly undisclosed subcontract price was, when properly adjusted for differences between the two, actually higher than LM Aero’s proposed price for the mission computers under the retrofit contract. The ASBCA concluded that the Government’s damages arguments were illogical and that the alleged non-disclosure had not harmed the Government.
The ASBCA’s decision is reported inBNA, Inc. Federal Contracts Report - Latest Developments and the Government Contractor.