Lockheed Martin Corporation ( 2021 )

ARMED SERVICES BOARD OF CONTRACT APPEALS
Appeal of - )
)
Lockheed Martin Corporation ) ASBCA No. 62377)
Under Contract No. N00019-11-C-0083 et al. )
APPEARANCES FOR THE APPELLANT: Nicole J. Owren-Wiest, Esq.
Catherine Shames, Esq.
Eric Ransom, Esq.
Crowell & Moring LLP
Washington, DC
APPEARANCES FOR THE GOVERNMENT: Arthur M. Taylor, Esq.
DCMA Chief Trial Attorney
Peter M. Casey, Esq.
Debra E. Berg, Esq.
Trial Attorneys
Defense Contract Management Agency
Hanscom AFB, MA
OPINION BY ADMINISTRATIVE JUDGE SWEET
This appeal is a declaratory action regarding whether the Fly America Act,
49 U.S.C. § 40118 (FAA) and Federal Acquisition Regulation (FAR) 52.247-63 only
apply to direct personnel performing direct work on covered contracts, or also apply to
indirect personnel or indirect travel. On August 3, 2020, the government moved to
dismiss this appeal, arguing that we do not possess jurisdiction because appellant
Lockheed Martin Corporation (Lockheed Martin) did not submit a claim seeking a sum
certain to the Corporate Administrative Contracting Officer (CACO), and the contract the
government allegedly breached was not a contract within the meaning of the Contract
Disputes Act, 41 U.S.C. § 7101 et seq. In the alternative, the government argues that we
should exercise our discretion, and decline to grant declaratory relief because there is no
live dispute. Lockheed Martin disputes each of those arguments.
For the reasons discussed below, we decline to grant declaratory relief because
there is no live dispute. Therefore, we do not address the government’s alternative
arguments, grant the motion to dismiss, and dismiss this appeal without prejudice to file a
new appeal in the event a live dispute arises.
STATEMENT OF FACTS (SOF) FOR PURPOSES OF THE MOTION
1. On April 10, 1997, the government and Lockheed Martin executed a
memorandum of understanding (MOU), under which the parties agreed that the FAA
only applied to direct personnel performing direct work on covered contracts, and did not
apply to indirect personnel or indirect travel (R4, tab 2).
2. On April 25, 2019, the CACO sent Lockheed Martin a letter, stating that the
government was withdrawing from the MOU because the MOU misinterpreted
FAR 52.247-63 (withdrawal letter) (R4, tab 15).
3. In a declaration, Chad F. Connell—Lockheed Martin’s Vice President of
Government Finance and Compliance—states that the government has not denied
payment or disallowed any indirect costs of international transport on the basis of
noncompliance with the FAA and FAR 52.247-63 (app. resp. at ex. 1, Connell decl. ¶ 9).
Moreover, Lockheed Martin “has not made any change whatsoever to its billing,
accounting, or international air transportation practices” (id. ¶ 8). Indeed, Lockheed
Martin “did not perceive the withdrawal letter as mandating any action be taken to [align]
Lockheed Martin’s accounting or international air transportation practices with the
Government’s newly advanced interpretation of the FAA and FAR 52.247-63” (id. ¶ 7).
We have carefully searched this declaration for a statement about any way that the
government’s withdrawal from the MOU has affected Lockheed Martin and we have
found nothing.
4. On June 27, 2019, Lockheed Martin submitted a claim to the CACO,
requesting an interpretation of the FAA and FAR 52.247-63 (R4, tab 16 at 310-11). The
claim indicated that Lockheed Martin would continue to operate in compliance with the
MOU (id. at 316).
5. On October 30, 2019, the CACO issued a final decision on Lockheed Martin’s
claim, interpreting the FAA and FAR 52.247-63 as applying to indirect costs of
international transportation (R4, tab 18).
6. Lockheed Martin appealed that decision to the Board, seeking a declaration that
the FAA and FAR 52.247-63 only apply to direct foreign air transportation costs, and do
not apply to indirect costs (compl. ¶ 47).
DECISION
Assuming, without deciding, that we possess jurisdiction over Lockheed Martin’s
claim for declaratory relief, we decline to grant such relief because there is no live dispute
between the parties. We may decline to grant declaratory relief if (1) the claim does not
involve a live dispute between the parties; (2) a declaration will not resolve that dispute;
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or (3) the legal remedies available to the parties are adequate to protect their interests.
Alliant Techsystems, Inc. v. United States, 178 F.3d 1260, 1271 (Fed. Cir. 1999). A live
dispute exists where a disagreement clearly exists, has significant ramifications, and
continues to impact the contractor. Kellogg Brown & Root Services, Inc., ASBCA
No. 58578, 13 BCA ¶ 35,411 at 173,712 (holding that a live dispute existed when the
Defense Contract Audit Agency (DCAA) issued a Notice of Contract Costs Suspended
and/or Disapproved Form stating that DCAA disapproved the costs, the contracting officer
(CO) sent a letter indicating that contractor’s interpretation of the contract was based upon
bad assumptions, and there was a qui tam action pending against the contractor regarding
its interpretation of the contract).
Here, Lockheed Martin argues that, under Kellogg Brown & Root, the withdrawal
letter has had significant ramifications for, and a continuing impact upon, Lockheed
Martin. However, unlike in Kellogg Brown & Root, there was no DCAA Notice of
Contract Costs Suspended and/or Disapproved Form stating that DCAA disapproved the
costs, or a qui tam action. Moreover, the withdrawal letter in this case is different than the
CO letter in Kellogg Brown & Root because—contrary to Lockheed Martin’s argument that
the government’s interpretation of the FAA and FAR 52.247-63 requires Lockheed Martin
to change its international air transportation or cost accounting systems, processes, policies,
and employee training (app. resp. 23-24; app. supp. resp. 8-9)— Mr. Connell declares that
Lockheed Martin has not made “any change whatsoever to its billing, accounting, or
international air transportation practices” as a result of the withdrawal letter (SOF ¶ 3).
Indeed, Mr. Connell concedes that Lockheed Martin does not even view the withdrawal
letter as mandating that it take any action (SOF ¶ 3). * Therefore, Mr. Connell’s declaration
establishes that any dispute has not had significant ramifications for, or a continuing impact
upon, Lockheed Martin. As a result, unlike in Kellogg Brown & Root, this appeal does not
involve a live dispute, and we exercise our discretion by declining to grant declaratory
relief. Alliant Techsystems, 178 F.3d at 1270-71; Kellogg Brown & Root Services, 13 BCA
¶ 35,411 at 173,711-13.
* It is not necessary for the government to disallow costs in order for there to be a live
dispute. TRW, Inc., ASBCA Nos. 51172, 51530, 99-2 BCA ¶ 30,407 at 150,330-32.
However, here, not only has the government failed to disallow any costs (SOF ¶ 3),
but Lockheed Martin has not even taken any action in response to the withdrawal
letter, and does not view the withdrawal letter as mandating any action (SOF ¶ 3).
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CONCLUSION
For the reasons discussed above, we exercise our discretion and decline to grant
declaratory relief because there is not a live dispute. Therefore, the motion is granted,
and we dismiss this appeal without prejudice to file an appeal, if and when a live dispute
arises.
Dated: January 7, 2021
JAMES R. SWEET
Administrative Judge
Armed Services Board
of Contract Appeals
I concur I concur
RICHARD SHACKLEFORD J. REID PROUTY
Administrative Judge 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. 62377, Appeal of Lockheed
Martin Corporation, rendered in conformance with the Board’s Charter.
Dated: January 8, 2021
PAULLA K. GATES-LEWIS
Recorder, Armed Services
Board of Contract Appeals
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