Applying the Statute of Limitations to Claims Under the Contract Disputes Act
Spring 2012

In April 2012, the U.S. Court of Federal Claims handed down a decision concluding that a claim by the government against a contractor was brought too late. On its way to reaching this result, Raytheon Company v. United States offers a full discussion of how the statute of limitations under the Contract Disputes Act is applied and possible defenses to the statute of limitations. 2012 WL 1072294 (Fed. Cl.)

Raytheon Company acquired Hughes Aircraft in 1997. Among the assets and liabilities that Raytheon assumed with this purchase was sponsorship of two retirement plans from which funds had been distributed improperly. Because the retirement funds had been mismanaged, the calculation of allowable, allocable, and reasonable costs for which Raytheon as a government contractor could charge the government was unresolved. To settle the issue, in 1999 Raytheon entered into an Advance Agreement with the Department of Defense that listed all of the costs incurred in connection with the plans that Raytheon considered chargeable to its contracts with DOD. The government agreed tentatively to these costs provided that the DCAA would review the numbers and that Raytheon would reimburse the government for any costs the auditors found unallowable. Meanwhile, Raytheon was permitted to include all of its proposed costs in its pricing, and Raytheon began collecting these costs from the government on an annual basis.

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