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United Technologies Corp. v. United States

Decided: October 1, 1987.

UNITED TECHNOLOGIES CORPORATION, APPELLANT,
v.
THE UNITED STATES, APPELLEE



Markey, Chief Judge, Nies, and Newman, Circuit Judges.

Newman

NEWMAN, Circuit Judge

United Technologies Corporation (UT) appeals the judgment of the Armed Services Board of Contract Appeals (Board) that Contract No. F33657-80-C-0281 (0218 contract) between UT and the United States (USG), providing for sale of F-16 aircraft engines to certain European Participating Governments (EPG or Consortium), is not subject to a Foreign Military Sales (FMS) factor. United Technologies Corp., ASBCA No. 25540, 85-3 BCA para. 18,399 (1985). We affirm.

Upon appellate review, the Board's "decision on any question of fact shall be final and conclusive and shall not be set aside unless the decision is fraudulent, or arbitrary, or capricious, or so grossly erroneous as to necessarily imply bad faith, or if such decision is not supported by substantial evidence." 41 U.S.C. ยง 609(b). The Board's legal conclusions are not final or conclusive. Id.

At issue is UT's claim that it was entitled to charge to the EPG, as a FMS factor, certain independent research and development (IR&D) and bid and proposal (B&P) costs in excess of the negotiated ceiling for such costs. Extensive background details and findings appear in the Board's opinion, some of which will be referred to, but familiarity with all of which is assumed.

The Board's decision turned in significant part on certain government-to-government agreements between the United States and Norway. The United States and the Consortium entered into a 40-page Memorandum of Understanding (MOU) in June 1975, that stated the Not to Exceed (NTE) price and other basic terms of the arrangement. Pertinent to the Board's decision are, inter alia, the following provisions:

All terms and conditions applicable to the NTE price secured for the [USG] from its prime contractors GD [General Dynamics] and UT are accorded to the EPG.

The NTE price is based upon . . . a quantity of 1000 F-16 aircraft [of which 350 are for the EPG.]

[The USG] will procure the equipment and services required for the F-16 program under the most advantageous terms and conditions available consistent with DOD regulations and procedures and in accordance with this MOU.

The Board referred in its findings to the following provision of the 0218 contract:

J-30 - FOREIGN MILITARY SALES FMS FACTOR APPLICABILITY

(a) The Contractor agrees that it shall not require a foreign military sales factor to be applied to any foreign military sale now or in the future of the F100 engines . . . for use in support of either the F-15 or F-16 Weapon Systems, unless such a factor is provided for or permitted in the agreement between the U.S. and foreign Governments.

The Board also referred to the government's initial Request for Proposal, which stated that "no special profit factor" ...


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