On April 4, 2022, the NAM filed an amicus brief in the Federal Circuit defending government contractors’ use of bright-line rules and other reasonable policies and procedures to facilitate compliance with the FAR. The FAR (Federal Acquisition Regulation) directs government contractors on which costs are reimbursable from the federal government, ensuring that the government does not overpay on its contracts. Compliance with the FAR is an onerous undertaking that requires government contractors to invest significant resources, talent, and efforts. In this case, the government attacked Raytheon’s use of bright-line rules in corporate policies to help its personnel navigate how various FAR provisions interact with one another and should be interpreted. According to the government, such policies are non-compliant unless they repeat, verbatim, the language of the FAR—no more, no less.
As the NAM’s brief makes clear, a regime that renders a company non-compliant with the FAR if it implements policies and rules that expound upon and interpret—rather than mimic
precisely—the FAR’s text is simply nonsensical. Determining which costs are allowed and which are unallowable under the FAR can be incredibly complex. The regulations themselves and caselaw interpreting the FAR recognize that the plain language is not always indicative of
whether costs are allowable or unallowable. In light of the FAR’s complex framework, government contractors need the flexibility to explain to their personnel the terms of individual FAR provisions and how they interact with one another as applied to the company’s specific contracts. The government’s position in this case, that policies and trainings that do not mimic the exact language of the FAR are non-compliant, could result in more inadvertent overbilling to the government and heighten the risk exposure for government contractors, both of which could adversely impact taxpayers.
Unfortunately, on January 3, 2023, the Federal Circuit reversed the decision of the Armed Services Board of Contract Appeals, holding that Raytheon’s corporate practices and policies are inconsistent with the FAR.