The Federal Circuit Summons the Ghost of Disputes Past by Throwing Out a Long-Standing Settlement, Announcing New Limits on a CO’s Authority to Resolve Cost Claims

In a significant ruling, the Federal Circuit has curtailed the ability of contracting officers to settle cost disputes prospectively. In Sec’y of Def. v. Pratt & Whitney, the Court invalidated a long-standing cost accounting settlement, finding that agreements governing future cost treatment cannot conflict with FAR requirements. This decision underscores strict compliance with FAR 31.109 and raises questions about the enforceability of past settlements—prompting contractors to reassess existing agreements.

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Disputes, government contracts, Settlement

About Steven Masiello

Steven M. Masiello is the chair of the US Government Contracts practice and a leader of the firm's Global Government Contracts and Procurement group. Masiello serves as lead counsel in complex government contract matters across numerous industry segments concerning state, federal, and foreign military funded transactions in the US courts, agency boards and under domestic and international alternative dispute resolution procedures.

About Phillip Seckman

Phillip Seckman represents clients concerning government and commercial contract matters. His practice spans a broad range of subjects related to federal procurement law, state and local procurement law, and complex federal regulatory issues. He concentrates his practice in the areas of commercial item acquisitions, GSA schedule contracting, cybersecurity, compliance, internal investigations, and bid protests (both federal and state). A significant component of his practice involves government contract cost allowability, proper cost accounting, and contract cost and pricing issues.

About Evan Sherwood

Evan Sherwood is a partner in the Dentons Government Contracts-US practice, counseling federal contractors on Contract Disputes Act (CDA) claims, the cost accounting standards (CAS), cost allowability, requests for equitable adjustment (REAs), commercial products/services contracting, contract terminations for convenience / default, and related audits, litigations, and investigations.