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AIA Cost Principles Committee Legal Update - Employment and HR


CAS, TINA and Cost Allowability
Northrop Grumman Corp. ASBCA No. 61775 (Oct. 7,
2020)
Northrop froze a defined benefit pension plan, triggering a CAS
413 requirement to calculate the difference between the plan s
assets and liabilities.
The present value of liabilities exceeded assets by
approximately $98 million.
Based on overhead costs allocated to the government, Northrop
determined that the government owed $74 million and submitted a
claim for this amount.
The government objected to Northrop s interpretation of CAS
413-50(c)(12), which it argued did not require it to make up the
difference in the plan s future liabilities.
The ASBCA disagreed, finding that the goal of CAS 413-50(c)(12) ....

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