Free Description not available - District Court of Federal Claims - federal

Case 1:00-cv-00129-FMA

Document 79-2

Filed 11/22/2004

Page 1 of 34

IN

THE UNITED STATES COURT OF FEDERAL CLAIMS

LOCKHEED MARTIN CORPORATION
PLAINTIFF

NO OO129C
JUDGE ALLEGRA

UNITED

STATES OF

AMERICA

DEFENDANT

APPENDIX TO PLAINTIFFS

REPLY IN SUPPORT OF ITS MOTION FOR

SUMMARYJUDGMENT AND OPPOSITION TO DEFENDANTS CROSS MOTION FOR SUMMARYJUDGMENT

PAGES 046077

DATED NOVEMBER 22 2004

Case 1:00-cv-00129-FMA

Document 79-2

Filed 11/22/2004

Page 2 of 34

SUPPLEMENTAL DECLARATION

OF JAMES FROM

BLUE

046049
INC
TO

DECEMBER 29 1995

LETTER

CRAY RESEARCH
ATTACHED

050052

LOCKHEED WITH DECEMBER 22

LETTERS

MAY

1997

FACSIMILE

FROM LOCKHEED
CONCERNING

TO

DON WHEATLEY
OF CRAY COMPUTERS

053056

TRANSMITTING

CORRESPONDENCE

DISPOSITION

MAY

1997

FACSIMILE APRIL

FROM LOCKHEED

TO

DON WHEATLEY

057068

TRANSMITTING

1996

DCAA

AUDIT

REPORT

OCTOBER

10

1997 LOCKHEED

MEMORANDUM WITH

ATTACHMENTS

069072 073074 075077

LOCKHEED MARTIN SKUNK WORKS FEDERAL COURTS 1992

LADC
PL

FY

1997

OVERHEAD RATE AGREEMENT

ADM IN

USCCAN

ACT OF 1992 3921

1025 72

DCAA

AUDIT GUIDANCE ON COST ACCOUNTING STANDARDS
IN

CAS

COST IMPACT WITH

078100

UNILATERAL

CHANGES AND DISCLOSED PRACTICES

COST ACCOUNTING PRACTICE AND NONCOMPLIANCE

CAS

JAN 2002

IN

RE VIOLATION

OF RULE

28C

MISCELLANEOUS

NO 774 2004
TO DORIS

101105
106

AUGUST 19 2004 OCTOBER 1997

LETTER

FROM CLARENCE KIPPS FROM LOCKHEED

FINNERMAN

LETTER

TO

DCE

BECKER

107108

Case 1:00-cv-00129-FMA

Document 79-2

Filed 11/22/2004

Page 3 of 34

IN

THE UNITED STATES COURT OF FEDERAL CLAIMS

LOCKHEED MARTIN CORPORATION
PLAINTIFF

NO OO129C
JUDGE ALLEGRA

UNITED

STATES OF

AMERICA

DEFENDANT

SUPPLEMENTAL
JAMES

DECLARATION

OF JAMES
MADE
IN

BLUE
2004

BLUE HEREBY SUPPLEMENT

THE STATEMENTS

MY SEPTEMBER

DECLARATION

AND DECLARE AS FOLLOWS ON THE BASIS OF

MY PERSONAL
RECORDS

KNOWLEDGE AND REVIEW

OF

LOCKHEED MARTIN CORPORATION
IN OCTOBER 2001

LOCKHEED
PREPARED

BUSINESS

SCHEDULE ENTITLED

COST IMPACT CONCLUSION

IN

WHICH

CALCULATED THE

CRAY

COSTS ALLOCABLE TO

GOVERNMENT CONTRACTS UNDER BOTH LOCKHEEDS

RESOURCE

COMMITMENT METHOD AND

THE

GOVERNMENTS ACTUAL

USAGE

METHOD SEE DEF

APP

AT

158

THE

SCHEDULE PROVIDED

AN ESTIMATE OF THE UNDERPAYMENT BY THE GOVERNMENT USING THE

GOVERNMENTS ACTUAL

USAGE

METHOD
THE

INCLUDING

THE IMPACT ON

LOCKHEEDS

FIXED PRICE

AND COST

TYPE CONTRACTS OF ALLOCATING

CRAY COSTS

TO

LASC

AND

LMSC

USING THE

GOVERNMENTS ACTUAL
OF THE

USAGE METHOD ID

ESTIMATED

THE AMOUNT OF LOCKHEEDS LOSS ON THE DISPOSITION

CRAY

COMPUTERS TO BE APPROXIMATELY

72

MILLION

OF WHICH APPROXIMATELY

36

MILLION

WAS ALLOCABLE

TO

LASC

AND APPROXIMATELY

36

MILLION

WAS ALLOCABLE

TO

LMSC

BASED ON

THEIR

RESPECTIVE

ACTUAL

USAGE OF THE

CRAY COMPUTERS

ID
HAVE REDUCED THE CALCULATION OF

SINCE

PREPARING THE SCHEDULE IN OCTOBER 2001

COSTS REFLECTED

IN

THIS

SCHEDULE INCLUDING

THE AMOUNT OF LOCKHEEDS LOSS ON THE DISPOSITION

OF THE

046

Case 1:00-cv-00129-FMA

Document 79-2

Filed 11/22/2004

Page 4 of 34

CRAY COMPUTERS ALLOCABLE
PARAGRAPH

TO

GOVERNMENT CONTRACTS 2004
DECLARATION

THE

REDUCED FIGURES

ARE REFLECTED

IN

25 OF MY SEPTEMBER

SEE P1

APP

AT

006

AS
1995

STATED

IN

PARAGRAPH

12 OF MY SEPTEMBER

DECLARATION

P1 APP

AT

004

THE

DISPOSITION

OF THE

CRAY COMPUTERS RESULTED
WHILE THE
TOTAL

IN

AN UNANTICIPATED

LOSS TO

LOCKHEED OF

APPROXIMATELY

68

MILLION

AMOUNT OF LOCKHEEDS

LOSS

ON THE DISPOSITION

OF THE

CRAY COMPUTERS WAS
632000
OF 1995

APPROXIMATELY

744
IN

MILLION

BECAUSE

LITC

INCLUDED

APPROXIMATELY

DEPRECIATION

COSTS

THE HOURLY BILLINGS

FROM LJTC

TO THE OPERATING

COMPANIES

REDUCED THE AMOUNT OF LOCKHEEDS LOSS ON THE DISPOSITION

OF THE

CRAY COMPUTERS BY

632000

FROM APPROXIMATELY

744

MILLION

TO

68

MILLION

ON
LOCKHEED PROVIDED

OCTOBER 23 2001

IN

CONNECTION

WITH THE PARTIES

NEGOTIATION

OF THIS

DISPUTE

COPY OF THIS SCHEDULE

TO THE

GOVERNMENT

AS

PAGE

OF

DOCUMENT

ENTITLED

DCMCLOCKHEED MARTIN DISCUSSION
UNDERSTAND FROM

SEE

DEF APP
JIM

AT

158
THAT

ORLANDODCAA AUDITOR

WILSON

HE CONDUCTED AN

AUDIT

OF THE

COST

IMPACT CONCLUSION

SCHEDULE WHICH WOULD HAVE INCLUDED

AN AUDIT OF LOCKHEEDS

ESTIMATE

OF ITS

LOSS

ON THE

DISPOSITION

OF THE

CRAY COMPUTERS AND ALLOCATION
FOR INFORMATION

OF THAT

LOSS TO

GOVERNMENT CONTRACTS

DCAA HAS

DENIED

MY REQUESTS

CONCERNING

THE RESULTS

OF

THAT

AUDIT

THE GOVERNMENT
IN

INCORRECTLY

STATES THAT

THE

CRAY COMPUTERS WERE NOT DISPOSED
PROPOSED FINDINGS OF

1995

DEF

BRIEF AT

21

N5

DEFENDANTS RESPONSE OF 1996

TO PLAINTIFFS

UNCONTROVERTED

FACT

AT

IN JANUARY

LOCKHEED USED THE

CRAY COMPUTERS PURSUANT
1995
FOR

TO

LEASEBACK

ARRANGEMENT AFTER COMPLETION

OF THE

SALE

OF THOSE

CRAY COMPUTERS IN
OF
ITS

THE

DOCUMENTS PROVIDED

IN

THE APPENDIX TO PLAINTIFFS

REPLY

IN

SUPPORT

MOTION

SUMMARY
AT

JUDGMENT AND OPPOSITION

TO

DEFENDANTS CROSS MOTION

FOR

SUMMARY JUDGMENT

P1 APP

047

Case 1:00-cv-00129-FMA

Document 79-2

Filed 11/22/2004

Page 5 of 34

CONFIRM

THAT THE

CRAY COMPUTERS WERE DISPOSED

OF IN 1995

AND

REFLECT THIS

LEASEBACK

ARRANGEMENT ITEM

831R

OF

LOCKHEEDS CORPORATE

CAS

DISCLOSURE

STATEMENT

PROVIDES

IN

RELEVANT PART THAT

FOR COST POOLS ALLOCATED ON
SET AT THE START

USAGE RATE BASIS

STANDARD RATES WILL

BE

OF THE YEAR AND REMAIN THROUGHOUT THE YEAR PROVIDED DOES NOT EXCEED WITHIN THIS RANGE LIQUIDATION THE OVERUNDER LIQUIDATION WILL BE ROLLED INTO THE NEXT YEARS RATES OVERUNDER

10

IF THE ACTUALS

OVERUNDER

LIQUIDATION

EXCEEDS

10

RATES WILL AT

BE ADJUSTED TO

MINIMUM

OF ONCE

YEAR USUALLY

YEAREND

DEF APP

AT

THE GOVERNMENT

INCORRECTLY

STATES THAT

LOCKHEED DID NOT REVISE

ITS

RATES AS

REQUIRED BY

LOCKHEEDS OWN DISCLOSURE STATEMENT

DEF

BRIEF

AT

12

IN FACT IN

1994

AND 1995

LOCKHEED COMPLIED WITH THE ABOVE REFERENCED PROVISION
ATTENDED AN APRIL
TH

11

2002

MEETING WITH THE GOVERNMENT REPRESENTATIVES AND OF THE

ATTEST THAT

THIS

PARTICULAR

ISSUE

THE LOSS ON THE DISPOSITION

CRAY COMPUTERS

WAS

DISCUSSED

BY

THE PARTIES

AT THAT

MEETING AND

THAT THE PRESENTATION

COVERED DURING THE MEETING

INCLUDED

INFORMATION

ON THIS TOPIC

048

Case 1:00-cv-00129-FMA

Document 79-2

Filed 11/22/2004

Page 6 of 34

10

PURSUANT

TO

28

USC

1746

TO THE

BEST OF

MY KNOWLEDGE
TRUE

AND BELIEF

DECLARE

UNDER PENALTY OF PERJURY

THAT THE FOREGOING

IS

AND CORRECT EXECUTED ON

THIS

22ND DAY OF NOVEMBER 2004

IAMES

BLUE

049

Case 1:00-cv-00129-FMA

Document 79-2
CMWCANY PISCE

Filed 11/22/2004
00
BAN

Page 7 of 34

3180

BIAS

RUV CAEAU

WESEMOOIOUICB 4610 IIS4NS FAX SIC USHBHI

29

LCCKHI
1401

CRTE

LTCB Y4CI
TZEET VICE PRESIDENT

COUPSAY

CO 10221

DATA CENTEZ DATED

SEVCSE
1095

EUBJECT

LOCJC3 1ETTA

DECEU 22

ATTEC3

DAZ
IC1CEED

5EZ
ARE

COACC
CRAY 3916
OUR

WITH

DUIYE RSTG
TT
OF

OTTWSRQ ICENA AN4 MANTENASAC TRADEAN OF THE CRAY 8K 171W
THOSE

COPIES

OF

TTEZA

IS

XJ

LETTERS

COVERAG THE

AND THE CCNDTTICAEG CU TRIM

ETPUC
IJ

SU

TERMS AND CCRDLT4ONA OF CTAY PEEEARCBS STANDARD SALE SOCTVT AND 4AINTAANOE MARVICE CCNTRACTA CRAYSIGNED COPISA ATTACHES HERATE THE 3926 GOVERN THIS TZACAACTION AND SOCTVARE VIII BE EOIEAEEDOG OPON LOCKHEED OF THESE CONTRACTS THE 2916 16 SCHEDULED TO ON OR EBOUT FEBTUORY 1996 THE LKE

IP

COU DE
PMI

ADDITION
SCZ

THE

7JG12

LICENSE
ALL

DISFA

CONTRACTS

NOTED COSTS TC THE 7916 1BE UOTE4 AND THE NOTED CHAZGEA FOR 3514 SERVICE CRAY WILL ISSUE INYOLOES TOT THE NOTED 630000 PTTCS AND THE UXIX DIES LICENSE TEE LOCKBSAD EYAIANTBY WILL HE 1I SCCORDANCAUITH THE PZOVISIONA OF THE
TO THE

EARVICES

GH

CHEA
OT

ABOV
OT

PLEASE TCRVARD ONE TULLYRCUTD ORIOLNAL OF EACH CT THE ABOVE TO XA AS SOC AS POASIBLE TO ALLOW US TO SCHEDLILE OF THE 3516 SHIPMRAT PLESAG CALL CAROL 9UROLLA AT 5LO 9660600 EZTSNAION 251 7M HARD AT 303 7055326 YOU HAVE ANY QUESTIONO

AOCOR

CO

SEAT REGARDS

FZVSH AOTHY CEOTRACTA MONAGAR

LITCLTR

DOC

SIC

SOS 9024

2294

0343FL

1002

42

050

Case 1:00-cv-00129-FMA

Document 79-2

Filed 11/22/2004

Page 8 of 34

LO BBIHS DU
1401 DAINUEW SINE 3104302120

03430435

L0CRSJ
DECSMBR 22 1995

CRAY ROE OARCH INC 3120 CROWCANYON PT STE 400

SAN RSMONCA94683

LOCKHEED INFORRRSATIOR EOHNOTOGY CCMPANY LILT AGREES TO PURCHS IROMCRAY IIESEOJCH TU INC THE TOFLOWING PURCHASE ORDER NUMBER HAS BEEN ASSIGNED TO THIS COQUIELTION ARID ASEOCLALED AND SOFTWARE UNDER BLOWING WNDITLONS FOLOWING EQUIPRR

PER

LT

CRAY

JG6M2046

OC
ELI F14
8143

1066

EOSSO

NM
FONRAN
LKILX

PE 2DOT0O

PURCHASE

PRICE

FOR ALL ITEMS

ABOVE

USEB

LICENSE

8500

UTC

WILL PAY ACTUAL EXCEED 6000

ET

COSTS FCR THE
IS

ABOVE EQUIPMENT

ACITWARE AT

PRICE NOT

INALATLALION

AT RIO COST

LIT

2I
WILL

PAY HSRDWAJ AND DELAYS IN THE SHIPMENT DSLVERY
CONTINUING TO USE THE

RR

AT

COST 5565
OF THE

INSTAILETION

OVE EQULPL7FLNTWLL

PER

MONTH FFECTIV

RESULT IN LITC

EASE YMPSI

AT MONTHLY COST OF

TV
WIN
BRNSLEIN VKO PRESIDENT
DATA CENTER SERVICES

TIMOTHY CRAY

FTUSH INC

510

SSS

O24

CS

442

051

Case 1:00-cv-00129-FMA

Document 79-2

Filed 11/22/2004

Page 9 of 34

LCIHMSI 5401

EABMMZHM JEDINDQY SMAA LHAQ4A

FUTW 30343FR22L5

LECEYNUS
ECEMBR22I

V5A

4NC CRNY 3130 CROW CANYON P3 SEN CA GASOS

NMON

11

400

TCCKHEED INTORMMTON TECHNOLOGY COMPANYLFLC

TO LEL

1222I

THE LOLLCWING

EQUIPMENT

AND ASSOCIATED PARLFHERALS

UNC
TO

GRAY RE5EETVH INC ON CONDITIONS

CLCYYMPSI4128
GRAY

CNN
LEASE

YMP4

61W1710

SN

1922

SALE OF EQUIPMENT
LEES CLEINETAUAGONJRAHIPPLN

6200000

S21

OF CREY

YMPBI

SM 1710

RACKSIVE

VI

END

OFIW

MFTINTONANC

BR

THE PERIOD

WIN

EMNSTEIN YICG PRESIDENT OATS CENTER SERVICES

FRUCH RESEARCH IFLOB GRAY

IMOTHY

CEC

SEE

60E4

1229OS

03431K

OO4

S42

052

Case 1:00-cv-00129-FMA

Document 79-2

Filed 11/22/2004

Page 10 of 34
RPRISE

LOCKHEED

MARTIN

YSTEMS
12506 LAKE UNDERHILL

FORMATION

ROAD

MP 267

FAX SHEET

ORLANDO

FL 328255002

PLEASE

NOTE ONE FAX

IS

BEING

SENT TO EACH FAX MACHINE

ADDRESSEES PLEASE MAKE COPIES FOR ALL

WHO MAY

SHARE THE FAX MACHINE

AT

YOUR LOCATION

THANK YOU

PLEASE DELIVER

TO

PHONE

FAX

MESSAGE

47

PAGES INCLUDING

COVER

FROM
PHONE

DATE

FAX
CALL JAN AT

407
THIS

3067292
TRANSMISSION

4O73O6

83O6

IF

WITH YOU HAVE ANY PROBLEMS

T001957

053

Case 1:00-cv-00129-FMA

Document 79-2

Filed 11/22/2004

Page 11 of 34

LOCKHCCD INFORMARION TCCHNALOGY 1401 DCL NONTSTRCCI

COMPANY

TCIEP

3034302130

DCNVERCO90221 PACAUNA 3034302225

LOCKNEED MARTIN
OCTOBER

23

1995

JAMES

LASHBROOK

BRANCH MANAGER DEFENSE CONTACT AUDIT 7112

AGENCY
SUITE

WEST JEFFERSON AVENUE LAKEWOOD CO 802352327

200

SUBJECT
DEAR

RESPONSE

TO

AUDIT REPORT

NO 0312195J10501001

MR LASHBROOK
CONCURS WITH YOUR

LITC

DECIDED 1200 CPU HOURS FOR 1996 WE HAVE REDUCED FORECASTED CRAY COMPUTING REQUIREMENTS HAS BEEN GIVEN 90 CRAY RESEARCH INC BOTH CRAYS BY YEAR END 1995 TO SHUT DOWN AND ELIMINATE THE INTENT TO SHUTDOWN ANDELIMINATE AND OUR USERS HAVE BEEN NOTIFIED OF OUR DAY NOTIFICATION FROM THIRD PARTY TO PURCHASE ANY REQUIRED CRAY CYCLES CRAYS WE WILL MAKE ARRANGEMENTS LETTER REDUCE ANNUAL CASTS AS NOTED IN YOUR ACTIONS WILL BE TAKEN TO LINRNEDIATE

RECORNMENDADON AS

STATED

IN

SCENARIO

ELIMINATE

BOTH CRAYS

BASED ON

SINCERELY

WILLIAM

BERNSTEIN

VICE PRESIDENT DATA CENTER SERVICES

001958

054

Case 1:00-cv-00129-FMA LOCK HCED
INFORMATION

TCF

1401

DI

Document 79-2 TI
CUMNANV DLRNVCRCOSE21

Filed 11/22/2004

Page 12 of 34

NNRC STREET
2130

LOCKHEED

MA

JANUARY

17

1996

MS

RENEE VANN

POTRATZ OFFICER

FILE

ADMINISTRATIVE

CONTRACTING

WBCS
REFERENCE

COLORADO CENTRAL ORCHARD PLAZA

TEAM
SUITE

DEFENSE CONTRACT MANAGEMENT AREA OPERATIONS

200

5975 GREENWOOD PLAZA BOULEVARD ENGLEWOOD CO 801114715
DEAR

MS

POTRATZ

THE

ACTIONS

DESCRIBED

IN

MY

OCTOBER

23 1995

LETTER

WERE COMPLETED ON

SCHE

TO ELIMINATE

THE TWO CRAY

SYSTEMS

FROM THIRD THE FUTURE LOWLEVEL DEMANDS FOR CRAY CYCLES RATHER THAN SATISFYING SIZED TO MEET OUR SINGLE VERY SMALL CRAY SYSTEM PARTY WE HAVE ACQUIRED

NEEDS

THIS

WAS DONE

SINCE

NONE
TO

OF THE THIRD

PARTIES

WHOWERE SELLING CRAY

CYCLES COMPETITIVELY

WERE ABLE

WOULD BE ASSURE US THAT OUR ROPRIETAFY DATA

PROPERLY SAFEGUARDED

SINCERELY

WILLIAM VICE

BERNSTEIN

PRESIDENT

DATA CENTER SERVICES

001959

055

C2MAII

JOE

FLUIIIUDU

SUBLECT

Case 1:00-cv-00129-FMA FW 1995 0CM HPCC AUDIT THNAI
CUSADMDTELEMAILPRMDMMC
WANDA RUMBAUGH AT

Document 79-2
OUTCOME

Filed 11/22/2004

Page 13 of 34
4996
103

FROM

NCU

SMAITDOSDD

MSMAIIEDEXNETLITC

PM

TO

ORLESCCCP

WANDA PLEASE
THX

GIVE

THIS

TO

ARCHY

FROM WADE JAN TO BLUE JAZNES

CCM

BERNSTEIN
FINAL

WILLIANI

CC KERCHER

SUBJ
DATE

RON DCAA HPCC AUDIT 01 1996 MONDAY APRIL 1995

OUTCOME

301PM

OF DCAA TODAY REGARDING HIS FOLLOWUP WAS CONTACTED TODAY BY GARY LEPAGE UP BOTH OF THE CRAY TO RETAINING ONE OR GIVING OF THE ALTERNATIVES ANALYSIS SHOULD BE THAT LIIC FINAL REPORT SAYING HE HAS PREPARED SYSTEMS TO GIVE UP BOTH DECISION EFFECTIVE COMMENDED FOR MAKING THE EXTREMELY COST WE MAY NOT SEE COPY OF THE REPORT THE SMALLER SYSTEM CRAYS AND ACQUIRE WILL PUT COPY OF TO THE DCAA ACO BUT SINCE HIS WRITEUP IS SUBMITTED FOR FUTURE REFERENCE THIS MEMO IN THE FILE

JAN

001960

TTACHO1

056

Case MESSAGE 1:00-cv-00129-FMA

Document 79-2

Filed 11/22/2004

Page 14 of 34

7FL
PAGES INCLUDING

COVER

FROM
PHONE

DATE

FAX
4073066692

407
WITH

3067292
TRANSMISSION

CALL JON

8306

IF

YOU HAVE ANY PROBLEMS

BJOI1D

1IWISDTI

ON

MSW ON

CE

SNA

1I

NI1

JO

DFL

9NTJH

001961

XJ 11FLS3 0W ILL NOILDO JDAL

3IL

OIR1
EDO
2116

057 SM
II
20T

J1FLS

NOISSII

SIJ

Case 1:00-cv-00129-FMA

Document 79-2

Filed 11/22/2004

Page 15 of 34

LOCKNEED MARTIN

FIN
12506

TERP RISE INFORM ATION

SYSTEMS
ROAD

LAKE UNDERHILL

MP 267

FAX SHEET

ORLANDO FL 328255002

PLEASE

NOTE ONE FAX

IS

BEING

SENT TO EACH FAX MACHINE

PLEASE

MAKE

COPIES FOR ALL ADDRESSEES

WHO MAY

SHARE THE FAX MACHINE

AT

YOUR LOCATION

THANK YOU

PLEASE

DELIVER

TO

PHONE

FAX

061

MESSAGE

JJ
FROM
PHONE

PAGES INCLUDING

COVER

DATE

FAX
CALL JAN AT

407
THIS

3067292
TRANSMISSION

4073066692

8306

IF

WITH YOU HAVE ANY PROBLEMS

PROPRIETARY

MATTER

PT

000151

058

Case 1:00-cv-00129-FMA

Document 79-2

Filed 11/22/2004

Page 16 of 34

21
LOCKHEED MARTIN
LOCKHEED MARTIN EIS 1401 DEL NONE STREET DATA CENTER
SERVICES

DENVER CO 80221

FACSIMILE

COVER SHEET

JIM BLUE COMPANY LM EIS PHONE 4078286393 FAX 4078261063

TO

FROM

WILLIAM

BERNSTEIN
SERVICES

COMPANY DATA CENTER PHONE 303 4302020 FAX 303 4302002
DATE
PAGES INCLUDING
COVER
THIS

43096
10

PAGE

COMMEFLTS

PT
PROPRIETARY

0001S2

MATTER

059

Case 1:00-cv-00129-FMA

Document 79-2

Filed 11/22/2004

Page 17 of 34

LOCKHEED MARTIN
EIS DATA CENTER
INTERDEPARTMENTAL

SERVICES

COMMUNICATION

TO
FROM
SUBJECT

FILE
DISTRIBUTION

REFERENCE

W81CSM1961524

BERNSTEIN

ATTACHED AUDIT

REPORT

DATE

APRIL

30

1996

THE

ATTACHED

AUDIT

REPORT

IS

FORWARDED FOR YOUR INFORMATION

ANIA
BERNSTEIN

VICE PRESIDENT

DATA CENTER SERVICES

LOCKHEED MARTIN EIS

DISTRIBUTION

BLUE

KERCHER

MONTANEZ

WADE

PROPRIETARY

MATTER

PT

000153

060

Case 1:00-cv-00129-FMA

Document 79-2

Filed 11/22/2004

Page 18 of 34

DEFENSE LOGISTICS AGENCY MANAGEMENTCOMMAND DEFENSE CONTRACT
DEFENSE

OPERATIONS DENVER CONTRACT MANAGEMENT APEA 200 6UITE ORCHARD PLACE PLAZA ALVD 5975 GREENWOOD ENGLEWOOD CO BOT147

DCMC GDOC MR WILLIAM
1401
BERNSTEIN

APRIL23

1996

LOCKHEED INFORMATION DCLNORTCSTRCCL DCNVER CO 80221

TECHNOLOGY COMPANY

DEAR

MR BERNSTEIN
REVIEW

OF THE ACQUISITION

OF

SINGLE

SMALL CRAY SYSTEM

AS STATED

IN

96 YOUR 17 JAN

LETTER HAS

BEEN ACCOMPLISHED

THE ATTACHED AUDIT REPORT
PERFORMANCE COMPUTER WILL WITH CRAY J90 COMPUTER
INSTALLATION

NO
INDICATES THAT RESULT

05 APR

96

CONCERNING

THE AUDIT

OF HIGH

UTILIZATION

THE REPLACEMENT OF ANNUAL COST AVOIDANCE IN
IS

S982OOO

OF BOTH THE CRAY COMPUTERS THEREFORE THE

OF THE CRAY J90 COMPUTER

HEREBY RECONUNENDED

IF YOU HAVE ANY QUESTIONS

YOUR POINT

OF CONTACT

IS

MS RENEE

VARIN POTRATZ

AT

3038434300X1

19

SINCERELY

ATTACHMENT

RENEE VARW PQTHATZ
ADMINISTRAUVE CONTRACTING

Z2
PRINTED
OFL

OFFICER

CC

DCAA

DENVER

COLORADO CENTRAL TEAM

RCYCIOD

PP
PT
000154

CVEIIFLQ

PIOGRAM

PROPRIETARY

MATTER

061

Case 1:00-cv-00129-FMA

Document 79-2

Filed 11/22/2004

Page 19 of 34

DEFENSE CONTRACT AUDIT AGENCY
AUDIT REPORT
APRIL

1996

PREPARED FOR

ADMINISTRATIVE

CONTRACTING OFFICER MILLER

AITN

MR GERALD

COMMANDDENVER DEFENSE CONTRACT MANAGEMENT SUITE 200 ORCHARD PLACE
GREENWOODPLAZA BOULEVARD ENGLEW6OD COLORADO 80111A715
5975

PREPARED BY

DENVER BRANCH OFFICE

AVENUE SUITE 200 LAKEWOOD COLORADO 802352327 TELEPHONE NO 303 9695000
7112
JEFFERSON

FAX NO

303

9695056

SUBJECT REFERENCES

UTILIZATION AUDIT OF HIGH PERFORMANCECOMPUTER

DCAA DCAA

AUDIT REPORI AUDIT

NO REPORT NO

0501001

CONTRACTOR

LOCKHEED INFORMATION
1401

TECHNOLOGY COMPANY

DEL NORTE

STREET

DENVER COLORADO 80221

REPORT RELEASE RESTRICTIONS
OF AUDIT

SEE PAGE

CONTENTS

SUBJECT

EXECUTIVE

SUMMAXY

SCOPE OF AUDIT RESULTS OF AUDIT

DCAA

AND REPORT AUTHORIZATION AND RESTRICTIONS AUDIT REPORT DISTRIBUTION
PERSONNEL

ORIGINAL
PT
PROPRIETARY MATTER

000155

062

Case 1:00-cv-00129-FMA

Document 79-2

Filed 11/22/2004

Page 20 of 34

AUDIT

REPORT

NO

O312L
SUBJECT OF AUDIT
TECHNOLOGY CORPORATION AUDIT OF LOCKHEED INFORMATION FOR THE HIGH PERFORMANCE AND OF CRAY J90 COMPUTER SERVICES TO THE LOCKHEED CENTER LITC PROVIDES COMPUTING OF CRAY 190 THE ACQUISITION THE AUDIT TO EVALUATE WHETHER

AS

LITC
CLASSIFIED

PART OF OUR COMPREHENSIVE WE REVIEWED THE ACQUISITION

COMPUTING

MARTIN CORPORATION

FOR THE FOR PROVIDING CRAY COMPUTING RESOURCES BEST ALTERNATIVE COMPUTER REPRESENTS THE AND MARCH OF 1996 AUDIT WAS CONDUCTED DURING FEBRUARY LOCKHEED MARTIN COMPANY THE

IIPCC WE PERFORMED

EXECUTIVE
IN OUR OPINION
RCSULT IN

SUMMARY NO

WILL CRAY 390 COMPUTER OF BOTH OF THE CRAY COMPUTERS WITH AUDIT REPORT OUR PREVIOUS AUDIT REFERENCE ANNUAL COST AVOIDANCE OF 982000 EFFECTIVE THE REPLACEMENT

312195310501001
DELIVERY

OF THE 1IPCC DISCLOSED
SERVICES IF
IT

THAT

LITC

COULD PROVIDE

OF COMPUTER

EITHER

DISPOSED

OF THE CRAY

YMP

AMORECOST 4E COMPUTER

OR DISPOSED OF

BOTH THE CRAY YMP AN OUTSIDE VENDOR

4E AND THE CRAY

YMP 81

FROM AND PURCHASED CRAY COMPUTING ESOUROES

SCOPE OF AUDIT

WE CONDUCTED OUR AUDIT
STANDARDS ASSURANCE AUDIT

IN ACCORDANCE

WITH GENERALLY ACCEPTED GOVERNMENT AUDITING
TO OBTAIN REASONABLE

AND PERFORM THE AUDIT THOSE STANDARDS REQUIRE THAT WE PLAN MISSTATEMENT AND RECORDS REVIEWED ARE FREE OF MATERIAL ABOUT WHETHER THE DATA

OUR

INCLUDES BASIS FOR PLANNING THE NATURE TIMING

ASSESSING TESTING

CONTROL RISK TO USE AS

AND

OF

EXAMINING ON
ASSESSING EVALUATING

TEST BASIS

EVIDENCE

SUPPORTING

DISCLOSURES THE AMOUNTS AND

IN THE DATA

AND RECORDS REVIEWED
THE ACCOUNTING
PRINCIPLES

USED AND

SIGNIFICANT

ESTIMATES

MADE BY LITC

AND

THE OVERALL DATA AND RECORDS PRESENTATION THE APPLICABLE CRAY 390 COMPUTER USING IEQUIREMENTS

WE EVALUATED
CONTAINED

THE ACQUISITION

OF

IN

FEDERAL

ACQUISITION

REGULATION

FARI
AND

DOD FAR

SUPPLEMENT COST ACCOUNTING STANDARDS

DFARS

FOR OFFICIAL

USE ONLY

PROPRIETARY

MATTER

PT

000156

063

Case 1:00-cv-00129-FMA

Document 79-2

Filed 11/22/2004

Page 21 of 34

AUDIT RCPORT

NO

O3121
INCLUDED PERSONNEL AND KEY MANAGERIAL

OUR AUDIT

SPECIFICALLY

INTERVIEWING

REVIEWING COSTS FOR VARIOUS COMPUTER SYSTEMS

RESULTS OF AUDIT
OUR
AUDIT DISCLOSED
THAT

LITCS

REPLACEMENT IN AN

SMALLER CRAY J90

COMPUTER WILL

RESULT

WITH OF BOTH OF ITS CRAY SUPER COMPUTERS OF APPROXIMATELY 982000 ANNUAL COST AVOIDANCE OF THE CRAY 390 COMPUTER WITH THE
IDLE

WE RECOMMEND THAT
IN

LITC
AUDIT

CONTINUE WITH THE INSTALLATION

OUR PREVIOUS

WE EXAMINED

THREE POSSIBLE

SCENARIOS FOR DEALING

CRAY

COMPUTER CAPACITY

DO

NOTHING

IE

CONTINUE

TO MAINTAIN

THE CRAY

YMP 4E

AND THE CRAY YMP FROM
THIRD

81
THIS

ELIMINATE
ALTERNATIVE

NEEDED CRAY TIME BOTH CRAY COMPUTERS AND BUY ANY
TO SAVE

PARTY

WAS PROJECTED
THE CRAY

496000
MAINTAIN THE CRAY

ELIMINATE

YMP

4E AND

YMP

81 THE CRAY
THIS

YMP

81

WOULD CONTINUE

TO SERVICE INTERNAL

LOCKHEED MARTIN REQUIREMENTS

ALTERNATIVE

WAS

PROJECTED TO SAVE

491000

ANNUALLY
THE PURCHASE OF SMALL CRAY J90

OUR ANALYSIS

OF THE FOURTH ALTERNATIVE

COMPUTERFOLLOWS

EQIECTHNUALCQS2FLQN
LABOR AND RELATED LABOR AND RELATED
OPERATIONS

HPCC

100100
89000 510900 226400 105600

HARDWARE MAINTENANCE
SOFTWARE

MAINTENANCE
OF CRAY J90

POWER CONSUMPTION
DEPRECIATION

NET SAVINGS
BASED ON THE ASSUMPTIONS THAT OVER PERIOD

THIS

ANALYSIS

IS

THE

COST OF THE CRAY J90

IS

DEPRECIATED

OF FOUR YEARS

FOR OFFICIAL

USE ONLY

PROPRIETARY

MATTER

PT

000157

064

Case 1:00-cv-00129-FMA

Document 79-2

Filed 11/22/2004

Page 22 of 34

AUDIT

REPORT

NO 0312196J10601001
YMP4E
AND THE CRAY

REPLACEMENT OF THE CRAY
IN

YMP81

WITH

CRAY 190
IN

WILL RESULT

HEADCOUNT REDUCTION OF ONE IN THE

HPCC

DEPARTMENT

AND ONE

THE OPERATIONS

DEPARTMENT

WE DISCUSSED WE EXAMINED

OUR FINDINGS

WITH

MS

JAN

WADE ADMINISTRATIVE

SUPERVISOR ON

APRIL

1996

ONLY THE ACQUISITION

OF

CRAY 190 COMPUTER
CONTROLS TAKEN AS

ACCORDINGLY

WE EXPRESS NO

OF INTERNAL OPINION ON THE CONTRACTORS SYSTEM

WHOLE
AND ASSISTANCE

WE WOULD LIKE
FROM THE

TO EXPRESS OUR APPRECIATION
STAFF DURING

FOR THE COOPERATION

WE RECEIVED

LITCS MANAGEMENT AND

THE COURSE OF OUR REVIEW

FOR OFFICIAL

USE ONLY

PROPRIETARY

MATTER

PT

000158

065

Case 1:00-cv-00129-FMA

Document 79-2

Filed 11/22/2004

Page 23 of 34

AUDIT REPORT

NO

03 12196J10601001

DCAA PERSONNEL
PRIMARY CONTACT REGARDING GARY LEPAGE
THIS

AUDIT

TELEPHONE

NO

EDP

AUDITOR

6127253296

OTHER CONTACTS REGARDING ALAN TEAL CHIEF
STEVE THORSTED

THIS

AUDIT

AMEDPOA
EDP
SUPERVISORY AUDITOR AUDITOR

KENNETH HILL
SALLY

BRANCH MANAGER

2146504916 8019753553 3039695000 3039695000 3039695056

X226

MILLS ACTING SUPERVISORY

DENVER BRANCH OFFICE FAX

NO

AUDIT REPORT AUTHORIZED

BY

KENNETH

HILL

BRANCH MANAGER DENVER BRANCH MANAGER

DCAA

FOR OFFICIAL

USE ONLY

PROPRIETARY

MATTER

PT

000139

066

Case 1:00-cv-00129-FMA

Document 79-2

Filed 11/22/2004

Page 24 of 34

AUDIT

REPORT

NO 0312196J10601001
AUDIT REPORT DISTRIBUTION

AND RESTRICTIONS

J2ISIEIBIYILQN

DCAA
155D

LOCKHEED MISSILES

MOFFETT

PO BOX
SUNNYVALE

PK DR

AND SPACE BLDG 571

CO RES

GFC

60549

CA

940880549
SYSTEMS ZONE 0262

DCAA
86

LOCKHEED AERONAUTICAL

CO RES OFE

COBB DRIVE BLDG B2 SUNNYVALE CA 940880549

DCAA
LOLL

LOCKHEED ADVANCED DEVELOPMENT

CO RES OFC

LOCKHEED

WAY
93599001
BRANCH OFFICE 300

PALMDALE

CA

DCAA
1000

POMONAVALLEY
GARVEY

AVE SOUTH SUITE

COVINA

CA 917902900
EASTERN REGION RESIDENT OFFICE

DCAA NORTH
NASHUA

65 SPIT BROOK RD BLDG

NHQ105

19

NH

030610868
BRANCH OFFICE

DCAA ATLANTA
2250 MARIETTA

NEWMARKET PKWY SUITE 124

GA

300678749

DCAA RAMA3 DCAA RSA3 ATTN
PERMANENT FILE
STEVE

THORSTED

FOR OFFICIAL

USE ONLY

MATTER

PT

000160

067

Case 1:00-cv-00129-FMA

Document 79-2

Filed 11/22/2004

Page 25 of 34

AUDIT REPORT

NO

0312196310601001

RESIEICI1QNS
CONTRACTOR INFORMATION
IDENTIFY

CONTAINED

IN THE AUDIT REPORT

MAY BE

PROPRIETARY

IT IS

NOT PRACTICAL

TO

OF THE DATA WHICH ARE PROPRIETARY TOO FEW AUDIT REPORTS ARE REQUESTED BY PARTIES OUTSIDE THE CONTRACTING ACTIVITY TO WARRANT THE SHOULD BE MADE IN THE EVENT OF AN EXTERNAL ADDITIONAL EFFORT PROPRIETARY DETERMINATIONS OF 18 1905 SHOULD BECONSIDERED BEFORE THIS REQUEST FOR ACCESS THE RESTRICTIONS
DURING THE CONDUCT OF THE AUDIT THOSE ELEMENTS

USC

INFORMATION

IS

RELEASED TO THE PUBLIC

ANY UNDER THE PROVISIONS OF TITLE 32 CODE OF FEDERAL REGULATIONS PART 29026BX2 WILL BE REFEIRCD FREEDOM OF INFORMATION ACT REQUESTS FOR AUDIT REPORTS RECEIVED BY DCAA
THE COGNIZANT CONTRACTING AGENCY FOR

TO

DETEN

AS TO RELEASABILITY

AND

DIRECT

RESPONSE

TO THE REQUESTER

THE DCFCNSE
DISCRETION

CONTRACT AUDIT

AGENCY HAS NO

OBJECTION

TO RELEASE OF THIS

OF THE CONTRACTING AGENCY TO AUTHORIZED REPRESENTATIVES OF
THIS

LTC

REPORT

AT THE

THE INFORMATION

CONTAINED

IN

ACTION ON THE SUBJECT OF THIS

AUDIT REPORT SHOULD NOT BE USED FOR PURPOSES OTHER THAN WITH THE AUDITOR AUDIT WITHOUT FIRST DISCUSSING ITS APPLICABILITY

FOR OFFICIAL

USE ONLY

PROPRIETARY

MATTER

000161

068

Case 1:00-cv-00129-FMA

Document 79-2

LOCKHEED MARTIN

Filed 11/22/2004

Page 26 of 34

MEMORANDUM
DATE
OCTOBER DALAL

10 LM

1997 SPACE SYSTEMS

TO

MISSILES

WHEELER LM

AERONAUTICAL

FROM

DIPASQUALE CORPORATE DIRECTOR

GOVERNMENTFINANCIAL
SUBJECT
WRITE OFF OF

MANAGEMENT

CRAY

COMPUTER

ENCLOSED

CRAY
OENVER

VALUE OF THE OF THE WRITE OFF OF THE NET BOOK WHICH REPRESENTS AN ALLOCATION IN TECHNOLOGY CENTER LOCKHEED INFORMATION OF THE COMPUTER WHICH WAS PART 996 AND NEEDS TO BE RECORDED ON THE CORPORATE BOOKS IN THIS WRITE OFF WAS TEMPORARILY
IS BILLING

LITC

DISPOSITIONED

PRIOR TO

YEAR END 1997
SEVERAL OPTIONS
FOR
IT

WE

HAVE

EXAMINED

RECORDING
IS

THIS

TRANSACTION

AND DECIDED

THAT

CAS
USAGE
OF

TO HANDLE COMPLIANT AND EQUITABLE WAY 1995 AND 1996 THE COMPUTER IN 1994 TO AERONAUTICAL SYSTEMS AND

TO ALLOCATE THE

WRITE OFF ACCORDING

TO ACTUAL

ACCORDINGLY

49

HAS BEEN ALLOCATED

TO MISSILES

SPACE

51

THIS

DECISION

HAS BEEN REVIEWED
CALL

AND APPROVED BY SENIOR

FINANCIAL

MANAGEMENT

IF

YOU

HAVE

ANY

QUESTIONS YOU MAY

ME

AT

301 8976781

ATTACHMENT

CC

DUKE KALLMAN MCCARTHY

MCKENNA

PROPRIETARY

MATTER

PT 000069
069

Case 1:00-cv-00129-FMA LQCKNEED AAIITHF7 E8O1AOCKL MESOAMARYLANO 2C

Document 79-2

INTEROFFICE

Filed 11/22/2004 DEBIT

Page 27 CREDIT

of 34 MEMOI

64148
LMAS
041718020100
DATE

OI1097

DEBIT

WE

YOUR ACCOUNT AS FOLLOWS
DESCRIPTION TOTAL

CRAY COMPUTER WRITE SEE
ATTACHMENT

OFF

79573388

BY

PROPRIETARY

MATTER

PT

OOO7O

IM2

REV 2481

070

Case 1:00-cv-00129-FMA LOCKHEED
8801

Document 79-2 INTEROFFICE DEBIT Filed 11/22/2004

Page MEMORANDUM CREDFL 28 of 34
NO

R4OCKLEPGE C3RIVE BETHESOA

MARYLANO 2Q817

64149

LMMS

042135200000
DATE

1011097

DEBIT

WE

YOUR ACCOUNT AS FOLLOWS
DESCRIPTION

TOTAL

CRAY COMPUTER WRITE OFF SEE
ATTACHMENT

646881

56

DY

PROPRIELARY

MATTER

PT
071

000071

IIM2

IREV

288

COPY

Case 1:00-cv-00129-FMA

GENERAL

MA MAINFO
JOIJINAL
TO

Document 79-2

Filed 11/22/2004
VOUCHER
SYSTEMS

AUTOMA1
OAI ACE
3I

FPEPA
AFP1OVE

SY EY
120 11

EXPLAT

EOQ2

JQ

CRA
IIC SU

OR

TR

FIES
RV FRU

CC

NO
Page 29 of 34

YE

IU

IV
EERT
II
II

LOF

77
TILL

FA

MASTER

CTESC

111111 LIII
IT

LIII
II

IKILL
IF
II

II

II

II

II

II

LLJLLLILJIJJJJIFFI
II III

II III

IT

LILT
III

IIT

IKIH
469
42W
CL

15044

O51
795

75

III

LILJLIJJ II II
PT000072

5L
CIJ

PROPRI MATT

Case 1:00-cv-00129-FMA

SEIILEMENT LOC1WE1 MARTIN SKLNK WORKS MTH AGREEMENT FXSCAE YEAR 1997
THIS

NF OV
INTO

Document 79-2

Filed 11/22/2004

Page 30 of 34

APEEMENT

IS ERITERCD

BY AND BCTWEEN THE

REPIEPENTED BY DEFENEC CONTRUCT

COMPANY ORHEAD ISSUES WORKSDIVISIONAL
AERONAUTICS THIS
IS

PA

MANE
FAR

DEPAR4

OF

LNSC DOD
AND LOCKHEED MARTIN

PU
AND
IN

PAIM4U1E GF SETTLING

LOVKH MARDNSKUI
1997
FEDERAL

LOT CONTRACTOR FISCAL YEAR

ENTERED INTO

PURSU
ON DEFENSE

ACCORDANCE WITB

FAR 42705I
THE
OOST
ISSUES

ENTITLED

CONTRACTING

PROCEDWE AGQNOY

YEAR 1997

AP

AGREED TO ARE BASED
TO

CONU AUDIT

DCAA

LOCKHEED MARTIN

VINAL OVEZBEAD PIOPOSAL SKUNK WORKS

QI
CORFIUCAI
COSTS

SUBIECT TO THE PROVISIOXIS

SET FOATH HEREIN TO

THE BELOW LISTED SATES ARE
FLEXIBLY LISTING

EBY4ATABLIAHED

AS ACCEPTABLE FOR APPLICATION

GOVCRNMENT

INCURRED DUZING
IS

LMSW FISCAL

YEAR 1997

PRICCDCONTRAOTS HAVING AND OF MAJOR

CON1

EUBCOU

ENCLOSED

TACAFR

19701632

RECCE
ENGINEERING
AIRCRAFT

IOG
40007768
12864485 74996235 325879 543028894

31834760 17713861

61888 62078
75792A

TACTICAL ALRCRAFTLO8

VLS

RGODFLA
ENGINEERING

LOB OLS

50776
23881340 84795322 183525215 553216

ILL

SERVICE

OPERATIONS

GSA 06344689
HELENDABE

OPA NONOPE
FACILITIES

96124
179752851

64333 88444 51952 65678 44764

AIRCRD SRVICESLOFL OPERATIC DLI
TOTAL

DLS DLI
OPAISTIONS

IWENDALE DKEOT

AN INDIRECT
AND INDIRECT

78011681

43399 TE4

LABOR

TO LASOPURIL

LABORS

CAPJUI

OFL
4303
4836
5440 3363 1A84

TACAIR

ENGINWING
AITCRAFT

SERVICES

THE AMOUNT OF SI Z456 DISALLOWED FAR SOFTWARE ASSOCIATED WITH CRAY LNI IS IN DISPT THE CONTRACTOR HAS APPEALED THE CONTRACTING IF THIS AMOUNT OR ANY PART TBOICOF IS AND THE PARTIES ARE IN LITIGATION DECISION DETEIMINED TO BE ALLOWABLE AND ALLOCABLE IT WILL BE ADDED TO THE SI2BSEQUENTLY
NEGOTIATION

OMPU

OFLHE THEN OLDEST OPEN OVERHEAD YEAR

DISALLOWED FOR THE ALLOCATION OF CRAY THE AMOUNT OF SI 469000 THE CONTRACTOR HES APPEALED THECONUACTING OFFICERS 1993 IS

DI

CONIP
ZNAL

IN

073

Case 1:00-cv-00129-FMA DEGSC
T1

Document 79-2
IITLGAT

Filed 11/22/2004
OT

Page 31 of 34

ARE IN

ON FII3I5

1Y
BE ADDED

UBSEQUENTLY4ETEZMINED OF THE THEN OLDEST OPEN OVERHEAD

TO BE ALLOWABLE AND AFLOVABLE

WILL

FR

YE
AND CONDITIONS OF

THIS

SGREOMENT SHALL NOT CHANGE ANY MONETARY CEILIN PROVIDED
IN THE IEZMS TO

CONKACT OBLIGATION

ALLOWANCE OR ISAFLOWANCC THIS AGREEMCNT
IS

OR AFFE
ZAIGHT
AVAILABLE

WITHOUT PREJUDICE

ANY

RIGHT OR CLAIM THAT IS

OR

TO EITHER

THE GOVERNMENT OR LOCKHEED WITH RESPECT TO SIMILAR

OR RELATED COSTS INLBTUIE

OVERHEAD PROPOSALS NEITHER THE GOVERNMENT NOR LOCKHEED SHALL CONSIDER ANYTHING IN ALLOWABLE OR UNALLOWABLE MUTUAL AGREEMENT ON SPECIFIC THIS AGREEMENT AS ESTABLISHING INCUZWED COSTS BEYOND 1997 HEREBY EXECUTED THIS AGREEMENT ON

IN WIFLIESS

HEREOFB THE PARTIES

TBIS

DAY OF

MMA2003
LOCK MARTIN
COMPANY MAI4AGEMENT

AG

MCCLENDON
MANAGER PALMDALE ACCOUNTING

JOHN
DIVISIONAL

LOCKE ADMIUISVECDNTRACTID

074

Case 1:00-cv-00129-FMA

Document 79-2

Filed 11/22/2004

Page 32 of 34

FEDERAL COURTS ADMINISTRATION PL
102572
SEE PAGE 106

ACT OF
4506

1992

STAT

DATES OF CONSIDERATION
SENATE AUGUST

AND PASSAGE
1992

OCTOBER 1992 138

HOUSE

OCTOBER

CONG RECORD VOL
SENATE

1992
JULY

REPORT JUDICIARY

COMMITTEE

NO 102342
1569

27

1992

TO ACCOMPANY
HOUSE REPORT JUDICIARY

COMMITTEE

TO ACCOMPANY HR 5933
THE SENATE
BILL

NO

1021006

OCT

1992

WAS PASSED

IN

LIEU

OF THE HOUSE
TEXT

BILL

AFTER

ITS LANGUAGE TO CONTAIN MUCH OF THE THE HOUSE REPORT THIS PAGE IS SET OUT BELOW AND PRESIDENTS SIGNING STATEMENT PAGE 2942 FOLLOWS

AMENDING
BILL

OF THE HOUSE
THE

HOUSE REPORT NO
PAGE

1021006

THE COMMITTEE ON THE JUDICIARY TO WHOM WAS REFERRED THE BILL TO IMPLEMENT THE RECOMMENDATIONS OF THE FEDERAL 5933 COURTS STUDY COMMITTEE AND FOR OTHER PURPOSES HAVING CONSIDERED THE SAME REPORT FAVORABLY THEREON WITH AN AMENDMENT AND RECOM MEND THAT THE BILL AS AMENDED DO PASS

HR

PAGE

121

EXPLANATION INASMUCH
AS IN

OF

AMENDMENT
SINGLE

HR
THE

AMENDMENT

5933 NATURE

WAS ORDERED REPORTED WITH
OF

REPORT CONSTITUTE

AN EXPLANATION

THE CONTENTS OF THIS SUBSTITUTE OF THAT AMENDMENT

SUMMARY AND PURPOSE
5933 IN PART IS SUPPLEMENT TO THE FEDERAL COURTS STUDY COMMITTEE IMPLEMENTATION ACT OF 1990 WHICH WAS ENACTED INTO LAW TO AD AS PART OF THE JUDICIAL IMPROVEMENTS ACT OF 1990 IN ADDITION NUMBER OF THE FEDERAL COURTS STUDY COMMITTEE RECOIN DRESSING

HR

3921

075

Case 1:00-cv-00129-FMA

Document 79-2

Filed 11/22/2004
PL
102572

Page 33 of 34
ACT

FED COURTS ADMINISTRATION
PAGE 28
SECTION

907

SITES

FOR HOLDING

COURT

THE AUTHORITY OF THE COURT TO HOLD PROCEED AND WITNESSES THE AMEND TO THE LITIGANTS WILL RESTORE THE AUTHORITY OF THE COURT TO PRESIDE IN HEARINGS IN GOVERNMENT CONTRACT DISPUTES WHEN THE OVERSEAS PARTICULARLY CIRCUMSTANCES OF THE CASE MAKE THAT THE MOST APPROPRIATE LOCATION FOR THE PARTIES AND WITNESSES
CLARIFIES

SECTION

907

INGS MERIT

WHERE CONVENIENT

SECTION

908

JURISDICTION

WOULD AMEND 41 605C BY MAKING CERTIFI UNDER THE CONTRACT DISPUTES ACT NONJURISDICTIONAL WASTEFUL AND ESOTERIC LITIGATION OVER THIS ISSUE HAS PRODUCED SEVER AL HUNDRED WRITTEN AND OFTENTIMES CONFLICTING OPINIONS FROM VARI OUS COURTS AND AGENCY APPEALS BOARDS THE LANGUAGE IN THIS SECTION IS THE RESULT OF MUCH DISCUSSION BETWEEN THE ADMINISTRATIVE CON COURT CHIEF JUDGE FERENCE MEMBERS OF CONGRESS AND THE CLAIMS SMITH OF THE CLAIMS COURT IS STRONG ADVOCATE OF THIS SECTION CERTIFICATION HAS ALWAYS BEEN TENDED TO INSURE THAT COMPLETE CLEAR AND HONEST CLAIMS ARE PRESENTED TO FEDERAL CONTRACTING OFFI CERS AND THIS REQUIREMENT REMAINS CONTRACTING OFFICERS ARE NOT RE OF QUIRED TO ADDRESS CLAIMS THAT DO NOT COMPLY WITH THE PROVISIONS 41 605
THIS
CATION PROVISION OF CLAIMS

USC

US

USC

CLAIM IS IN THE CERTIFICATION DISCOVERED AFTER BE CURED BY THE CONTRACTOR TO AVOID REPETITION OF MAY THE ENTIRE ADMINISTRATIVE CLAIMS PROCESS AND WASTE OF JUDICIAL OR BOARD RESOURCES SEE GENERALLY UNITED GRUMMAN AERO STCRES BALL BALL BROSAMER SPACE CORP 927 F2D 575 FED CIR 1991 INC UNITED STATES 878 F2D 1426 FED CIR 1986 THE TERM TECHNICALLY DEFECTIVE IS INTENDED TO COVET THE FULL OF DEFECTS FOUND BY THE COURTS THAT DO NOT INVOLVE SUBSTAN RANGE TIVE DEFECT SUCH AS BAD FAITH FRAUD OR RECKLESS AND INTENTIONAL DIS OF THE STATUTORY CERTIFICATION REGARD REQUIREMENTS EXAMPLES OF DEFECTIVE CERTIFICATIONS MADE CURABLE BY THIS AMEND TECHNICALLY MENT INCLUDE CERTIFICATION WITH EACH DOCUMENT SUBMITTED AS PART OF THE CLAIM WHEN ALL CLAIM DOCUMENTATION IS NOT SUBMITTED SIMULTA WHEN TWO OR MORE CLAIMS NOT REQUIR NEOUSLY MISSING CERTIFICATIONS ING CERTIFICATION ARE DEEMED BY THE COURT OR BOARD TO BE LARGER CLAIM REQUIRING CERTIFICATION AND CERTIFICATION BY THE WRONG OR IN CORRECT REPRESENTATIVE OF THE CONTRACTOR WHEN THE PERSON MAKING THE CERTIFICATION WAS AUTHORIZED BY THE CONTRACTOR TO CERTIFY ON ITS BEHALF THIS LIST IS NOT INTENDED TO BE EXCLUSIVE BUT TO ILLUSTRATE THAT USE OF THE WORD TECHNICALLY DOES NOT NARROWLY AND UNREASON ABLY LIMIT THE SCOPE OF THIS AMENDMENT IT IS THE COMMITTEES BELIEF THAT CONTRACTORS WHOSE CERTIFICATIONS MISTAKE ARE DEFECTIVE AS THE RESULT OF INNOCENT OR INADVERTENCE SHOULD NOT BE PENALIZED WHERE THEIR CLAIMS ARE OTHERWISE MERITORI OUS AND GOOD FAITH EFFORT APPEARS TO HAVE BEEN MADE TO PROVIDE CERTIFICATION IN THE FIRST INSTANCE RECERTIFICA RESPONSIVE INCLUDING TIONS FILED IN RESPONSE TO CONTRACTING OFFICER IN QUIRIES AFTER THE MI TIAL CLAIM WAS FILEDL TO REITERATE THE LANGUAGE WOULD NOT ELIMINATE THE CERTIFICATION REQUIREMENT THE LANGUAGE MERELY WOULD PERMIT AN AGENCY BOARD OF CONTRACT APPEALS OR COURT TO ALLOW CERTIFICATION TO BE AMENDED

HOWEVER
LITIGATION

DEFECT

IN

3937

076

Case 1:00-cv-00129-FMA

Document 79-2
LEGISLATIVE
HOUSE REPORT

Filed 11/22/2004
HISTORY

Page 34 of 34

NO

1021006

PAGE 291 WAS THERE ARE REASONABLE GROUNDS AND SO LONG AS THE CERTIFICATION NOT MADE FRAUDULENTLY IN BAD FAITH OR WITH RECKLESS OR GROSSLY NEG ACT OR APPLICABLE REGULA LIGENT DISREGARD OF THE CONTRACT DISPUTES AND ALLOW TIONS THIS SECTION SHALL ALSO HAVE PROSPECTIVE APPLICATION WHERE COURT OR CLAIM WAS FILED INTEREST TO ACCRUE FROM THE DATE TO BE COR DEFECTIVE CERTIFICATION BOARD OF CONTRACT APPEALS ALLOWS RECTED
IF

SECTIONS SECTION

909

AND 910 AWARDOBLE

COSTS

AND PROCEEDINGS GENERALLY

909 AND 910 WILL PROMOTE UNIFORMITY AMONG THE COURTS BY OF TITLE 28 TO THE CLAIMS COURT VARIOUS PROVISIONS MAKING APPLICABLE IN FORMA PAUPERS PROCEEDINGS AND PERTAINING TO COSTS WITNESS FEES COURTS TO OTHER FEDERAL TRIAL PAYMENT OF JUDGMENTS NOW APPLICABLE SECTION P11 SUBPOENAS
WILL

AND

INCIDENTAL

POWERS
2521

TO PROVIDE FOR THE CLAIMS SECTION 911 TO ENFORCE ITS ORDERS AND PROCESSES AS IS COURT THE SAME AUTHORITY TAX COURT PRESENTLY PRQVIDED FOR THE

AMEND 28

USC

US

TITLE

XEMCTIVE

DATE

DATE STATING THAT EXCEPT AS RESIDUAL EFFECTIVE THIS SECTION IS THE TEXT OF THE BILL THIS ACT SHALL OTHERWISE SPECIFICALLY PROVIDED IN 1993 BE EFFECTIVE ON JANUARY

COMMITFEE OVIIISIGWR
IN

FINDINGS

OF THE RULES OF THE COMPLIANCE WITH CLAUSE 2LX3XA OF RULE THECOMMITTEE REPORTS THAT THE FINDINGS HOUSE OF REPRESENTATIVES AND RECOMMENDATIONS OF THE COMMITTEE BASED ON OVERSIGHT ACTIVI OF THE RULES OF THE HOUSE OF TIES UNDER CLAUSE 2XBX1 OF RULE IN THE DESCRIPTIVE PORTIONS OF THE ARE INCORPORATED REPRESENTATIVES REPORT

COMMFITEE ON GOVERNMENT OPERATIONS OVERSIGHT FINDINGS

NO FINDINGS OR RECOMMENDATIONS OF THE COMMITTEE ON GOVERN MENT OPERATIONS WERE RECEIVED AS REFERRED TO IN CLANSE 2LX3XD OF RULE XI OF THE RULES OF THE HOUSE OF

REPRE
INAPPLICABLE

NEW BUXX
CLAUSE
ISLATION

AUTHORITY

AND TAX EXPENDITURES
IS

2LX3XB

OF

HOUSE RULE XI

DOES NOT PROVIDE

NEW BUDGET

AUTHORITY

BECAUSE THIS LEG OR INCREASE TAX EX

PENDITURES

CONGRESIONAL BUDGF
IN

OFFICE

COST ESTIMATE

OF THE COMPLIANCE WITH CLAUSE 2LX3XC OF RULE XI OF THE RULES WITH RESPECT TO THE COMMITTEE SETS FORTH HOUSE OF REPRESENTATIVES THE BILL 5933 THE FOLLOWING ESTIMATE AND COMPARISON PREPARED UNDER SECTION OFFICE BY THE DIRECTOR OF THE ACT OF 1974 403 OF THE CONGRESSIONAL BUDGET

HR

CONGI BUD
3938

077