Teledyne Continental Motors, General Products Div. v. U.S.

• Citation: 906 F.2d 1579
• Decision Date: 02 July 1990
• Docket Number: No. 89-1599,89-1599
• Parties: 36 Cont.Cas.Fed. (CCH) 75,887 TELEDYNE CONTINENTAL MOTORS, GENERAL PRODUCTS DIVISION, Appellant, v. The UNITED STATES, Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals for the Federal Circuit

Page 1579

906 F.2d 1579

36 Cont.Cas.Fed. (CCH) 75,887

TELEDYNE CONTINENTAL MOTORS, GENERAL PRODUCTS DIVISION, Appellant, v. The UNITED STATES, Appellee.

No. 89-1599.

United States Court of Appeals Federal Circuit.

July 2, 1990.

Appealed from: Armed Services Board of Contract Appeals.

Thomas L. Patten, Latham & Watkins, of Washington, D.C., argued for appellant. With him on the brief were Everett C. Johnson, Jr., Franklin G. Snyder and Lauren Battaglia.

John S. Groat, Commercial Litigation Branch, Dept. of Justice, of Washington, D.C., argued for appellee. With him on the brief were Stuart M. Gerson, Asst. Atty. Gen., David M. Cohen, Director and Helene M. Goldberg, Asst. Director. Also on the brief was Gary Smith, Defense Logistics Agency, Cleveland, Ohio, of counsel.

Before RICH, MAYER and PLAGER, Circuit Judges.

ORDER

MAYER, Circuit Judge.

Teledyne Continental Motors, General Products Division, appeals a decision of the Armed Services Board of Contract Appeals, 89-2 B.C.A. p 21,780, 1989 WL 46978 (1989), denying-in-part, sustaining-in-part, and remanding a decision of the administrative contracting officer that Teledyne's use of active employee head count as the sole basis for allocating pension costs between two of its divisions does not comply with Cost Accounting Standards (CAS) 403 and 413. We dismiss the appeal for lack of jurisdiction.

Background

Teledyne Continental Motors manufactures tank and airplane engines for military and industrial application at two plants in Muskegon, Michigan, established as separate divisions called the General Products Division (GPD) and the Industrial Products Division (IPD), respectively. Each division manufactures engines both for the government and for commercial customers. The government reimburses Teledyne for the pension costs allocable to work performed under its government contracts. Therefore, the apportionment of Teledyne's pension costs between its two Muskegon divisions affects the share of these costs born by the government.

Teledyne allocates its pension costs according to the number of employees working in each plant, a method known as the "active employee head count." In 1979, following an audit of Teledyne's costs for 1976-77, the administrative contracting officer notified Teledyne of his initial finding that its pension cost allocation method did not comply with CAS 403 (Allocation of Home Office Expenses to Segments), 4 C.F.R. Sec. 403, and CAS 413 (Adjustment and Allocation of Pension Costs), 4 C.F.R. Sec. 413. On February 1, 1980, the administrative contracting officer issued his final decision of noncompliance. He directed Teledyne to compute its pension costs separately for GPD and IPD and to remit to the government $2,700,000, the amount he determined was overcharged for calendar year 1979 because Teledyne did not calculate pension costs separately for the two Muskegon divisions. The contracting officer later reduced the overcharge to $1,627,000.

Teledyne appealed to the board. The parties selected two CAS-covered contracts as test cases and stipulated the issue to be: "Does the active employee head count method currently used by Teledyne for allocating the following elements of pension cost comply with CAS 403, 412 and 413: (1) past service costs; (2) supplemental pension benefits; and (3) retirement bonus." The parties also asked the board to determine whether any of the alternative cost allocation methods suggested by the government complied with the Cost Accounting Standards.

The board made extensive findings of fact and drew the following conclusions: (1) CAS 413.50(c)(1) does not mandate the use of the active employee head count as the base for allocating the past service, supplemental benefit and retiree bonus components of pension cost; (2) with respect to past service cost, the requirement of CAS 413.50(c)(1) would be satisfied by the use of earned service credits as the allocation base, and both earned service credits and the active employee head count should be included in the allocation base to satisfy the requirement of CAS 403; ^* (3) supplemental benefit and retiree bonus costs should be allocated according to service credits earned by retirees at the respective divisions to satisfy the requirement of CAS 413.50(c)(1); and (4) use of the active employee head count as the allocation base for retiree bonus cost complied with CAS 403, but this standard requires the use of both earned service credits of retirees and the active employee head count as the allocation base for supplemental benefit cost.

Because neither party proposed alternative formulas that incorporated the factors required to allocate all pension cost components properly, the board remanded the case to the parties for the formulation of an appropriate allocation base. It ordered Teledyne to submit a proposal to the contracting officer within 60 days and the contracting officer to act on Teledyne's proposal within 90 days. If the parties failed to agree on an allocation base, the matter would be resubmitted to the board for final resolution. 89-2 B.C.A. p 21,780 at 109,593. Teledyne appeals, asking this court to hold that the active employee head count is the appropriate base for allocating all of the disputed components of pension cost. The government says we have no jurisdiction.

Discussion

The premise for the government's challenge to our jurisdiction over Teledyne's appeal is that the decision of the board is not a "final decision of an agency board of contract appeals" under 28 U.S.C. Sec. 1295(a)(10) because the board merely ruled on the issues presented to it in an interlocutory manner. It did not decide finally whether the government is entitled to the money it claims and which was awarded by the contracting officer in the appealed decision. Teledyne responds that the board's determination of CAS noncompliance is a final, appealable order directing it to change its method of allocating pension costs and that the board disposed of every issue before it, leaving nothing of the contracting officer's decision to be resolved.

We have jurisdiction under section 1295(a)(10) to review only final decisions of the boards of contract appeals. United States v. W.H. Moseley Co., 730 F.2d 1472, 1474 (Fed.Cir.1984). A final decision is one which " 'ends the litigation on the merits and leaves nothing for the court to do but execute the judgment.' " Firestone Tire & Rubber Co. v. Risjord, 449 U.S. 368, 373, 101 S.Ct. 669, 673, 66 L.Ed.2d 571 (1981) (quoting Coopers & Lybrand v. Livesay, 437 U.S. 463, 467, 98 S.Ct. 2454, 2457, 57 L.Ed.2d 351 (1978) and Catlin v. United States, 324 U.S. 229, 233, 65 S.Ct. 631, 633, 89 L.Ed. 911 (1945)). "This final judgment rule requires that 'a party must ordinarily raise all claims of error in a single appeal following final judgment on the merits.' " Flanagan v. United States, 465 U.S. 259, 263, 104 S.Ct. 1051, 1054, 79 L.Ed.2d 288 (1983) (quoting Firestone Tire & Rubber Co. v. Risjord, 449 U.S. at 374, 101 S.Ct. at 673).

The Supreme Court has identified several important interests served by the final judgment rule:

It helps preserve the respect due trial judges by minimizing appellate-court interference with the numerous decisions they must make in the prejudgment stages of litigation. It reduces the ability of litigants to harass opponents and to clog the courts through a succession of costly and time-consuming appeals. It is crucial to the efficient administration of justice.

Flanagan v. United States, 465 U.S. at 263, 104 S.Ct. at 1054. In accordance with the rule, a judgment limited to the issue of liability, where the assessment of damages or other relief remains open, is not final. Liberty Mutual Ins. Co. v. Wetzel, 424 U.S. 737, 744, 96 S.Ct. 1202, 1206, 47 L.Ed.2d 435 (1976). Therefore, absent a statute, it is not appealable.

These principles apply to appeals from boards of contract appeals, of course, and we are not writing on a clean slate in this case. In Teller Envtl. Sys., Inc. v. United States, 802 F.2d 1385, 1389 (Fed.Cir.1986), we said that "an important focal point in ascertaining finality of a board's decision is the scope and extent of the contracting officer's decision." There, the contracting officer had determined both the contractor's liability and the amount of damages. Both issues were before the board, but it decided only the liability issue and remanded the determination of damages to the parties. This court had no jurisdiction over the appeal because the board had not completely decided the case before it.

Here, the administrative contracting officer likewise determined both liability (noncompliance with the Cost Accounting Standards) and the amount Teledyne owed the government. The board affirmed the determination of noncompliance (at least with respect to some components of pension cost), but did not decide whether the government had been overcharged or, if so, by how much. Therefore, the board did not completely decide the case before it, and...