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ASBCA Reconsiders CAS 418 Definition Of "Homogeneous Cost Pools"


In a decision published on February 26, 2007, the Armed Services Board of Contract Appeals granted Appellant's motion for reconsideration of the widely criticized decision in AM General LLC, ASBCA Nos. 53610, 54741, 06-1 BCA ¶ 33,190, in which the Board had granted summary judgment to the Government, finding that an overhead cost pool that included some capital facilities used in production of the commercial HUMMER but was allocated to all HUMMER production did not comply with the homogeneity requirements of CAS 418 because those assets did not directly benefit production of the military version of the HUMMER. After considering the additional arguments of the contractor and of the National Defense Industrial Association as amicus curiae (represented by Crowell & Moring), the Board found that the evidence about the "homogeneity" of activities in the pool and the base at issue was insufficient to demonstrate a violation of CAS 418 and that the Government had failed even to address materiality ("a crucial test for determining homogeneity"), and for these reasons vacated its prior decision.

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