Under the CAS, contractor must agree to pay a contract price adjustment, with interest, for any increased cost paid by the government because of the contractor’s failure to comply with CAS. The statute further provides that where multiple contracts are affected by a noncompliance, the increased cost to the government is to be determined by considering the costs among those contract in the aggregate in accordance with CAS 306(e). The government assertion that lower costs would have been negotiated on its fixed price contracts had there been no CAS violation and it tried to limit any offsets to this amount by assserting that the aggregate computation is limited by CAS 306(b) where the contractor cannot offset or eliminate cost increases associated with changes in accounting practices in cost reimbursement contracts with cost decreases triggered in fixed price contracts. The Court rejected the government position stating CAS 306(b) dealt onlyiwth cost increases that inflated the price of a fixed price contract. Looking at the preamble to CAS 306(b) the court found there was "no hint that this regulation required a contractor to reimburse the government fully for increased costs under a cost reimbursement contract if the same CAS violation had the effect of decreasing costs in other fixed price contracts."

Further, the court said that any idea that CAS 306(b) somehow limits the aggregation principle in CAS 306(e) contracts DCAA’s own guidance on calculating the cost impact of a non-compliance when the non-compliance affects both fixed price and cost-type contracts. DCAA’s guidance concludes that increased costs in the aggregate paid by the government is calculated by combining the increased or decreased costs paid for each group of current contracts – that is flexibly priced and fixed price contracts. The court concluded the government "is incorrect in suggesting that decreased costs associated with other fixed-price contracts is had with Lockheed cannot have the effect of diminishing or even eliminating the cost increases associates with the noncompliance of the CAS in question."

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