RETROACTIVE COST DISALLOWANCES REVISITED: DID THE FEDERAL CIRCUIT COMMIT ERROR BY FAILING TO RECOGNIZE RELEVANT SUPREME COURT PRECEDENT WHEN IT DECIDED RUMSFELD V. UTC?

"2 The Federal Circuit cases in question rely on United States Supreme Court and federal appellate court decisions holding that to establish equitable estoppel against the government, there must be, in addition to the four standard elements required to establish equitable estoppel, a showing of some form of affirmative misconduct by a government representative.3 However, all of these Supreme Court and appellate court decisions involve situations in which the claimant attempted to obtain authorizations (e.g., immigrant status) or payments (e.g., social security entitlement) from the federal government based on erroneous advice received from a governmental representative in a circumstance where the approval or payment was not permitted by a federal statute or regulation.4 Significantly, not one such case involved a government contract. "15 Finally, in OPM v. Richmond the Court reversed a Federal Circuit finding that affirmative misconduct (erroneous advice) supported finding estoppel; the Court found the government is not estopped from refusing to pay a claim for money from the Public Treasury contrary to a statutory appropriation where a retiree received erroneous advice regarding eligibility for disability annuity payments. 16 In none of those cases has the Supreme Court found, though requested to do so by the government, that there should be a blanket prohibition on estoppel against the government.17 In addition, in only one of those cases, Heckler v. Community Health Service, was the government arguably acting in a proprietary capacity (government claim for reimbursement of overpayments to a health care provider).18 However, the Court decided Heckler on the basis that the provider failed to establish two of the four elements necessary to find estoppel (change of position and reliance), not on the basis of a failure to establish affirmative misconduct.19 Other than Heckler, and independent of decisions by the Federal Circuit, none of the other federal appellate court decisions that have addressed affirmative misconduct by a government representative as an element required to establish estoppel involved a government contract or the government acting in its proprietary capacity. "23 Then in United States v. Winstar Corp., et al., in concluding that Congress' enactment of the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA) breached Winstar's government contract, the Court cited with approval the above-quoted statement from Lynch as well