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Early on in her career, Karen Manos adopted a strategy that has served her well: “Pick one thing and become very good at it.” For Manos, a 45-year-old partner at D.C.’s Howrey Simon Arnold & White, that one thing is costs and pricing in government contracts. Although Manos describes the specialty as “arcane,” its appeal to her is clear-cut: “The amount of money being argued about tends to be huge, and there are many opportunities to make new law,” she says. One of Manos’ biggest cases, one that she calls “the most fun case � I think I would have done it for free,” was representing Teledyne Inc. in 2001. Like many other defense contractors in the 1990s, Teledyne enjoyed an unexpected surplus in its pension fund from the booming stock market. Eyeing these surpluses, the federal government reasoned that since companies typically include estimates of pension costs in their contract pricing, it must have overpaid its contractors. In 1995, the Cost Accounting Standards Board revised its rules: If a company sold off a division, it would now be required to pay the government an “equitable share” of any pension surplus. Manos successfully argued before the U.S. Court of Federal Claims that this amounted to repricing old contracts and therefore required an offset adjustment to counter the payout. “What’s so great about cost accounting standards is it’s an area where you’re able to make new law, and that’s what we did in Teledyne,” Manos says. The health of pension funds remains a live issue, although now the problem is that many government contractors face pension deficits. Manos has a case, not yet filed, where she plans to argue that the government ought to contribute money to contractors’ underfunded pensions. Manos’ experience in the costs and pricing area dates back to her service in the Air Force � she graduated from the U.S. Air Force Academy in 1981 as part of the second class to admit women. She wanted to be a fighter pilot, but since that wasn’t an option for women back then, she became a contracting officer. The Air Force later sent her to Duke University School of Law, where she earned her J.D. in 1986. As an officer in the Judge Advocate General Corps, Manos continued to focus on contracts. She also served as a part-time clerk to U.S. District Judge Royce Lamberth of the District of Columbia from 1987 to 1989. When she left the Air Force in 1995, Manos joined Howrey’s government contracts group as an associate, making nonequity partner in 1998 and full equity partner in 2000. She now heads the firm’s government contracts practice. Ruth Franklin, director of the procurement division at the National Defense Industrial Association, praises Manos’ “considerable legal skills and expertise, particularly in the area of cost principles and cost accounting standards. . . . In the field, we count on her.” Manos also chairs the trade group’s contract finance committee. Another one of her current cases concerns Arch Chemicals Inc. For 50 years, the Norwalk, Conn.-based company held the sole contract to supply all the government’s hydrazine, which is used as fuel for rockets, the space shuttle, and the F-16 jet’s emergency power unit. But earlier this year, the company lost the $200 million contract to SpaceChem, an alliance between an American company and a French company. In May, Manos protested the SpaceChem award before the General Accounting Office (now the Government Accountability Office) on Arch’s behalf. She argued that relying on a foreign producer � from France, no less � for technology, expertise, and equipment jeopardizes national security. In July, the GAO reopened the bidding, giving Arch another shot at winning the contract. A decision is pending. “Karen has a magnificent ability to use her understanding of government contract regulations to support us in our development of contract strategies and legal strategies,” says Christopher Cice, business manager of propellants at Arch. The company, he adds, has been “very, very happy” with the result.

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