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not be the basis for a genuine issue as to a material fact so as
to preclude the use of summary judgment.
Petitioner contends that it has shown that stock option
costs would not be shared in an arm’s-length transaction.
Petitioner’s proof on this point consists of the experiences of
its officers and employees, some of whom have worked for or with
unrelated third parties. Petitioner also relies on the fact that
the Federal Acquisition Regulations System (FARS) classifies
qualifying employee stock purchase plans as “noncompensatory.”
That classification precludes payment by the Federal Government
for costs of qualified employee stock options in connection with
contracts governed by FARS. Because FARS governs all civil and
military Federal executive branch contracts with private business
for goods and services, petitioner reasons that a large number of
“arm’s-length transactions” do not include the cost-sharing of
employee stock options.
Respondent counters that the regulations provide that all
costs should be included and that stock option costs are “costs”
that may be allocated. In addition, respondent relies on an
expert’s opinion that stock option costs would be accounted for
in an arm’s-length business relationship. Respondent also relies
on what he believes are analogous court opinions in which the
stock options have been treated as compensation or as part of the
consideration for a transaction. Finally, respondent contends
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