dissenting in part:
I concur in the court’s decision as to the accounting issues, Part II, but dissent regarding the court’s approach and method of finding excessive profits, Part III — Part VI.
My comments and objections to the court’s decision are both specific and general in nature. Specifically, I believe there are technical flaws in the court’s determination of excessive profits.1 There are sounder methods of evaluation which, when applied, demonstrate that plaintiffs profits were not excessive. Indeed, Trial Judge Harkins found plaintiff to be entitled to a clearance. In more general *730terms, however, I am compelled to express my disagreement with the court’s approach of essentially placing the burden of proof upon plaintiff to show its profits were not excessive in contravention of Lykes Bros. S.S. Co. v. United States, 198 Ct.Cl. 312, 459 F.2d 1393 (1972)(hereinafter Lykes). The majority’s decision is an unwarranted extension of an approach begun in Major Coat Co. v. United States, 211 Ct.Cl. 1, 543 F.2d 97 (1976) (hereinafter Major Coat) in which the court stated it would "engage in judgmental adjustments and reworkings of the data placed in the record,” 211 Ct.Cl. at 48, 543 F.2d at 124, in order to ascertain whether excess profits existed. I agree fully with Major Coat and believe its approach plays a necessary role in deciding renegotiation cases. But in the instant case, the majority’s independent analysis and reworking of data extends the approach of Major Coat to a point where the burden of proof rules delineated by Lykes are virtually abolished. In my opinion, Major Coat never intended such a result.
The following discussion breaks down into essentially three parts. First there is a review of the development of burden of proof allocation in renegotiation cases concentrating on Lykes and Judge Bennett’s important opinion in Major Coat. The purpose of this review is to demonstrate that there is a key difference between permitting defendant to escape the burden of proof requirements of Lykes (in effect, the majority’s decision) and engaging in an independent analysis of the record pursuant to Major Coat so as to excuse defendant from meeting the stricter evidentiary standards of Major Coat.
Second, with this background it can next be seen how, in this particular case, the majority’s independent analysis has the effect of repudiating Lykes in view of the Government’s complete failure of proof and the concededly favorable consideration due to plaintiff under all the statutory factors. In this second portion, the difference between this case and other cases where excessive profits have been found is also illustrated as well as the practical effect of the "new rule” established by the majority’s approach.
Third, even assuming (which I do not) that it is correct to conduct the independent analysis as the majority does, in *731the last portion of the dissent suggested deficiencies of this independent analysis are discussed. I have put forward an alternative method of analysis indicating plaintiffs profits are not excessive.
I.
Development of the Burden of Proof Allocation
Until 1971 jurisdiction over contract renegotiation cases was in the United States Tax Court. In line with its practice of placing the burden of proof on taxpayers the Tax Court required the renegotiation petitioner affirmatively to demonstrate that its profits were not excessive. A contractor before the Tax Court had both the burden of proceeding with the evidence, and the ultimate burden of persuasion.2 Lykes, 198 Ct.Cl. at 321, 459 F.2d at 1397.
Congress transferred jurisdiction over renegotiation cases from the Tax Court to the Court of Claims in 1971, and in Lykes the court had its first opportunity to reexamine burden of proof responsibilities. Chief Judge Cowen, speaking for the court, stated in his landmark decision that while plaintiffs would still have the "initial burden of going forward with proof’ or "the burden of pleading,” Lykes, supra, 198 Ct.Cl. at 326-327, 459 F.2d at 1401-02, the ultimate burden of proof and risk of nonper-suasion would be upon the Government. After plaintiff had met its initial burden the Government, in rebuttal, must first go forward with its own evidence to meet plaintiffs prima facie case, and must further satisfy its burden of persuasion by presenting a preponderance of evidence to support its contentions. Lykes, supra, 198 Ct.Cl. at 327-30, 459 F.2d at 1401-03. Henceforth, the Government would have to show both that "plaintiff realized excessive profits, as well as the amount of excessive profits.” 198 Ct.Cl. at 330, 459 F.2d at 1403. *732The court in Lykes recognized it was reversing the Tax Court’s assignment of burden of proof. Renegotiation cases, it was noted, differ significantly from tax cases, or any other cases in this court because plaintiff is not seeking to recover a money judgment against the United States; rather, "It is the Government, based upon a unilateral order of the Renegotiation Board, which asserts that the contractor owes it money.” 198 Ct.Cl. at 325, 459 F.2d at 1400. Therefore renegotiation cases are analogous to cases before boards of contract appeals where a contractor appeals from a contracting officer’s assessment of extra Costs and where "the Government has the burden of proof in the de novo hearing before a board.” 198 Ct.Cl. at 329, 459 F.2d at 1403.
The Lykes allocation of burden of proof responsibilities accords with several fundamental and practical principles. First, our jurisprudence recognizes the general proposition that the party seeking to change the status quo must prove its case, in civil matters, by a preponderance of evidence. In renegotiation cases the Government is accorded a right by statute to challenge the fairness of dealings it freely engaged in and claim it has been the victim of excessive profiteering. It is sometimes difficult to feel great sympathy for the Government’s position when the Government often can and has threatened contractors with forced acceptance of Government business unless a contractor "voluntarily” agrees to contract negotiation, see Major Coat, 211 Ct.Cl. at 11, 543 F.2d at 103. The Renegotiation Act permits the Government later to complain the profits a contractor made on a contract it was compelled to accept were excessive. Under such circumstances, it seems fair to place the burden of proof on the Government. Finally, this placement makes sense because the Government is most likely to possess the best information indicating whether plaintiffs profits were excessive. One feature of Major Coat was to emphasize the need for comparative data in litigating renegotiation cases. With its ability to draw on Renegotiation Board files and the records of procuring agencies, the Government is best positioned to offer evidence of the profits of companies similar to plaintiffs. The court in both Lykes and more recently in Camel Mfg. Co. v. United States, 215 Ct.Cl. 460, 572 F.2d 280 (1978) *733required plaintiff to bear the burden of proof as to the accuracy of the financial figures it submits concerning its own operation because, simply, "plaintiff is in a much better position to prove financial facts concerning its own operations.” Camel, 215 Ct.Cl. at 479, 572 F.2d at 290. Similarly, defendant is in a much better position to demonstrate plaintiffs excessive profits by use of the comparative data at its disposal. Therefore for this reason as well as others just mentioned it is appropriate that the burden of proof in renegotiation cases be upon defendant.
In Major Coat the court refined its burden of proof requirements by calling for defendant to supply data comparing the profits made by plaintiff to the profits of other similar companies. First, the statutory factors of character of business, the net worth and capital employed, and the reasonableness of costs and profits are to be used to identify the firms sufficiently similar to plaintiff to be considered part of plaintiffs industry. The other statutory factors of efficiency, risks assumed, and contribution to defense effort are then used to determine whether plaintiffs profits were excessive relative to similar companies. "Only after all the statutory factors have been considered, the contractor has been 'located’ on the industry profit hierarchy, and the profit reasonable for him at that point on the hierarchy is measured against his actual earnings, can it be known whether any part of his profit was excessive.” 211 Ct.Cl. at 26, 543 F.2d at 111.
The court in Major Coat realized this approach to standard of proof requirements was more demanding than any previously enunciated. The court concluded application of this exacting standard to cases which had completed trial and were on appeal would be unfair to defendant. Consequently, the court chose to stay application of strict Major Coat standards until the Government could catch up with the court’s new requirement. Winding up its opinion the court noted:
In these circumstances, the court will undertake, however reluctantly, and for only a limited span of time, to engage in judgmental adjustments and reworkings of the data placed in the record in order to arrive at a finding of a reasonable profit for the renegotiated contractor— where the state of the evidence permits this to be done in *734a responsible manner, consistent with the purposes of the Act, as we think is the situation here, . . . 211 Ct.Cl. at 48, 543 F.2d at 124.
Interpretation of this statement goes to the heart of the present case. It seems the statement was intended to provide defendant an "out” from meeting the stricter Major Coat standards, but not to relax Lykes standards. The authority to "engage in judgmental adjustments and reworkings of the data placed in the record” mentioned in Major Coat was meant to lessen the impact of the more exacting standards of Major Coat, for a brief time, not to dismiss Lykes standards. It is one thing to excuse defendant of the obligation to meet Major Coat standards; it is quite another to absolve it entirely from the burden of proof requirements in Lykes.
Nor do I believe the cases cited by the majority at the beginning of Part III of the opinion indicate a departure from Lykes standards. Granted, the passages cited justify use of a "broad brush” approach or state that exercise of the court’s independent judgment can excuse defendant from its Major Coat burden of providing "meaningful comparative data,” but the passages do not indicate abandon of Lykes standards. Sec Manufacturers Service Co. v. United States, 217 Ct.Cl. 387, 412, 582 F.2d 561, 577 n. 28 (1978); Blue Bell, Inc. v. United States, 213 Ct.Cl. 442, 450, 556 F.2d 1118, 1124 (1977) ("Since defendant has the burden of proof, the absence of this almost indispensible [comparative] data could well lead to a clearance determination”); Dynasciences Corp. v. United States, 214 Ct.Cl. 643, 647-48 (1977) (". . defendant benefits from the nonapplication to this case of the standards of proof defendant must in future meet as announced in Major Coat”); Tool Products Co. v. United States, 218 Ct.Cl. 486, 491, 589 F.2d 506, 508 (1978) ("Since the trial of this case antedates the warnings we gave in Major Coat, defendant benefits from the lenience we promised as to trials that occurred before that date”).
By way of summary, Lykes announced the burden of proof in renegotiation cases was to be upon defendant. Major Coat said that in order to meet this burden defendant must provide comparative data, but absent the presence of comparative data, in cases tried before the new *735rule of Major Coat, the court would independently examine the record to determine whether excessive profits existed. Simply because the court can and will engage, in this independent review, however, does not mean Lykes standards no longer control. On the contrary, the court in Major Coat emphasized Lykes was the governing decision as to burden of proof allocation. The discretion to perform an analysis independent of the parties’ presentations noted in Major Coat was never intended to eviscerate Lykes.
II.
Application of Burden of Proof principles to the Present Case
Trusting I have shown that there is a crucial difference between the court’s engaging in an independent analysis of record evidence to excuse defendant from its Major Coat responsibilities and the burden of proof defendant must still meet under Lykes, let me now move on to illustrate how important this difference is in deciding the case at bar.
Reexamining a bit of history at this point, the position of the parties in Shinn Engineering — before the trial judge— may be roughly described as follows: to demonstrate the existence of excessive profits the Government offered the Mock model, based upon a percentage of return on capital. Trial Judge Harkins rejected the model both because of its use of return on capital as a gauge and for its selection of inappropriate base years. Based upon the level of plaintiffs non-renegotiable or commercial profits, the undisputed favorable consideration due to plaintiff under every statutory factor, and the Government’s total failure of proof under Lykes standards, the trial judge granted plaintiff a clearance.
During oral argument on appeal, it became painfully obvious the Government had absolutely no evidence to offer of excessive profits other than Dr. Mock’s model.
The majority herein also agrees the Mock model is valueless in this case as an excessive profit indicator, as do I. But despite Lykes, the Government’s complete failure of proof apparently does not indicate to the majority that plaintiff deserves a clearance. The majority cites the cases *736at the beginning of Part III of its decision and discussed above for the proposition that "the court’s consideration of excessive profits can be more lenient toward the defendant than it might be under a strict application of the burden of proof set forth in Lykes.” With this authority, the majority proceeds to find the existence of excessive profits on a theory advanced by neither the parties nor by the trial judge. I have particular doubts about the court’s technical analysis and use, for example, of SIC data.3 But the crux of the matter is simply this: though the Government has failed completely to meet its burden of proof or even establish a prima facie case, and though plaintiff unquestionably merits favorable consideration under every statutory factor, and its commercial profit figures indicate its renegotiable profits were not excessive, the majority still contends Major Coat and cases since permit it independently to find excessive profits in circumvention of the Lykes burden of proof allocation.
I do not believe the authority of Lykes has been so completely eroded, though the results of some recent renegotiation cases and most spectacularly this case, suggest it has. Let me hypothesize as to what has apparently happened: defendant’s evidentiary presentations continue to be anemic as suggested in Major Coat. This forces the court, more often than perhaps it should, to engage in independent evaluation and analysis of the data presented to find the existence of excessive profits and resuscitate defendant’s dying case. As authority to do this, the court has perhaps overextended the discretion it said it would exercise in Major Coat. I cannot say use of this discretion in previous cases was inappropriate. At least in prior cases the Government has managed to offer some credible evidencie. Here, however, defendant relied 100% on the Mock model as its total evidence. That model has now been rejected by the trial judge, by the majority, and by this dissent. In this case the evidence offered by the defendant is not merely "weak” or "scanty material”; it is nothing. Moreover, it is conceded plaintiff deserves favorable or very favorable consideration under every statutory factor. Plaintiffs ingenious development of multi-spindle, *737multiaxis machinery not only made plaintiff extraordinarily efficient, but uniquely efficient, for no other contractor possessed this machining capability. The Government has offered no evidence detracting from plaintiffs outstanding performance according to the statutory factors. It seems the Government would have done just as well had it submitted a one sentence brief: "The defendant believes plaintiffs profits were excessive.”'
Under the majority’s "new rule,” we have in effect a further development in standard of proof requirements, a phenomenon which plaintiffs counsel in oral argument wryly called the "ping-pong” effect. First plaintiff must put on its prima facie case, which all agree is not difficult to do. Then defendant must establish its own primá facie case and meet its burden of proof of excessive profits by a preponderance of evidence. Yet, should defendant fail this task the burden again bounces back to plaintiff to convince the court its profits actually were not excessive, that all the additional profits it made above a normalized figure can be attributed to the various statutory factors. The burden is insuperable.
Now, some may argue Lykes should be modified or reversed. Perhaps this court should abandon burden of proof analysis entirely and invite the parties to submit the best evidence they can and make a reasoned judgment accordingly. If so, let it be after thorough discussion of the approach the court will adopt. Otherwise we shall promote confusion among parties and the court’s trial division as to how renegotiation cases are to be handled and risk inconsistency in our own decisions.
III.
Deficiencies in the Majority’s Analysis
The foregoing discussion questions the propriety of the court’s action in this particular case under Lykes standards. Yet even assuming it is proper to engage in the independent analysis the court does, the structure of the analysis has several weaknesses. Sounder methods of evaluation, I believe, demonstrate plaintiffs profits were not excessive.
*738The majority bases its excessive profit determination on two factors: the Internal Revenue Service’s Standard Industrial Classification (SIC) composite statistics and a starting point of 12% return on renegotiable sales (profit to sales ratio), 12% being the average return during the three-year base period of 1964-66 selected by the court. Reference to SIC data as an indicator of excessive profits is particularly surprising since as the trial judge recognized, even defendant’s expert made no serious attempt to justify the data’s usefulness given its deficiencies. In previous cases this court has not merely "questioned the strength of such industry wide statistics,” but has excoriated their use, see Instrument Systems Corp. v. United States, 212 Ct.Cl. 99, 106-08, 546 F.2d 357, 361 (1976). In Butkin Precision Manufacturing Corp. v. United States, 211 Ct.Cl. 110, 118-19, 544 F.2d 499, 504 (1976) (hereinafter Butkin) the court said comparisons based on SIC aircraft parts industry data (on which the majority herein relies) were "superficial at best.” Though the Butkin court mentioned that "merely because comparative data has some weaknesses is no reason to ignore it entirely” the court immediately added, "However, it [SIC data] is little more than useless in this case because the court has been provided with no standard by which to judge the results of the comparison.” 211 Ct.Cl. at 119, 544 F.2d at 504. Plaintiff in Butkin received a clearance. The shift of Shinn from the $5 million asset class to the $10 million asset class renders the SIC comparision even more unreliable than usual. It is commendable for the majority to note some of these drawbacks, but simply recognizing the flaws does nothing to restore the data’s usefulness. True, the SIC data was part of the record, but that in itself cannot justify its applicability to this case. The SIC data as Trial Judge Harkins found, really deserves no reference except to dismiss its relevance.
Thus, the majority is left with its computation of a 12% average return on sales for a base period 1964-66. It is not clear why the years 1964-66 are deemed appropriate for comparison purposes other than the reason that Dr. Mock was remiss in not including 1966 with 1964 and 1965 in his base year comparison. The record contains evidence showing it is inappropriate to include 1964 and 1965 as *739base years for comparative purposes, leaving plaintiffs profit figures of 1966 as the only reliable evidence of what a reasonable "starting point” would be. During 1963 through 1965, Shinn was engaged in an extensive capital improvement program to such a degree that in 1964 and 1965, Shinn’s accounts receivables were being factored and all of its assets, including its capital equipment and inventory were pledged for operating capital; 1966 was the first year Shinn’s operation was bankable. Furthermore, starting in 1965, substantial changes occurred in Shinn’s production equipment and in the complexity of parts for the aerospace and aircraft industries. The production of more complex parts gave Shinn an added advantage over its competitors as use of the multiple spindle, multiple axis equipment by Shinn resulted in reduced labor costs and increased Shinn’s quality and quantity of output. Moreover, materials utilized in the aerospace industry changed. Before 1965 aluminum was the primary material used to fabricate structural parts manufactured by Shinn. After 1965, stainless steel and titanium, which are more difficult to machine and require longer production times came into use.4 Because Shinn’s financial structure was abnormally unstable in 1964 and 1965 and because the character of the aerospace parts industry underwent a substantial change beginning in 1965, I believe it is incorrect to include 1964 and 1965 as base years for comparison purposes. Though it is unfortunate only one year, 1966, can be reliably used as an indication of what Shinn’s "normal profits” were, record evidence supports this conclusion.
In 1966, Shinn’s return on renegotiation sales was 17.01%. Even accepting the credit for all statutory factors determined by the majority of 6.75%, the result, 23.76% return on sales, is more than enough to warrant a clearance for plaintiff with a 20.43% return on renegotiable sales of 1967 and a 23.47% return on sales for 1968.
Comparing the return on sales for plaintiffs non-renegotiable business fortifies the clearance result since in 1967 the return on nonrenegotiable sales was 25.50% and in 1968, 22.29%. The majority rejects a comparison to nonrenegotiable profits using, once again, the inherently *740unreliable SIC data. As an additional reason for rejecting the nonrenegotiable comparison, the majority implies the relevant market was distorted by high demand. Statements in Shinn’s annual reports indicating order backlogs and a favorable business climate are cited as evidence of market distortion. I question whether statements which may be little more than normal annual report puffery are sufficient evidence upon which to conclude the relevant market was distorted. On the contrary, the trial judge explicitly stated that "There is no indication in the record that the markets in which Shinn was operating were subject to conditions that resulted in a breakdown of competitive forces.” Finally, defendant has argued that plaintiffs nonrenegotiable figures are unreliable yet the figures and the accounting practices used in their computation were approved after an FBI audit. Furthermore, defendant stipulated to the accuracy of the figures.
In short, defendant has not presented a convincing reason to reject a comparison with plaintiffs nonrenegotia-ble figures. Plaintiffs nonrenegotiable return on sales for the years in review plus a comparison to 1966 as a base year show plaintiff is entitled to a clearance. Nor is this result extraordinary considering the clearances given in Butkin and also in Aero Spacelines v. United States, 208 Ct.Cl. 704, 530 F.2d 324 (1976).
One final point deserves attention. Implicit in the majority’s approach is the notion that plaintiff cannot receive a clearance unless it can affirmatively demonstrate that all the profits it made above a normalized figure are attributable to one or more of the various statutory factors. I cannot accept such a position for several reasons. In the first place, to the degree the court implies that plaintiff must prove the absence of excessive profits, the court repudiates the Lykes burden of proof allocation. Moreover, we have stated in previous opinions that it is not plaintiff’s obligation to show that its increased efficiency, for example, accounts entirely for its higher profits. Instead, "it would seem the burden of proof would require defendant to put a cap on the claim, i.e. supply something to enable the court to determine its limits.” Butkin, 211 Ct.Cl. at 130, 544 F.2d at 510 (emphasis added). See also Major Coat, 211 Ct.Cl. at 36, 543 F.2d at 117; Dynasciences Corp. v. United States, 214 Ct.Cl. at 669 (1977).
*741Even if we should assume that plaintiff does have the burden of showing the statutory factors make up for its higher profits, I believe plaintiff has, in this exceptional case, met the burden. The Government concedes plaintiff deserves favorable or very favorable consideration for each statutory factor. Not only this, but it appears plaintiff was highly efficient in comparison to other similar companies because only plaintiff possessed the extraordinary multi-spindle, multi-axis machinery which made plaintiff such a superior contractor. In Major Coat, 211 Ct.Cl. at 36, 543 F.2d at 117, the court recognized that while plaintiff had been shown to be efficient, there was no way to gauge its efficiency relative to other firms. I think in this case it is a fair inference that plaintiff was significantly more efficient than other similar firms for only plaintiff, having created the equipment itself out of scrap materials, had this exceptional machinery.
Accordingly, for the above reasons, I believe plaintiff is entitled to a clearance. Therefore, with respect, I dissent.
See Part III, infra.
The terms used to describe burdens of proof vary and can be confused. There are essentially two distinct burdens. There is the initial burden of "proceeding with the evidence” also referred to as the "burden of producing evidence,” or in renegotiation cases before this court, the burden of "establishing a prima facie case.” The second burden is the ultimate "burden of proof’ or "burden of persuasion” to convince the trier of fact of the proposition at issue by a preponderance of evidence. The party upon whom the burden of proof is placed is said to bear "the risk of nonpersuasion.”
See Part III, infra.
See statement of facts, majority opinion.