Board Erred in Ruling Appeal Was Barred by Statute of Limitations

The Court of Appeals for the Federal Circuit reversed and remanded the dismissal of an appeal because the board of contract appeals erred in concluding the contractor’s claim was barred by the Contract Disputes Act’s statute of limitations. The LOGCAP contractor sought to recover costs expended by its subcontractor for construction of dining facilities and for providing meals. The board dismissed the appeal as untimely (14-1 BCA ¶35,713) because the contractor did not submit the claim to the contracting officer within six years of accrual as required by the CDA (41 USC 7103(a)(4)(A)). However, the board erred in law and on the application of law to the undisputed facts. The date a claim accrues is determined by the Federal Acquisition Regulation, the conditions of the contract, and the facts of the particular case (56 CCF ¶79,797). Fixing the date of accrual of a claim requires first that there is a “claim” as defined in FAR 33.201, i.e., “a written demand … by one of the contracting parties seeking, as a matter of right, the payment of money in a sum certain ….” According to the contractor, in light of its dispute with the subcontractor regarding the termination of the subcontract, there was no basis for determining the “sum certain” until the subcontractor documented and certified its claim, which occurred within the statute of limitations period.

Pre-Claim Procedures

The court concluded the board misapplied the “non-routine” request rule when it held payment of remaining subcontractor costs was a non-routine request for payment and therefore accrued on the date the contractor terminated the subcontract. Termination of a subcontractor is not a per se “unexpected or unforeseen government action” that permits and requires an immediate claim by the prime contractor. Also, the limitations period does not begin to run if a claim cannot be filed because mandatory pre-claim procedures have not been completed. Here, the government required the contractor to resolve disputed costs with the subcontractor before presenting a claim for reimbursement of the costs. There also was no merit to the government’s reliance on the Severin doctrine to argue the claim accrued when the contractor terminated the subcontract. Severin is concerned with liability among the government, prime contractor, and subcontractor, not with dates of “accrual” of “claims” as defined by the FAR. Finally, the CDA does not require the filing of protective claims related to subcontractors while those claims are being resolved between the prime and subcontractor. (Kellogg Brown & Root Services, Inc. v. Murphy, CA-FC, 60 CCF ¶80,894)