A recent decision by the Armed Services Board of Contract Appeals underscores the importance of timely filing a certified claim for excusable delay, and the risks of failing to do so. In ECC CENTCOM Constructors, Inc. (September 4, 2018), the ASBCA denied a construction contractor’s appeal from a termination for default. Critical to that ruling was the Board’s refusal to consider the contractor’s assertion that it had encountered excusable delays during the course of project performance.
In this case, the contractor asserted that it had encountered 218 days of excusable delay. In response, the Board asked the parties to address two issues: (a) whether the contractor submitted a claim under the CDA to the contracting officer seeking a time extension for the delays that it contends are excusable, and (b) if not, whether the Board possesses jurisdiction to consider these defenses in light of two Federal Circuit Court decisions—M. Maropakis Carpentry, Inc. v United States, 609 F.3d 1323 (Fed. Cir. 2010) and Securiforce International America, LLC v. United States, 879 F.3d 1354 (Fed. Cir. 2018).
In issuing its opinion following the supplemental briefing, the Board noted that in Maropakis the contracting officer issued a final decision assessing liquidated damages on $303,500. The contractor then filed suit in the U.S. Court of Federal Claims alleging (a) breach of contract due to government delay and seeking resulting time extensions, and (b) breach of contract due to the government’s assessment of liquidated damages and seeking remission of the full $303,500. The Court dismissed the contractor’s claim for time extensions for lack of subject matter jurisdiction because the contractor had not submitted a claim for a contract modification. The Court also granted the government summary judgment with respect to its counterclaim for liquidated damages.
The Federal Circuit affirmed, observing that jurisdiction of a court or board required both a valid claim and a contracting officer’s final decision on that claim. The Federal Circuit held that (a) the contractor’s communications with the government did not meet the CDA requirements for a claim, and (b) it would enforce the strict limits of the CDA as jurisdictional prerequisites to any appeal.
The Federal Circuit also upheld the grant of summary judgment to the government on its claim for liquidated damages, holding that “a contractor seeking an adjustment of contract terms must meet the jurisdiction requirements and procedural prerequisites of the CDA, whether asserting the claim against the government as an affirmative claim or as a defense to a government action.” (emphasis added).
After discussing two other decisions, the Board then discussed the Securiforce decision, which addressed Maropakis in the context of a termination for default. In Securiforce, the Federal Circuit reiterated its holding in Maropakis that “to the extent the affirmative defense seeks a change in the terms of the contract—for example, an extension of time or an equitable adjustment—it must be presented to the CO, since evaluation of the action by the CO is a necessary predicate to a judicial decision.”
The Board then stated “[b]ased on these decisions, it is clear that, while all possible defenses need not be submitted to a contracting officer for a final decision, a contractor contesting liquidated damages or a default termination due to excusable delay must submit a claim for a time extension before appealing to the Board.” The Board held that it lacked jurisdiction to consider the majority of the contractor’s alleged delays because the contractor never submitted a claim or an REA for these alleged delays and failed to mention them in its response to the show cause notice. Accordingly, consideration of these delays “would be contrary to the statutory purpose of encouraging resolution of disputes at the contracting offer level and beyond the limited waiver of sovereign immunity in the CDA”.
The Board further narrowed the contractor’s right to raise alleged delays in considering two other alleged delays. The Board noted that it was undisputed that the contracting officer had actual knowledge of these alleged delays and mentioned them in the default termination letter. However, the Board noted that the Federal Circuit rejected the actual knowledge argument as a basis for Board jurisdiction.
The Board further noted the contractor’s strongest argument concerned a mobilization delay because, among other things, it submitted an REA and described these delays in its response to the show cause letter. However, since the contractor failed to submit an actual claim that clarified its demands and met the requirements of the CDA, the contractor did not satisfy the jurisdictional requirements of the CDA.
The Board also pointed out the lack of certification and/or vagueness as to the specific number of days sought by the contractor. The Board decision emphasizes the importance of submitting timely, properly documented, specific and certified claims for time extensions to the government. Failure to do so could result in the Board refusing to consider excusable delays as a defense to claims by the government to liquidated damages or a termination for default.
If you have any questions about this article or defending against liquidated damages or terminations for default, please don’t hesitate to contact us.