ASBCA Provides Guidance on CENTCOM Default Termination Decision
In Watts Constructors, LLC, (June 24, 2019), the Armed Services Board of Contract Appeals (ASBCA) provided further guidance on its earlier decision ECC CENTCOM, 18-1 BCA 37,133. That case, which was the subject of a previous blog post by Davis Wright Tremaine, stated in part "[A] contractor contesting . . . a default termination due to excusable delay must submit a claim for a time extension before appealing to the Board."
In Watts Constructors, LLC, the contractor was default terminated and appealing the default, in part on the basis that it encountered excusable delays. The federal government sought to dismiss this count of the appeal on the basis the board lacked jurisdiction to consider Watts' allegations of excusable delay.
The government’s justification was that Watts did not submit its delay claim to the contracting officer in accordance with the terms to the Contract Disputes Act (CDA) prior to appealing the default, relying in part of two Federal Circuit Court of Appeals cases and its recently decided CENTCOM decision.
Watts initially responded by inviting the board not to follow CENTCOM. The board declined that invitation, finding Watts had in fact submitted a delay claim to the contracting officer after the government moved for summary judgment, and when the contracting officer refused to decide it on the basis for lack of authority, Watts submitted the delay claim to the board where it was consolidated with the appeal of the default.
Hence, the delay claim was before the board.
The federal government unsuccessfully relied on Court of Federal Claims authority holding that "[b]elatedly submitting a certified claim to a [contracting officer] once a claim is in litigation is not a cure for failing to present a claim to the [contracting officer] before filing suit." This is because once a claim is before the Court of Federal Claims, even if not proper because it was not first submitted to the contracting officer, federal law divests the agency of authority to decide it.
The government supported its argument by relying upon AFARS 5133.212-90, a provision of the Army FAR Supplement. However, the board held such regulation was not as sweeping as the absolute transfer to the Department of Justice for Court of Federal Claims cases.
In contrast, the board stated that in board claims, the Corps contracting officers retain authority over a claim’s ultimate disposition, as opposed to the Army or Engineer Chief Trial Attorneys.
The government then argued a defense premised upon excusable delay "must [be] submit[ed] as a claim for a time extension before appeals to the Board." The board noted Watts did submit its certified delay claim to the contracting officer before appealing to the board.
The board then explained CENTCOM did not squarely hold that, to pursue delay as a defense to default, a contractor must submit its delay claim before it appeals the default termination. The board noted in CENTCOM that no delay claim was submitted there.
Further, nothing in the CDA constricted the time period for submitting a delay claim to less than 90 days when proffered as a defense to a timely appealed default termination. Rather, under 41 U.S.C. 7103(a) (4), contractors have six years after accrual to submit a claim.
The board did concede that in CENTCOM the board raised the possibility that it lacked jurisdiction to consider a delay defense due to the absence of a claim. However, the board noted that the reason it denied CENTCOM’s request for a stay to pursue its delay claim was not because such a claim would be time-barred, but simply due to the lateness of the request.
The board further noted that such a claim would be futile because the alleged delay would not affect the validity of the default. The board concluded the reasoning for denying the stay in CENTCOM was simply inapplicable to Watts Constructors.
Critical Takeaways
When faced with the potential for a termination for default:
- submit a delay claim, if appropriate, at the earliest possible time, to avoid the possibility of having it rejected in a subsequent appeal from a termination for default; and
- consider the alternative forums—Court of Federal Claims or Board of Contract Appeals—and how they address delay claims in relation to appeals from terminations for default.
If you are faced with a termination for default and have any questions about your course of action, please don’t hesitate to contact us.