In JAAAT Technical Services, LLC,1 the Armed Services Board of Contract Appeals (ASBCA) addressed the breadth of application of the Severin doctrine, which restricts a prime contractor's ability to file claims on behalf of a subcontractor against the Government unless the prime contractor "has reimbursed the subcontractor or is liable to make such reimbursement."2
In JAAAT, the prime contractor submitted a certified claim as an equitable adjustment under the changes clause, which included a pass-through claim for its subcontractor. The Board noted the claim did not seek damages for breach of contract. The Contracting Officer denied the claim and JAAAT filed an appeal with the ASBCA.
The Government raised several defenses to the appeal, including alleging that the pass-through claim was barred by the Severin doctrine. The Board noted that the Severin doctrine is narrowly construed and thereafter held that the Severin doctrine did not bar the pass-through claim because the claim is not based solely upon a breach of contract theory.
The Board noted that where the claim is not based solely upon a breach of contract but is, rather, a claim for an equitable adjustment by a prime contractor pursuing a remedy redressable under the contract, the Severin rule is inapplicable.
The teaching point is that if a prime contractor has a potential Severin issue with a pass-through claim, the prime contractor may want to consider characterizing its claim as seeking an equitable adjustment rather than breach of contract damages.