Too Little, Too Late: Takeaway From the ASBCA Decision in JE Dunn Construction Co.
The recent decision by the U.S. Armed Services Board of Contract Appeals in JE Dunn Construction Co., ASBCA No. 63183 (Dec. 13, 2023), highlights the immediate importance of the Federal Circuit's decision in ECC International and its impact on the sum certain requirement for Contract Disputes Act litigation.
Background
In January 2022, JE Dunn Construction Co. ("JE Dunn") filed an appeal with the U.S. Armed Services Board of Contract Appeals (the "Board"). The appeal and underlying claim included multiple components arising from various Government changes and direction related to humidifiers, hydronic piping, and boilers on an HVAC system at Fort Drum, N.Y. In addition, the claim alleged a Government violation of the Prompt Payment Act. Notably, the claim included a single-dollar amount for the above-referenced categories.
The Board scheduled a hearing slated to begin on February 28, 2023, over one year after the initial appeal was filed. Just prior to the hearing, the Government submitted a motion to dismiss the Prompt Payment Act component of the appeal for failure to first present it as a claim to the Contracting Officer. However, the motion did not raise any challenge to the sum certain included in the claim. The Board deferred its consideration of the motion until after the conclusion of the scheduled hearing.
The Board held a four-day hearing on the merits of the appeal in February and March of 2023. During the hearing, the Board raised the issue of its own jurisdiction over the appeal and asked whether three components of the appeal (hydronic piping, humidifiers, and boilers) were subject to separate sums certain in the claim presented to the Contracting Officer. However, the Government deferred comment on the Board's jurisdictional concerns, and the parties agreed to reserve the issue for post-hearing briefs.
JE Dunn and the Government submitted post-hearing briefs in April and May 2023. In its brief, the Government moved to dismiss the appeal for lack of jurisdiction "because JE Dunn presented three distinct claims while stating only one dollar amount." Neither party addressed the Board's jurisdiction over the Prompt Payment Act component of the claim previously raised by the Government.
In August 2023, the U.S. Court of Appeals for the Federal Circuit (the "Federal Circuit") issued its opinion in ECC International, holding that the sum certain requirement under the Contract Disputes Act ("CDA") is a mandatory but non-jurisdictional requirement. The Federal Circuit further held that asserting a jurisdictional defense due to a defective sum certain is subject to forfeiture by the Government if initially raised after the parties have progressed "too far" into litigation. The Board requested additional briefing in light of the decision. In its brief, the Government requested that its previous motion be converted into a motion to dismiss JE Dunn's appeal for failure to state a claim upon which relief can be granted, due to JE Dunn's failure to satisfy the sum certain requirement.
Decision
The Board denied the Government's motion. The Board found that the Government had the opportunity to request dismissal of the appeal on sum certain grounds on multiple occasions, both of its own volition and in response to the jurisdictional concerns over the appeal raised by the Board. However, the Government failed to do so until after the parties held a hearing on the merits of the appeal. As a result, the Board found that in accordance with the ECC International decision, the Government had forfeited its right to challenge whether JE Dunn's certified claim satisfied the sum certain requirement.
Takeaway
JE Dunn is a notable departure from past Board precedent, which previously allowed the Government to assert a challenge to the sum certain requirement at any point before the Board issued its decision on the merits. While there is still no indication as to the earliest point at which the Government is "too far into litigation" to raise a sum certain challenge, JE Dunn ensures that contractors will not expend resources on a yearslong litigation process only to have their claim dismissed due to defects that the Government failed to raise until after the hearing has taken place.