In December 2014, the Court of Appeals for the Federal Circuit issued an important decision that impacts how the 6 year statute of limitations (SOL) is applied under the Contract Disputes Act (CDA). In Sikorsky Aircraft Corporation v. United States, the Court of Appeals determined that the CDA’s 6 year SOL for filing a claim is not jurisdictional, contrary to number of lower court opinions. This ruling has a number of important consequences that Federal Government contractors should understand.
The CDA states that, “each claim by a contractor against the Federal Government…and each claim by the Federal Government against a contractor…shall be submitted within 6 years after the accrual of the claim.” Prior to Sikorsky, this requirement was considered by most to be jurisdictional. This meant that the 6 year time limit was absolute and, even in extenuating circumstances, could not be missed. Therefore, any claim brought beyond 6 years simply could not be considered by the court. The court would not have the jurisdiction.
While the decision in Sikorsky did not eliminate the CDA’s 6 year SOL, it does open the door to “equitable tolling” an important exception in applying a limitations period. Equitable tolling is a legal concept that, in certain circumstances, allows contractors to bring claims after the time allowed by an applicable SOL. Specifically related to the 6 year SOL under the CDA, a claim can be equitably tolled if a claimant diligently pursues its rights to bring that claim but extraordinary circumstances stood in its way. For example, in Sikorsky the activities that brought about that claim began in 1999 but did not become material until 2003. The claim was eventually brought in 2008 and a dispute ensued regarding whether the claim was timely filed. The claimant, in this case the Government, argued that because the claim was not material until 2003 the SOL did not start to run until then and, therefore, when the claim was filed with the court in 2008, it was brought within the 6 year SOL. Sikorsky, on the other hand, argued that the claim accrued in 1999 and was, therefore, barred by the 6 year SOL because it was not brought until 2008. Ultimately, the court did not decide whether the claim was timely filed because it found that the appellant failed to meet its burden in proving the merits of the claim. In the process of discussing that issue, however, the court made the important determination that the 6 year SOL was not jurisdictional.
In addition to opening the door for equitable tolling, Sikorsky will also change how SOL issues are litigated under the CDA. Prior to this decision, because the CDA’s 6 year SOL was largely considered jurisdictional, any challenge to the Court’s jurisdiction had to be decided if and when it was raised. The issue could not be waived and could come up at any time. After review, if it was found that the court did not have jurisdiction, the matter would be dismissed because jurisdiction is a prerequisite for the court to decide a matter on the merits. Based upon Sikorsky, things have changed. First, a defendant must now raise SOL as an affirmative defense. An affirmative defense must typically be plead at the first opportunity possible (usually in the Answer to a Complaint) or it is waived. Second, a non-jurisdictional challenge to the SOL is normally decided when a court renders a decision on the merits. For contractors doing business with the Federal Government this has an important practical effect. If a contractor brings a claim against the Federal Government and also argues that equitable tolling should apply, post-Sikorsky a judge or jury will likely decide whether equitable tolling has taken place after all of the evidence on the facts have been heard. This means that a claimant may have to litigate its entire claim before the court will even determine if the claim was raised within the 6 year SOL.
As a practical matter, if you have a claim, or a potential claim, do not sit on your rights. While Sikorsky is helpful and important in terms of how the SOL is considered under the CDA, do not take any chances. 6 years represents a very generous limitations period. Seek professional assistance as early as possible and get the claim submitted. If you have any questions, please let us know.
Edward T. DeLisle is Co-Chair of the Federal Contracting Practice Group. Ed frequently advises contractors on federal contracting matters including bid protests, claims and appeals, procurement issues, small business issues and dispute resolution.
Amy M. Kirby is an Associate in the firm’s Federal Contracting Practice Group and focuses her practice on government construction litigation. Amy’s practice includes a wide variety of federal construction matters.