Disputes frequently arise because the government refuses to agree that a contractor is entitled to additional money or time resulting from constructive changes, differing site conditions, government-caused delays, or countless other reasons. These disagreements typically are dealt with through the submission of Requests for Equitable Adjustment (REAs) or certified claims and are ultimately resolved through the disputes process. They focus on the rights of the parties under the specific terms of the contract. The problem, however, is that contractors also incur costs because of government indecisiveness that has not yet generated an REA or claim under a particular contract clause. This places the contractor in a state of limbo, not knowing whether there will be a significant impact to the project.
Federal contractors generally don’t need to worry too much about statute of limitations issues on federal contract claims because the Contract Disputes Act (“CDA”) includes a generous six-year window to file. However, it is vital to remember that there are exceptions to this rule, the most important of which is the one year deadline for filing any claim relating to a termination for convenience settlement proposal. Continue Reading An Important Reminder for Federal Contractors: Act Fast on Termination for Convenience Claims!
Agility Defense & Government Services, Inc. v. United States provides hope to contractors that incur higher than anticipated costs on a requirements contract or, alternatively, on construction contracts where line item prices are based on estimated quantities. Continue Reading Federal Circuit Clarifies Requirements for Government-Furnished Estimated Quantities
Last month, we outlined Congress’ plan to block the implementation of President Obama’s Fair Play and Safe Workplaces executive order. Today, we report that the prognosis has grown even more grim for the former President’s initiative, as both the House of Representatives and Senate have passed measures blocking the order from taking effect – now, the only remaining hurdle to a full repeal of the Fair Play and Safe Workplaces order is the signature of the President. Continue Reading The End is Near for “Fair Play and Safe Workplaces”
For the last few months, we have been following the troubled rollout of the “Fair Play and Safe Workplaces” rules, an Obama-era Executive Order that placed new requirements on contractors prohibiting certain labor practices. It is now becoming increasingly clear that the controversial act is likely to be a casualty of the new administration’s deregulatory agenda. Continue Reading Congress Strikes Blow to “Fair Play and Safe Workplaces”
Government contractors know that an unfavorable performance review posted to the Contractor Performance Assessment Reporting System (“CPARS”) can be extremely costly. Many negotiated solicitations include past performance as an important or even primary evaluation factor for contract award. An unfavorable review on a past contract can impose significant costs on the contractor to address the unfavorable review with contracting officers on future solicitations. However, the contractor saddled with an unfair and inaccurate CPARS review may now have a means to challenge the review and recover some of these costs. Continue Reading A New Way to Claim Damages Resulting from an Unfavorable CPARS Rating
- Report labor law “violations” of itself or any of its subcontractors (where the estimated value of the subcontract exceeds $500,000) under various federal employment and labor laws;
- Restrict the use of binding, pre-dispute arbitration provisions in non-collectively bargained employment contracts; and
- Establish “paycheck transparency” through the issuance of wage statements to all individuals performing work under a covered contract.
In United States v. Nagle, the Third Circuit provided instruction on how to calculate the amount of “loss” defendants are attributed when being sentenced in a Disadvantaged Business Enterprise (“DBE”) fraud case. Going forward, in a DBE fraud case, the loss calculation must include consideration of the fair market value of the services rendered to the government under the affected contract, or contracts. Continue Reading Third Circuit Allows for Offset when Calculating Loss in DBE Fraud Cases
It is not uncommon, in the litigation of a federal construction claim, for the Government to produce gigabytes of electronic data, amounting to thousands and thousands of documents, in response to a motion for the production of documents. Frequently, these “electronic” documents are simply the scanned versions of paper files in the Government’s offices. In the scanning process, extensive duplication occurs and documents that are clearly separate in paper file folders are scanned together in a manner that often combines multiple documents. Once combining occurs, it is very difficult for the recipient of the electronic information to tell where one document ends and the next one begins. Documents and their attachments become confused, are re-arranged, and difficult to follow. Continue Reading E-Discovery- Bring Back the Boxes
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.