Contract Disputes Act - Statue of Limitations

Introduction

The statutes of limitation, and in extreme circumstances the due process clauses, U.S. Const. Amends. V and XIV, protect the accused from unreasonable delays.

A statute of limitations dictates the time period within which a legal proceeding must begin. The purpose of a statute of limitations is to ensure the prompt prosecution of criminal or civil assertions (charges) and thereby spare the accused of the burden of having to defend against stale charges after memories may have faded or evidence is lost. The statue is designed to protect individuals from having to defend themselves against charges when the basic facts may have become obscured by the passage of time and to minimize the danger of official punishment because of acts in the far-distant past. A time limit may also have the salutary effect of encouraging law enforcement officials promptly to investigate suspected criminal activity. Therefore, in most instances, prosecutions are barred if the defendant points out that there was no indictment or other formal charge within the time period dictated by the statute of limitations.

Federal Acquisition Streamling Act (FASA) of 1994

The Federal Acquisition Streamlining Act (FASA) of 1994 provides for a six (6) year statute of limitation. The clock starts ticking when a claim accrues.

Determination of When a Claim “Accrues”

“Accrual of a claim” means the date when all events, that fix the alleged liability of either the Government or the contractor and permit assertion of the claim, were known or should have been known. For liability to be fixed, some injury must have occurred. However, monetary damages need not have been incurred.

Initiation of a claim

(a) Contractor claims shall be submitted, in writing, to the contracting officer for a decision within 6 years after accrual of a claim, unless the contracting parties agreed to a shorter time period. This 6-year time period does not apply to contracts awarded prior to October 1, 1995. The contracting officer shall document the contract file with evidence of the date of receipt of any submission from the contractor deemed to be a claim by the contracting officer.

(b) The contracting officer shall issue a written decision on any Government claim initiated against a contractor within 6 years after accrual of the claim, unless the contracting parties agreed to a shorter time period. The 6-year period shall not apply to contracts awarded prior to October 1, 1995, or to a Government claim based on a contractor claim involving fraud.

ASBCA Cases

Raytheon Corp. (April 22, 2013)

The ASBCA dismissed the government's CAS-based claims relating to 3 out of the 4 accounting practice changes at issue. The Board allowed one claim to proceed where Raytheon only reported the fact of a change, not the cost impact from which the Government could have concluded it had a claim. In the other 3 claims Raytheon had provided cost impact information more than 6 years prior to the final decision asserting a Government claim. Of note is that the clock starting running when Raytheon Corp notified the Government of the cost impact.

Laguna Construction Co., Inc.

ASBCA No. 58569, 14-1 This case involves a claim for costs associated with two subcontracts awarded without adequate price competition and without determining whether the awarded prices were reasonable. In December 2005 and February 2006, DCAA issued audit reports identifying deficiencies in Laguna's subcontractor management system. The reports, however, did not set forth any costs for the Government to recover and did not identify the two subcontractors that formed the basis for the Government's later claim. Not until 2011 did DCAA issue a "Notice of Contract Costs Suspended and/or Disapproved," disapproving US$2,383,370 in costs and associated G&A relating to the two subcontractors. The Government argued that its claim did not accrue - and the statute of limitations did not begin running - until that 2011 Notice.

Judge Delman rejected this argument and found that the claim accrued, at the latest, when DCAA identified deficiencies in Laguna's subcontractor management system in February 2006.

Carter v. Halliburton Co.

(4th Cir. 2013) Relator filed original complaint in 2006 alleging FCA claims for water purification contracts in Iraq.

• • Compliant dismissed several times
  • Relator refiled complaint for fourth time in 2011 after the FCA's six-year statute of limitations had run.
  • Fourth Circuit held that statute of limitations extended by Wartime Suspension of Limitations Act because Congress authorized the use of military force in Iraq in 2002.

Kellogg Brown & Root Services

ASBCA No. 58492 8/18/2014 KBR failed to submit the certified claim to the Contracting Officer within the applicable six-year statute of limitations.

Fluor Corporation

ASBCA No. 57852 - 12/5/2013 Dismissed amounts accruing before 2005 and denied claimed amounts accruing on/after that date associated with alleged CAS non-compliance. The government did not and could not know at that time, much less submit a CDA claim for the increased cost of those practices to the government work over the next seven years until that work was performed, billed and paid. The government's 11/17/2011 claim was a continuing claim inherently susceptible to being broken down into a series of independent distinct events each having its own associated damages. Each payment for a CAS non-compliant billing was and independent claim.

To see more details on these or other cases; go to: http://www.asbca.mil/

References

• Federal Acquisition Streamlining Act
• Defense Contract Management Agency (DCMA) Guidebook; http://guidebook.dcma.mil/48/index.cfm
• Federal Acquisition Regulation, Part 33.2 - Disputes and Appeals