Saving Cost and Adding Value to the Company: A Brief Note on Having In-House Counsel Move to Have the Government File Complaints Before the Boards of Contract Appeals

 

In a previous blog posting[1], I advocated that in-house counsel, in these times of budget cuts and reduced contract actions, can add value to their client by, generally, assuming matters typically handled by retained counsel, such as litigation before the Boards of Contract Appeals and by, specifically, filing motions to dismiss for statute of limitation violations under the Contract Disputes Act, when warranted by the facts.  This brief note further encourages in-house counsel, under certain circumstances and for various tactical reasons, to move the Board to order the government to file the complaint in an appeal.  In a recent decision, the Armed Services Board of Contract Appeals (ASBCA) addressed those circumstances where it would be appropriate for the government, instead of the contractor, to file a complaint in an appeal.

The Contract Disputes Act (CDA) of 1978, 41 U.S.C. §§ 601-613, provides procedures for US government and contractors to resolve disputes arising out of federal contracts.  The CDA contains detailed procedures for filing claims and the various forums for the resolution thereof.  A claim is first subject to a contracting officer’s final decision (COFD), which denies or grants the claim, in whole or part.  Then, the contractor can appeal the COFD to the ASBCA or to the Civilian Board of Contract Appeals, depending on the agency involved or, alternatively, to the Court of Federal Claims. Both the CDA and the Board rules require the filing of a complaint.  The filing party is the contractor.  This is because the CDA only authorizes contractors to appeal a COFD, and Rule 6 of the ASBCA specifically requires the appellant to file a complaint, and the appellant is almost always the contractor, regardless of whether the claim is a contractor claim, such as a request for equitable adjustments, or a government claim, such as a termination for default or a recoupment demand of previously paid cost.

However, one can envision circumstances where it would be appropriate for the government to file the complaint.  In Beechcraft Defense Company, ASBCA No. 59173, 2014 ASBCA LEXIS 121, April 24, 2014, the Board addressed such circumstances.  In Beechcraft, the government issued a COFD that Beechcraft was noncompliant with CAS 402.  Beechcraft moved to have the government file the complaint, arguing that “since the appeal involved a government claim, the government was in a better position to file the complaint and that the proceeding would be facilitated by the government’s filing of the initial pleading setting forth the full rationale for the assertion of its claim.”  Beechcraft maintained that requiring it to file the complaint on a government claim for which the government had the burden of proof would require it to speculate about the grounds supporting the government’s position.  The Board, in granting the motion, stated that it was appropriate for the government to file the complaint “when the proceedings would be facilitated by the government filing the complaint or initial pleading.”  Relevant to its decision was the fact that the government had the burden of proving CAS noncompliance.  Other situations where the Board has determined that the proceedings would be facilitated by the government’s filing of the complaint involved a termination for default claim, RO. VI.B. Srl, ASBCA No. 56198, 09-1 BCA 34,068, and a defective pricing claim, Hughes Aircraft Company, ASBCA No. 46321, 94-2 BCA 26,801.

Thus, where the proceedings could be facilitated by the government’s filing of the complaint, the Board may order such. However, it appears to occur only where the underlying appeals arise from a government claim.  What does this mean for in-house counsel?  Foremost, in-house counsel should be able to file this type of motion, preferably very early in litigation, in order to shape the appeal and the settlement thereof.  For example, there has been and will continue to be in the foreseeable future, a plethora of COFDs from large, cost-type contracts awarded and performed during the wars in Afghanistan and Iraq in which, as a result of audits, the government seeks to recoup amounts paid contractors for costs incurred years and years prior to the COFD.  These COFDs are government claims, many of which have already been subject to motions to dismiss for statute of limitation violations.  Both the contractor and the government may harbor intentions to settle these demands, but each may want to wait until the filing of the initial pleadings before instigating or entertaining settlement offers so as to better appreciate the opposing party’s factual and legal contentions.  The contractor, ready, willing, and able to negotiate a settlement, instead has to first file the notice of appeal and the complaint, most often through retained counsel. Where agency counsel is the bottleneck, being ordered by the Board to file the complaint may be the spark she needs to seriously entertain settling the appeal early, in order to avoid putting work into writing a complaint for an appeal likely to settle anyway.

Having the government file the complaint would also allow in-house counsel the opportunity to more thoroughly understand the government’s legal issues and the underlying facts thereof, valuable and necessary information that in-house counsel can use to advise company decision makers on the various courses of action.  For various reasons, ultimately it may be necessary to turn the appeal over to outside counsel.  However, in situations where having the government file the complaint may lead to a quick resolution of an appeal, in-house counsel can take the lead and litigate accordingly, possibly saving her client substantial cost as well as adding value to the company.

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[i] David Newsome is a Senior Legal Counsel for KBR and a retired Army officer of the Judge Advocate General’s Corps where he maintained an Acquisition Law Specialty. The views expressed herein are his own.  This article is for general information purposes and is not intended to be and should not be taken as legal advice.

 

 

[1] David Newsome, Jr., Adding Value to the Company: Moving to Dismiss Claims Under the Contract Disputes Act for Statute of Limitation Violations, Public Contracting Institute, July 9, 2013, https://publiccontractinginstitute.com/adding-value-to-the-company-moving-to-dismiss-claims-under-the-contract-disputes-act-for-statute-of-limitation-violations/ .

 

 

 

 

 

 

 

 

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