Insights

In a big change for defense contractors, Congress has amended 10 U.S.C. § 3372 to make clear that a Department of Defense (DoD) contracting officer’s unilateral definitization of an undefinitized contract action is directly appealable to the Armed Services Board of Contract Appeals (ASBCA) or the Court of Federal Claims. Congress’s change (made under Section 803 of the Servicemember Quality of Life Improvement and National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2025) (we report on the FY 2025 NDAA here) is contrary to recent ASBCA and Federal Circuit decisions.

On October 31, 2024, the Armed Services Board of Contract Appeals (ASBCA or Board) published its FY 2024 Report of Transactions and Proceedings, which provides statistics regarding the “adjudication of appeals, petitions for contracting officer final decisions, applications for fees and costs under the Equal Access to Justice Act, and other matters” of the Army, Navy, Air Force, Corps of Engineers, Defense Logistics Agency, Defense Contract Management Agency, Central Intelligence Agency, National Aeronautics and Space Administration, or the Washington Metropolitan Area Transit Authority. 

The Civilian Board of Contract Appeals (CBCA or Board) recently published its Annual Report for FY 2024, providing statistics regarding the adjudication of appeals between contractors and civilian agencies. This year, the civilian agencies with the highest number of docketed claims at the Board were the Department of Veterans Affairs, the General Services Administration, the Department of State, the Department of Homeland Security, and the Department of Agriculture. These agencies accounted for 126, or 76%, of the 165 Contract Disputes Act (CDA) appeals docketed at the Board. 

In Fortis Industries, Inc., CBCA 7967 (Sept. 18, 2024), the Civilian Board of Contract Appeals (CBCA) denied in part the government’s motion for partial summary judgment on the issue of whether the contractor released its claims by signing a modification terminating the contract for convenience. During contract performance, the General Services Administration (GSA) imposed monthly deductions to contract payments as a response to certain performance issues. GSA later proposed to terminate the contract for convenience and sent a contract modification stating that all obligations under the contract were concluded except payment for work performed in June 2022. The contractor signed the modification but stated in its transmittal email that it was owed payment for services in May 2022 as well. 

In Chugach Federal Solutions, Inc., ASBCA Nos. 62712, et al., the Armed Services Board of Contract Appeals held that a contractor could recover its costs for having to quarantine personnel in accordance with government-imposed COVID safety requirements, because the underlying contract contemplated that the contractor would be compensated for complying with any changes to health and safety requirements.

At midnight on October 1, 2024, the International Longshoremen’s Association launched a labor strike that effectively shut down all ports from Maine to Texas after being unable to reach agreement on terms for a new labor contract with the United States Maritime Alliance.  This strike may impact virtually all industries that rely on maritime shipping, either directly or indirectly. 

The Armed Services Board of Contract Appeals (Board) recently issued notable reminders to contractors regarding its jurisdictional authority and the importance of timely filing claims.  The Board explained in DSME Construction Co., Ltd., ASBCA 63878 (July 30, 2024), that it may retain jurisdiction over a dispute even when a different forum is listed in the contract.  In Platinum Services., Inc., ASBCA No. 63878 (Aug. 1, 2024), the Board instructed contractors to be mindful of the CDA’s statute of limitations period, even when seeking to amicably resolve a dispute.

In Konecranes Nuclear Equip. Servs. LLC, ASBCA, Nos. 62797, 62827 (May 7, 2024), the Armed Services Board of Contract Appeals (Board) awarded approximately $4.9 million in delay-related breach damages to Konecranes Nuclear Equipment Services (Konecranes) due to the Navy’s breach of its implied duty to not interfere on a commercial-item contract for the provision of 25-ton general purpose portal cranes.

In Lockheed Martin Aeronautics Company, ASBCA No. 62209 (a C&M case), the Armed Services Board of Contract Appeals (Board) awarded $131,888,860 in damages plus applicable interest in connection with Lockheed Martin’s claim for the cumulative disruptive impacts it experienced in performing over and above work on the C-5 Reliability Enhancement and Re-Engining Program.  The underlying contract related to the modernization of a fleet of C-5 Galaxy Aircraft, which is the largest U.S. military transport plane and has provided heavy intercontinental strategic airlift capabilities since the 1970s.  The Board sustained the appeal after finding that Lockheed Martin had met its burden of proof on entitlement and quantum, using the measured-mile methodology, which compares an affected period of performance with an unaffected period.  This case is a prime example of marshalling fact and expert witness testimony, and documentary evidence, to demonstrate the impacts of cumulative disruption on performance to justify causation and damages.

In MLU Services, Inc. v. Department of Homeland Security, CBCA No. 8002, the Civilian Board of Contract Appeals (Board) denied a Federal Emergency Management Agency (FEMA) motion to dismiss for failure to prosecute, which the agency filed just four days after MLU failed to timely submit one of its initial pleadings.

The U.S. Court of Appeals for the Federal Circuit held in Avue Technologies Corp. v. Department of Health and Human Services that an appellant’s non-frivolous allegation of a contract with the government via an end-user license agreement (EULA) incorporated into another contractor’s Federal Supply Schedule (FSS) agreement was sufficient to establish jurisdiction under the Contract Disputes Act (CDA).

The Civilian Board of Contract Appeals (CBCA) recently published its Annual Report for FY 2023, providing statistics regarding the adjudication of appeals between contractors and civilian agencies such as the Department of State, the Department of Veterans Affairs, the General Services Administration, the Department of Transportation, the Department of Agriculture, the Department of the Interior, and the Central Intelligence Agency. According to this year’s report, contractors prevailed in 45% of the appeals decided on the merits, which is much higher than the 21% success rate in 2022. The report also shows that the CBCA’s alternative dispute resolution (ADR) program remains successful—resolving 70% of appeals for which the parties completed ADR. All of this came in the context of a substantial jump in the number of appeals, with 246 new appeals docketed in 2023 compared to 177 in 2022 and 185 in 2021. Click here to view the full CBCA report.

In Flatland Realty, LLC, ASBCA No. 63409, the Armed Services Board of Contract Appeals (Board) granted an appeal seeking damages, plus interest, from an improper termination for default.  In an uncommon result, the Board awarded lost profit expectancy damages because the government had improperly terminated the contract, which did not incorporate a termination for convenience clause.

On November 1, 2023, the Armed Services Board of Contract Appeals (ASBCA) published its FY 2023 Report of Transactions and Proceedings, which provides statistics regarding the adjudication of appeals between contractors and the Army, Navy, Air Force, Corps of Engineers, Central Intelligence Agency, National Aeronautics and Space Administration, Defense Logistics Agency, Defense Contract Management Agency, other Defense agencies, Non-Appropriated Fund Instrumentalities, and the Washington Metropolitan Area Transit Authority.

In StructSure Projects, Inc., ASBCA No. 62927, the Armed Services Board of Contract Appeals (Board) granted an appeal seeking recovery for increased costs resulting from the COVID-19 pandemic.  The underlying task order involved design and alteration services for existing medical facilities at Travis Air Force Base, and included a specific Contract Line Item Number (CLIN) for the provision of temporary phasing facilities that the Government could use while the construction work was ongoing.  When the pandemic began in March 2020, StructSure and its subcontractors had to stop their on-site construction work for 44 days because the Government had limited base access for contractors deemed to be not mission-essential.  StructSure later sought schedule and monetary relief, but the Government only granted schedule extensions under the Default clause.

In ECC Int’l Constructors Inc. v. Army, No. 2021-2323 (Fed. Cir. Aug. 22, 2023), the Court of Appeals for the Federal Circuit overturned longstanding precedent by holding that the requirement to state a “sum certain” in a claim submitted under the Contract Disputes Act (CDA) is not a jurisdictional requirement.  The Court based its decision on recent Supreme Court guidance to “treat a procedural requirement as jurisdictional only if Congress ‘clearly states’ that it is.”  The Court parsed the CDA and found that Congress never used the words “sum certain,” evidencing that Congress did not intend the requirement to be jurisdictional.  This is important because jurisdictional requirements can be raised at any time—even years after the claim was filed and a full hearing on the merits was held—and result in dismissal of the case.  The Court explained that the “sum certain” is “nonetheless a mandatory rule that claimants must follow.” 

On May 15, 2023, the Armed Services Board of Contract Appeals (“ASBCA” or “the Board”) in J&J Maintenance, Inc., d/b/a J&J Worldwide Services, ASBCA No. 63013 issued an instructive analysis of its jurisdiction to hear monetary and nonmonetary claims.  Partially granting a government motion to dismiss, the ASBCA explained that, if a contractor does not seek monetary relief in its claim to the contracting officer (“CO”), then the contractor cannot seek monetary relief on appeal to the Board.  Addressing the contractor’s claim for contract interpretation, however, the Board denied the government’s motion to dismiss and held that, where a contractor can reasonably articulate “significant consequences” of its claim other than the recovery of money, the fact that the claim may also have a financial impact on the parties does not strip the Board of jurisdiction. 

On November 1, 2022, the Armed Services Board of Contract Appeals (ASBCA) published its FY 2022 Report of Transactions and Proceedings, which provides statistics regarding the adjudication of appeals between contractors and the Army, Navy, Air Force, Corps of Engineers, Central Intelligence Agency, National Aeronautics and Space Administration, Defense Logistics Agency, Defense Contract Management Agency, and other Defense agencies, Non-Appropriated Fund Instrumentalities, and the Washington Metropolitan Area Transit Authority.

In Lockheed Martin Aeronautics Company, ASBCA No. 62209 (a C&M case), the Armed Services Board of Contract Appeals (“Board”) denied the Air Force’s motion for summary judgment, which had argued that the “measured mile” approach to calculating disruption was legally untenable.  In its decision, the Board noted that it has “accepted the measured mile approach as an appropriate method of determining impact to productivity” referencing extended discussion in King Aerospace, Inc., ASBCA No. 60933, 19- 1 BCA ¶ 37,316.  The Board also granted Lockheed Martin’s cross-motion for summary judgment on the issue of release, holding that the express language of modifications signed by the parties indicated that Lockheed Martin did not release any portion of its claim.  The recent decisions follow on the heels of two other Board decisions.  In April 2022, the Board granted Lockheed Martin’s cross-motion for summary judgment on the Air Force’s statute of limitations defense because Lockheed Martin’s claim did not accrue before the events that fixed the government’s liability occurred (discussed here).  In June 2021, in a case of first impression, the Board granted Lockheed Martin’s motion for summary judgment on the Air Force’s affirmative defense of laches, holding that laches is no longer applicable in CDA cases at the Board (discussed here).

The Armed Services Board of Contract Appeals recently denied two separate appeals that sought recovery for increased costs caused by Government-imposed base restrictions in response to the COVID-19 pandemic. Applying the Sovereign Acts Doctrine, the Board denied the contractors any monetary recovery because it found that the Government acted in its sovereign capacity. Notably, both appeals were decided without an evidentiary hearing because each appellant elected to have streamlined proceedings at the Board under Rules 11 and 12.3.