Michelle D. Coleman, Skye Mathieson, John Nakoneczny and Tyler Piper | Crowell
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 DSME Construction, the contract was for the provision of various maintenance services at two U.S. military bases in the Republic of Korea (ROK). Although the ROK funded the contract, a U.S. Contracting Officer (CO) executed it. The contract incorporated a unique disputes clause that required the contractor to appeal from a CO’s Final Decision (COFD) to the Principal Assistant Responsible for Contracting, rather than the applicable Board of Contract Appeals or the U.S. Court of Federal Claims. The government terminated the contractor for default, and the contractor submitted, and the CO denied, the contractor’s subsequent certified claim. Rather than following the procedures outlined in the unique disputes clause, the contractor appealed to the Board.
In what the decision noted was a first, the contractor moved to affirm the Board’s jurisdiction over the appeal. Relying on precedent in Sungwoo E&C Co., ASBCA Nos, 6144, 61216, 19-1 BCA ¶ 37,449, the Board granted the motion, finding that the determining factor was whether the U.S. benefited from the procurement. Here, while the funding was provided by the ROK, a U.S. CO signed the contract and the U.S. was getting some benefit from the contract. Thus, the Board had jurisdiction despite a contract clause providing a different disputes process.
In Platinum Services, the Board held that it could not equitably toll the Contract Disputes Act (CDA) limitations period where the contractor’s claims were submitted more than six years after accrual, because there was no evidence of extraordinary circumstances.
The contract was for the provision of shipping and storage services for military service members’ household items. During the course of performance, the government declined to pay a number of invoices for services rendered because the corresponding orders were lost due to a computer crash. The contractor and the CO exchanged hundreds of emails over the subsequent years in an effort to pay the contractor. The government continually assured the contractor that it was working to resolve the dispute. Finally, more than six years after the government initially failed to pay the invoices, the contractor submitted a certified claim for payment of the still-outstanding invoices.
Before the Board, the government moved for summary judgment on the grounds that the claims were time barred. The contractor opposed, arguing that the statute of limitations was equitably tolled (1) because the government’s continued assurance that it was trying to pay the invoices induced the contractor not to submit a claim, and (2) because the government’s loss of the required paperwork constituted an “extraordinary” situation.
The Board disagreed and granted the government’s motion. The Board observed that computer crashes, while unfortunate, are not unusual. The Board further found that the crash and the government’s subsequent efforts to pay in no way mislead the contractor into waiting more than six years to assert its rights and file its claim. Equitable tolling is only provided sparingly, and here the Board said there was no extraordinary circumstance that would warrant tolling the statute. The contractor was, for example, free to submit a protective claim while the parties continued to negotiate an amicable resolution.
DSME Construction and Platinum Services serve as important reminders to contractors that they should be mindful of their rights and obligations under their contracts when navigating disputes.
When one of your cases is in need of a construction expert, estimates, insurance appraisal or umpire services in defect or insurance disputes – please call Advise & Consult, Inc. at 888.684.8305, or email experts@adviseandconsult.net.