When a contractor appeals a decision to terminate its contract for default, must that contractor also submit to the contracting officer a claim, obtain a decision on that claim and appeal the decision or the failure to render it? At least 11 fairly recent cases have addressed this issue and the decisions have left the waters very murky. Until recently, all a contractor had to do was appeal the termination for default and avail itself of the panoply of defenses available including, for example, acts of the government in its contractual capacity, which include constructive changes.
As a result of Maropakis Carpentry, Inc. v. United States, 609 F. 3d 1323 (Fed. Cir. 2010), and its progeny, a contractor must consider the need to file a separate claim seeking an adjustment in the terms of the contract. When does a particular defense require an adjustment in the terms of the contract? When does the defense require that a claim be submitted to the contracting officer?
The cases addressing these issues do not provide a clear answer.
In ERKA Constr. Co., Ltd. ASBCA No. 57618, 12-2 BCA para. 35,129, the Board said if the defense could be a constructive change which could lead to a contract adjustment, the contractor was required to submit that claim and having failed to do so, the Board granted the government's motion to dismiss. Other cases have suggested that a defense requiring the interpretation of contract language but not a contract adjustment might also require a claim be submitted to the contracting officer.
Wow. Almost any defense may raise issues of contract interpretation.
So where does a contractor stand today? If terminated for default (or if defending any other government claim) must a contractor also submit a claim and request a contracting officer's final decision on that claim? Recently, the ASBCA stated: "Based on these decisions, it is clear that, while all possible defenses need not be submitted to a contracting officer for a final decision, a contractor contesting liquidated damages or a default termination due to excusable delay must submit a claim for a time extension before appealing to the Board." ECC CENTCOM Constructors, LLC, ASBCA No. 60647, September 4, 2018.
Our advice is that a contractor should always file a claim asserting entitlement to a contract adjustment in a default termination appeal. Request a final decision and either appeal the decision or appeal the failure to render it (FAR Part 33). If the adjustment requested to support the defense involves money, also submit with the claim a sum certain.
It may be better to be safe than sorry. The claim can be submitted after the appeal on the termination for default is taken. The second appeal of the claim itself can be consolidated with the T for D appeal. We've had two recent ASBCA appeals in which this has happened.
bill@spriggslawgroup.com
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