November 4, 2016

Boards of Contract Appeals Will Prod Contracting Officers to Issue Final Decisions

Holland & Knight Government Contracts Blog
David S. Black

The Armed Services Board of Contract Appeals (ASBCA) recently demonstrated that it is willing to help government contractors who are waiting many months for a contracting officer to issue a final decision on a pending certified claim.

As background, the government contract claims process is supposed to be efficient, providing for the "informal, expeditious, and inexpensive resolution of disputes," as the Contract Disputes Act (CDA) states.  See 41 U.S.C. §§ 7101-7109.  But that's easier said than done.  All too often, when a contractor submits a written request for equitable adjustment (REA) or certified claim, the Contracting Officer (CO), for whatever reason, doesn't "expeditiously" issue a final decision.  Sometimes, it may seem that the government is just sitting on the claim, without giving it due consideration at all.  What's a contractor to do to spur the CO to act?  This may be a touchy subject for some, but there are a few alternatives. 

Some contractors elect to do nothing and wait out the CO, although this isn't necessarily a good option.  After having raised a dispute by asserting a claim, some contractors are reluctant to press for a final decision, feeling, rightly or wrongly, that demanding issuance of a decision may impact the CO's view of the merits.    

Less timid contractors realize that contract administration is a two-way street and that even Uncle Sam has a legal obligation to respond and act.  Such contractors invoke the procedural requirements of the CDA.  By law, upon receipt of a certified claim, the CO must issue a final decision within 60 days, or if the amount sought exceeds $100,000 the CO must at least inform the contractor of the date by which a final decision will be issued, with the statute requiring issuance within a "reasonable time" based on the size and complexity of the claim. 41 U.S.C. § 7103(f)(2)-(3). 

The CDA affords contractors some protections against unresponsive or slow COs.  In the event a CO fails to issue any response within the initial 60-day time period or another time period he or she establishes, the contractor may appeal the claim to the board of contract appeals having jurisdiction on the basis of the claim being "deemed denied."  41 U.S.C. § 7103(f)(5).  In the event the CO responds within the initial 60-day time period by asserting an unreasonably long period of to issue a decision of a claim of more than $100,000, the contractor may formally request the Board direct the CO to issue a final decision within shorter time period.  41 U.S.C. § 7103(f)(4). 

In a decision issued on October 7, 2016, the ASBCA showed that it will enforce § 7103(f)(4) and direct a CO to issue a decision sooner when the agency cannot justify the additional delay.  See Volmar Constr., Inc., ASBCA No. 60710-910 (Oct. 7, 2016).  On May 19, 2016, Volmar submitted eight claims to the CO for the Army Corps of Engineers, seeking $2.75 million and schedule extensions.  On July 18, 2016, one of the claims was granted, and the CO notified Volmar that final decisions on the other seven claims would be issued by March 31, 2017 – more than ten months after the claims were originally submitted.  Unwilling to wait that long to prosecute its claims, Volmar petitioned the ASBCA, seeking an order directing the CO to issue decisions earlier. 

Whether the time period for issuing a decision is reasonable is determined on a case by case basis.  Here, the ASBCA found that March 31, 2017 was not reasonable and directed the CO to issue final decisions by January 13, 2017. 

The Board's reasoning shows that agencies bear the burden of justifying the need for additional time to issue a final decision and cannot rely on government staffing shortages to excuse a delay in issuing a final decision.  Although the contractor in Volmar Construction sought the relief from the Board, the Board looked squarely to the Government to offer "persuasive" reasons why such a lengthy time period was required.  When the Government failed to do so, the Board granted relief to the contractor.  The Board also rejected the Government's argument that additional time was required because of a change in contracting officers and logistics surrounding the engagement of scheduling and damage experts.  The Board reasoned: "[w]hile bringing on a CO who has had no exposure to the issues can be time-consuming, internal staffing matters are not one of the factors used to determine a reasonable time under the CDA."  (Emphasis added.)  The Board noted that in a prior case, the Board held that a scarcity of attorneys to assist with the review of a CO's final decision could likewise not justify a delay because internal staffing "is a matter wholly and exclusively within the control of the government."  The Board also scrutinized and picked apart the Government's argument that it needed until late March to engage and receive input from scheduling and damages consultants. 

In light of Volmar Construction,, contractors who are stuck waiting unreasonably amounts of time for final decisions on important disputes should take heart.  If the amount of time asserted by a CO to issue a final decision seems unreasonably long, they can petition the pertinent board of contract appeals and turn the table on the CO by requiring him or her to persuade the board that the delay is required.  If the CO is unable to make a persuasive justification, the boards are not shy about imposing a shorter time for decision. 

Related Insights