Certified claims are sometimes required when asserting affirmative defenses
The books are filled with decisions where a contractor filed a certified claim under the Contract Disputes Act (CDA), 41 U.S.C. chapter 71, for an equitable adjustment or other relief arising under or related to the contract. But is there ever a requirement for a contractor to file a certified claim in support of an affirmative defense to a government claim?
It may come as a surprise to some readers that such a requirement does exist in some situations. In the Federal Circuit’s decision in M. Maropakis Carpentry, Inc. v. United States, 609 F.3d 1323 (Fed. Cir. 2010), the court held that a contractor's failure to assert excusable delay in a claim to the contracting officer (CO) precluded excusable delay as a defense to the government's imposition of liquidated damages. The court reasoned that “[t]o the extent the affirmative defense seeks a change in the terms of the contract—for example, an extension of time or an equitable adjustment—it must be presented to the CO.”
A close review of the facts in Maropakis will help illustrate how this doctrine works in practice.
Maropakis involved a contract to replace windows and the roof of a building. After it completed the work late, the contractor sent the Navy a demand for a 447-day time extension based on five alleged delays. The Navy later sent the contractor a demand letter in which it, among other things, informed the contractor it would owe liquidated damages due to its late completion. After a further exchange of correspondence, the contracting officer issued a final decision upholding the government’s claim for liquidated damages.
The contractor then filed suit in the Court of Federal Claims alleging (1) breach of contract due to government delay and seeking resulting time extensions and (2) breach of contract due to the government’s assessment of liquidated damages and seeking remission of the full amount of these damages: $303,550. The court dismissed the contractor’s claim for time extensions for lack of subject-matter jurisdiction because it had not submitted a claim for a contract modification. The court granted the government summary judgment with respect to its counterclaim for liquidated damages. The contractor appealed to the Federal Circuit, which affirmed the trial court's decision.
With respect to the time extensions, the Federal Circuit observed that the jurisdiction of a court or board requires both a valid claim and a contracting officer's final decision on that claim. Accordingly, for the tribunal to possess jurisdiction under the CDA, the contractor must submit a proper claim—a written demand that includes (1) adequate notice of the basis and amount of a claim and (2) a request for a final decision. In addition, the contractor must have received the contracting officer's final decision on that claim (or a deemed denial if the contracting officer fails to act). A claim for more than $100,000 must be certified.
The Federal Circuit, like the Court of Federal Claims, examined Maropakis’ communications with the government and held that they did not meet the CDA requirements for a claim. Among other things, the court held that the contractor’s letter was not a valid claim because “it did not provide the contracting officer adequate notice of the total number of days actually requested in extension, it did not state a sum certain, . . . it did not request a final decision,” and it was not certified.
The Federal Circuit also upheld the Court of Federal Claims’ grant of summary judgment to the government on its claim for liquidated damages. Maropakis contended that there was a distinction between claims and defenses that would allow it to raise an excusable delay defense without submission of a claim. The Federal Circuit disagreed, holding that “a contractor seeking an adjustment of contract terms must meet the jurisdictional requirements and procedural prerequisites of the CDA, whether asserting the claim against the government as an affirmative claim or as a defense to a government action.” Because the time extension claim was the contractor’s only defense to the liquidated damages claim, the Federal Circuit upheld the grant of summary judgment to the government.
It bears emphasis that no general requirement exists under the Contract Disputes Act for a contractor to submit a claim in support of every affirmative defense to a government claim. In Securiforce International America, L.L.C. v. United States, 879 F.3d 1354 (Fed. Cir. 2018), the Federal Circuit considered Maropakis in the context of a termination for default. The contract at issue required delivery of fuel to eight sites. The government terminated two of the sites for convenience almost immediately and terminated the remainder for default 2 months later. Securiforce raised as an affirmative defense to the default termination that the government’s partial termination for convenience constituted a prior material breach.
The Federal Circuit concluded that a defense of prior material breach need not be submitted to the contracting officer for a final decision. But the Court of Appeals also reiterated its holding in Maropakis that “[t]o the extent the affirmative defense seeks a change in the terms of the contract—for example, an extension of time or an equitable adjustment—it must be presented to the CO, since evaluation of the action by the CO is a necessary predicate to a judicial decision.”
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 an adjustment of contract terms, such as a time extension, before appealing a contracting officer's final decision to the Federal Circuit's subordinate trial forums, a board of contract appeals, or the U.S. Court of Federal Claims.
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