Contract Disputes Act claims are subject to a six-year statute of limitations. While the math involved in calculating when that limitations glass-time-watch-businessperiod runs seems easy, determining when a CDA claim accrued is not always so simple. FAR 33.201 defines “accrual of a claim” as the date when the party with the claim knew or should have known all of the events that “fix the alleged liability” of the other party. But the Federal Circuit’s decision in Kellogg Brown & Root Services, Inc. v. Murphy, No. 2015-1148 (Fed. Cir. May 18, 2016) [PDF], shows that the date of accrual is not always clear.
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Leslie Arkansas Post Office
The termination of a $34,000 mail delivery contract serving this post office in Leslie, AR could result in three standard clauses being declared unlawful on thousands of USPS transportation contracts.

Three standard clauses used in virtually all Postal Service surface transportation contracts are now on the chopping block. In an interim ruling, the Court of Federal Claims ordered the Postal Service to show why these three clauses should not be declared unlawful and unenforceable. Tabetha Jennings v. U.S., Fed. Cl. No. 14-132C, May 29, 2016.

The case involves the default termination of a $34,000 contract to provide mail delivery between Leslie and Timbo, Arkansas. Tabetha Jennings, the sole proprietor contractor, had provided service for seven years without any issues. Then, during a heavy volume Christmas season, a postmaster accused her of using a vehicle with insufficient capacity. The postmaster was wrong, but this charge led to other accusations. Eventually, the postmaster accused Jennings of conducting herself “in an unprofessional manner” and disrupting mail processing operations. These accusations, in turn, led the contracting officer to rescind Jennings’s security clearance and her access to postal premises and the mail.

Jennings disputed the accusations against her and presented statements from a different postmaster and from another contractor that backed her up. But the contracting officer was unmoved and did not lift the suspension of her security clearance. When Jennings failed to provide a substitute carrier to continue the service she had been barred from performing herself, the contracting officer terminated her contract for default.
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An agency must use-it or lose-it under a fixed-priced contract.  When an agency makes it impossible to receive a contractor’s service under a fixed-priced contract, it must still pay the full contract price. So long as the contractor is willing to live up to its end of the bargain, the contractor is entitled to payment

HCR Seminar Postal Contracting Brochure 2016_3Unpaid for work you performed on your HCR contract?  Can’t agree with the Postal Service on a contract price adjustment?  Not given a chance to bid on new work in your area?

Learn about remedies for these problems at our new seminar, “Claims and Disagreements under Postal Service HCR contracts.”  Husch Blackwell partner David Hendel

The Supreme Court’s decision in Kellogg Brown & Root Services, Inc. v. United States ex rel. Carter, No. 12-1497 (U.S. May 26, 2015) [pdf], holds that the Wartime Suspension of Limitations Act applies only to criminal offenses. It also holds that the first-to-file bar in the False Claims Act applies only when an earlier-filed action remains “pending.” BALAD AIR BASE, Iraq.  Staff Sgt. Gary Messer, 332nd Expeditionary Aerospace Medical Squadron bioenvironmental engineer, transfers a sample of tap water to a tube before performing tests to confirm that the water is free from bacteria. March 13, 2008. (U.S. Air Force photo / Senior Airman Julianne Showalter.)The unanimous opinion, written by Justice Alito, takes a plain-meaning approach to both of the questions presented.

The Wartime Suspension of Limitations Act

Citing dictionary definitions of the word “offense” and the appearance of the WSLA in Title 18 of the U.S. Code, the Court inferred that Congress intended to toll the applicable statutes of limitations only in criminal cases. As to the removal of the phrase “now indictable” from the text of the WSLA in 1944, the Court found that such a subtle change does not prove that Congress intended to expand the tolling effect of the WSLA beyond criminal cases. “[T]he removal of the ‘now indictable’ provision was more plausibly driven by Congress’ intent to apply the WSLA prospectively, not by any desire to expand the WSLA’s reach to civil suits.”

Carter reverses the Fourth Circuit’s holding in United States ex rel. Carter v. Halliburton Co., 710 F.3d 171 (4th Cir. 2013) as to the scope of the WSLA.
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PSBCA sealThe first Board of Contract Appeals to fully enter the digital age is the Postal Service Board of Contract Appeals, which recently issued new rules on electronic filing.  Although the PSBCA hears claims against the agency that provides U.S. Mail, that method of filing will no longer be allowed (absent permission). The Postal Service, however, is not a Luddite agency and has embraced modern technology in running its business.

Effective July 2, 2015, PSBCA filings must be made electronically unless permission to submit physical filings is requested and obtained. The website for electronic filing is https://uspsjoe.justware.com/JusticeWeb.  Online filers must use this exact web address. Omitting the initial “https://” – or the final “justiceweb” – results in an error message.  To assist users, the Board has created a PSBCA tutorial on electronic filing.
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The contractor’s duty to proceed with performance pending the resolution of disputes is a basic concept in the law of government contracts. It is laid out explicitly in FAR 52.233-1(i), the mandatory disputes clause that appears in nearly all federal contracts: “The Contractor shall proceed diligently with performance of this contract, pending final resolution of any request for relief, claim, appeal, or action arising under the contract, and comply with any decision of the Contracting Officer.”

But the duty to proceed has important limits. A contractor is excused from its duty to proceed and may stop work if the government materially breaches its own obligations under the contract.

Breaches occur in many contexts. A cardinal change in the scope of work is a breach that excuses a contractor’s performance. Terminating a contract just to get a lower price is a breach. Refusing to pay for a contractor’s work without an adequate excuse is also a breach.

According to the decision in Kiewit-Turner v. Dep’t of Veteran Affairs, CBCA No. 3450 (Dec. 9, 2014) [pdf], the government breaches the contract by ordering a contractor to continue performance when it is clear that there will be no funds available to pay for the work. The Civilian Board of Contract Appeals recognized Kiewit-Turner‘s right to stop work when the Department of Veteran Affairs failed to provide a design that would have allowed construction to be completed within the budget established by the available appropriations. Despite the general duty to proceed, Kiewit-Turner was not required to continue performance because it was clear that the construction costs would exceed the available funds and the VA refused to seek additional funding or incorporate value engineering changes to reduce the overall construction cost.
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If you are getting ready to submit a claim on a federal contract—especially one that challenges an assessment of liquidated damages—take note of the Federal Circuit’s decision in K-Con Building Systems, Inc. v. United States, No. 2014-5062 (Fed. Cir. Feb. 12, 2015) [pdf]. It has some specific instructions for the contents of your claim letter and demonstrates the harsh results that follow from a misstep in the disputes process.

U.S. Coast Guard photo by Petty Officer 1st Class Bethannie Kittrell.  August 26, 2013.K-Con held a Federal Supply Schedule contract for prefabricated structures. In 2004, it won a $582,000 Coast Guard task order for the design and construction of a Coast Guard cutter support building at Port Huron, Michigan.

K-Con’s July 2005 Claim

When K-Con was unable to complete the work by the deadline set forth in the task order, the Coast Guard assessed liquidated damages of $109,554—186 days at $589 per day. On July 28, 2005, K-Con submitted a one-page claim letter seeking remission of the liquidated damages.

Although it was brief, K-Con’s letter asserted three reasons why the liquidated damages assessment was improper:

  1. K-Con “was not the sole cause of any alleged delays” and any K-Con delays were “concurrent with delays caused by the government;”
  2. the government “failed to issue extension to the completion date as a result of changes to the contract by the government;” and
  3. the liquidated damages “are an impermissible penalty.”

K-Con’s letter requested a contracting officer’s final decision. Though it demanded relief of more than $100,000, K-Con’s letter asserted that a certification was not required “since the assessment of liquidated damages is a claim by the Government.”


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Despite getting a rare Writ of Mandamus from the D.C. Circuit Court of Appeals establishing that its internal investigations were covered by the attorney-client privilege, Kellogg Brown & Root must still turn them over. As predicted in our earlier posts on Barko v. Halliburton, Judge James Gwin has ruled that KBR waived the attorney-client privilege that would otherwise have shielded KBR’s internal investigation documents from discovery. His rationale is reflected in three opinions published in November and December 2014.A trash-burning incinerator is installed at Forward Operating Base Warhorse, Iraq, through a LOGCAP contract.

In a June 2014 opinion, the D.C. Circuit held that KBR’s internal investigation documents would be privileged if obtaining or providing legal advice was “a primary purpose of the communication, meaning one of the significant purposes. . . .”

But the Court of Appeals also invited the District Court to consider additional arguments that might have been timely asserted as to “why these documents are not covered by either the attorney-client privilege or the work product doctrine.”

That is what Judge Gwin did. When the case returned to the District Court, Barko sought “interviews, reports, and documents that KBR prepared while investigating tips KBR had received that involved the same allegations found in Barko’s complaint.” Barko relied on four arguments to support his claim that KBR had waived any attorney-client privilege or work-product protection over the documents:

  1. KBR put the contents of the documents at issue in the litigation;
  2. KBR’s Rule 30(b)(6) witness reviewed the privileged documents prior to testifying at his deposition;
  3. The documents fell under the crime-fraud exception to the privilege; and
  4. KBR had failed to list these documents on a privilege log when responding to an earlier administrative subpoena from the Defense Criminal Investigative Service (“DCIS”).

In an opinion issued on November 20, 2014, Judge Gwin accepted the first two arguments.


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