Per the Contract Disputes Act (CDA) the statute of limitations for a claim by the Federal government against a contractor, or a contractor against the Federal government relating to a contract, is six years (41 U.S.C. §§ 7103(a)(4)(A)). The law concerning the six-year statue continually evolves however and has become less rigid resulting in long term issues for defending against claims. All of this came to a head recently in the Armed Services Board of Contract Appeals decision in February 2023 concerning a request for summary judgment by Beechcraft Defense Company, LLC against a claim made against it by the Defense Contract Management Agency (DCMA). A little background will help.
The most significant change concerning the CDA statute of limitations occurred in 2014 when the U.S. Court of Appeals for the Federal Circuit held in Sikorsky Aircraft Corp. v. United States that the statute of limitations is no longer jurisdictional but is an affirmative defense. Prior to Sikorsky the claimant bore the burden to prove that the statute of limitations did not apply (did not have jurisdiction). An affirmative defense means that the party seeking to invoke the statute of limitations bears the burden of proving that it does apply (that the claim accrued or started more than six years before its assertion by the claimant). One of the outcomes of the Sikorsky ruling is that the boards of contract appeals and Court of Federal Claims are not barred from hearing cases involving untimely claims.
A quick review of the timeframes of the documents involved in the Beechcraft case (ASBCA Nos. 61743, 61744, 61745 dated 2.02.2023) illustrates the issue with untimely claims. The Beechcraft case revolves around the following:
- Three Defense Contract Audit Agency (DCAA) audit reports concerning Cost Accounting Standards (CAS) non-compliances issued in June 2011.
- A fourth DCAA audit report issued in June 2011 concerning Beechcraft’s forward pricing rate proposal for 2011-2015. The audit report considered the alleged CAS non-compliances to have a limited impact on the proposal and DCAA believed the proposal to be an acceptable basis for negotiation of fair and reasonable forward pricing rates.
- At some later point (the record is unclear exactly when) DCMA requested that Beechcraft submit general dollar magnitude (GDM) proposals related to the CAS non-compliances. Beechcraft did so in April 2015. At DCMA’s request Beechcraft resubmitted the GDM proposals in July and August 2016. DCAA audited the proposals throughout 2017.
- In May 2018 DCMA issued a contracting officer’s (CO) final decision regarding the non-compliances which Beechcraft timely appealed in August 2018.
Beechcraft asserts that the statute of limitations began to run in June 2011 when DCAA issued its reports on the non-compliances and the forward pricing rate proposal and that the CO’s final decision in 2018 was beyond the six-year period. DCMA asserts that the statute began to run when Beechcraft submitted its GDM proposals in 2015.
Beechcraft sought a summary judgment which the Board denied due to a lack of evidence. The Board’s decision does not prevent Beechcraft from presenting additional evidence in the future which Beechcraft will likely do. As a result, the case is ongoing twelve years after the original DCAA audit reports and could continue on for another two or three years.
For more insights concerning this case read the interview with Zach Prince, Haynes Boone law firm partner, by Tom Temin in his article titled “Defense claims against contractors have a shelf life of infinity” (link below).
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