Traditionally, disputes that rise to the level of an appeal before the Armed Services Board of Contract Appeals (ASBCA) (or other board of contract appeals) follow a similar path:

·       The contractor and the Government enter into a written contract

·       The contractor performs the contract, but believes that it is entitled to recover additional costs or damages in connection with its performance and files a claim

·       The Government denies the claim in a formal Contracting Officer’s Final Decision (COFD).

The appeal before the Board is the contractor’s appeal of the COFD.

However, in a recent decision, the ASBCA held that contractors have the right to bring an appeal — even if the government claims a contract does not exist: no COFD is required.

The case at issue concerns training services.  The contractor alleged the existence an “implied-in-fact” contract between the contractor and the Navy. An implied-in-fact contract is one where there has been a meeting of the minds between the parties, but there is no written agreement and the contract must be inferred from the conduct of the parties.  Here, the contractor alleged that the Navy made payments for certain training services performed by the contractor, but denied others based on the purported absence of a written agreement.

The Navy moved to dismiss the appeal for lack of jurisdiction based on the absence of a traditional written contractor and COFD.  In its decision denying the Navy’s motion, the Board held that it has the authority to hear disputes regarding the existence of a contract.  Further, the Board reviewed the facts and found that even though the Government was apparently “unable to locate” documentation for alleged unpaid training services, the claim, at minimum, was not frivolous.

Previous cases before the Board have found that an implied-in-fact contract will trigger its jurisdiction.

The absence of a COFD is a particularly noteworthy procedural quirk.  As noted above (and argued by the Navy in this case) a contractor typically must rely on a COFD as the basis for an appeal to the Board. However, where the fundamental question at the heart of the appeal is whether a contract exists, the Board can exercise jurisdiction to resolve the dispute without a final decision. Thus, even though the Navy purposefully fashioned its response to the contractor to avoid any indication that it was a “COFD,” the contractor still had a right to an appeal.

While a contractor in this situation bears the burden of establishing jurisdiction, the Board emphasized that the contractor only must make a “non-frivolous allegation that a contract existed.” This is good news for contractors, as it presents a relatively low hurdle.  Basic allegations regarding the parties’ course of conduct should suffice.

This case should serve as a reminder to contractors that – even without an express contract — they may still have the option to bring an appeal before the ASBCA. The absence of a written contract (or even a COFD) does not necessarily leave you without the right to appeal before the applicable Board.

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