A few years back, a string of decisions at the Armed Services Board of Contract Appeals and the Court of Federal Claims invoked the Contract Disputes Act’s six-year statute of limitations to dispose of several long-pending contractor and government claims. Under the case precedent then in force, the CDA’s statute of limitations was considered “unequivocally jurisdictional,” and a party bringing a claim bore the burden of demonstrating it presented its claim to a contracting officer within six years of the claim’s accrual. This made the statute of limitations a potent tool for cutting litigation short early in an appeal. The Court of Appeals for the Federal Circuit overturned that precedent two years ago in Sikorsky Aircraft Corp. v. United States, 773 F.3d 1315 (Fed. Cir. 2014), which transformed the six-year statute of limitations from a jurisdictional prerequisite (which could be invoked at the outset of an appeal to gain a dismissal) into a plain-vanilla affirmative defense, which the opposing party bears the burden of proving (and which seldom will support a dismissal at the outset of an appeal). In Kellogg Brown & Root Services Inc. v. Murphy, No. 2015-1148 (KBR), the Federal Circuit recently dulled the edge of the CDA’s statute of limitations further still.

Facts of the Case and Board Decision -

KBR involved a contractor’s 2012 CDA claim for settlement costs for a subcontract it terminated for default in July 2003 and for which all performance had ceased by September 2003. The two primary components of the claim were the subcontractor’s construction costs for dining facilities in Iraq (completed prior to termination) and compensation for meals it served to U.S. troops after termination pending onboarding of the replacement subcontractor. For several years after performance ended, the contractor and subcontractor engaged in discussions and litigation over the amount due the subcontractor. In 2005, pursuant to a settlement agreement, the contractor converted the subcontractor’s default termination into a termination for convenience. Over a year and a half later, in August 2006, the subcontractor submitted its claim for costs to the prime contractor. Two months later, the contractor submitted the subcontractor’s request for payment to the government, but expressly declined to certify it or comment on its validity. The government declined to pay the bill until the prime contractor had settled the claim with the subcontractor. In 2008, the contractor submitted a certified claim to the contracting officer on behalf of the subcontractor, but withdrew the claim in 2010 before the contracting officer had issued a final decision. In 2012 (after a second lawsuit by the subcontractor), the prime submitted to the contracting officer a new certified claim, which eventually was deemed denied.

Originally published in Law360, New York on June 14, 2016.