This holiday weekend presents a good time to reflect on the recent uptick in jurisdictional decisions before the Court of Federal Claims and the Boards of Contract Appeals related to the Contract Disputes Act’s (CDA) six-year statute of limitations. Most recently, we reported about the ASBCA’s decision in Laguna Constr. Co., Inc., ASBCA No. 58569 (May 29, 2014), which held that the government’s $3.8 million claim was time-barred by CDA’s statute of limitations. There the ASCBA found that the government’s claim accrued when DCAA issued an audit report more than six years prior to the final decision being issued. Now, in Zomford Company, ASBCA No. 59065 (June 10, 2014), the government argues that the contractor’s claim should be time-barred. As will be discussed below, this decision serves as a teaching tool with respect to the CDA statute of limitations and document preservation issues.
Here the contractor performed additional work pursuant to a contract modification issued on January 5, 2007. On January 21, 2007, the contacting officer emailed the contractor a notice terminating the contract and stating that “[n]o payments will be made” thereunder. (Apparently the contractor never received the termination notice.) Then in a March 9, 2007 email, the contractor informed the contracting officer that it had completed all work under the contract and attached an invoice. Another contracting officer replied, indicating that “payment has been sent out, please allow 30 days [i.e., around April 9, 2007] for payment to post.” Because no payment was made, the contractor submitted a claim on February 5, 2013 to recover for the work it performed.
In its motion to dismiss, the government argued that the contractor’s claim accrued on or about January 21, 2007 – when the termination notice was sent to the contractor. Judge James disagreed, finding that although that “date of accrual was plausible,” there was no evidence that the contractor ever received the termination notice. Instead, Judge James found that April 9, 2007 was likely the “earliest date” the claim would have accrued – 30 days after the parties exchanged emails about the work being complete and the date by which the government indicated that the contractor should receive payment. Thus, the contractor’s claim was submitted two months prior to the end of the six-year statute of limitations period.
This case is important for a variety of reasons:
- While many of the recent CDA statute of limitations cases involve contractors raising the jurisdictional issue, it is critical to remember that the government is equally entitled to raise this defense. Contractors must always be cognizant of six-year window it has to file a CDA claim, and set-up internal procedures and controls to track potential CDA claims and the six-year limitations period.
- The government’s statute of limitations defense failed because it could not prove that the contractor received the termination notice sent by email. In a day and age when email is one of the most prevalent forms of communication, this decision reminds us that proof of receipt still can be an issue at times. It is critical to include read receipts with important emails, and to consider sending a duplicate hardcopy via mail (with a return receipt requested). It is also important to follow-up with your contracting party to ensure that important documents are received.
- This case teaches about the importance of having records to support factual assertions. The contractor prevailed on the jurisdictional dispute mostly because the government could not demonstrate that the contractor received the termination notice and the contractor had records demonstrating when the claim likely accrued. Of course, the impact arising from a failure to maintain records is a two-way street. Contractors must ensure that they have adequate procedures and controls in place to preserve important records.
