There But for the Grace… Government Contracts Rules Lay Traps Aplenty

From time to time, I see a government contracts case that sends chills down my spine. The decision painfully reminds me of how the law governing our unique industry lays so many traps for those who venture into this realm.

The case, decided by the Armed Services Board of Contract Appeals, rejected a contractor’s appeal because it was filed a single day late. See Appeal of Kentucky Business Enterprise, ASBCA No. 63023 (Feb. 16, 2022). In and of itself, that outcome is not unusual because under the Contract Disputes Act, 41 U.S.C. § 7101, et seq., a contractor is given two options if it wishes to appeal the outcome of a Contracting Officer’s Final Decision (“COFD”). The contractor can initiate an appeal by filing an action before the Court of Federal Claims if it is filed within one year following the decision. 41 U.S.C. § 7104(b). Alternatively, the contractor can seek review of the decision at a Board of Contract Appeals within 90 days of the COFD. 41 U.S.C. § 7104(a).

Either way, the deadlines are absolutely unforgiving because the CDA waives sovereign immunity for federal contract appeals that, in the absence of the waiver, would be an absolute bar to legal actions against the government. All such waivers are applied strictly because courts simply have no jurisdiction over actions barred by sovereign immunity.

Here, Kentucky Business Enterprise (“KBE”) had a contract to provide food service at the Army’s base at Fort Knox, Kentucky. For reasons that are not apparent in the decision, the Army and KBE had a dispute that proved fatal when KBE sent a letter to the Contracting Officer “that demonstrated an anticipatory repudiation ‘which clearly manifested [the] contractor’s inability to perform the contract. . . .’” Decision at 3. Accordingly, the Army sent contract modifications terminating the contract and two task orders for cause along with a COFD, all dated June 4, 2021.

With that, the clock started ticking on KBE’s right to appeal the decision, in this case 90 days for an appeal to the Armed Services Board of Contract Appeals, such that the appeal had to be filed on or before September 2, 2021. The rules provide that the appeal must be filed with the Board and delivered to the Contracting Officer by that deadline. Here, KBE did just that—on September 2, 2021, KBE filled an appeal and delivered the notice to the Contracting Officer. There was just one problem—the contractor filed its appeal with the Civilian Board of Contract Appeals, not the Armed Services Board of Contract Appeals, the latter being the only Board with jurisdiction over KBE’s appeal. Having become aware of its error, KBE refiled its notice with the ASBCA on September 3, 2021.

The Army moved to dismiss the appeal based on the Board’s lack of jurisdiction due to the fact that KBE’s appeal was filed at the ASBCA a day after its deadline. KBE countered that the late filing was excused by what is known as the “misdirected appeal” doctrine. This principle is occasionally applied to excuse contractors whose filing somehow is not received by the Board by the deadline so long as timely written notice is provided to the contracting agency (usually meaning to the Contracting Officer) that indicates “dissatisfaction with the [COFD and] an intention to appeal to a higher authority.” Decision at 5 (citations omitted).

On its face, that might seem to save KBE’s appeal. Unfortunately, it did not. The Board found that KBE’s appeal remained untimely because its notice did not express an intention to appeal to the correct higher authority. Thus, the Board it lacked jurisdiction because the notice that indicated the intent to appeal to the ASBCA was a day late. Thus, the timely notice sent to the Contracting Officer simply was irrelevant because it identified the CBCA, not the ASBCA, as the higher authority. Case closed. Decision at 5.

It would be easy to beat up on the contractor and/or its counsel, but I won’t. I choose not to because, after nearly 25 years of government contracts practice, I know there are myriad traps for the unwary—and the wary.

Our firm’s practice devotes considerable time to advising contractors on compliance with and litigating disputes under laws such as the Service Contract Act, the Davis-Bacon Act, and various Executive Orders that, together, impose often confusing rules regarding prevailing wages and fringe benefits to those who work on covered federal contracts as well as mandates to provide paid sick leave and minimum wages to those who work on or in connection with covered contracts. Did you catch that difference(“on” versus “on or in connection with”)? Many don’t.

I could go on. And on. Our little parcel in the vast lands of the legal world is rife with hard-to-see pools of quicksand that can trap even the most sophisticated contractors. We urge you to read your contracts. Look up the text of contract clauses that are listed but not quoted. Find the rules that govern how to deal with disputes. Read them. Read them again. And, where needed, seek help.

One final note here… All is not lost, KBE may be able to take its appeal to the Court of Federal Claims by filing an action before a full year has passed since the errant filing of its appeal at the ASBCA. While an appeal to one forum versus the other is an irrevocable choice, the Court of Federal Claims has stated that this bar applies when the Board has jurisdiction over the appeal. Here, the Board decided it did not; therefore, the Court theoretically could take up the case. See Jo-Mar Corp. v. United States, 15 Cl Ct. 602, 605 (1988) (noting that election not a bar when Board lacks jurisdiction but dismissing case because it truly was a maritime dispute outside the claims court’s jurisdiction. Ouch.); see also Information Systems & Networks Corp. v. United States, 17 Cl. Ct. 527, 529-30 (finding that untimely filing at Board did not bar claims court jurisdiction but dismissing case for its lack of jurisidiction because action was untimely there as well. Ouch again.). Rules. Rules. Rules.