ASBCA | The Contracting Education Academy

November 23, 2020 By cs

ASBCA revisits email “signature” and finds typed name meets the test

In a departure from its prior precedent, the Armed Services Board of Contract Appeals (ASBCA) recently held in Kamaludin Slyman CSC, ASBCA Nos. 62006, 62007, 62008, that a typed name at the end of an email satisfies the certification requirement under the Contract Dispute Act (CDA), so long as it is discrete, verifiable, and conveys an intent to authenticate.

The contractor at issue submitted a $155,500 demand for payment to the Government in March 2013, thus, triggering the CDA’s certification requirement under FAR 52.233-1. The demand itself did not contain a certification, but the contractor sent a follow-up email just prior to the six-year statute of limitations, stating:

Hey Sir,

For contract numbers -12-C-0089, -12-C-0131, -11-C-0322, and the claims submitted in respect to them on March 16, 2013, I certify that the claim is made in good faith; that the supporting data are accurate and complete to the best of my knowledge and belief; that the amount requested accurately reflects the contract adjustment for which the contractor believes the Government is liable; and that I am duly authorized to certify the claim on behalf of the contractor.

Sincerely,

Kamaludin Slyman

Three days after sending this email, the contractor submitted an appeal to the ASBCA pursuant to a “deemed denial” and the Government moved to dismiss asserting that the contractor had failed to sign its certification and, thus, failed to certify its claim. The Board noted that the Government did not argue in its motion that the appeal was premature, as the requisite 60 days had not passed between the certification and the purported deemed denial. However, because at the time of its decision more than 60 days had elapsed since the certification, the ASBCA saw “no useful purpose in dismissing the appeal as premature and requiring appellant to refile.”

Keep reading this article at: https://www.mondaq.com/unitedstates/government-contracts-procurement-ppp/1003364/asbca-revisits-email-signature-and-finds-typed-name-meets-the-test

October 5, 2018 By AMK

ASBCA does not bar government claim to disallow contractor’s direct costs paid 11 years earlier

The Armed Services Board of Contract Appeals (ASBCA) recently held in DRS Global Enterprise Solutions, Inc. that the government’s 2017 claim disallowing fiscal year 2006 direct costs was not necessarily time-barred by the Contract Disputes Act’s (CDA) six-year statute of limitations.

The DRS decision is another in a line of statute of limitations cases that tend to enable the government’s practice of conducting untimely audits and subsequently asserting stale cost disallowance claims.

In September 2017, the government issued DRS a contracting officer’s final decision disallowing approximately $8 million of direct costs incurred in fiscal year 2006. DRS moved for summary judgment, arguing that undisputed facts establish that the government’s claim accrued more than six years before the final decision was issued and, therefore, the claim was time-barred by the CDA’s six-year statute of limitations. DRS set forth three alternative arguments for the date the government’s claim accrued. The ASBCA rejected all of these arguments.

First, DRS argued that the government’s claim for unallowable direct costs accrued no later than December 15, 2006, when the last voucher for the costs was paid. The ASBCA, citing to its prior precedent, stated that there is no “blanket rule” providing that the statute of limitations begins to run when the government pays a voucher or invoice. The ASBCA also distinguished its contrary holding in Spartan DeLeon Springs, LLC, ASBCA No. 60416, 17-1 BCA ¶ 36,601, from the facts of this case noting that, unlike in Spartan DeLeon Springs, DRS was not able to offer undisputed facts demonstrating that DRS’s vouchers contained sufficient information concerning the government’s potential claim.
Second, DRS argued that the government’s claim accrued no later than March 31, 2008, when DRS submitted its final indirect cost rate proposal containing the costs at issue. The ASBCA rejected this argument because the undisputed facts did not support that the final indirect cost rate proposal information addressed the specific bases for the government’s disallowance claim and, thus, DRS failed to establish that the government’s potential cost disallowance claim was “reasonably knowable.”
Finally, DRS argued that the government’s claim accrued no later than July 17, 2009, the date of the Defense Contract Audit Agency entrance conference. The ASBCA rejected this argument as well, reasoning that there was nothing in the undisputed record establishing that the auditor should have been aware of the government’s potential claim at the time of the entrance conference. In sum, the ASBCA found that DRS failed to offer sufficient undisputed facts to supports its positions.

Keep reading this article at: http://www.mondaq.com/article.asp?articleid=737536

July 20, 2017 By AMK

ASBCA throws DCAA another brushback pitch

In an April 2017 decision, the Armed Services Board of Contract Appeals (ASBCA) once again rejected the position of the Defense Contract Audit Agency (DCAA) that a cost or type of cost for which allowability depends on the circumstances or Contracting Officer discretion can nonetheless be “expressly unallowable” and subject to penalties under FAR 42.709-1(a).

Although the law is clear that penalties are appropriate only when such costs are named and stated to be unallowable in a cost principle such that a counter position is unreasonable, the DCAA has continued to assert its erroneous position in its audit guidance and findings.

A contractor is subject to penalties if it includes in its indirect cost submission an indirect cost that is “expressly unallowable under a cost principle in the FAR, or an executive agency supplement to the FAR.” FAR 42.709-1(a)(1).

The ASBCA has explained the standard for whether a cost is expressly unallowable is “objective.” General Dynamics Corp., ASBCA No. 49732, 02-2 BCA ¶ 31,888, reversed on other grounds, Rumsfeld v. General Dynamics Corp., 365 F.3d 1380 (Fed. Cir. 2004). An item of cost is expressly unallowable if it is “specifically named and stated as unallowable….” Raytheon Company, ASBCA Nos. 57576, 57679, 58290, June 26, 2015. Moreover, “the Government must show that it was unreasonable under all the circumstances for a person in the contractor’s position to conclude that the costs were allowable.” General Dynamics Corp.

In twin Memoranda for Regional Directors (MRDs) dated December 18, 2014 and January 7, 2015, the DCAA provided its audit teams with guidance concerning the identification of expressly unallowable costs that contradicted these clear rules. 14-PAC-021(R); 14-PAC-022(R). Relying on an ASBCA case from the 1980s, Emerson Electric Co., ASBCA No. 30090, 87-1 BCA ¶ 19,478, November 19, 1986, the DCAA opined that “a cost can be unallowable even though the cost principle does not explicitly state that the cost is unallowable or not allowable.” 14-PAC-022(R). “[I]n situations where a cost principle does not specifically state that the applicable cost is unallowable or not allowable, the audit team will have to employ critical thinking when determining whether the cost principle identifies expressly unallowable costs” and “whether the cost principle identifies a cost or type of cost clearly enough that there cannot be a reasonable difference of opinion as to whether a questioned cost meets the criteria specified.” Id.

Keep reading this article at: http://www.mondaq.com/article.asp?articleid=601112

July 17, 2017 By AMK

ASBCA issues important ruling in ‘contractor-on-the-battlefield’ dispute

Last month, the Armed Services Board of Contract Appeals (ASBCA) held that the U.S. Army breached its contractual obligation to provide physical security to its principal logistical support contractor, KBR, during the height of the Iraq War.

As a consequence, the Board found that KBR was entitled to be reimbursed for $44 million, plus interest, in costs that the Government had withheld from KBR relating to KBR’s and its subcontractors’ use of private security. A copy of the opinion is available here.

Before the Board, the Army had argued that the costs in question were unallowable because KBR’s LOGCAP III contract with the Government prohibited the use of private security. In response, KBR argued (among other things) that any violation of this prohibition had been excused by the Government’s prior material breach of its obligation to provide physical security. On the basis of an extensive documentary and testimonial record (including a month-long trial), the Board agreed with KBR, finding:

[D]espite the many and continuing failures of the government to provide the promised level of force protection to KBRS and its subcontractors . . . , the government seeks to disallow the PSC costs incurred . . . in order to accomplish [the] mission under the LOGCAP contract despite the government’s breach, and argues that its breach was not material. It is hard to imagine a contract breach more material than this one, which eviscerated the promise at the heart of the justification for the government’s claim.

Keep reading this article at: https://www.insidegovernmentcontracts.com/2017/06/asbca-issues-important-ruling-contractor-battlefield-dispute/

January 24, 2017 By AMK

ASBCA shoots down DCAA overreach on responsibility to manage subcontractors

A prime contractor is responsible for managing its subcontractors, but what exactly does that require?

In a recent decision, the answer of the Armed Services Board of Contract Appeals was: not nearly as much as DCAA claimed.

In Lockheed Martin Integrated Sys., Inc., ASBCA Nos. 59508, 59509, the Board ruled on a Government claim seeking more than $100 million from LMIS for allegedly breaching an obligation to manage subcontracts. In DCAA’s reading, this obligation was extensive and required a number of concrete actions by the prime contractor.

After auditing three LMIS contracts, DCAA questioned $103 million in subcontract costs. DCAA claimed that, for the costs to be allowable, LMIS had to provide documents showing it had: (1) reviewed subcontractor resumes to confirm personnel qualifications; (2) reviewed subcontractor timesheets to confirm the accuracy of invoiced hours; and (3) tried to obtain incurred cost submissions from its subcontractors, contacting “the Government” for “assistance” if the subcontractors refused. DCAA claimed it could find no subcontract costs allowable “[w]ithout an incurred cost submission from the subcontractor,” which was the prime contractor’s responsibility to obtain.

Keep reading this article at: https://www.insidegovernmentcontracts.com/2017/01/asbca-shoots-dcaa-overreach-responsibility-manage-subcontractors/