Contract Disputes Act Forum Selection

The Contract Disputes Act (CDA) allows contractors to exclusively choose the forum to challenge a Contracting Officer’s (CO) adverse Final Decision, including a deemed denial, on a contract claim. The contractor has two options: (1) file suit in the United States Court of Federal Claims (COFC); or (2) appeal to the appropriate agency’s board of contract appeal.  The Government cannot appeal a CO’s decision.

It is extremely important the contractor chooses its forum wisely because the decision is usually final. See Bonneville Assocs. v. United States, 43 F.3d 649, 653 (Fed. Cir. 1994).  With respect to the COFC, judges are not required to have any experience relating to Government contracts whereas board judges are. On the other hand, claims may run smoother or more quickly at the COFC because active COFC judges have two law clerks while board judges typically have none.  The COFC will also consolidate related cases, including cases filed with an agency’s board, and may transfer the cases to the board or keep both cases at the COFC. So, if a contractor files a case related to a contract with the COFC and files a case related to the same contract with the agency’s board, the contractor will have no control over which forum his suits get heard.

Filing an appeal with the agency’s board of contract appeals will provide “to the fullest extent practicable, informal, expeditious, and inexpensive resolution of disputes.” 41 U.S.C. § 607(e). The three boards of contract appeals are (1) the Armed Services Board of Contract Appeals (“ASBCA”)[1]; (2) the Civilian Board of Contract Appeals (“CBCA”)[2]; and (3) the Postal Service Board of Contract Appeals (“PSBCA”)[3].

Either the boards or the COFC can be more expensive depending on your case, and practitioners disagree as to which one is more expensive. Neither the boards nor the COFC are bound by each other’s decisions; however, they are bound by precedential decisions from the U.S. Supreme Court, published decisions of the Federal Circuit, the Court of Claims, and the Court of Customs and Patent Appeals.

If there is no controlling authority from the Federal Circuit or other courts, the respective board will typically follow any prior rulings from itself on the matter. This show of deference to itself can include disagreeing with other boards or the COFC.

In both the COFC and the boards of appeal, the contracting officer’s determinations regarding the facts and the law are reviewed de novo, so the COFC and boards of appeal are reviewing the suit as if it was first brought before the COFC or the boards. Importantly, only the named party in the contract may bring the appeal except in certain circumstances (i.e., subcontractors cannot bring an appeal). These circumstances where a subcontractor or third-party may bring the appeal include a “third-party beneficiary enforc[ing] the payment provision of the contract in a direct action against the Government” and “where the prime contractor [is] determined to be a mere Government agent.” Key Fed. Fin. v. Gen. Serv. Admin., CBCA Nos. 411, 412, 07-1 BCA ¶ 33,555, at 15 (citing 41 U.S.C. § 606).

There are many considerations before filing including the time constraints, election doctrine, settlement, and alternative dispute resolution. Below is a key list of considerations and guidelines for the contractor to use in choosing its respective forum.

LIST OF CONSIDERATIONS FOR THE CONTRACTOR:

DO file within the timeframe of each board. You have ninety days from receiving the Contracting Officer’s (CO) final decision to file an appeal with the agency’s board. To file with the COFC, you have one year from the CO’s final decision.

DO be sure you are filing in the forum most beneficial for your claim, which may include discussion with your legal counsel about the costs and benefits of filing in either forum. Because of the time constraints of filing with the agency’s respective board, you should initiate discussion with legal counsel as soon as possible. Again, your filing decision is binding; the contractor cannot dismiss its action and file the appeal in the other forum. Once you are in, you are in.

DON’T file in both the COFC and the appeal board if the claims involve the same contract. The COFC does have authority to consolidate these claims and choose which forum will hear them. This action takes away your autonomy from choosing the more beneficial forum.

DO consider who has authority to settle your case. If you file in the COFC, the Department of Justice (DOJ) has authority to settle your case, not the Contracting Officer. The DOJ almost assuredly will not settle the case without the approval of the agency. If you file with the agency’s appeal board, the CO has the authority to settle the case while the appeal is pending.

DO consider the penalties if your claim is deemed fraudulent. In the COFC, you may be liable for affirmative relief and the Government may allege a counterclaim of fraud. However, the boards may only reduce the claim to the extent it is deemed fraudulent.

DO consider the different standards of review applied by the Federal Circuit to the factual findings of the COFC and the boards, but DON’T put too much of an emphasis on it. Typically, your claim will not rise to the level of the Federal Circuit and these standards of review should be a minor factor in your consideration. Even if your claim does make its way to the Federal Circuit, the differences in standards of review are unlikely to have an outsized impact on your case. Factual findings of the boards are reviewed by the Federal Circuit using the “substantial evidence” standard; whereas, the factual findings of the COFC are reviewed using the “clearly erroneous” standard.

DO consider if you can win on a dispositive motion, such as a motion for summary judgment. These motions accept facts that are not genuinely disputed and apply the law. Consider which facts will be facts that the agency cannot dispute. Typically, these are expressly documented facts that can be presented as evidence in a filing. The COFC is more willing to grant such motions than the boards.

DO consider the amount of your claim. If your claim is for $150,000 or less, you may take advantage of the boards’ expedited processes, likely minimizing your costs.

DO research the case law of the various courts (including the Federal Circuit and COFC) and boards prior decisions on the key issues of your case. Again, the higher courts such as the Federal Circuit bind the COFC and the boards in their decisions. However, the COFC and the boards are not bound by COFC and other boards’ decisions. A board hearing a case that had previously decided the key issue will likely maintain the same decision; however, the board is not bound by decisions of other boards and the COFC.

 
[1] The ASBCA has jurisdiction over Department of Defense and NASA contracts.
[2] The CBCA has jurisdiction over civilian and executive agency contracts excluding NASA, the Tennessee Valley Authority, and the Postal Service.
[3] The PSBCA has jurisdiction over U.S. Postal Service and Postal Rate Commission contracts.