Maropakis was awarded a Navy contract for window and roof replacement at a warehouse building in Pennsylvania. The contract included a completion date, and a liquidated damages clause, FAR 52.211-12, that provided for liquidated damages of $650 per day for each day of delay past the completion date.

Apparently Maropakis did not begin work until after the scheduled completion date, and finished 467 days late. After completing the work, the contractor sent a letter to the contracting officer seeking an extension of 447 days delay based on several specified reasons. The Contracting Officer replied that the delay was not sufficiently substantiated, but invited the contractor to submit more information. The reply also said that it was not a Contracting Officer final decision.

No additional information was submitted, and the Contracting Officer made a demand to the contractor for liquidated damages for delay. Maropakis responded that the it would dispute the delay damages, but did not request a specific number of days of extension, and did not file a claim. The contracting officer issued a final decision holding Maropakis liable for liquidated damages for the delay.

The contractor filed a complaint in the United States Court of Federal Claims for breach of contract, seeking an extension due to government delay, and seeking remission of the liquidated damages. The government counterclaimed for the remaining balance due on its liquidated damages decision.

The United States Court of Federal Claims granted the government’s motion to dismiss Maropakis’ claim for time extension for lack of subject matter jurisdiction. Maropakis had failed to submit a “claim” to the contracting officer within the meaning of the Contract Disputes Act. The court also granted the government summary judgment on its liquidated damages counterclaim.

Maropakis appealed to the United States Court of Appeals for the Federal Circuit, which affirmed the Court of Federal Claims decision — because the court’s jurisdiction requires both a valid claim under the Contract Disputes Act and a contracting officer final decision. Maropakis’ letter to the contracting officer seeking the delay was not a valid claim – it was not an unequivocal statement that gave the contracting officer adequate notice of the basis and amount of the claim, and it did not request a contracting officer final decision.

Since the Contract Disputes Act is a statute waiving sovereign immunity, it must be construed strictly. The Court of Federal Claims does not have jurisdiction to hear a breach of contract claim if the contractor did not file a valid claim with the contracting officer within the meaning of the Contract Disputes Act.

Maropakis argued excusable delay in response to the government’s liquidated damages counterclaim. However, the Court found that Maropakis’ failure to assert its excusable delay claim properly meant it could not use the delay as a defense to the government’s liquidated damages claim; the contractor must first make the claim to the contracting officer before litigating the claim under the Contract Disputes Act.

This case reads like a lecture from Government Contract Claims 101. The Contractor failed to submit a proper claim to the contracting officer seeking an extension for excusable delays, and as a result was held liable for all of the delay. The contractor then spent considerable time and money litigating the issue in the United States Court of Federal Claims, and appealing to the United States Court of Appeals, Federal Circuit.

The teaching point of this case is to make sure up front that the contractor’s correspondence to the contracting officer constitutes a valid claim under the Contract Disputes Act.

Contact the government contract lawyer Karen S Hindson of Hindson & Melton LLC for assistance with your government contract claim under the CDA.

In 2005 the State Department contracted with First Kuwaiti to build a new U.S. Embassy in Baghdad, comprised of more than twenty buildings plus infrastructure. This was one of the largest construction projects ever undertaken by the State Department.

John Owens was hired as a general construction foreman but his building was not yet underway, so he handled a variety of assignments around the embassy site. He apparently grew increasingly dissatisfied with his job and resigned the following year.

Owens subsequently brought a qui tam suit under the False Claims Act (FCA), 31 U.S.C. Section 3729 against First Kuwaiti. He alleged that the firm billed falsely for deficient work in connection with construction of the embassy buildings. He claimed to have witnessed a number of construction mistakes at the job.

In response to the lawsuit’s fraud allegations, the U.S. government was obligated to investigate to determine whether to intervene in the FCA case. The government’s expert examined the matter and concluded that the defects in the construction were minor and not unexpected for a project of this size. Further, they had been repaired. The government elected not to intervene in the qui tam action.

The Court determined that the essence of relator John Owen’s claim is that his former employer failed to live up to its contractual obligations. He did not produce any evidence of knowing misrepresentations on First Kuwaiti’s part.

The Fourth Circuit opinion stated “Congress crafted the FCA to deal with fraud, not ordinary contractual disputes. The FCA plays an important role in safeguarding the integrity of federal contracting, administering strong medicine in situations where strong remedies are needed. Allowing it to be used in run-of-the-mill contract disagreements and employee grievances would burden, not help, the contracting process, thereby driving up costs for the government and, by extension, the American public.”

“The FCA provides that suit may be brought against anyone who “knowingly presents” to the government “a false or fraudulent claim for payment or approval.” 31 U.S.C. Section 3729(a)(1). It similarly allows suit against anyone who “knowingly makes…a false record or statement material to a false or fraudulent claim.” Id. at Section 3729(a)(1)(B). In adopting the FCA, “the objective of Congress was broadly to protect the funds and property of the government.” Rainwater v. United States, 356 U.S. 590, 592 (1958).”

A specific intent to defraud is not required; reckless disregard of the truth or falsity of the information can satisfy the “knowingly presents” requirement. Congress did not intend the false Claims Act to punish honest mistakes or incorrect claims submitted as a result of mere negligence. FCA is a fraud prevention statute. “It does not allow a qui tam relator to shoehorn what is, in essence, a breach of contract action into a claim that is cognizable under the False Claims Act.” United States ex rel. Kellogg Brown & Root, Inc. 525 F.3d 370, 373 (4th Cir.2008).

Contact Karen Hindson for your government contract law matter.

In Parker v. Donley, 20 WL 2330408 (C.A.Fed.), Mr. Parker was to provide software use license and support services to the Air Force for the Predator MQ-1 Unmanned Aerial Vehicle Multi-Task Trainer. The contractor was informed that no further delivery orders would be placed against his contract. Mr. Parker submited a certified claim for payment, which was denied. The contracting officer’s final decision letter informed him of his appeal rights to the Board of Contract Appeals within 90 days or in the United States Court of Federal Claims within 12 months. Mr. Parker appealed after the statutory 90-day deadline, so there was no jurisdiction under the Contract Disputes Act.

Mr. Parker also submitted an invoice which was rejected, but the rejection letter did not state it was a final decision. Mr. Parker appealed to the Board of Contract Appeals, which found that the Board did not have jurisdiction under the Contract Disputes Act because the invoice did not use the word claim or request a contracting officer final decision. The Act states that “all claims by a contractor against the government relating to contract shall be in writing and shall be submitted to the contracting officer for a decision.” FAR 2.101 states that an invoice, or other routine request for payment that is not in dispute when submitted is not a claim.

Mr. Parker appealed to the United States Court of Federal Claims, which affirmed the Board of Contract Appeals dismissing the claims for lack of jurisdiction as untimely and for filing to seek a contracting officer final decision.

For assistance with your government contract claims, contact government contracts lawyer Karen S. Hindson of Hindson & Melton LLC.

In question was a Lockheed Martin challenge to a government claim asserted against the airplane manufacturer for costs negotiated in a “rephasing” of the F-22 fighter aircraft. The dispute was whether the government is entitled to recover a portion of the negotiated price increase on the ground that it resulted from a change in Lockheed’s accounting practices.

The contract included FAR Cost Accounting Standards (“CAS”) provisions which prescribe the manner in which a contractor may alter its accounting practices and the contractor’s responsibilities when it makes such an accounting change. 41 U.S.C. Section 422(h). If an accounting change results in increased costs because expenses previously accounted as indirect are now directly charged to the government contract, the contractor is required to agree to a contract price adjustment over all of the contractor’s affected CAS-covered contracts and subcontracts.

The Court of Appeals affirmed the Armed Services Board of Contract Appeals decision in favor of Lockheed Martin. Lockheed disclosed its new accounting practices to the Air Force’s negotiating team, and the negotiations were a “repricing” action and unusually comprehensive. The F-22 contract was not an “affected contract” requiring renegotiation. Costs were not estimated under one accounting practice but reported under another. Additional accounting costs were not tacked on to the contract estimate; the parties created a wholly new cost estimate incorporating all of the additional expenses.

Contact government contracts attorney Karen Hindson for more information.