Appeal Board Continues to Erode Statute of Limitation Defense to Claimed Costs
(Editor’s Note. One of the hottest issues recently involves the Contract Disputes Act’s (CDA) six year statute of limitations (SOL) which has been invoked to prevent government claims against contractors. The following case shows it will be more diffi cult for contractors to defend against government claims using SOL grounds. Despite precedents showing a government claim accrues when the government “should have known” the facts giving rise to the claim, recent cases including the one below is requiring something closer to actual knowledge for contractors to establish the government claim is time barred by SOL.)
The government claimed Raytheon violated CAS 403 and 415 in claiming certain 401(k) costs. Raytheon moved to dismiss the appeal arguing the government claim was time barred by the SOL because Raytheon’s incurred cost proposal was submitted more than six years before the government put forth its claim. Without examining any of the facts, the ASBCA denied Raytheon’s motion holding it could not issue a summary decision because “reasonableness and subjective knowledge are facts at issue” where discovery and a hearing is required to ascertain what was known. Criticism of the decision is mounting indicating the ruling will result in a “waste of time and money for contractors and the government.” A comment by McKenna Long states the decision is a misreading of the FAR and case law citing cases ruling “the events fixing liability should have been known when they occurred unless it can be reasonably found to either be concealed or inherently unknowable at the time” and that contractors should not need to demonstrate the government had specific, subjective knowledge underlying its claim nor should contractors be required to demonstrate the government understood the significance of contractor disclosures before or during audits (Raytheon Co., ASBCA 58849).
