The Contract Disputes Act presents government contractors with two venue options for appealing an adverse final decision.[1]  Within one year of receiving a denial of its claim, the contractor may appeal to the United States Court of Federal Claims (COFC) or, in the alternative, the contractor has ninety days to appeal to an administrative law judge in the appropriate agency board of contract appeals.  For defense contractors, that means the Armed Services Board of Contract Appeals; and with a few exceptions, non-defense contractors may appeal to the Civilian Board of Contract Appeals (CBCA).[2]

Brief History of the CBCA

The CBCA is a relatively new enterprise, established by Congress in 2007 in an effort to simplify appeals under the CDA.[3]  Prior to 2007, non-defense agencies like the General Services Administration and the Department of Transportation had their own boards authorized to decide claims from procurement contractors.  In parallel track with the COFC, the agency boards developed their own body of case law that was binding on all subsequent appeals before that particular board.  Over several decades, each board developed its own interpretations of Federal Acquisition Regulation (FAR) clauses and federal common law relevant to procurement.[4]  But after 2007, these boards dissolved and the CBCA emerged as a consolidated venue for administrative appeals involving civilian agencies.

Divergent Precedents Among Predecessor Boards

The CBCA consolidated the jurisdiction of eight predecessor boards, which included boards for the General Services Administration and the Departments of Transportation, Agriculture, Veterans Affairs, Interior, Energy, Housing and Urban Development, and Labor.  From its very first CDA decision, the CBCA declared that “holdings of our predecessor boards shall be binding as precedent in this Board.”[5]  The CBCA refused to let decades of precedent fall by the wayside based simply on a reconfiguration of administrative law boards. That said, the swath of agency board decisions created a conundrum: what board precedent governs where two or more predecessor boards reached different outcomes on the same issue?  Last week, the CBCA finally answered that question.

Hof Construction, Inc. v. General Services Administration[6]

In December 2017, Hof Construction was terminated by the GSA under FAR Part 52.249-10, Default (Fixed Price Construction).  The notice of default stated that the decision to terminate was “final unless the contractor appeals or files a suit as provided in [the CDA].”  In May 2018, GSA assessed liquidated damages against Hof and defunded the remainder of the construction project.  However, the liquidated damages notice did not contain a statement of Hof’s appeal rights.  On August 13, 2018, Hof submitted a certified claim to the agency, challenging both the termination and the assessment of liquidated damages.  When GSA failed to respond to the claim, Hof appealed to the CBCA.

The CBCA was presented with a jurisdictional challenge under the CDA, which requires contractors to file their appeal within 90 days of a final agency decision.[7]  As a termination for default and issuance of liquidated damages are both considered to be a “final decision” that triggers the 90-day clock, Hof’s appeal was clearly outside of the allowable statutory window.  Hof argued, however, that the notice of appeal rights in GSA’s correspondence was unclear and misleading, so as to be defective and warrant tolling the appeal window. Hof relied primarily on Ledford Construction-a 2002 decision from the Veterans Affairs Board of Contract Appeals (VABCA).

Under the FAR, a contracting officer’s final decision is required to provide the contractor with written notice of its CDA appeal rights, using mandatory language prescribed in Part 33.211.[8]  In Ledford, the VABCA held that “critical” defects in a termination notice may render the decision “substantially deficient and unable to meet the minimum requirements necessary to trigger the running of” the CDA appeal period.[9]  The CBCA noted, however, that decisions of other predecessor boards were in conflict with Ledford.  Specifically, older precedent from the Department of Transportation Board of Contract Appeals (DOTBCA) maintained that defects in a termination notice toll the appeal period only if the contractor “is able to demonstrate that it suffered some harm as a result of that defect.”[10]  The CBCA had never issued a decision clarifying the issue one way or another.

The CBCA Decides How to Address Conflicting Precedent

Holding in favor of the Government, the CBCA upheld the DOTBCA’s requirement that the contractor demonstrate prejudice to justify an extension of time to file its appeal.  In dicta, the CBCA noted that it was expressly “articulat[ing] for the first time how this Board will approach conflicting precedents of our predecessor boards.”[11]  The CBCA identified four potential options for how to deal with conflicting precedent, which included: (1) treating the oldest decision as binding precedent until expressly overturned by a full panel of the tribunal; (2) requiring that the matter be reviewed by a full panel of the tribunal; (3) circulating a draft opinion to all judges on the board and issuing the decision if no objection is raised, or; (4) allowing the presiding judge to freely choose which line of conflicting precedent to follow.[12]

After clarifying that binding precedent of the Federal Circuit always governs CBCA proceedings, the CBCA explained the new rules for addressing conflicting precedent, as follows:

If, as here, deciding a case requires resolving a genuine conflict between decisions of two or more predecessor boards (which intervening Federal Circuit precedent does not resolve), the panel will apply what it deems our better precedent and the panel decision will be the Board’s precedent on the issue…. This will resolve conflicts expeditiously and definitively. We reject the other approaches used by the circuit courts because there is no principled reason to follow the decision of a predecessor board that happened to be issued first, and all of our judges can see a panel decision when it is published online, after which the full Board may vote to consider an issue either on its own initiative or at a party’s request.[13]

Finding that the DOTBCA’s holding in Carter Industries was a more consistent application of the rule regarding omissions or defects in appeal rights language, the Hof board expressly overturned Ledford.  Accordingly, even imperfect notices of appeal rights in a contracting officer’s final decision can trigger the statutory appeal period, with a limited exception where the contractor can demonstrate actual prejudice and detrimental reliance on the defective decision language.

Conclusion

In light of Hof Construction, the presiding judge’s interpretation of the “better” precedent in the CBCA prevails where the board faces conflicting holdings from two or more predecessor boards.  What, exactly, constitutes a “better” precedent is not abundantly clear.  As best as can be gleaned from the holding, the “better” decision is the one that most closely aligns with analogous precedent out of the Court of Appeals for the Federal Circuit.  As it relates to defective notification of appeal rights, the better precedent (and now the binding rule) is that the contractor cannot toll the 90-day filing requirement unless it relies on a defective notice to its detriment.  As for other future conflicts between predecessor boards to the CBCA, contractors should take nothing for granted, familiarize themselves with all applicable precedent, and be prepared to argue why their reading of the law is the better one.

 


[1] 41 U.S.C. § 7104.

[2] There is a third board of contract appeals—the Government Accountability Office Contract Appeals Board (GAOCAB)—which hears appeals from contractors that provide goods, services, or construction to legislative agencies, such as the Architect of the Capitol and the Government Publishing Office.  4 C.F.R. § 22.1 (“The Government Accountability Office Contract Appeals Board is authorized to hear appeals from decisions of contracting officers with respect to any contract entered into by a legislative branch agency.”)

[3] National Defense Authorization Act for FY 2006, Pub. L. No. 109-163, § 847, 119 Stat. 3136, 3391 (2006).

[4] Most agency boards were established in the late 1970s, pursuant to the CDA, 41 U.S.C. § 601, et. seq. (1978), however, certain agencies had established similar tribunals even before the statute was enacted.  The General Services Board of Contract Appeals (GSBCA), for example, has reported decisions dating back to the mid 1960s.

[5] Bus. Mgmt. Research Assoc., Inc., CBCA No. 474, 07-1 BCA ¶ 33486 (Jan. 18, 2007).

[6] CBCA No. 6306, 2018 WL 6604916 (Dec. 12, 2018).

[7] 41 U.S.C. § 7103(g), 7104.

[8] 48 C.F.R. § 33.211((a)(v).

[9] Ledford Constr., Inc., VABCA No. 6630, 02-1

[10] Carter Indus., Inc., DOTBCA No. 2995, 98-1 BCA ¶ 29625 (Dec. 4, 1996).

[11] CBCA No. 6303.

[12] Id.

[13] Id. (internal citations omitted)