Reflectone, Inc. v. Dalton

• Decision Date: 26 July 1995
• Citation: 60 F.3d 1572
• Parties: , 40 Cont.Cas.Fed. (CCH) P 76,803 REFLECTONE, INC., Appellant, v. John H. DALTON, Secretary of the Navy, Appellee. 93-1373.
• Court: U.S. Court of Appeals — Federal Circuit

Page 1572

60 F.3d 1572

64 USLW 2090, 40 Cont.Cas.Fed. (CCH) P 76,803

REFLECTONE, INC., Appellant, v. John H. DALTON, Secretary of the Navy, Appellee.

93-1373.

United States Court of Appeals Federal Circuit.

July 26, 1995.

Rehearing Denied Sept. 27, 1995.

Victor J. Zupa, Dickstein, Shapiro & Morin, L.L.P., Washington, DC, argued, for appellant. With him on the brief were Brian J. Siebel and Ellen MacDonald, of counsel.

Sharon Y. Eubanks, Asst. Director, Commercial Litigation Branch, Dept. of Justice, Washington, DC, argued, for appellee. With her on the brief were Frank W. Hunger, Asst. Atty. Gen. and David M. Cohen, Director.

Also on brief was Robert C. Ashpole, Dept. of Navy, Washington, DC, of counsel.

David A. Churchill, McKenna & Cuneo, Washington, DC, was on the brief, for amicus curiae, Chamber of Commerce of U.S. With him on the brief were Alison L. Doyle and J. Keith Burt. Also on the brief was Robin S. Conrad, Nat. Chamber Litigation Center, Inc., Washington, DC, of counsel.

Stephen T. Owen, Marcus B. Slater, Jr., Lisa D. Goekjian, Jerald S. Howe, Jr., President and George E. Hutchinson, Executive Director, Washington, DC, were on the brief, for amicus curiae, Federal Circuit Bar Ass'n.

Gregory A. Smith, Piper & Marbury, Washington, DC, was on the brief, for amicus curiae, Nat. Security Indus. Ass'n, Aerospace Industries Ass'n of America, Inc. and Electronic Industries Ass'n. With him on the brief were Michael W. Clancy and Vincent S. Antonacci, Pettit & Martin, Washington, DC.

Before ARCHER, Chief Judge, SKELTON, Senior Circuit Judge, NIES, NEWMAN, MAYER, MICHEL, PLAGER, LOURIE, CLEVENGER, RICH, RADER, SCHALL and BRYSON, Circuit Judges.

Opinion for the court filed by Circuit Judge MICHEL. Concurring opinion filed by Circuit Judge NIES.

MICHEL, Circuit Judge.

Reflectone, Inc. (Reflectone) appeals from the decision of the Armed Services Board of Contract Appeals (Board) dismissing Reflectone's appeal for lack of subject matter jurisdiction. Reflectone, Inc., ASBCA No. 43081, 93-1 BCA p 25,512, 1992 WL 302847 (1992). The Board held that Reflectone had not submitted a "claim" within the meaning of the Contract Disputes Act of 1978 (CDA), 41 U.S.C. Secs. 601-13 (1988 & Supp. V 1993), as interpreted in the Federal Acquisition Regulation (FAR), because a dispute over the amount of money Reflectone asserted it was owed did not predate Reflectone's June 1, 1990 Request for Equitable Adjustment (REA), the purported claim. Board jurisdiction is grounded in the CDA which authorizes Board review only of a contracting officer's final decision on a "claim." The CDA, however, does not define "claim." Because we conclude that FAR 33.201 (1988), which alone defines "claim" for purposes of the CDA, does not require a pre-existing dispute as to either amount or liability when, as here, a contractor submits a non-routine "written demand ... seeking, as a matter of right, the payment of money in a sum certain," FAR 33.201, we hold that Reflectone's REA was a CDA "claim" and, therefore, the Board has jurisdiction. Accordingly, we reverse the dismissal and remand for adjudication of Reflectone's appeal from the contracting officer's decision on its merits.

BACKGROUND

On April 15, 1988, Reflectone entered into a $4,573,559 fixed price contract with the Naval Training Systems Center in Orlando, Florida, requiring Reflectone to update helicopter weapon system trainers. The contract called for delivery of the first trainer on February 15, 1989, with the other three trainers to follow at three-month intervals. In a letter dated December 14, 1988, Reflectone advised the contracting officer (CO) that delivery of certain equipment was being delayed by late, unavailable or defective government-furnished property. In response, the Navy denied responsibility for the delay and issued a cure notice warning Reflectone that unless the condition endangering timely delivery of the equipment was eliminated within thirty days, the Navy might terminate the contract for default.

On January 17, 1989, Reflectone again wrote the CO that the delays were the fault of the government and requested an extension of the contract delivery schedule. Subsequently, the Navy modified two of the original four delivery dates but reserved its right to seek additional compensation for delay. After Reflectone advised the Navy that it would be unable to meet even the extended delivery dates due to faulty government-furnished On June 1, 1990, Reflectone submitted an REA to the CO demanding $266,840 for costs related to government-caused delay with respect to twenty-one enumerated items. Reflectone's President and CEO certified the REA and requested a decision from the CO. In the initial review of the REA, completed on January 15, 1991, the CO denied sixteen of the twenty-one items in their entirety, estimated entitlement in the remaining five items at $17,662, and advised Reflectone that a counterclaim and set-off, exceeding the amount requested by Reflectone, was being prepared. ¹ On March 19, 1991, the CO rendered a final decision indicating that the government's position remained the same and advising Reflectone of its right to appeal to the Board.

property, the CO indicated on May 5, 1989, that Reflectone was delinquent on the contract and that the Navy would seek compensation for the delay. Between May 1989 and April 1990, the contract delivery schedule was modified at least three more times and each time the Navy reserved the right to make a claim against Reflectone for delay. In response, Reflectone continued to inform the Navy that it considered the government to have caused all delays and that it would claim relief once the full economic impact of the delay was known.

Reflectone appealed the CO's final decision to the Board, which held that the REA was not a "claim" within the meaning of the Contract Disputes Act and, therefore, it did not have jurisdiction over the appeal. The Board relied on language from Dawco Constr., Inc. v. United States, 930 F.2d 872, 878 (Fed.Cir.1991), stating, "A contractor and the government contracting agency must already be in dispute over the amount requested." Dawco also states "The [CDA] and its implementing regulation require that a 'claim' arise from a request for payment that is 'in dispute.' " Id. The Board interpreted Dawco as holding that no demand for payment could be a claim unless the amount of the payment had been put in dispute. The Board reasoned that because Reflectone first requested a specific amount from the government in the REA, no dispute over the amount existed prior to the REA and, therefore, the REA could not be a claim according to its interpretation of Dawco. The Board explained:

[W]e need not determine whether these issues [presented in the REA] had previously been submitted to the contracting officer and were in dispute. Dawco requires that the parties be in dispute over the amount requested. Clearly in the appeal before us, [Reflectone] had not quantified the impact of the delays on itself and communicated it to the Government prior to the 1 June 1990 REA. The failure of [Reflectone] to request any amount (and therefore a dispute could not exist over it) prior to its REA, renders [Reflectone's] 1 June 1990 REA incapable of being considered a claim under the CDA in accordance with the holding of Dawco.

93-1 BCA p 25,512 at 127,056.

On appeal to this court, a divided, three-judge panel affirmed the Board's dismissal decision, accepting its interpretation of Dawco and its rationale, in an opinion dated September 1, 1994, now vacated. Reflectone, Inc. v. Kelso, 34 F.3d 1031 (Fed.Cir.) (withdrawn from bound volume), vacated, 34 F.3d 1039 (Fed.Cir.1994). Due to the exceptional public importance of the issue of first impression presented by this case concerning the proper definition of a CDA "claim," we granted Reflectone's Suggestion for Rehearing In Banc.Fed.Cir.R. 35.

We have jurisdiction pursuant to 28 U.S.C. Sec. 1295(a)(10) (1988) and Section 8 of the Contract Disputes Act, 41 U.S.C. Sec. 607(g)(1) (1988).

STANDARD OF REVIEW

The CDA dictates the standards this court applies in reviewing decisions of agency

contract appeal boards. 41 U.S.C. Sec. 609(b) (1988). A determination of CDA jurisdiction and interpretation of applicable procurement regulations present questions of law which we review de novo. Santa Fe Eng'rs, Inc. v. Garrett, 991 F.2d 1579, 1581 (Fed.Cir.1993).

ANALYSIS

I

A. FAR 33.201 Does Not Require That A Payment Demanded In A Non-Routine Submission Be In Dispute Before The Submission To A Contracting Officer Can Be A "Claim"

Under the CDA, a final decision by a CO on a "claim" is a prerequisite for Board jurisdiction. Sharman Co. v. United States, 2 F.3d 1564, 1568-69 (Fed.Cir.1993) (reviewing jurisdictional scheme of CDA). Because the CDA itself does not define the term "claim," ² we must assess whether a particular demand for payment constitutes a claim, based on the FAR implementing the CDA, the language of the contract in dispute, and the facts of the case. Garrett v. General Elec. Co., 987 F.2d 747, 749 (Fed.Cir.1993). ³ The FAR defines "claim" as:

a written demand or written assertion by one of the contracting parties seeking, as a matter of right, the payment of money in a sum certain, the adjustment or interpretation of contract terms, or other relief arising under or relating to the contract.... A voucher, invoice, or other routine request for payment that is not in dispute when submitted is not a claim. The submission may be converted to a claim, by written notice to the contracting officer as provided in 33.206(a), if it is disputed either as to liability or amount or is not acted upon in a reasonable time.

FAR (48 C.F.R. Sec.) 33.201 (emphasis added). The issue is whether sentence adds a requirement to those stated in sentence that applies to all submissions.

The government and the Board would require that before Reflectone's REA can qualify...