Under the Contract Disputes Act, contractor claims submitted to contracting officers (CO) must set forth a clear and unequivocal statement that gives the CO adequate notice of the basis and amount of the claim. This requirement prohibits contractors from raising new claims in court that were not first presented to the CO. In the Affiliated Construction Group v. United States case issued last week, the Court of Federal Claims held that the contractor’s new articulation of a claim in litigation was based on different operative facts from those on which the claim presented to the CO was based. Although the court observed that the case presented a very close question, the court dismissed the claim for lack of subject matter jurisdiction. The case provides a helpful reminder to contractors that they (and counsel) must carefully assess all of the facts in preparing CDA claims—and carefully craft all theories of recovery based on the relevant facts.
Affiliated entered into a design-build, fixed-price contract with DoD to renovate a power-distribution room. Affiliated filed a claim with the CO seeking reimbursement for costs and an extension of time after it was required to install increased quantities of fire-mitigation items, when the required quantities turned out to be greater than what Affiliated had estimated in its bid. Affiliated alleged that the final quantities were based on code requirements that were not the design team’s requirements, and that it was impossible to determine the requirements prior to a complete site survey. The Government moved to dismiss the claim because, under the fixed-price contract, Affiliated assumed the risk of unexpected expenses if it underestimated the cost of the project.
In its initial response and at oral argument, Affiliated contended that the increase was caused by changes the Government ordered in an uninterrupted power source (UPS) system. During the hearing, the court instructed Affiliated to file a supplemental brief addressing how the code requirements linked to the UPS changes and whether the CO had the opportunity to consider that claim. In its supplemental brief, Affiliated stated that contrary to what it had previously argued in open court, it was not the UPS change that affected the quantities. Instead, Affiliated argued that the reason for the increased quantities was the existing duct work did not meet the code requirements, and Affiliated had to upgrade the room to make it code-compliant. Regarding the question of jurisdiction, Affiliated argued that because the claims presented to the CO stated that the increased quantities were due to code requirements rather than design changes, the CO had been given an opportunity to consider the basis of the claim. In response, the Government argued that the ground articulated in Affiliated’s supplemental brief was a new claim within the meaning of the CDA.
The court observed that in determining whether a claim in court constitutes a new claim, the court must assess whether the new issue is based on the same set of operative facts as the claim submitted to the CO. Two claims are the same if they arise from the same operative facts, and seek essentially the same relief. That is true even if the claims assert differing legal theories for that recovery. Although the issue of whether Affiliated’s argument that the increased amounts of fire mitigation items were due to existing duct work not meeting code standards was a “very close question,” the court concluded that the articulation presented in the litigation constituted a new claim. The court noted that the problem facing Affiliated was that the claims as presented to the CO and repeated in the complaint did not state that the room was unexpectedly found to violate code requirements. Although Affiliated alleged that final quantities were based on code requirements and thus were not the design team’s requirements, that allegation was not placed in the context of the site’s failure to comply with code requirements. The claims as presented to the CO concerned the reasonableness of Affiliated’s estimate of the amount of items that would be required compared to the quantities actually required—there was no language in the CDA claim indicating that the existing ducts and equipment were insufficient to comply with the code. The court concluded that the newly articulated claim was not just a change in legal theories but was based on different operative facts from those associated with the claim presented to the CO.
As noted above, contractors must carefully assess all of the facts in preparing CDA claims—and should carefully develop any theories of recovery based on those relevant facts. Contractors should try to anticipate defenses the Government may raise in response to allegations in CDA claims. Contractors that fail to conduct due diligence with respect to the relevant facts and theories of recovery may find themselves forced to adjust the claims before the court or a board of contract appeals based on Government defenses or questions from the court—which, in turn, can lead to motions to dismiss for lack of subject matter jurisdiction.