In the decades since the enactment of the Contract Disputes Act (CDA), contractors, agencies, and the tribunals that decide government contract disputes have grappled with the question of what constitutes a claim. In 2010, the Federal Circuit ruled in M. Maropakis Carpentry, Inc. v. U.S. that to raise the adjustment of contract terms as a defense when litigating a CDA claim, a contractor must satisfy the CDA’s jurisdictional and procedural prerequisites by filing a claim with the contracting officer (CO) and receiving a final decision. To some, the Federal Circuit’s Maropakis decision appeared to impose an additional burden on contractors litigating CDA claims. Total Engineering, Inc. v. U.S., a recent decision from the CFC, helpfully suggests a limited application of the Maropakis decision.
The Total Engineering dispute arose out of a contract to prepare a site for construction, including the construction of a new steam line system. During performance, the agency noticed deficiencies in the steam line work and brought its concerns to the contractor’s attention. The contractor allegedly failed to cure the problems, and the agency eventually terminated the contract for default. The CO demanded $2.3 million, which was the amount that the agency paid another contractor to construct a working steam line. The CO rejected the contractor’s argument that the steam line failure was due to the Government’s defective designs and retained amounts otherwise due to the contractor as a credit against the $2.3 million claim.
The contractor filed a lawsuit in the CFC challenging the agency’s claim and asserting the same defective specification argument it had argued to the CO—and challenging the CO’s decision to withhold the contract balance. The Government moved to dismiss, arguing that the defective specification defense was an independent claim that had to be submitted to the CO before it could be litigated at the CFC.
The CFC rejected the Government’s argument and its reliance on Maropakis. The CFC explained that in Maropakis, the contractor sought an adjustment of contract terms as its defense to a Government claim. But in Total Engineering, the contractor was not seeking an adjustment of terms. Rather, it was arguing that the Government’s design—not its performance—caused the problems. As the court explained, the CDA does not require a “contractor to jump though  an extra hoop and refile its defense to a Government claim as a so-called contractor’s ‘claim’” when the contractor is not seeking a modification or separate monetary relief.
The Government also contended that the contractor’s challenge to the agency’s retention of the contract balance needed to be submitted to the CO before it could be appealed to the court. The CFC also rejected this argument, stating that the court has long held that the retention of the unpaid balance is a Government claim that need not be certified.
Lastly, the court denied the Government’s motion to dismiss the complaint for lack of specificity, stating:
The Government’s call for Rule 8 specificity is misplaced in this quirky CDA realm where a plaintiff is appealing a Contracting Officer’s Final Decision on a Government claim. Under this statutory regime, a contractor need not attempt to devise and set forth its own “claim” when it is appealing a Contracting Officer’s Final Decision on a Government claim.
The CFC’s recent decision provides some answers with respect to the question of what constitutes a claim that must be submitted to a CO before it can be asserted in the appeal of a CO’s decision. It also provides a helpful precedent if the Government moves to dismiss a CDA claim for lack of specificity. Contractors appealing a Government claim at the CFC or Boards should keep this decision in mind if confronted with a similar motion to dismiss.