CHAPTER 1
INTRODUCTION
I.
II.
INTRODUCTION/COURSE ORGANIZATION.
A.
Introductions.
B.
Schedule.
C.
Time and Location.
D.
Materials.
1.
Deskbook – you assemble it!
2.
Class Outlines and Handouts.
3.
Rule 4 (R4) File and Trial Attorney’s Litigation File (TALF).
4.
Cibinic and Nash, Administration of Government Contracts
5.
CAD CD.
6.
1st Semester Outlines.
7.
Dan Lavering.
GRADES AND SIGNIFICANT DATES.
A.
Assignments – 3 Graded Events.
Major John Siemietkowski
Disputes and Remedies
January 2001
B.
III.
1.
Answer/Motion – 25% (Due on 20 February 2001) (10-15 pages).
2.
Discovery Request – 25% (Due on 13 March 2001) (10-15 pages).
3.
Brief – 50% (Due on 1 May 2001) (15-25 pages).
4.
All student work must be original. Students may discuss the issues in the
assignments. Students may not, however, collaborate on the actual writing
of an assignment nor review each other’s written work.
Grading.
1.
90% Median.
2.
Grading Philosophy.
LITIGATION OVERVIEW.
A.
B.
Clients.
1.
Material (Buying) Commands.
2.
Major Activities (e.g., Forces Command, Training and Doctrine
Command, National Guard Bureau, Health Services Command,
Information Systems Command, etc.).
3.
Defense Agencies (e.g., AAFES, Defense Commissary Agency, etc.).
4.
Post, Camp, and Station.
Forums (fora?).
1.
Armed Services Board of Contract Appeals.
2
C.
D.
E.
F.
2.
U.S. Court of Federal Claims.
3.
U.S. Court of Appeals for the Federal Circuit.
Opponents.
1.
Large and “Boutique” Law Firms.
2.
Slip and Fall Attorneys.
3.
Pro Se appellant.
Issues.
1.
Default Terminations.
2.
Changes and Differing Site Conditions.
3.
Other Issues (e.g., Defective Pricing, Cost Allowability, Convenience
Terminations, Delay, Inspections, Government Furnished Property, etc.).
Witnesses.
1.
Contracting Officers and Supporting Cast.
2.
Inspectors.
3.
Experts and Other Strange Breeds.
Why Contract Litigation is Fun.
3
IV.
LITIGATION PHILOSOPHY.
A.
Truth, Justice, and the American Way.
B.
Client Relations.
C.
Elements of a Winning Case.
1.
Facts are King.
2.
Law.
3.
V.
a.
Straightforward.
b.
Constant.
Organization.
a.
Backward Planning.
b.
Making the Judge’s Job Easier.
4.
Eat the elephant one bite at a time.
5.
Settlement.
COMING EVENTS.
A.
Advanced Contract Law Course (26-30 March 2001).
B.
Contract Attorney’s Course (30 April – 11 May 2001
4
VI.
APPEAL OF CENTRAL INDUSTRIAL ELECTRIC CO.,
ASBCA NO. 33761.
A.
Background.
B.
Key Documents.
VII. HOMEWORK FOR NEXT CLASS. READ RULE 4 FILE AND TALF.
VIII. CONCLUSION.
5
CHAPTER 2
PREPARING TO LITIGATE
I.
INTRODUCTION.................................................................................................................... 1
II. CLAIMS PREVENTION......................................................................................................... 1
A. Prevention is the Best Defense ............................................................................................. 1
B. Prevention During Contract Formation ................................................................................ 1
C. Prevention During Contract Administration......................................................................... 1
III.
PREPARING TO DEFEND ................................................................................................. 3
A. Read the Contract.................................................................................................................. 3
B. Review the Claim.................................................................................................................. 3
C. Review the Final Decision .................................................................................................... 4
D. Identify and Interview Knowledgeable Persons ................................................................... 4
E. Identify and Preserve Records .............................................................................................. 6
IV.
THE RULE 4 (R4) FILE....................................................................................................... 7
A. What is a Rule 4 File?........................................................................................................... 7
B. Why Prepare a Rule 4 File? .................................................................................................. 7
C. What Should the Rule 4 File Include? .................................................................................. 7
D. Assembling a Good Rule 4 File ............................................................................................ 8
E. Submitting the Rule 4 File .................................................................................................... 9
F. Objecting to Documents in the Rule 4 File......................................................................... 10
G. Supplementing the Rule 4 File. ASBCA Rule 4(b). .......................................................... 10
V. THE TRIAL ATTORNEY’S LITIGATION FILE (TALF) .................................................. 11
VI.
CONCLUSION................................................................................................................... 12
CHAPTER 2
PREPARING TO LITIGATE
I.
INTRODUCTION.
II.
CLAIMS PREVENTION.
A.
Prevention is the Best Defense.
B.
Prevention During Contract Formation.
1.
2.
C.
Review the procurement history of the same or similar items.
a.
Find out whether previous contractors filed claims and why.
b.
Fix past problems before awarding new contracts.
Use negotiated procedures whenever possible. Can look at things other
than price. Can’t gig a contractor just because they’ve filed lots of claims.
Prevention During Contract Administration.
1.
Monitor the contractor’s performance.
a.
Government personnel should verify a contractor’s work
performance periodically and document significant observations.
b.
Periodic monitoring permits the early identification of potential
claims and the preservation of potential evidence.
MAJ John Siemietkowski
Disputes & Remedies
January 2001
2.
Develop good documentation procedures. See FAR 4.803 and FAR 4.805.
a.
b.
3.
4.
5.
Include the documents specified in FAR 4.803 in the contract file.
(1)
Record every substantive conversation with the contractor.
(2)
Make record copies of all correspondence.
(3)
Record coordination on the back of record copies.
(4)
Note the mailing date on letters.
Do not dispose of documents during the retention periods specified
in FAR 4.805.
Answer the mail.
a.
Avoid or minimize claims by investigating issues and responding
to contractor complaints or requests for guidance/direction in a
timely fashion. Especially important for the contracting officer.
b.
Do not expect problems to disappear if ignored.
Bad facts make bad law.
a.
Strive to develop a favorable factual record by treating contractors
with courtesy and professionalism.
b.
Avoid conduct that may appear petty (or not founded upon sound
business judgment or practices) to an outside or impartial observer.
See, e.g., Libertatia v. United States, 46 Fed. Cl. 702 (2000); Apex
Int’l Mgt. Servs., ASBCA No. 38087, 94-2 BCA
& 26,842 (imposing breach damages against the government).
Ask contractors to record actual cost data to support requests for equitable
adjustment.
2-2
III.
PREPARING TO DEFEND.
A.
Read the Contract.
1.
B.
Obtain a copy of the contract, including:
a.
Any modifications; and
b.
Any plans, drawings, or specifications.
2.
Review the entire document.
3.
Ask knowledgeable persons to explain vague or technical portions.
Review the Claim.
1.
Jurisdictional Issues.
a.
Is the submission a claim?
(1)
Is the submission a routine request for payment?
(2)
Did the claimant submit its request in writing?
(3)
Did the claimant request a sum certain, the adjustment or
interpretation of a contract term, or other relief arising
under or related to the contract?
(4)
Did the claimant submit enough supporting data to allow
the contracting officer to render an informed decision?
(5)
Did the claimant certify its request if it exceeds $100,000?
2-3
(6)
2.
C.
D.
Did the claimant implicitly or explicitly request a
contracting officer’s final decision?
b.
Is the claimant a proper party? If the claimant is a sub, is the prime
properly sponsoring the claim?
c.
Is the claim timely?
Substantive Issues.
a.
Identify the legal theories the contractor is relying on to show
entitlement and the elements of proof for each.
b.
Identify any legal theories supporting entitlement that the
contractor has not yet raised and the elements of proof for each.
c.
Identify possible defenses to each theory of entitlement and the
elements of proof for each.
Review the Final Decision.
1.
Did the contracting officer issue a written final decision?
2.
Did the contracting officer issue the final decision in a timely manner?
3.
Did the contracting officer properly advise the contractor of its appeal
rights?
4.
Did the contracting officer furnish the final decision to the contractor?
Identify and Interview Knowledgeable Persons.
1.
Government Employees.
2-4
2.
3.
a.
Contract Personnel. Identify and interview the procuring
contracting officer (PCO), the administrative contracting officer
(ACO), the contract specialist, the contracting officer’s
representative (COR), and the contracting officer’s technical
representative (COTR).
b.
Technical Personnel. Identify and interview the project engineer,
the test engineer, the item manager, the quality assurance
representative (QAR), the quality assurance specialist (QAS), and
the industrial specialist (IS) (especially if these people work inside
the contractor’s facility).
c.
Financial Personnel. Identify and interview the financial specialist,
the cost analyst, and the auditor.
Contractor Employees. Identify and interview knowledgeable contractor
employees.
a.
Former contractor employees are often more candid than current
employees. See, e.g., J.C. Equip. Corp., ASBCA No. 42879, 97-2
BCA ¶ 29,197 (finding the testimony of the appellant’s president
unpersuasive based, in part, on contradictory testimony provided
by two of his former employees).
b.
May have to go through contractor’s attorney!
c.
Ask government employees to assess the knowledge and honesty
of contractor employees.
Protect your interviews as attorney work product.
a.
Federal Rule of Civil Procedure (FRCP) 26(b)(3) protects
documents prepared in anticipation of litigation or trial by a party
or its attorney.
2-5
b.
E.
Based on this rule, the government may be able to protect records
of interviews prepared by field attorneys from later discovery. See
generally B.D. Click Co., Inc., ASBCA Nos. 25609, 25972, 83-1
BCA ¶ 16,328; Ingalls Shipbldg. Div., Litton Sys., Inc., ASBCA
No. 17717, 73-2 BCA ¶ 10,205.
Identify and Preserve Records.
1.
Ask every knowledgeable person for relevant records. Look for personal
diaries and logs.
2.
Mark all records that may be relevant to the claim/dispute to prevent their
routine destruction.
3.
Protect the status of business records.
a.
Federal Rule of Evidence (FRE) 803(6) permits the government to
introduce records of regularly recorded activity as an exception to
the hearsay rule if:
(1)
The record was made at or near the time of the event;
(2)
The record was made by persons with knowledge (or from
information transmitted by a person with knowledge) of the
recorded facts;
(3)
The record was made in the regular course of business
activity; and
(4)
The regular practice of the business was to make the
record.
See Rault Center Hotel, ASBCA No. 31232, 91-3 BCA ¶ 24,247
(admitting quality control questionnaires under FRE 803(6)); cf.
USD Tech., Inc., ASBCA No. 31305, 87-2 BCA 19,680
(overruling the government’s objection to the admission of a
document in the Rule 4 file).
2-6
b.
IV.
Do not endanger the status of documents as business records by
interfering with the way the government regularly maintains them.
THE RULE 4 (R4) FILE.
A.
What is a Rule 4 File? ASBCA Rule 4(a).
B.
Why Prepare a Rule 4 File?
1.
The Board will rely on the documents in the Rule 4 file to decide the
appeal. But cf. Thomas & Sons Bldg. Contractor, Inc., ASBCA No.
43527, 96-1 BCA ¶ 28,101 (stating that “[a]dmission of a document . . .
under ASBCA Rule 4 does not establish as true everything that is said
therein”).
2.
A well-prepared Rule 4 file:
a.
Facilitates discovery;
b.
Facilitates meaningful preliminary procedures;
c.
Simplifies hearing procedures; and
d.
May bolster the credibility of the contracting officer and other
government witnesses.
See X-Tyal Int’l Corp., ASBCA Nos. 24353, 26495, 84-2 BCA ¶ 17,251
(stating that “[e]fficient use of the Rule 4 file cuts the costs of litigation to
the parties and can significantly reduce the time needed to hear appeals”).
C.
What Should the Rule 4 File Include? ASBCA Rule 4(a).
1.
The Rule 4 file should include all documents pertinent to the appeal,
including:
2-7
2.
D.
a.
The contracting officer’s final decision;
b.
The contract, including pertinent plans, drawings specifications,
and amendments;
c.
All relevant correspondence between the parties;
d.
Transcripts of testimony, affidavits, and witness statements made
prior to the filing of the notice of appeal; and
e.
Other relevant information (e.g., audit reports, Department of
Defense Inspector General (DODIG) reports, trip reports,
production progress reports, inspection logs, quality deficiency
reports (QDR), photographs, critical path charts, memoranda of
phone conversations, evidence of the date the contractor received
the final decision, etc.).
The Rule 4 file should not include:
a.
Privileged documents (e.g., attorney-client privileged documents,
attorney work product, etc.);
b.
Rank hearsay prepared in anticipation of litigation; and
c.
Irrelevant documents.
Assembling a Good Rule 4 File. ASBCA Rule 4(c).
1.
Requirements. See McDonnell Aircraft Co., ASBCA No. 37346, 96-1
BCA ¶ 28,164 (stating that Board orders “are not to be taken lightly or
blatantly ignored” and discussing the Board’s threat to preclude the
government from introducing any oral or written evidence in further
proceedings if the government continued to ignore the Board’s order to
retab the Rule 4 file).
a.
Use originals, legible facsimiles, or authenticated copies.
2-8
2.
E.
b.
Place the contract first.
c.
Arrange the other documents in chronological order.
d.
Tab and number each document sequentially.
e.
Prepare a comprehensive index.
Practical Considerations.
a.
Copy head-to-head.
b.
Punch holes on the sides.
c.
Ensure that all documents are complete.
d.
Assemble the file into manageable volumes.
Submitting the Rule 4 File. ASBCA Rules 4(a) and 4(d).
1.
The contracting officer is responsible for preparing the Rule 4 file;
however, the field attorney should review it before the contracting officer
submits it.
2.
Each Chief Trial Attorney (CTA) has established procedures for
distributing the Rule 4 file.
a.
The contracting officer (or contract specialist) must normally make
at least six copies of the Rule 4 file—one for the ASBCA, one for
the head of the contracting activity (HCA), one for the appellant,
one for the field attorney, and two for the trial attorney.
b.
The contracting officer (or contract specialist) should use an
overnight delivery service or first class mail to send the Rule 4 file.
2-9
3.
F.
a.
The contracting officer may omit the contract, including plans,
drawings, specifications, and amendments, from the file it provides
to the contractor. ASBCA Rule 4(a).
b.
Upon request, the Board may waive the requirement to furnish
copies of bulky, lengthy, or out-of-size documents; however, the
party requesting the waiver must make a copy of the document
available for inspection.
Objecting to Documents in the Rule 4 File. ASBCA Rule 4(e).
1.
2.
G.
Authorized Omissions.
A party may object to the Board’s consideration of one or more documents
in the Rule 4 file. See USD Tech., Inc., supra (noting that “[t]he
Government is not deemed to have sponsored every document contained
in its initial Rule 4(a) submission and is not precluded from objecting to
the admissibility of particular writings therein”).
a.
If a party objects, the Board will remove the challenged document
from the Rule 4 file.
b.
The other party may then move to admit the document under
ASBCA Rules 13 and 20.
A party will waive its right to object if its fails to assert its right in a timely
manner.1 See X-Tyal Int’l Corp., supra (overruling the appellant’s
objection to certain Rule 4 documents because the appellant did not raise
its objections until after the hearing had started, even though the appellant
had been in possession of the disputed documents for approximately two
years).
Supplementing the Rule 4 File. ASBCA Rule 4(b).
1
A party must object to documents in the Rule 4 file “reasonably in advance of:” (1) the hearing; or (2) the settling
of the record if there is no hearing. ASBCA Rule 4(e).
2-10
V.
1.
The appellant may supplement the Rule 4 file within 30 days of the date it
receives its copy. See Trinity Universal Insurance Co., ASBCA No.
41846, 96-1 BCA ¶ 27,976 (refusing to allow the appellant to supplement
the Rule 4 file because it failed to adhere to the Board’s Scheduling
Order); see also International Crane Co., ASBCA No. 49604, 00-1 BCA
¶ 30,624.
2.
The Board normally permits the parties to submit supplemental Rule 4
matters even after the 30-day submission period expires; however, the
Board may refuse to accept additional documents at some point in time.
See Hill Constr. Corp., ASBCA No. 43615, 92-2 BCA ¶ 24,832 (ordering
the parties to supplement the Rule 4 file with documents that address
issues raised by the appellant’s notice of appeal and complaint regarding
the imposition of liquidated damages).
THE TRIAL ATTORNEY’S LITIGATION FILE (TALF).
A.
The contracting officer sends a TALF to the CTA at the same time the contracting
officer sends the Rule 4 file to the Board.
B.
The TALF should include:
1.
A list of potential witnesses;
2.
A signed statement from each government witness;
3.
The contracting officer’s analysis of the dispute;
4.
A legal memorandum discussing the relevant legal issues;
5.
Privileged documents not included in the Rule 4 file (e.g.,
communications with an attorney, attorney work product, trade secrets of
other contractors, classified documents, etc.); and
6.
Other potentially relevant documents not included in the Rule 4 file.
2-11
VI.
CONCLUSION.
2-12
CHAPTER 3
ASBCA JURISDICTION
I.
INTRODUCTION. ................................................................................................................1
II.
REFERENCES. .....................................................................................................................1
III. OVERVIEW. .........................................................................................................................2
IV. THE ASBCA. ........................................................................................................................3
A.
Composition.......................................................................................................................3
B.
Jurisdiction.........................................................................................................................3
C.
Board Guidance. ................................................................................................................4
D.
Standard of Review............................................................................................................5
V.
CDA CLAIMS AND JURISDICTIONAL CONSIDERATIONS. .......................................5
VI. FAILURE TO SUBMIT A PROPER CLAIM. .....................................................................7
A.
Definition of a Claim. ........................................................................................................7
B.
Elements of a Claim.........................................................................................................10
C.
Government Claims. ........................................................................................................17
VII.
LACK OF STANDING. ..................................................................................................19
A.
Parties to the Contract......................................................................................................19
B.
Others...............................................................................................................................19
VIII.
LACK OF A CONTRACTING OFFICER’S FINAL DECISION..................................20
A.
Elements of a Valid Final Decision.. ...............................................................................20
B.
Timeliness. .......................................................................................................................21
C.
Reconsideration of a Final Decision................................................................................23
D.
Delivery of the Final Decision.........................................................................................23
E.
Independent Act of a Contracting Officer. ......................................................................24
IX. FAILURE TO APPEAL IN A TIMELY MANNER...........................................................25
A.
Filing Methods. ................................................................................................................25
B.
Contents ...........................................................................................................................26
C.
The Board liberally construes appeal notices ..................................................................25
X.
FRAUDULENT CLAIMS...................................................................................................26
A.
CDA Provisions Regarding Fraudulent Claims...............................................................26
B.
Fraudulent Claims and the BCAs. ...................................................................................27
XI. CONCLUSION....................................................................................................................27
CHAPTER 3
ASBCA JURISDICTION
I.
II.
INTRODUCTION. As a result of this instruction, the student will understand:
A.
The jurisdiction of the Armed Services Board of Contract Appeals (ASBCA) to
decide appeals from contracting officer final decisions.
B.
The dispute resolution process provided by the Contract Disputes Act.
REFERENCES.
A.
The Contract Disputes Act of 1978 (41 U.S.C. §§601-613).
B.
Charter of the Armed Services Board of Contract Appeals. The charter can be
accessed at www.law.gwu.edu/asbca/charter.htm.
C.
Rules of the Armed Services Board of Contract Appeals. The rules can be
accessed at www.law.gwu.edu/asbca/rule.htm.
D.
Department of Defense Directive (DODD) 5515.6, Processing Tort, Contract and
Compensation Claims Arising out of Operations of Nonappropriated Fund
Activities (3 Nov. 1956).
E.
Department of Defense Instruction (DODI) 4105.67, Nonappropriated Fund
Procurement Policy (2 Oct. 1981).
F.
AR 215-4, Nonappropriated Fund Contracting (10 Sep. 1990).
MAJ Jon Guden
49th Graduate Course
Disputes & Remedies
January 2001
III.
OVERVIEW.
A.
Boards of Contract Appeals (BCAs). During World War I (WWI), the War and
Navy Departments established full-time BCAs to hear claims involving wartime
contracts. The War Department abolished its board in 1922, but the Navy board
continued in name (if not fact) until World War II (WWII). Between the wars, an
interagency group developed a standard disputes clause. This clause made
contracting officers’ decisions final as to all questions of fact. WWII again
showed that boards of contract appeals were needed to resolve the massive
number of wartime contract disputes. See Penker Constr. Co. v. United States, 96
Ct. Cl. 1 (1942). Thus, the War Department created a board of contract appeals,
and the Navy revived its board. In 1949, the Department of Defense (DOD)
merged the two boards to form the current ASBCA.
B.
Post-WWII Developments. In a series of cases culminating in Wunderlich v.
United States, 342 U.S. 98 (1951), the Supreme Court upheld the finality (absent
fraud) of factual and legal decisions issued under the disputes clauses by agency
BCAs. It further held that the Court of Claims could not review board decisions
de novo. Congress reacted by passing the Wunderlich Act, 41 U.S.C. §§ 321-322,
which reaffirmed that the Court of Claims could review factual and legal
decisions by agency BCAs. At about the same time, Congress changed the Court
of Claims from an Article I (legislative) to an Article III (judicial) court. Pub. L.
No. 83-158, 67 Stat. 226 (1953). Later, the Supreme Court clarified the
relationship between the Court of Claims and the agency BCAs by limiting the
jurisdiction of the boards to cases “arising under” remedy granting clauses in the
contract. See Utah Mining and Constr. Co. v. United States, 384 U.S. 394 (1966).
C.
The Contract Disputes Act (CDA) of 1978, 41 U.S.C. §§ 601-613. Congress
replaced the previous disputes resolution system with a comprehensive statutory
scheme. Congress intended that the CDA:
1.
Help induce resolution of more disputes by negotiation prior to litigation;
2.
Equalize the bargaining power of the parties when a dispute exists;
3.
Provide alternate forums suitable to handle the different types of disputes;
and
4.
Insure fair and equitable treatment to contractors and Government
agencies. S. REP. NO. 95-1118, at 1 (1978), reprinted in 1978
U.S.C.C.A.N. 5235.
3-2
IV.
D.
Federal Courts Improvement Act of 1982, Pub. L. No. 97-164, 96 Stat. 25.
Congress overhauled the Court of Claims and created a new Article I court (i.e.,
the Claims Court) from the old Trial Division of the Court of Claims. Congress
also merged the Court of Claims and the Court of Customs and Patent Appeals to
create the Court of Appeals for the Federal Circuit (CAFC).
E.
Federal Courts Administration Act of 1992, Pub. L. No. 102-572, 106 Stat. 4506.
Congress changed the name of the Claims Court to the United States Court of
Federal Claims (COFC), and expanded the jurisdiction of the court to include the
adjudication of nonmonetary claims, such as termination of a contract, rights in
tangible or intangible property, compliance with cost accounting standards, and
other nonmonetary disputes on which a decision of the contracting officer has
been issued.
F.
Federal Acquisition Streamlining Act (FASA) of 1994, Pub. L. No.
103-355, 108 Stat. 3243. Congress increased the monetary thresholds for
requiring CDA certifications and requesting expedited and accelerated appeals.
THE ASBCA.
A.
B.
Composition.
1.
The ASBCA consists of 25-30 administrative judges.1
2.
ASBCA judges specialize in contract disputes and come from both the
government and private sectors. Each judge has at least five years of
experience working in the field of government contract law.
Jurisdiction. 41 U.S.C. § 607(d).
1.
The ASBCA has jurisdiction to decide appeals regarding contracts made
by:
a.
The Department of Defense; or
1
The four judges of the Corps of Engineer Board of Contract Appeals merged with the ASBCA on 12 July 2000.
All pending ENGBCA cases received new ASBCA docket numbers. The ASBCA disposed of 857 appeals during
fiscal year 2000, dismissing 509, denying 81, and sustaining 186. 42 GOV’T CONTRACTOR, NO. 42, AT 4 (NOV. 8,
2000).
3-3
b.
2.
C.
An agency that has designated the ASBCA to decide the appeal.
The ASBCA may grant any relief that would be available to a litigant
asserting a contract claim before the United States Court of Federal
Claims. The board does not have authority to grant injunctive relief or
order specific performance. See Applied Ordnance Technology, Inc.,
ASBCA Nos. 51297, 51543, 98-2 BCA ¶ 30,023.
Board Guidance.
1.
ASBCA Charter. The ASBCA will invoke its Charter as authority to hear
certain appeals. See Atlantis Construction Corp., ASBCA Nos. 44044,
44860, 96-1 BCA ¶ 28,045 (rejecting Navy’s contention that Charter did
not give board jurisdiction over NAFI disputes).
2.
Paragraph 1 of the Charter provides that appeals to the board may be taken
pursuant to:
3.
a.
The Contract Disputes Act of 1978.
b.
Provisions of contracts requiring the decision by the Secretary of
Defense or by a Secretary of a Military Department or their duly
authorized representative or board. See e.g. Disputes clause, DA
Form 4074-R, I-25 (SEP 1984) (NAF contracts); see also D’Tel
Communications, ASBCA No. 50093, 97-2 BCA ¶ 29,251
(holding that the Board’s jurisdiction stemmed from the disputes
resolution provision in the contract); COVCO Hawaii Corp.,
ASBCA No. 26901, 83-2 BCA ¶ 16,554 (NAFI contract’s
Disputes clause afforded ASBCA jurisdiction).
c.
Pursuant to the provisions of any directive whereby the Secretary
of Defense or the Secretary of a Military Department has granted a
right of appeal not contained in the contract on any matter
consistent with the contract appeals procedure. See Recreational
Enterprises, ASBCA No. 32176, 87-1 BCA ¶ 19,675 (citing to
DODD 5515.6 to accept jurisdiction of NAFI contract with no
Disputes clause).
ASBCA Rules.
3-4
a.
The Rules of the Armed Services Board of Contract Appeals
appear in Appendix A of the DFARS.
b.
Preface, para. I.
c.
D.
V.
(1)
The ASBCA shall consider appeals pursuant to the CDA
relating to contracts made by the Departments of Defense,
Army, Navy, and Air Force or
(2)
Any other executive agency when such agency or the
Administrator for Federal Procurement Policy has
designated the Board to decide the appeal.
Rules 1-3 describe how appeals are taken, the contents of a notice
of appeal, and the docketing of an appeal.
Standard of Review. The ASBCA will review the appeal de novo. See
41 U.S.C. § 605(a) (contracting officer’s specific findings of fact are not binding
in any subsequent proceeding); see also Wilner v. United States, 24 F.3d 1397
(Fed. Cir. 1994) (en banc); Precision Specialties, Inc., ASBCA No. 48717, 96-1
BCA ¶ 28,054 (final decision retains no presumptive evidentiary weight nor is it
binding on the Board).
CDA CLAIMS AND JURISDICTIONAL CONSIDERATIONS.
A.
CDA Applicability.
1.
The CDA applies to most express and implied-in-fact2 contracts entered
into by an executive agency.3 41 U.S.C. § 602; FAR 33.203.
2
An “implied-in-fact” contract is similar to an “express” contract. It requires: (1) “a meeting of the minds” between
the parties; (2) consideration; (3) an absence of ambiguity surrounding the offer and the acceptance; and (4) an
agency official with actual authority to bind the government. James L. Lewis v. United States, 70 F.3d 597 (Fed.
Cir. 1995).
3
The CDA normally applies to contracts for: (1) the procurement of property; (2) the procurement of services; (3)
the procurement of construction, maintenance, and repair work; and (4) the disposal of personal property. 41 U.S.C.
§ 602. See G.E. Boggs & Assocs., Inc., ASBCA Nos. 34841, 34842, 91-1 BCA ¶ 23,515 (holding that the CDA did
not apply because the parties did not enter into a contract for the procurement of property, but retaining jurisdiction
pursuant to the disputes clause in the contract).
3-5
2.
B.
C.
Exchange Service contracts. The CDA applies to contracts with the Army
and Air Force, Navy, Marine Corps, Coast Guard, and NASA Exchanges.
See 41 U.S.C. § 602(a), 28 U.S.C. §§ 1346, 1491.
Federal Acquisition Regulation (FAR) implementation.4 FAR 33.215.
1.
FAR 52.233-1, Disputes, requires the contractor to continue to perform
pending resolution of disputes “arising under” the contract.5 See
Appendix B.
2.
FAR 52.233-1, Alternate I, Disputes, requires the contractor to continue to
perform pending resolution of disputes “arising under or relating to” the
contract.6 See Appendix B.
Jurisdictional Prerequisites for Contractor Appeals.
1.
Written Submission of Claim.
a.
The contractor must show that it submitted a written claim to the
contracting officer for a decision. 41 U.S.C. § 605(a); FAR
33.201; FAR 33.206(a). See W.M. Schlosser Co. v. United States,
705 F.2d 1336, 1338-39 (Fed. Cir. 1983); Service Eng’g Co.,
ASBCA No. 40274, 93-1 BCA ¶ 25,520.
b.
Statute of Limitations. If the claim is based on a contract awarded
after 1 October 1995, the contractor must show that it submitted
the claim to the contracting officer within 6 years of the date the
claim accrued. 41 U.S.C. § 605(a); FAR 33.206(a).
4
The CDA—and hence the Disputes clause—does not apply to: (1) tort claims that do not arise under or relate to an
express or an implied-in-fact contract; (2) claims for penalties or forfeitures prescribed by statute or regulation that
another federal agency is specifically authorized to administer, settle or determine; (3) claims involving fraud; and
(4) bid protests. 41 U.S.C. §§ 602, 604, 605(a); FAR 33.203; FAR 33.209; FAR 33.210.
5
“Arising under the contract ” is defined as falling within the scope of a contract clause and therefore providing a
remedy for some event occurring during contract performance. RALPH C. NASH ET AL., THE GOVERNMENT
CONTRACTS REFERENCE BOOK, at 8 (2d ed. 1998).
6
“Relating to the contract” means having a connection to the contract. The term encompasses claims that cannot be
resolved through a contract clause, such as for breach of contract or correction of mistakes. Prior to passage of the
CDA, contractors pursued relief for mutual mistake (rescission or reformation) under the terms of Pub. L. No. 85804 (see FAR 33.205; FAR Part 50, Extraordinary Contractual Actions). RALPH C. NASH ET AL., THE
GOVERNMENT CONTRACTS REFERENCE BOOK, at 438 (2d ed. 1998).
3-6
D.
VI.
2.
Final Decision. The contractor must normally show that the claim was
the subject of a contracting officer’s final decision. 41 U.S.C. § 605(a);
FAR 33.211
3.
Timely Appeal. The contractor must show that it appealed the contracting
officer’s final decision in a timely manner. 41 U.S.C. § 606.
Jurisdictional Motions.
1.
The parties may raise jurisdictional issues at any time; however, the
Armed Services Board of Contract Appeals (ASBCA) prefers that a party
file jurisdictional motions “promptly.” ASBCA Rule 5(a).
2.
The ASBCA may raise jurisdictional issues, sua sponte, at any time.
ASBCA Rule 5(a).
3.
Jurisdictional motions include motions to dismiss for lack of:
a.
subject matter jurisdiction;
b.
a proper claim;
c.
standing;
d.
a contracting officer’s final decision;
e.
a timely appeal; or
f.
Fraud.
FAILURE TO SUBMIT A PROPER CLAIM.
A.
Definition of a Claim.
3-7
1.
Contract Disputes Act. The CDA does not define the term “claim.” As a
result, courts and boards look to the FAR for a definition. See Essex
Electro Eng’rs, Inc. v. United States, 960 F.2d 1576 (Fed. Cir. 1992)
(holding that the executive branch has authority to issue regulations
implementing the CDA, to include defining the term “claim,” and that the
FAR definition is consistent with the CDA).
2.
FAR. The FAR defines a “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 a contract.” FAR
33.201; FAR 52.233-1.
a.
Claims arising under or relating to the contract include those
supported by remedy granting clauses, breach of contract claims,
and mistakes alleged after award.
b.
A written demand (or written assertion) seeking the payment of
money in excess of $100,000 is not a valid CDA claim until the
contractor properly certifies it. FAR 33.201.
c.
A voucher, invoice, or other routine request for payment that is not
in dispute when submitted is not a valid CDA claim. FAR 33.201;
52.233-1. See Reflectone, Inc. v. Dalton, 60 F.3d 1572 (Fed. Cir.
1995) (reversing four years of case law requiring a pre-existing
dispute for both routine and nonroutine demands for payment). A
contractor may convert such a submission into a valid CDA claim,
however, if:
(1)
The contractor complies with the submission and
certification requirements of the Disputes clause; and
(2)
The contracting officer:
(a)
Disputes the submission as to either liability or
amount; or
3-8
(b)
d.
Fails to act in a reasonable time. FAR 33.201; FAR
52.233-1. See S-TRON, ASBCA No. 45890, 94-3
BCA ¶ 26,957 (contracting officer’s failure to
respond for 6 months to contractor’s “relatively
simple” engineering change proposal (ECP) and
REA was unreasonable).
Termination for Convenience (T4C) Settlement Proposals. FAR
49.206.
(1)
A contractor may submit a settlement proposal for costs
associated with the termination of a contract for the
convenience of the government. FAR 49.206-1; FAR
49.602-1.
(2)
Courts and boards consider T4C settlement proposals to be
“nonroutine” submissions under the CDA. See Ellett, 93
F.3d at 1542 (stating that “it is difficult to conceive of a
less routine demand for payment than one which is
submitted when the government terminates a contract for
its convenience”).
(3)
Courts and boards, however, do not consider T4C
settlement proposals to be CDA claims when submitted
because contractors normally do not submit them for a
contracting officer’s final decision—they submit them to
facilitate negotiations. See Ellett, 93 F.3d at 1543-44
(holding that the contractor’s T4C settlement proposal was
not a claim because the contractor did not submit it to the
contracting officer for a final decision); see also Walsky
Constr. Co. v. United States, 173 F.3d 1312 (Fed. Cir.
1999) (T4C settlement proposal was not a claim because it
had not yet been the subject of negotiations with the
government).
3-9
B.
(4)
A T4C settlement proposal may “ripen” into a CDA claim
once settlement negotiations reach an impasse. See Ellett,
93 F.3d at 1544 (holding that the contractor’s request for a
final decision following ten months of “fruitless
negotiations” converted its T4C settlement proposal into a
claim); Metric Constructors, Inc., ASBCA No. 50843, 98-2
BCA ¶ 30,088 (holding that a contractor’s T4C settlement
proposal ripened into a claim when the contracting officer
issued a unilateral contract modification following the
parties’ unsuccessful negotiations).
(5)
The passage of time is not itself an indication that the
parties have reached an impasse such that the settlement
proposal has been converted to a claim. See Rex Sys., Inc.
v. Cohen, 224 F.3d 1367 (Fed. Cir. 2000) (parties took 2 ½
years to settle T4C).
Elements of a Claim.
1.
Submitted in Writing. The CDA requires contractors to submit their
claims in writing. 41 U.S.C. § 605(a); FAR 33.206(a). See Honig Indus.
Diamond Wheel, Inc., ASBCA No. 46711, 94-2 BCA ¶ 26,955 (granting
the government’s motion to strike monetary claims that the contractor had
not previously submitted to the contracting officer for a decision). The
CDA does not require contractors to submit their claims in any particular
form. Contract Cleaning Maint., Inc. v. United States, 811 F.2d 586, 592
(Fed. Cir. 1987).
2.
Seeking as a matter of right,7 one of the following:
a.
Payment of money in a sum certain;
(1)
Where the essence of a dispute is the increased cost of
performance, the contractor must demand a sum certain as
a matter of right.
(2)
A claim states a sum certain if:
7
Some submissions, such as cost proposals for work the government later decides it would like performed, would
not be considered submissions seeking payment “as a matter of right.” Reflectone v. Dalton, 60 F.3d 1572, n.7 (Fed.
Cir. 1995)
3-10
b.
(a)
The government can determine the amount of the
claim using a simple mathematical formula. Metric
Constr. Co. v. United States, 1 Cl. Ct. 383 (1983);
Mulunesh Berhe, ASBCA No. 49681, 96-2 BCA ¶
28,339 (simple multiplication of requested monthly
rate for lease); Jepco Petroleum, ASBCA No.
40480, 91-2 BCA ¶ 24,038 (claim requesting
additional $3 per linear foot of excavation, when
multiplied by total of 10,000 feet, produced sum
certain).
(b)
Enlarged claim doctrine. Under this doctrine, a
BCA or the COFC may exercise jurisdiction over a
dispute that involves a sum in excess of that
presented to the contracting officer for a final
decision if:
(i)
The increase in the amount of the claim is
based on the same set of operative facts
previously presented to the contracting
officer; and
(ii)
The contractor neither knew nor reasonably
should have known, at the time when the
claim was presented to the contracting
officer, of the factors justifying an increase
in the amount of the claim. Johnson
Controls World Services, Inc. v. United
States, 43 Fed. Cl. 589 (1999). See also
Stencel Aero Engineering Corp., ASBCA
No. 28654, 84-1 BCA ¶ 16,951 (finding
essential character or elements of the
certified claim had not been changed).
Adjustment or interpretation of contract terms. TRW, Inc.,
ASBCA Nos. 51172 and 51530, 99-2 BCA ¶ 30,047 (seeking
decision on allowability and allocability of certain costs).
Compare William D. Euille & Assocs., Inc. v. General Services
Administration, GSBCA No. 15,261, 00-1 BCA ¶ 30,910 (dispute
concerning directive to remove and replace building materials
proper contract interpretation claim), with Rockhill Industries,
Inc., ASBCA No. 51541, 00-1 BCA ¶ 30,693 (money claim
“masquerading” as claim for contract interpretation); or
3-11
c.
3.
Other relief arising under or relating to the contract. See General
Electric Co.; Bayport Constr. Co., ASBCA Nos. 36005, 38152,
39696, 91-2 BCA ¶ 23,958 (demand for contractor to replace or
correct latent defects under Inspection clause).
(1)
Reformation or Rescission. See McClure Electrical
Constructors, Inc. v. United States, 132 F.3d 709 (Fed. Cir.
1997); LaBarge Products, Inc. v. West, 46 F.3d 1547 (Fed.
Cir. 1995) (ASBCA had jurisdiction to entertain
reformation claim).
(2)
Specific performance is not an available remedy. Western
Aviation Maintenance, Inc. v. General Services
Administration, GSBCA No. 14165, 98-2 BCA ¶ 29,816.
Submitted to the contracting officer for a decision. 41 U.S.C. § 605(a).
a.
The Federal Circuit has interpreted the CDA’s submission
language as requiring the contractor to “commit” the claim to the
contracting officer and “yield” to his authority to make a final
decision. Dawco Constr., Inc. v. United States, 930 F.2d 872 (Fed.
Cir. 1991).
b.
The claim need not be sent only to the contracting officer or
directly to the contracting officer. If the contractor submits the
claim to its primary government contact with a request for a
contracting officer final decision, and the primary contact delivers
the claim to the contracting officer, the submission requirement
can be met. Neal & Co. v. United States, 945 F.2d 385 (Fed. Cir.
1991). See also D.L. Braughler Co., Inc. v. West, 127 F.3d 1476
(Fed. Cir. 1997) (letter to resident engineer did not satisfy
submission requirement); Hamza v. United States, 31 Fed. Cl. 315,
321 (1994) (permitting the contractor to submit its claim through a
U.S. Army Corps of Engineers attorney). But see J&E Salvage
Co., 37 Fed. 256 (1997) (concluding that a demand letter submitted
to the Department of Justice was not a claim, even though the
appropriate contracting officer eventually received it).
c.
Only receipt by the contracting officer triggers the time limits
and interest provisions set forth in the CDA. See 41 U.S.C.
§ 605(c)(1), § 611.
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4.
d.
A claim should implicitly or explicitly request a contracting
officer’s final decision. See Ellett Constr. Co., Inc. v. United
States, 93 F.3d 1537, 1543, 1546 (Fed. Cir. 1996) (holding that
submission to the contracting officer is required, but the request
for a final decision may be implied); Heyl & Patterson, Inc. v.
O’Keefe, 986 F.23 480, 483 (Fed. Cir. 1993) (stating that “a
request for a final decision can be implied from the context of the
submission”); Transamerica Ins. Corp. v. United States, 973 F.2d
1572, 1576 (Fed. Cir. 1992) (stating that no “magic words” are
required “as long as what the contractor desires by its submissions
is a final decision”).
e.
A contracting officer can’t issue a valid final decision if the
contractor explicitly states that it is not seeking a final decision.
Fisherman’s Boat Shop, Inc. ASBCA No. 50324, 97-2 BCA
¶ 29,257 (holding that the contracting officer’s final decision was a
nullity because the contractor did not intend for its letter
submission to be treated as a claim).
Certification. CDA certification serves to create the deterrent of potential
liability for fraud and thereby discourage contractors from submitting
unwarranted or inflated claims. See Fischbach & Moore Int’l Corp. v.
Christopher, 987 F.2d 759 (Fed. Cir. 1993).
a.
A contractor must certify any claim that exceeds $100,000. 41
U.S.C. § 605(c)(1); FAR 33.207.
b.
Determining the claim amount.
(1)
A contractor must consider the aggregate effect of
increased and decreased costs to determine whether the
claim exceeds the dollar threshold for certification.8 FAR
33.207(d).
(2)
Claims that are based on a “common or related set of
operative facts” constitute one claim. Placeway Constr.
Corp. , 920 F.2d 903 (Fed. Cir. 1990); American
Consulting Services, Inc., ASBCA No. 52923, 2000 BCA
¶ 31,084.
8
The contractor need not include the amount of any government claims in its calculations. J. Slotnik Co., VABCA
No. 3468, 92-1 BCA ¶ 24,645.
3-13
c.
(3)
A contractor may not split a single claim that exceeds
$100,000 into multiple claims to avoid the certification
requirement. See, e.g., Columbia Constr. Co., ASBCA No.
48536, 96-1 BCA ¶ 27,970; Jay Dee Militarywear, Inc.,
ASBCA No. 46539, 94-2 BCA ¶ 26,720.
(4)
Separate claims that total less than $100,000 each require
no certification, even if their combined total exceeds
$100,000. See Phillips Constr. Co., ASBCA No. 27055,
83-2 BCA ¶ 16,618; B. D. Click Co., ASBCA No. 25609,
81-2 BCA ¶ 15,394.
(5)
The contracting officer cannot consolidate separate claims
to create a single claim that exceeds $100,000. See B. D.
Click Co., Inc., ASBCA No. 25609, 81-2 BCA ¶ 15,395.
Courts and boards, however, can consolidate separate
claims for hearing to promote judicial economy.
(6)
A contractor need not certify a claim that grows to exceed
$100,000 after the contractor submits it to the contracting
officer if:
(a)
The increase was based on information that was not
reasonably available at the time of the initial
submission; or
(b)
The claim grew as the result of a regularly accruing
charge and the passage of time. See Tecom, Inc. v.
United States, 732 F.2d 935 (Fed. Cir. 1984);
Mulunesh Berhe, ASBCA No. 49681, 96-2 BCA ¶
28,339.
Requirement. FAR 33.207(c). When required to do so, a
contractor must certify that:
(1)
The claim is made in good faith;
(2)
The supporting data are accurate and complete to the best
of the contractor’s knowledge and belief;
3-14
(3)
The amount requested accurately reflects the contract
adjustment for which the contractor believes the
government is liable; and
(4)
The person submitting the claim is duly authorized to
certify the claim on the contractor’s behalf.9
d.
Proper Certifying Official. A contractor may certify its claim
through “any person duly authorized to bind the contractor with
respect to the claim.” 41 U.S.C. § 605(c)(7); FAR 33.207(e). See
Northeast Air Group, Inc., ASBCA No. 46350, 95-2 BCA ¶ 27,679
(concluding that company president at time of claim submission
was a proper certifying official).
e.
No claim vs. Defective Certification. Tribunals treat differently
those cases where an attempted certification is “substantially”
compliant from those where the certification is either entirely
absent or the language is intentionally or negligently defective.
(1)
No claim.
(a)
Absence of Certification. No valid claim exists.
See FAR 33.201 (“Failure to certify shall not be
deemed to be a defective certification.”); Eurostyle
Inc., ASBCA No. 45934, 94-1 BCA ¶ 26,458
(“complete absence of any certification is not a
mere defect which may be corrected”).
(b)
Certifications made with intentional, reckless, or
negligent disregard of CDA certification
requirements are not correctable. See Walashek
Industrial & Marine, Inc., ASBCA No. 52166, 00-1
BCA ¶ 30,728 (two prongs of certificate omitted or
not fairly compliant).
9
Absent extraordinary circumstances, courts and boards will not question the accuracy of the statements in a
contractor’s certification. D.E.W., Inc., ASBCA No. 37332, 94-3 BCA ¶ 27,004. A prime contractor need not agree
with all aspects or elements of a subcontractor’s claim. In addition, a prime contractor need not be certain of the
government’s liability, or the amount recoverable. The prime contractor need only believe that the subcontractor has
good grounds to support its claim. See Oconto Elec., Inc., ASBCA No. 45856, 94-3 BCA ¶ 26,958 (holding that the
prime contractor properly certified its subcontractor’s claim, even though the official certifying the claim lacked
personal knowledge of the amount claimed); see also Arnold M. Diamond, Inc. v. Dalton, 25 F.3d 1006 (Fed. Cir.
1994) (upholding the contractor’s submission of a subcontractor’s claim pursuant to a court order).
3-15
(2)
Claim with “defective”, or correctable, certification. 41
U.S.C.A.§ 605 (c)(6). FAR 33.201 defines a defective
certification as one which alters or otherwise deviates from
the language in 33.207(c) or which is not executed by a
person duly authorized to bind the contractor.
(a)
Exact recitation of the language of CDA section
605(c) is not required—“substantial compliance”
suffices. See Fischbach & Moore Int’l Corp. v.
Christopher, 987 F.2d 759 (Fed. Cir. 1993)
(substituting the word “understanding” for
“knowledge” did not render certificate defective).
(b)
Technical defects are correctable. Examples
include missing certifications when two or more
claims are deemed to be a larger claim requiring
certification, and certification by the wrong
representative of the contractor. See H.R. Rep. No.
102-1006, 102d Cong., 2d Sess. 28, reprinted in
1992 U.S.C.C.A. at 3921, 3937.
(c)
Certifications used for other purposes may be
acceptable even though they do not include the
language required by the CDA. See James M. Ellett
Const. Co., Inc. v. United States, 93 F.3d 1537
(Fed. Cir. 1996) (SF 1436 termination proposal not
substantially deficient as a CDA certificate); Metric
Constructors, Inc., ASBCA No. 50843, 98-2 BCA
¶ 30,088. Compare SAE/Americon - Mid-Atlantic,
Inc., GSBCA No. 12294, 94-2 BCA ¶ 26,890
(holding that the contractor’s “certificate of current
cost or pricing data” on SF 1411 was susceptible of
correction, even though it did not include the first
and third statements required for a proper CDA
certification), with Scan-Tech Security, L.P. v.
United States, 46 Fed. Cl. 326 (2000) (suit
dismissed after court equated use of SF 1411 with
no certification).
(d)
The CO need not render a final decision if he
notifies the contractor in writing of the defect
within 60 days after receipt of the claim. 41 U.S.C.
§ 605 (c)(6).
3-16
5.
C.
(e)
Interest on a claim with a defective certification
shall be paid from the date the contracting officer
initially received the claim. FAR 33.208(c).
(f)
A defect will not deprive a court or board of
jurisdiction, but it must be corrected before entry of
a court’s final judgment or a board’s decision. 41
U.S.C. § 605 (c)(6).
Supporting Data. Invoices, detailed cost breakdowns, and other
supporting financial documentation need not accompany a CDA claim as
a jurisdictional prerequisite. H.L. Smith v. Dalton, 49 F.3d 1563 (Fed.
Cir. 1995) (contractor’s failure to provide CO with additional information
“simply delayed action on its claims”); John T. Jones Constr. Co., ASBCA
No. 48303, 96-1 BCA ¶ 27,997 (stating that the contracting officer’s
desire for more information did not invalidate the contractor’s claim
submission).
Government Claims.
1.
General Requirements. The requirements set forth in the preceding
sections also apply to government claims.
2.
Requirement for Final Decision. 41 U.S.C. § 605(a); FAR 52.233-1(d)(1).
a.
The government may assert a claim against a contractor; however,
the claim must be the subject of a contracting officer’s final
decision.
b.
Some government actions are immediately appealable.
(1)
Termination for Default. A contracting officer’s decision
to terminate a contract for default is an immediately
appealable government claim. See Malone v. United
States, 849 F.2d 1441, 1443 (Fed. Cir. 1988); Independent
Mfg. & Serv. Cos. of Am., Inc., ASBCA No. 47636, 94-3
BCA ¶ 27,223.
3-17
(2)
Withholding Monies. A contracting officer’s decision to
withhold monies otherwise due the contractor is an
immediately appealable government claim. Placeway
Constr. Corp. United States, 920 F.2d 903, 906 (Fed. Cir.
1990).
(3)
Cost Accounting Standards (CAS) Determination. A
contracting officer’s decision regarding the allowability of
costs under the CAS is often an immediately appealable
government claim. See Litton Sys., Inc., ASBCA No.
45400, 94-2 BCA ¶ 26,895 (holding that the government’s
determination was an appealable government claim
because the government was “seeking, as a matter of right,
the adjustment or interpretation of contract terms”).
(4)
Miscellaneous Demands. See Outdoor Venture Corp.,
ASBCA No. 49756, 96-2 BCA ¶ 28,490 (holding that the
government’s demand for warranty work was a claim that
the contractor could immediately appeal).
3.
As a general rule, the government may not assert a counterclaim that was
not the subject of a contracting officer’s final decision. See, e.g.,
Teledyne MEC, ASBCA Nos. 35680, 35681, 89-1 BCA ¶ 21,334
(granting the appellant’s motion to dismiss a government counterclaim
that had not been the subject of a contracting officer’s final decision). But
cf. ORC, Inc., ASBCA No. 49693, 96-2 BCA ¶ 28,371 (denying the
appellant’s motion to dismiss the government’s allegation of fraud in the
inducement because it put the existence of an enforceable contract
between the parties in issue and was relevant to both the merits of the
appellant’s claims and the Board’s jurisdiction).
4.
Opportunity to Comment. The contracting officer should give the
contractor notice and an opportunity to comment before issuing a final
decision on a government claim. FAR 33.211(a); 52.233-1(d). See
Martin J. Simko Constr., Inc. v. United States, 852 F.2d 540 (Fed. Cir.
1988); B.L.I. Constr. Co., ASBCA No. 40857, 92-2 BCA ¶ 24,963 (stating
that “[w]hen the Government is considering action, the contractor should
be given an opportunity to state its position, express its views, or explain,
argue against, or contest the proposed action.
5.
Certification. Neither party is required to certify a government claim.
41 U.S.C. §§ 605(a); 605(c)(1). See Placeway Constr. Corp., 920 F.2d at
906.
3-18
VII. LACK OF STANDING.
A.
B.
Parties to the Contract.
1.
Only the parties to the contract (i.e., the prime contractor and the
government) may normally submit a claim. 41 U.S.C. § 605(a); United
States v. Johnson Controls, 713 F.2d 1541 (Fed. Cir. 1983) (dismissing
subcontractor claim); see also Detroit Broach Cutting Tools, Inc., ASBCA
No. 49277, 96-2 BCA ¶ 28,493 (holding that the subcontractor’s direct
communication with the government did not establish privity); Southwest
Marine, Inc., ASBCA No. 49617, 96-2 BCA ¶ 28,347 (rejecting the
subcontractor’s assertion that the Suits in Admiralty Act gave it the right
to appeal directly).
2.
Dissolved/Suspended Corporations. A corporate contractor must possess
valid corporate status, as determined by applicable state law, to assert a
CDA appeal. See Micro Tool Eng’g, Inc., ASBCA No. 31136, 86-1 BCA
¶ 18,680 (holding that a dissolved corporation could not sue under New
York law). A corporation filing for dissolution under Chapter 7 of the
U.S. Bankruptcy Code cannot prosecute claims. Microscience, Inc.,
ASBCA No. 46452, 98-1 BCA ¶ 29,481 (granting motion to dismiss). But
cf. Fre’nce Mfg. Co., ASBCA No. 46233, 95-2 BCA ¶ 27,802 (allowing a
“resurrected” contractor to prosecute the appeal); Certified Abatement
Technologies, Inc., ASBCA No. 39852, 99-1 BCA ¶ 30,398 (allowing
substitution of appellants following Chapter 11 sale and transfer of assets).
Others.
1.
Subcontractors. A prime contractor can sponsor claims (also called “passthrough claims) on behalf of its subcontractors. Erickson Air Crane Co. of
Washington, Inc. v. United States, 731 F.2d 810 (Fed. Cir. 1984);
McPherson Contractors, Inc., ASBCA No. 50830, 98-1 BCA ¶ 29,349
(appeal dismissed where prime stated it did not wish to pursue the appeal);
cf. Department of the Army v. Blue Fox, 119 S. Ct. 687 (1999) (holding
that a subcontractor may not sue the government directly by asserting an
equitable lien on funds held by the government).
3-19
2.
Sureties. Absent privity of contract, sureties may not file claims.
Admiralty Constr., Inc. v. Dalton, 156 F.3d 1217 (Fed. Cir. 1998) (surety
must finance contract completion or take over performance to invoke
doctrine of equitable subrogation); William A. Ransom and Robert D.
Nesen v. United States, 900 F.2d 242 (Fed. Cir. 1990) (discussing doctrine
of equitable subrogation); Brent M. Davies, ASBCA No. 51938, 00-1
BCA ¶ 30,678.
VIII. LACK OF A CONTRACTING OFFICER’S FINAL DECISION.
A.
Elements of a Valid Final Decision. 41 U.S.C. § 605(a); FAR 33.211.
1.
The contracting officer must issue a written final decision on all claims.
41 U.S.C. § 605(a); FAR 33.211(a). See Tyger Constr. Co., ASBCA No.
36100, 88-3 BCA ¶ 21,149. But cf. McDonnell Douglas Corp., ASBCA
No. 44637, 93-2 BCA ¶ 25,700 (dismissing the contractor’s appeal from a
government claim for noncompliance with CAS because the procuring
contracting officer issued the final decision instead of the cognizant
administrative contracting officer).
2.
Format. 41 U.S.C. § 605(a); FAR 33.211(a)(4). The final decision must:
3.
a.
Describe the claim or dispute;
b.
Refer to the pertinent or disputed contract terms;
c.
State the disputed and undisputed facts;
d.
State the decision and explain the contracting officer’s rationale;
e.
Advise the contractor of its appeal rights; and
f.
Demand the repayment of any indebtedness to the government.
Every final decision must inform the contractor of its appeal rights under
the CDA. 41 U.S.C. § 605(a); FAR 33.211(a)(4)(v).
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a.
The FAR specifies that the rights advisement should state:
This is a final decision of the Contracting Officer. You may appeal this
decision to the agency board of contract appeals. If you decide to appeal,
you must, within 90 days from the date you receive this decision, mail or
otherwise furnish written notice to the agency board of contract appeals
and provide a copy to the Contracting Officer from whose decision the
appeal is taken. The notice shall indicate that an appeal is intended,
reference this decision, and identify the contract by number. With regard
to appeals to the agency board of contract appeals, you may, solely at your
election, proceed under the board’s small claim procedure for claims of
$50,000 or less or its accelerated procedure for claims of $100,000 or less.
Instead of appealing to the agency board of contract appeals, you may
bring an action directly in the United States Court of Federal Claims
(except as provided in the Contract Disputes Act of 1978, 41 U.S.C. 603,
regarding Maritime Contracts) within 12 months of the date you receive
this decision.
b.
4.
B.
Failure to properly advise the contractor of its appeal rights may
prevent the “appeals clock” from starting. If the contracting
officer’s rights advisory is deficient, the contractor must
demonstrate that, but for its detrimental reliance upon the faulty
advice, its appeal would have been timely. 10 U.S.C. § 605(a).
See Decker & Co. v. West, 76 F.3d 1573 (Fed. Cir. 1996).
Specific findings of fact are not required and, if made, are not binding on
the government in any subsequent proceedings. 41 U.S.C. § 605(a); FAR
33.211. See Wilner v. United States, 24 F.3d 1397 (Fed. Cir. 1994)
(concluding that admissions favorable to the contractor do not constitute
evidence of government liability).
Timeliness. A contracting officer must issue a final decision on a claim within
certain statutory time limits. 41 U.S.C. § 605(c); FAR 33.211(c).
1.
Claims of $100,000 or less. The contracting officer must issue a final
decision within 60 days.
2.
Certified Claims that Exceed $100,000. The contracting officer must take
one of the following actions within 60 days:
a.
Issue a final decision; or
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b.
3.
Uncertified and Defectively Certified Claims Exceeding $100,000.
a.
b.
4.
Notify the contractor of a firm date when the decision will be
issued.10 See Eaton Contract Services, Inc., ASBCA Nos. 52686,
52796, 00-2 BCA ¶ 31,039 (4 and 8 months to issue final decisions
reasonable periods of time); Northrop Grumman Corp., ASBCA
No. 52263, 00-1 BCA ¶ 30,676 (intent to render final decision 90
days after completion of ADR not sufficient) Aerojet Gen. Corp.,
ASBCA No. 48136, 95-1 BCA ¶ 27,470 (concluding that the
contracting officer failed to provide a firm date where the
contracting officer made the timely issuance of a final decision
contingent upon the contractor’s cooperation in providing
additional information).
The contracting officer has no obligation to issue a final decision
on a claim that exceeds $100,000 if the claim is:
(1)
Uncertified; or
(2)
Defectively certified.
If the claim is defectively certified, the contracting officer must
notify the contractor, in writing, within 60 days of the date the
contracting officer received the claim of the reason(s) why any
attempted certification was defective.
If the contracting officer fails to issue a final decision within a reasonable
period of time, the contractor may:
a.
Request the ASBCA direct the contracting officer to issue a final
decision.11 41 U.S.C. § 606(c)(4); FAR 33.211(f).12 See
American Indus., ASBCA No. 26930-15, 82-1 BCA ¶ 15,753.
10
The contracting officer must issue the final decision within a reasonable period. What constitutes a “reasonable”
period depends on the size and complexity of the claim, the adequacy of the contractor’s supporting data, and other
relevant factors. 41 U.S.C. § 605c(3); FAR 33.211(d). See Defense Sys. Co., ASBCA No. 50534, 97-2 BCA
¶ 28,981 (holding that nine months to review a $72 million claim was reasonable).
11
The Board may not direct the contracting officer to issue a more detailed final decision than the final decision the
contracting officer already issued. See A.D. Roe Co., ASBCA No. 26078, 81-2 BCA ¶ 15,231.
12
A NAFI contractor whose contract is not subject to the CDA cannot seek this remedy. Charitable Bingo Assocs.,
Inc., d/b/a Mr. Bingo, ASBCA Nos. 52999-883, 2000 ASBCA LEXIS 185 (Nov. 17, 2000).
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b.
C.
D.
Treat the contracting officer’s failure to issue a final decision as an
appealable final decision (i.e., a “deemed denial”). 41 U.S.C.
§ 605(c)(5); FAR 33.211(g). See Aerojet Gen. Corp., ASBCA No.
48136, 95-1 BCA ¶ 27,470.
Reconsideration of a Final Decision.
1.
A contracting officer may reconsider, withdraw, or rescind a final decision
before the expiration of the appeals period. See General Dynamics Corp.,
ASBCA No. 39866, 91-2 BCA ¶ 24,017; cf. Daniels & Shanklin Constr.
Co., ASBCA No. 37102, 89-3 BCA ¶ 22,060 (rejecting the contractor’s
assertion that the contracting officer could not withdraw a final decision
granting its claim and indicating that the contracting officer has an
obligation to do so if the final decision is erroneous).
2.
The contracting officer’s rescission of a final decision, however, will not
necessarily deprive a BCA of jurisdiction because jurisdiction vests as
soon as the contractor files its appeal. See Security Servs., Inc., GSBCA
No. 11052, 92-1 BCA ¶ 24,704; cf. McDonnell Douglas Astronautics Co.,
ASBCA No. 36770, 89-3 BCA ¶ 22,253 (indicating that the Board would
sustain a contractor’s appeal if the contracting officer withdrew the final
decision after the contractor filed its appeal).
3.
A contracting officer may vacate his or her final decision unintentionally
by agreeing to meet with the contractor to discuss the matters in dispute.
See Sach Sinha and Assocs., ASBCA No. 46916, 95-1 BCA ¶ 27,499
(finding that the contracting officer “reconsidered” her final decision after
she met with the contractor as a matter of “business courtesy” and
requested the contractor to submit its proposed settlement alternatives in
writing); Royal Int’l Builders Co., ASBCA No. 42637, 92-1 BCA ¶
24,684 (holding that the contracting officer “destroyed the finality of his
initial decision” by agreeing to meet with the contractor, even though the
meeting was cancelled and the contracting officer subsequently sent the
contractor a letter stating his intent to stand by his original decision).
Delivery of the Final Decision.
1.
The contracting officer should use certified mail, return
receipt requested; however, hand delivery and facsimile (FAX)
transmission are also acceptable means of delivery.
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2.
E.
The contracting officer should preserve all evidence of the date the
contractor received the contracting officer’s final decision. See Omni
Abstract, Inc., ENG BCA No. 6254, 96-2 BCA ¶ 28,367 (relying on a
government attorney’s affidavit to determine when the 90-day appeals
period started).
a.
When hand delivering the final decision, the contracting officer
should require the contractor to sign for the document.
b.
When using a FAX transmission, the contracting officer should
confirm receipt and memorialize the confirmation in a written
memorandum. See Mid-Eastern Indus., Inc., ASBCA No. 51287,
98-2 BCA ¶ 29,907 (concluding that the government established a
prima facie case by presenting evidence to show that it
successfully transmitted the final decision to the contractor’s FAX
number); see also Public Service Cellular, Inc., ASBCA No.
52489, 00-1 BCA ¶ 30,832 (transmission report not sufficient
evidence of receipt).
Independent Act of a Contracting Officer.
1.
The final decision must be that of the contracting officer. Compare PLB
Grain Storage Corp. v. Glickman, 113 F.3d 1257 (Fed. Cir. 1997) (unpub.)
(holding that a termination was proper, even though a committee of
officials directed it); with Climatic Rainwear Co. v. United States, 88 F.
Supp. 415 (Ct. Cl. 1950) (holding that a termination was improper because
the contracting officer’s attorney prepared the termination findings
without the contracting officer’s participation).
2.
The contracting officer shall seek assistance from engineers, attorneys,
auditors, and other advisors, as appropriate. See FAR 1.602-2 (requiring
the contracting officer to request and consider the advice of “specialists,”
as appropriate); FAR 33.211(a)(2) (requiring the contracting officer to
seek assistance from “legal and other advisors”); Prism Constr. Co.,
ASBCA No. 44682, 97-1 BCA ¶ 28,909 (indicating that the contracting
officer is not required to independently investigate the facts of a claim
before issuing final decision.
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IX.
FAILURE TO APPEAL IN A TIMELY MANNER.
A.
B.
Filing Methods. ASBCA Rule 1(a). A contractor’s notice of appeal shall be
mailed or otherwise furnished to the Board and contracting officer within 90 days
from date of receipt of the final decision. Cosmic Constr. Co. v. United States,
697 F.2d 1389 (Fed. Cir. 1982) (90 day filing requirement is statutory and cannot
be waived by the Board); Rex Sys, Inc., ASBCA No. 50456, 98-2 BCA ¶ 29,956
(refusing to dismiss a contractor’s appeal simply because the contractor failed to
send a copy of the NOA to the contracting officer); Duane A. Carlson, ASBCA
No. 48462, 95-2 BCA ¶ 27,880.
1.
Physically delivering a written notice of appeal (NOA) to the ASBCA or
the contracting officer.
2.
Mailing a written NOA via the U.S. Postal Service. See Thompson
Aerospace, Inc., ASBCA Nos. 51548, 51904, 99-1 BCA ¶ 30,232 (NOA
mailed to KO timely filed); North Coast Remfg., Inc., ASBCA No. 38599,
89-3 BCA ¶ 22,232 ( NOA delivered by Federal Express courier service
not accorded same status as U.S. mail service and was therefore untimely).
Contents. An adequate notice of appeal (NOA) must:
1.
Be in writing. See Lows Enter., ASBCA No. 51585, 00-1 BCA ¶ 30,622
(holding that verbal notice is insufficient).
2.
Express dissatisfaction with the contracting officer’s decision;
3.
Manifest an intent to appeal the decision to a higher authority, see e.g.,
McNamara-Lunz Vans & Warehouse, Inc., ASBCA No. 38057, 89-2 BCA
¶ 21,636 (concluding that a letter stating that “we will appeal your
decision through the various avenues open to us” adequately expressed the
contractor’s intent to appeal); and
4.
Be timely. Thompson Aerospace, Inc., ASBCA Nos. 51548, 51904, 99-1
BCA ¶ 30,232.
a.
A contractor must file an appeal with a BCA within 90 days of the
date it received the contracting officer’s final decision. 41 U.S.C.
§ 606.
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b.
C.
X.
In computing the time taken to appeal (See ASBCA Rule 33(b)):
(1)
Exclude the day the contractor received the contracting
officer’s final decision; and
(2)
Count the day the contractor mailed (evidenced by
postmark by U.S. Postal Service) the NOA or that the
Board received the NOA.
(3)
If the 90th day is a Saturday, Sunday, or legal holiday, the
appeals period shall run to the end of the next business day.
The Board liberally construes appeal notices. See Thompson Aerospace, Inc.,
ASBCA Nos. 51548, 51904, 99-1 BCA ¶ 30,232 (Board jurisdiction where timely
mailing of NOA to KO, despite Board rejecting its NOA mailing).
FRAUDULENT CLAIMS.
A.
CDA Provisions Regarding Fraudulent Claims.
1.
Jurisdiction. 41 U.S.C. § 605(a); 4 C.F.R. § 101.3(a). The CDA does not
apply to any “claim or dispute for penalties or forfeitures prescribed by
statute or regulation which another Federal agency is specifically
authorized to administer, settle, or determine,” and the Department of
Justice is specifically authorized to settle fraud claims. See FAR
33.210(a) (limiting a contracting officer’s authority to settle such claims).
2.
Settlement Authority. 41 U.S.C. § 605(a); FAR 33.210(b). The CDA
specifically prohibits agency heads from settling, compromising, paying,
or otherwise adjusting any claim involving fraud.
3.
Penalties. 41 U.S.C. § 604. If a contractor is unable to support any part of
its claim because of misrepresentation or fraud, the contractor must pay
the government:
a.
An amount equal to the unsupported part of its claim; and
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b.
B.
XI.
All costs to the government attributable to the cost of reviewing
the unsupported part of its claim. See UMC Elecs. Co. v. United
States, 45 Fed. Cl. 507 (1999) (contracting officer, DCAA, and
DOJ costs of reviewing the fraudulent part of the contractor’s
claim awarded to the government).
Fraudulent Claims and the BCAs.
1.
The government may assert a fraud conviction as either an affirmative
defense, or a justification for a default termination. See Michael C.
Avino, Inc., ASBCA No. 31752, 89-3 BCA ¶ 22,156.
2.
BCAs, however, will not suspend or dismiss appeals based on a mere
allegation of fraud. See Meisel Rohrbau, ASBCA No. 35566, 90-1 BCA
¶ 22,424 (concluding that a CID report alleging fraud was insufficient to
deprive the Board of jurisdiction).
3.
BCAs will retain jurisdiction over appeals involving allegations of fraud
when the dispute may be resolved without a finding of fraud. See Systems
Eng’g Assocs., ASBCA No. 37536, 90-2 BCA ¶ 22,900 (characterizing
the appeal as a “negligent estimate” case rather than a fraud case); General
Constr. and Dev. Co., ASBCA No. 36138, 88-3 BCA ¶ 20,874
(questioning only whether certain costs were properly incurred).
CONCLUSION.
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APPENDIX A
The Disputes Process
Contractor or
Government Claim
Contracting Officer’s
Final Decision
Choose One
12 Months
No Appeal
90 Days
COFC
BCA
60 Days
120 Days
CAFC
Writ of Certiorari
U.S. Supreme Court
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APPENDIX B
DISPUTES CLAUSES
52.233-1 Disputes.
As prescribed in 33.215, insert the following clause:
Disputes (Dec 1998)
(a) This contract is subject to the Contract Disputes Act of 1978, as amended (41 U.S.C. 601-613).
(b) Except as provided in the Act, all disputes arising under or relating to this contract shall be
resolved under this clause.
(c) “Claim,” as used in this clause, means 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 this contract. A claim
arising under a contract, unlike a claim relating to that contract, is a claim that can be resolved under a
contract clause that provides for the relief sought by the claimant. However, a written demand or
written assertion by the Contractor seeking the payment of money exceeding $100,000 is not a claim
under the Act until certified as required by subparagraph (d)(2) of this clause. A voucher, invoice, or
other routine request for payment that is not in dispute when submitted is not a claim under the Act.
The submission may be converted to a claim under the Act, by complying with the submission and
certification requirements of this clause, if it is disputed either as to liability or amount or is not acted
upon in a reasonable time.
(d)(1) A claim by the Contractor shall be made in writing and, unless otherwise stated in this contract,
submitted within 6 years after accrual of the claim to the Contracting Officer for a written decision. A
claim by the Government against the Contractor shall be subject to a written decision by the
Contracting Officer.
(2)(i) Contractors shall provide the certification specified in subparagraph (d)(2)(iii) of this clause
when submitting any claim exceeding $100,000.
(ii) The certification requirement does not apply to issues in controversy that have not been submitted
as all or part of a claim.
(iii) The certification shall state as follows: “I certify that the claim is made in good faith; that the
supporting data are accurate and complete to the best of my knowledge and belief; that the amount
requested accurately reflects the contract adjustment for which the Contractor believes the Government
is liable; and that I am duly authorized to certify the claim on behalf of the Contractor.”
(3) The certification may be executed by any person duly authorized to bind the Contractor with
respect to the claim.
(e) For Contractor claims of $100,000 or less, the Contracting Officer must, if requested in writing by
3-29
the Contractor, render a decision within 60 days of the request. For Contractor-certified claims over
$100,000, the Contracting Officer must, within 60 days, decide the claim or notify the Contractor of the
date by which the decision will be made.
(f) The Contracting Officer's decision shall be final unless the Contractor appeals or files a suit as
provided in the Act.
(g) If the claim by the Contractor is submitted to the Contracting Officer or a claim by the Government
is presented to the Contractor, the parties, by mutual consent, may agree to use alternative dispute
resolution (ADR). If the Contractor refuses an offer for ADR, the Contractor shall inform the
Contracting Officer, in writing, of the Contractor's specific reasons for rejecting the offer.
(h) The Government shall pay interest on the amount found due and unpaid from (1) the date that the
Contracting Officer receives the claim (certified, if required); or (2) the date that payment otherwise
would be due, if that date is later, until the date of payment. With regard to claims having defective
certifications, as defined in (FAR) 48 CFR 33.201, interest shall be paid from the date that the
Contracting Officer initially receives the claim. Simple interest on claims shall be paid at the rate, fixed
by the Secretary of the Treasury as provided in the Act, which is applicable to the period during which
the Contracting Officer receives the claim and then at the rate applicable for each 6-month period as
fixed by the Treasury Secretary during the pendency of the claim.
(i) The Contractor shall proceed diligently with performance of this contract, pending final resolution
of any request for relief, claim, appeal, or action arising under the contract, and comply with any
decision of the Contracting Officer.
(End of clause)
Alternate I (DEC 1991). If it is determined under agency procedures, that continued performance is
necessary pending resolution of any claim arising under or relating to the contract, substitute the
following paragraph (i) for the paragraph (i) of the basic clause:
(i) The Contractor shall proceed diligently with performance of this contract, pending final resolution
of any request for relief, claim, appeal, or action arising under or relating to the contract, and comply
with any decision of the Contracting Officer.
(End of clause)
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3-31
CHAPTER 4
PLEADINGS & MOTIONS
I.
INTRODUCTION.
II.
NOTICE OF APPEAL.
A.
How to Appeal to the ASBCA. ASBCA Rules 1 and 2.
1.
A notice of appeal must be in writing.
2.
An appellant must mail or otherwise furnish its notice of appeal to the
Board within 90 days following receipt of a contracting officer’s final
decision.
3.
Appellant should furnish a copy of the notice of appeal to the contracting
officer.
4.
Contents of the Notice of Appeal. ASBCA Rule 2.
a.
Contract number.
b.
Agency involved in the dispute.
c.
The decision from which the appeal is taken.
MAJ Jon Guden
49th Graduate Course
Disputes & Remedies
January 2001
5.
B.
d.
The amount in dispute, if known.
e.
Signed personally by appellant, or appellant's duly authorized
representative or attorney.
Complaint. The complaint referred to in Rule 6 may be filed with the
notice of appeal, or the appellant may designate the notice of appeal as the
complaint. ASBCA Rule 2.
Docketing of the Appeal.
1.
The ASBCA Recorder dockets the appeal and assigns a docket number.
2.
The Recorder furnishes a copy of the appeal to the agency’s designated
Chief Trial Attorney (CTA), who informs the contracting officer and the
local attorney. The Recorder also requests information regarding the
appeal. The CTA's docket section handles these tasks.
3.
Time limits commence from the date the agency receives notice of the
appeal.
C.
Assignment of the Government's Trial Attorney.
D.
Representation of the parties. ASBCA Rules 26 and 27.
1.
Appellant.
a.
Individual. May appear before the board in person, or be
represented by an attorney at law duly licensed in any state,
commonwealth, territory, the District of Columbia, or in a foreign
country (hereafter “attorney”).
b.
Corporation. May be represented by one of its officers or an
attorney.
4-2
c.
III.
Partnership or joint venture. May be represented by one of its
members or an attorney. See Marine Instrument Company,
ASBCA Nos. 41370, 46295, 97-2 BCA ¶ 29,082 (son’s proof of
partnership under Arizona law supported jurisdiction).
2.
The Government. Attorneys represent the Government before the
ASBCA.
3.
Notice of appearance. Counsel representing either side must file a written
notice of appearance with the Board. See Dalton v. Gaffny Corp., 1997
U.S. App. LEXIS 2387 (Fed. Cir. 1997)(CAFC reverses ASBCA award of
attorney's fees to licensed attorney who represented Gaffny as
officer/attorney pro se).
4.
Format.
a.
Use the letter format of AR 25-50 (see CAD Toolbox), modified to
include a reference to the ASBCA number, appeal name, and
contract number.
b.
The trial attorney should ask the board to communicate directly
with him.
c.
The trial attorney should provide phone numbers and an alternate
point of contract, such as the team chief.
PLEADINGS.
A.
Generally.
1.
“The main purpose of pleadings under our rules is to frame and join the
issues.” RCA, ASBCA No. 33866, 87-2 BCA ¶ 19,797.
2.
“In our practice, pleadings are not straightjackets, irrevocably binding the
parties to matters alleged therein.” RCA, ASBCA No. 33866, 87-2 BCA
¶ 19,797 (stating that pleading at the ASBCA is not as formal as that
observed in District Courts).
4-3
B.
C.
3.
Matters extraneous to the scope of the appeal, which is circumscribed by
the claim, the contracting officer’s decision thereon, and the appeal
therefrom, are outside the purview of the appeal. Honeywell, Inc.,
ASBCA No. 47103, 95-2 BCA ¶ 27,835.
4.
Counterclaims are not authorized. Phoenix Petroleum Co., ASBCA Nos.
42763, et. seq., 94-1 BCA ¶ 26,461.
5.
A party intending to raise an issue concerning the law of a foreign country
shall give notice in the pleadings or provide other reasonable notice.
ASBCA Rule 6(c).
Complaint. ASBCA Rule 6(a).
1.
The appellant must file a complaint within 30 days of notice of the
docketing of the appeal. ASBCA Rule 6(a). This time frame may be
shortened for the small claims ("expedited") procedure under Rule
12.2(b), or the accelerated procedure of Rule 12.3(a).
2.
The Board may, in limited circumstances, require the Government to
submit a complaint. See e.g. Worldwide Tankers, ASBCA No. 20903,
79-1 BCA ¶ 13,619.
3.
Appellant’s complaint should set forth simple, concise, and direct
statements of each of its claims. It should state the basis of the appeal,
refer to relevant contract provisions, and state the dollar amount claimed.
There is no set format.
4.
The appeal letter, if sufficiently detailed, may substitute for the complaint.
This is common in pro se appeals.
Government Answer. ASBCA Rule 6(b).
1.
The answer shall set forth simple, concise, and direct statements of the
government’s defenses to each claim asserted by the appellant, including
affirmative defenses (e.g., accord and satisfaction, laches, estoppel, fraud,
waiver, final payment, res judicata, collateral estoppel).
4-4
2.
D.
Purpose of an answer.
a.
Define areas in dispute.
b.
Set forth version of facts.
c.
State affirmative defenses, for which the government will have the
burden of proof.
3.
The government must answer the complaint within 30 days of receipt of
the appellant’s complaint from the board. If the board designates the
notice of appeal as the complaint, the government’s answer is due within
30 days of receipt of the designation. ASBCA Rule 6(b). This time frame
may be shortened for the small claims ("expedited") procedure under Rule
12.2(b), or the accelerated procedure of Rule 12.3(a).
4.
The answer is NOT limited to the rationale set forth and the positions
taken in the contracting officer’s final decision. The ASBCA reviews a
contracting officer’s final decision de novo. Wilner v. United States, 24
F.3d 1397 (Fed. Cir. 1994).
Answer Format.
1.
The typical Army answer is divided into two parts: the responsive
pleadings (Part I) and the affirmative pleadings (Part II). A Part III is
often used to assert affirmative defenses.
a.
Part I. Plead responsively to each allegation, sentence by sentence,
in numbered paragraphs corresponding to the numbered
paragraphs of the complaint. For unnumbered complaints, attach
an annotated complaint providing numbers for the allegations.
b.
Part II. This is the Government's version of the facts.
(1)
Part II is optional and may be omitted when Part I fully
develops the issues in dispute or when affirmative
allegations may disclose significant weaknesses in the
government’s case.
4-5
c.
2.
(2)
Creation of a Part II forces the trial attorney to understand
case early.
(3)
The trial attorney's ability to draft a good Part II is
dependent upon good field support (i.e. Rule 4 file, TALF,
and draft answer).
(4)
Part II serves as the basis for the brief's proposed findings
of fact. You should have a document or testimony that
supports Part II statements, and cite to it if possible. It is
not necessary to attach or supplement the R4 file at this
stage. However, make sure to introduce the evidence
before the record is closed.
(5)
Generally, assert the facts in chronological order and
continue numbering the paragraphs in sequence from the
end of Part I.
Part III. Affirmative Defenses.
(1)
Federal Rule of Civil Procedure 8(c) lists many of the
possible government affirmative defenses.
(2)
Affirmative defenses must be timely pled or generally will
be waived. See Varo, Inc., ASBCA Nos. 47945, 47946,
98-1 BCA ¶ 29,484 (waiver of untimely T4C settlement
proposal defense).
(3)
Failure to raise an affirmative defense in the pleadings may
not be fatal if the party will not be surprised or unfairly
prejudiced. Caldera v. Northrop Worldwide Aircraft
Services, Inc., 192 F.3d 962 (Fed. Cir. 1999) (collateral
estoppel not waived).
Stylistic conventions.
4-6
3.
a.
Headings. Identify the contractor, the contract, and the docket
number. The ASBCA has a standard format for correspondence
and pleadings.
b.
Parties. The contractor is the "appellant" and the government is
the “respondent.” To create a more readable answer, you may
instead use the contractor’s name, e.g. "Boeing", and
“Government” or “Army”.
c.
Openings. Answers generally open with an introductory paragraph
explaining the style of the answer adopted.
d.
Acronyms. Should be defined when used. Consider providing a
separate list of acronyms to aid the judge. Parties often use
acronyms for organizations, corporations, or government
personnel.
e.
Prayer for relief. Answers typically close with a request for a
specific result, normally denial of the appeal in its entirety.
f.
Signature.
(1)
The Chief Trial Attorney and the Trial Attorney sign
pleadings in Army cases.
(2)
Although the ASBCA has no provision concerning the
signing of pleadings, motions, or other papers, Fed. R. Civ.
P. 11 states that a signature certifies that the signer has read
and believes the document is well grounded in fact and
warranted by existing law.
Standard responses.
a.
Don't be afraid to use responses that are to the point, rather than
longer, more recognized "legalistic" responses.
4-7
b.
4.
E.
Watch out for “specific writing is the best evidence of . . .” See
RCA, ASBCA No. 33866, 87-2 BCA ¶ 19,797 (“[w]e share
appellant’s misgivings about the suitability of [such] responses).
General Denials.
a.
The board may enter a general denial if the government fails to file
its answer within 30 days.
b.
The preferred approach is for the government attorney to seek a
time extension (enlargement of time) from the board.
Amendment of Pleadings. ASBCA Rule 7.
1.
The Board may on its own or upon application of a party order a party to
make a more definite statement of the complaint or answer.
a.
ASBCA Rule 7 combines the features of Fed. R. Civ. P. 12(e) and
15.
b.
A Motion for a more definite statement under Rule 12(e) is
generally limited to such definiteness to allow for a responsive
pleading.
c.
A Rule 7 order for a more definite statement serves the broader
purpose of defining and clarifying the issues and assuring effective
joinder of the issues for the benefit of the parties and the Board.
Honeywell, Inc., ASBCA No. 47103, 95-2 BCA ¶ 27,835.
2.
The Board may, in its discretion, and within the proper scope of the
appeal, permit either party to amend its pleading upon conditions fair to
both parties.
3.
Issues within the proper scope of the appeal that are tried by express or
implied consent of the parties or by permission of the Board, but are not
raised by the pleadings, shall be treated as if raised by the pleadings.
4-8
IV.
4.
Amendment is not necessary to conform the pleadings to the proof of the
case.
5.
If evidence is objected to at a hearing on grounds that it was not raised by
the pleadings, the Board may grant the objecting party a continuance if
necessary to meet the introduced evidence.
MOTIONS.
A.
ASBCA Rule 5 refers to jurisdiction motions and "other appropriate motions."
B.
Format. There is no required ASBCA format. Generally, motions should include
a heading that clearly identifies the motion, an introduction, proposed findings of
fact, legal argument, and a conclusion.
C.
Hearings. A hearing on the motion shall be afforded on application of either
party.
D.
Jurisdictional Motions. The Board may raise this issue on its own initiative.
1.
2.
Parties must file motions to dismiss for lack of jurisdiction promptly.
ASBCA Rule 5(a).
a.
Do not delay filing jurisdictional motions because delay wastes
scarce judicial and agency resources.
b.
If the motion is filed late, the Board may require the parties to brief
the jurisdictional issue in their post-hearing briefs.
Bases for jurisdictional motions include:
a.
Timeliness of the appeal. Cosmic Constr. Co. v. United States,
697 F.2d 1389 (Fed. Cir. 1982) (90 day filing requirement is
statutory and cannot be waived by the Board).
4-9
E.
F.
b.
Failure to submit a proper claim. See Chapter 3 of the Deskbook,
ASBCA Jurisdiction.
c.
Lack of a final decision. However, an appeal is properly before
the Board if the government has failed to timely render a final
decision, i.e., there is a "deemed denial."
d.
Subject Matter Jurisdiction.
(1)
There must be an express or implied-in-fact contract.
Henry P. Duncan, ASBCA No. 47,565, 95-1 BCA ¶
27,588.
(2)
Remedies of injunctive relief or specific performance are
not available at the ASBCA. Dixon Pest Controls, ASBCA
No. 41042, 91-1 BCA ¶ 23,640.
Motions to Strike. Parties have moved to strike:
1.
Pleadings concerning improperly certified claims. Sarbo, Inc., ASBCA
No. 34292, 87-3 BCA ¶ 20,176.
2.
Portions of a brief concerning issues beyond the scope of the appeal.
Talley Defense Systems, Inc., ASBCA No. 39878, 93-1 BCA ¶ 25,521.
3.
Documents submitted with a filing, such as an affidavit. Rockwell
International Corp., ASBCA No. 41095, 95-2 BCA ¶ 27,897; Stemaco
Products, Inc., ASBCA No. 45469, 94-3 BCA ¶ 27,060.
Motions for Summary Judgment.
1.
When a motion presents a non-jurisdictional, affirmative defense to a
claim and relies on material other than the pleadings, it is treated as a
motion for summary judgment. The Swanson Group, Inc., ASBCA No.
52109, 2000 ASBCA LEXIS 168.
4-10
2.
The ASBCA considers motions for summary judgment under ASBCA
Rule 5(b). The Board applies the standards set forth in Federal Rule of
Civil Procedure 56(e).
3.
Timing of summary judgment motions. Parties must file summary
judgment motions early in the proceedings, as soon as all of the facts
supporting the motion are known. Summary judgment motions are
intended to eliminate the need for intensive case preparation. Blake
Constr. Co. Inc., ASBCA No. 36307, 90-2 BCA ¶ 22,889 (motion denied
because facts relied on were known at time of COFD, and motion was not
filed until after case was set for hearing and parties had begun
preparation).
4.
A board will grant a motion for summary judgment when the moving
party can establish that there is no genuine issue as to any material fact
and that the moving party is entitled to judgment as a matter of law. The
Swanson Group, Inc., ASBCA No. 52109, 2000 ASBCA LEXIS 168.
5.
G.
a.
A fact is "material" if it is one which will make a difference in the
case. Cochrane Construction Co., ASBCA No. 39434, 90-2 BCA
¶ 22,684.
b.
If any material facts are in dispute, the board will deny a motion
for summary judgment. CBI Na-Con, Inc., ASBCA No. 37972,
90-1 BCA ¶ 22,447.
In deciding a motion for summary judgment, the board will construe all
evidence and draw all inferences in favor on the non-moving party.
TRW Inc., ASBCA Nos. 44068, 44473, 97-1 BCA ¶ 28,627 (motion
denied because construction of record in favor of government showed
material fact questions remained).
Motions to Dismiss for Failure to Prosecute.
1.
Where a party shows a lack of “meaningful effort” to continue the
prosecution of an appeal, the Board may dismiss an appeal for failure to
prosecute. ASBCA Rule 31; Scorpio Piping Company, ASBCA No.
34073, 89-2 BCA ¶ 21,813.
4-11
H.
I.
2.
An order to show cause is a prerequisite to an order dismissing an appeal.
RADALAB, Inc., ASBCA No. 44530, 95-1 BCA ¶ 27,566.
3.
The board will dismiss an appeal when an appellant fails to respond to the
Board’s Show Cause Order. See Intelligence Systems Service-I.S.S., Inc.,
ASBCA Nos. 51017, 51019, 1999 ASBCA LEXIS 29.
Motions to Suspend the Proceedings. ASBCA Rule 30
1.
The board will suspend the proceedings for a limited time by agreement of
the parties, i.e., when the parties wish to enter settlement discussions.
2.
The board may suspend the proceedings for good cause at the request of
one of the parties.
3.
Fraud allegations are asserted frequently as a basis to suspend the
proceedings. See T. Iida Contracting, Ltd., ASBCA No. 51865, 00-1
BCA ¶ 30,626; Triax Co. Inc., ASBCA No. 33899, 88-1 BCA ¶ 20,830
(the government must show that there is a real possibility that fraud exists
or that the fraud adversely affected the board's ability to ascertain the
facts.)
Discovery Motions.
1.
Motion to Compel. Use when opposition fails to timely respond to
discovery.
2.
Motion for Sanctions. The Board has inherent power to impose sanctions
for discovery abuses and has barred introduction of evidence in extreme
circumstances where the circumstances warrant. See ASBCA Rule 35;
Hughes Aircraft Co., ASBCA No. 46321, 97-1 BCA ¶ 28,972. Parties
have requested the following sanctions:
a.
Issue and evidence preclusion. Hughes Aircraft Co., supra.
4-12
b.
V.
VI.
Attorney's fees. Turbomach, ASBCA No. 30799, 87-2 BCA ¶
19,756 (ASBCA has no jurisdiction to award attorney's fees as a
sanction against the government). Attorney's fees under the Equal
Access to Justice Act are not "sanctions." Industrial Steel, Inc.,
ASBCA Nos. 49632, 49633, 97-2 BCA ¶ 29,177.
GRADED EXERCISE.
A.
Answers and jurisdictional motions are due at 0800 on 20 February
2001.
B.
The answer and motion should be prepared as separate documents. Though there
is no page requirement for this assignment, a sufficient submission should total
10-15 pages.
1.
The answer must include a Part I and Part II.
2.
The motion should address all jurisdictional issues for which you believe
the government can obtain relief.
C.
Use formats provided on your Contract Appeals Division CD.
D.
All student work must be original. Students may discuss the issues in the
assignments. Students may not collaborate on the actual writing of an assignment
or review each other’s written work.
E.
Pose any questions concerning this exercise to either MAJ Guden or MAJ
Siemietkowski.
CONCLUSION.
4-13
PROFESSIONAL RESPONSIBILITY IN CONTRACT LITIGATION:
SELECTED ISSUES AND PRACTICAL PROBLEMS
TABLE OF CONTENTS .......................................
19-1
TABLE OF AUTHORITIES ....................................
19-2
I.
INTRODUCTION .......................................
19-6
A.
Contract Litigation Focus .....................
19-6
B.
The Alternative Dispute Resolution Angle ......
19-6
C.
Applicable Rules and Caveat ...................
19-7
PROFESSIONAL RESPONSIBILITY ISSUES .................
19-9
A.
Who is the Client? ............................
19-9
B.
Advice ........................................
19-9
C.
Meritorious Claims and Contentions ............
19-10
D.
Candor Towards the Tribunal ...................
19-10
E.
Statements to Others ..........................
19-14
F.
Fairness to Opposing Party and Counsel ........
19-15
G.
Impartiality and Decorum of the Tribunal ......
19-17
H.
Lawyer as a Witness ...........................
19-20
I.
Dealings with Represented Persons .............
19-22
II.
III. SUMMARY AND CONCLUSION .............................. 19-23
PRACTICAL PROBLEMS .......................................
ANN
LTC Richard B. O’Keeffe, Jr.
2000 Government Contract Law Symposium
4-8 December 2000
TABLE OF AUTHORITIES
UNITED STATES COURTS OF APPEALS
Amstar Corp. v. Envirotech Corp.,
730 F.2d 1476, 1486 (Fed. Cir. 1984) ...................
19-12
Barnhill v. United States,
11 F.3d 1360 (7th. Cir. 1993) ........................ 19-14, 17
Genentech v. United States Int’l Trade Commission,
122 F.3d 1409 (Fed. Cir. 1997) .........................
19-14
McCandless v. Great Atlantic and Pacific Tea Company,
697 F.2d 198, (7th Cir. 1983) ..........................
19-9
Westmoreland v. CBS, Inc.,
770 F.2d 1168, (D.C. Cir. 1985) ........................
19-10
UNITED STATES COURT OF FEDERAL CLAIMS AND PREDECESSOR COURTS
Estrada v. Sec’y of Health and Human Services,
29 Fed. Cl. 78, 1993 U.S. Claims LEXIS 123 (1993) ......
19-14
Gulf & Western Industries, Inc. v. United States,
230 Ct. Cl. 1, 671 F.2d 1322; 1982 U.S. Ct. Cl.
LEXIS 70, 29 Cont. Cas. Fed. (CCH) ¶82,274 ........... 19-12, 20
In the Matter of Judith Ward Mattox,
35 Fed. Cl. 425, 429, 1996 U.S. Claims LEXIS 70 ........
19-8
Syscon Corp. v. United States,
10 Cl. Ct. 200, 1986 U.S. Cl. Ct. LEXIS 851, (1986) ....
19-21
STATE COURTS
Colorado v. Holmes,
921 P.2d 44; 1996 Colo. LEXIS 252; 20 BTR 113 (1996) ...
19-16
BOARDS OF CONTRACT APPEALS
Application Under the Equal Access to Justice Act,
Decker & Company, GmbH, ASBCA No. 41089, Apr. 23,
1998, 98-2 BCA ¶29,740 .................................
19-2
19-12
Application under the Equal Access to Justice Act
of Gaffny Corp., ASBCA Nos. 39740, 46025, 46027,
46028, 46029, Oct. 25, 1995, 96-1 BCA ¶28,060 ......... 19-7, 21
B.G.W. Limited Partnership,
GSBCA No. 10501, Aug. 28, 1991, 91-3 BCA ¶24,336,
1991 GSBCA LEXIS 401 .................................. 19-8, 21
Charles G. Williams Construction, Inc.,
ASBCA No. 33766, Feb. 27, 1989, 89-2 BCA ¶21,733,
1989 ASBCA LEXIS 86 ....................................
19-15
Cleveland Telecommunications Corp.,
GSBCA Nos. 12586-P, 12599-P, 12629-P, Oct. 18, 1993,
94-1 BCA ¶26,494, 1993 GSBCA 514 .......................
19-8
Ford Aerospace & Communications Corp.,
DOTBCA Nos. 1559, 1606, Feb. 5, 1986, 86-1 BCA ¶18,718,
1986 DOT BCA LEXIS 105 .................................
19-22
Gary Aircraft Corp.,
ASBCA No. 21731, Dec. 5, 1989, 91-3 BCA ¶24,122,
1989 ASBCA LEXIS 541 ...................................
19-17
Giuliani Associates, Inc.,
ASBCA No. 51672, Feb. 14, 2000 .........................
19-7
Hospital Healthcare Systems, Inc. v. Department of
the Treasury, GSBCA No. 14442-TD, Jun. 29, 1998,
1998 GSBCA LEXIS 231 ...................................
19-8
Inslaw, Inc.,
Docket Nos. 1609, 1673, 1775, 1828, Oct. 8, 1992,
1992 DOT BCA LEXIS 21; 93-1 BCA ¶25,554 ................
19-10
Integrated Systems Analysts, Inc.,
GSBCA Nos. 10750-P, 10757-P, Sep. 12, 1990, 91-1
BCA ¶ 23,330, 1990 GSBCA LEXIS 448 .....................
19-22
Int’l Technology Corp.,
1989 GSBCA LEXIS 476; Oct. 16, 1989, 90-1 BCA ¶22,341 ..
19-10
Kaiser Aerospace & Electronics Corp.,
ASBCA No. 32098, Feb. 12, 1990, 90-2 BCA ¶22,695 .......
19-10
19-3
Louis Gordon (Ariana),
ASBCA Nos. 26652 and 26724, Jun. 6, 1983,
83-2 BCA P16,616, 1983 ASBCA LEXIS 360 .................
19-18
McDaniel Brothers Construction Co.,
GSBCA Nos. 6973-R, 7283-R, Sep. 21, 1984,
84-3 BCA ¶17,683, 1984 GSBCA LEXIS 208 .................
19-6
Melville Energy Systems, Inc.,
ASBCA No. 33890, Jul. 1, 1987, 87-3 BCA ¶19,992,
1987 ASBCA LEXIS 739 ...................................
19-16
Neal R. Gross and Company, Inc.,
ASBCA Nos. 28776 and 29982, Aug. 23, 1985, 84-3 BCA
¶17,596, 1984 ASBCA LEXIS 455 ..........................
19-8
Systems Management American Corp.,
GSBCA No. 9733-P, Jun. 2, 1989, 1989 GSBCA LEXIS 227 ...
19-9
TDC Management Corp.,
DOTBCA No. 1802, Jul. 11, 1990, 90-3 BCA ¶ 23,099,
1990 DOT BCA 26 ........................................
19-22
The Swanson Group, Inc.,
ASBCA No. 47675, Oct. 11, 1995, 96-1 BCA ¶27,972,
1995 ASBCA LEXIS 282 ...................................
19-22
United Technologies Corp.,
ASBCA No. 25501, Jun. 26, 1986, 86-3 BCA ¶19,171,
1986 ASBCA LEXIS 675 ...................................
19-18
W.B. & A., Inc.,
ASBCA No. 32524, Feb. 27, 1989, 89-2 BCA ¶21,736,
1989 ASBCA LEXIS 89 ....................................
19-14
DECISIONS OF THE COMPTROLLER GENERAL
Information Processing Services, Inc.,
B-282220, Jun. 10, 1999, 99-1 CPD ¶109 .................
19-12
Memorex Corp.,
B-213430.2, Oct. 23, 1984, 84-2 CPD ¶432, 1984 U.S.
Comp. Gen. LEXIS 350 ...................................
19-19
REGULATIONS, ARTICLES, MISCELLANEOUS MATERIALS
41 U.S.C. §607(b)(1) ...................................
19-4
19-11
ABA Formal Opinion 91-359, CONTACT WITH FORMER EMPLOYEE
OF ADVERSE CORPORATE PARTY, March 22, 1991 .............
19-22
Alexis De Tocqueville, Democracy in America,
The Henry Reeves Text, Part II, First Book at 275-6,
(Phillips Bradley ed., A.A. Knopf, 1945) (1840) .......
19-6
Bid Protests at GAO: A Descriptive Guide,
GAO/OGC-96-24 (6th ed. 1996) ..........................
19-19
Black’s Law Dictionary (5th ed. 1979) .................
19-11
Carrie Menkel-Meadow, Ethics in ADR Representation:
A Road Map of Critical Issues, Dispute Resolution
Magazine, Winter 1997 .................................
19-21
JAGINST 5803.1A, July 13, 1992, Subject:
Professional Conduct of Attorneys Practicing Under
the Supervision of The Judge Advocate General;
republished at 32 C.F.R. Part 776 .....................
19-7
Professional Responsibility Note, Disclosing Adverse
Case Law From Noncontrolling Jurisdictions, 1996 Army
Law. 56 (1996) ........................................
19-13
Rule 204(c)(1)Rules of procedure of the General
Services Board of Contract Appeals ....................
19-19
Rule 34, Rules of the Armed Services Board of
Contract Appeals, July 1, 1997 ........................
19-18
19-5
PROFESSIONAL RESPONSIBILITY IN CONTRACT LITIGATION:
SELECTED ISSUES AND PRACTICAL PROBLEMS
[P]eople in democratic states do not mistrust
the members of the legal profession, because it
is known that they are interested to serve the
popular cause; and the people listen to them
without irritation, because they do not
attribute to them any sinister designs.
Alexis De Tocqueville, Democracy in America
The Henry Reeve Text, Part II, First Book at 275-6
(Phillips Bradley ed., Alfred A. Knopf, 1945)(1840)
* * * * *
We admire appellant's counsel for his candor.
This is the sort of conduct that is required,
... and it is all the more remarkable
because it is so seldom displayed.
McDaniel Brothers Construction Co.
GSBCA Nos. 6973-R, 7283-R
1984 GSBCA LEXIS 208, *5
Sep. 21, 1984, 84-3 BCA ¶17,683
I.
INTRODUCTION
A.
B.
Contract Litigation Focus
(1)
Contract cases are employed to the maximum extent
possible so as the enhance their “fit” in
arguments and briefs involving Government
contract issues.
(2)
Only those rules having the most specific
application to litigation are discussed.
The Alternative Dispute Resolution (ADR) Angle
As ADR becomes ever more popular, more professional
responsibility issues will arise. Yet ADR is
different in ways that affect the applicability of
19-6
ethical rules and considerations. Although this area
of professional responsibility is not well developed,
obvious differences between traditional litigation and
ADR will be highlighted.
C.
Applicable Rules and Caveat
(1)
The Army’s professional responsibility
regulation, AR 27-26, The Rules of Professional
Conduct for Lawyers, 1 May 1992 is the primary
source for the ethical norms discussed. These
rules are applicable to:
•
•
•
•
(2)
(3)
Army judge advocates;
All other military personnel who are
attorneys and who deliver legal services to
an Army activity as part of their duties;
Civilian attorneys employed by the Army to
provide legal services; and
Non-Government attorneys practicing in Army
proceedings under the Manual for CourtsMartial.
Lawyers from other services and agencies will be
subject to different rules, for example:
(A)
U.S. Navy: JAGINST 5803.1A, July 13, 1992,
Subject: Professional Conduct of Attorneys
Practicing Under the Supervision of The
Judge Advocate General; republished at 32
C.F.R. Part 776.
(B)
U.S. Air Force: See Web FLITE, Air Force
Rules of Professional Responsibility.
http://aflsa.jag.af.mil/GROUPS/AIR_FORCE/
TJAG/AFRulePC.htm.
Do the boards of contract appeals have the
authority to enforce ethics codes?
(A)
The ASBCA has shied away from enforcement,
citing a lack of precedent for such action.
Application under the Equal Access to
Justice Act of Gaffny Corp., ASBCA Nos.
39740, 46025, 46027, 46028, 46029, Oct. 25,
1995, 96-1 BCA ¶28,060. Giuliani
Associates, Inc., ASBCA No. 51672, Feb. 14,
19-7
2000. But see Cleveland Telecommunications
Corp., GSBCA Nos. 12586-P, 12599-P, 12629-P,
Oct. 18, 1993, 94-1 BCA ¶26,494, 1993 GSBCA
514 (boards of contract appeals have
inherent authority to control the attorneys
appearing before them).
(B)
ASBCA judges are themselves governed by the
Code of Judicial Conduct of the American Bar
Association. Neal R. Gross and Company,
Inc., ASBCA Nos. 28776 and 29982, Aug. 23,
1985, 84-3 BCA ¶17,596, 1984 ASBCA LEXIS
455, *3.
(C)
GSBCA members are required by 41 CFR 105735.705(b)(3)1 to “criticize and correct
unprofessional conduct of lawyers” in board
practice. B.G.W. Limited Partnership, GSBCA
No. 10501, Aug. 28, 1991, 91-3 BCA ¶24,336,
1991 GSBCA LEXIS 401. Board not required to
adopt and enforce any particular code, but
elected to enforce the code of the lawyers
involved in the ethical dispute. 1991 GSBCA
LEXIS 401, *15.
(D)
Is there a greater need for enforcement of
professional responsibility standards in
Government contract cases? Court of Federal
Claims wants to be "particularly acute" in
enforcing ethical rules for the lawyers
before it because of: (1) the pressures of
the unique and demanding practice of
procurement law; (2) the high volume of
documents involved in a typical contracts
case: and (3) judgments, often very large in
amount, are satisfied out of the public
treasury. In the Matter of Judith Ward
1
This section was removed in favor of the Joint Ethics
Regulation, which does not contain similar language. See 61 FR
56399, 56403, Nov. 1, 1996. The GSBCA, however, stills applies
the professional standards of the state bars of the lawyers
involved. Hospital Healthcare Systems, Inc. v. Department of
the Treasury, GSBCA No. 14442-TD, Jun. 29, 1998, 1998 GSBCA
LEXIS 231.
19-8
Mattox, 35 Fed. Cl. 425, 429, 1996 U.S.
Claims LEXIS 70, ** 14-15.
II.
PROFESSIONAL RESPONSIBILITY ISSUES
A.
Who is the Client?
RULE 1.13 Army as Client
(a)
B.
Except when representing an individual client
pursuant to (g) below, an Army lawyer represents
the Department of the Army acting through its
authorized officials. These officials include
the heads of organizational elements within the
Army, such as the commanders of armies, corps and
divisions, and the heads of other Army agencies
or activities. When an Army lawyer is assigned
to such an organizational element and designated
to provide legal services to the head of the
organization, the lawyer-client relationship
exists between the lawyer and the Army as
represented by the head of the organization as to
matters within the scope of the official business
of the organization.
Advice
RULE 2.1 Advisor
In representing a client, a lawyer shall exercise
independent professional judgment and render candid
advice. In rendering advice, a lawyer may refer not
only to law but to other considerations such as moral,
economic, social, and political factors, that may be
relevant to the client's situation, but not in
conflict with the law.
(1)
Candor to the client means telling him the bad
news along with the good. "[A]bout half of the
practice of a decent lawyer is telling would-be
clients that they are damned fools and should
stop." See McCandless v. Great Atlantic and
Pacific Tea Company, 697 F.2d 198, 201 (7th Cir.
1983) (quoting Elihu Root).
(2)
Attorney obliged to provide the best advice
possible, even if he or she is relying on
19-9
privileged information that cannot be revealed to
the client. Systems Management American Corp.,
GSBCA No. 9733-P, Jun. 2, 1989, 1989 GSBCA LEXIS
227, *12.
C.
Meritorious Claims and Contentions
RULE 3.1 Meritorious Claims and Contentions
A lawyer shall not bring or defend a proceeding, or
assert or controvert an issue therein, unless there is
a basis for doing so that is not frivolous, which
includes a good faith argument for an extension,
modification, or reversal of existing law.
See also Fed. R. Civ. P. 11.
D.
(1)
More than subjective good faith is required. A
lawyer must undertake a reasonable inquiry into
the validity of the facts and arguments advanced
before a tribunal. Westmoreland v. CBS, Inc.,
770 F.2d 1168, 1174 & n.8 (D.C. Cir. 1985), cited
in Int’l Technology Corp., 1989 GSBCA LEXIS 476;
Oct. 16, 1989, 90-1 BCA ¶22,341.
(1)
A reconsideration request that does not present
arguments or contentions distinct from those
advanced prior to the initial decision of the
board may violate Rule 3.1; however, the ASBCA
has declined to impose sanctions, such as the
costs of responding to such a reconsideration
request. Kaiser Aerospace & Electronics Corp.,
ASBCA No. 32098, Feb. 12, 1990, 90-2 BCA ¶22,695.
(2)
The filing of groundless motions, though not
relevant to the ultimate issues in an appeal, can
be considered by the board in ruling on motions
to dismiss and for discovery. Inslaw, Inc.,
Docket Nos. 1609, 1673, 1775, 1828, Oct. 8, 1992,
1992 DOT BCA LEXIS 21; 93-1 BCA ¶25,554.
Candor Towards the Tribunal
RULE 3.3 Candor Toward the Tribunal
(a) A lawyer shall not knowingly:
19-10
(1) make a false statement of material fact or
law to a tribunal;
(2) fail to disclose a material fact to a tribunal
when disclosure is necessary to avoid assisting a
criminal or fraudulent act by the client;
(3) fail to disclose to the tribunal legal authority
in the controlling jurisdiction known to the
lawyer to be directly adverse to the position of
the client and not disclosed by opposing counsel;
(4) offer evidence that the lawyer knows to be false.
If a lawyer has offered material evidence and
comes to know of its falsity, the lawyer shall
take reasonable remedial measures; or
(5) knowingly disobey an obligation or order imposed
by a superior or tribunal, unless done openly
before the tribunal in a good faith assertion
that no valid obligation or order should exist.
(b) The duties stated in paragraph (a) continue to
the conclusion of the proceeding, and apply even
if compliance requires disclosure of information
otherwise protected by Rule 1.6.
(c) A lawyer may refuse to offer evidence that the
lawyer reasonably believes is false.
(d) In an ex parte proceeding, a lawyer shall inform
the tribunal of all material facts known to the
lawyer which are necessary to enable the tribunal
to make an informed decision, whether or not the
facts are adverse.
(1)
Who/what is a “tribunal?”
(A)
The dictionary definition is restrictive.
Tribunal. The seat of a judge; the place
where he[she] administers justice. The
whole body of judges who compose a
jurisdiction; a judicial court; the
jurisdiction which judges exercise. Black’s
Law Dictionary 1350 (5th ed. 1979).
19-11
(2)
(B)
Boards of Contract Appeals. “Members”
rather than judges preside over the Board’s
of Contract Appeals. 41 U.S.C. §607(b)(1).
However, the CDA states that board members
“shall be selected and appointed to serve in
the same manner as administrative law judges
pursuant to section 3105 of title 5 ... .”
Id. The boards see themselves as tribunals.
See Application Under the Equal Access to
Justice Act, Decker & Company, GmbH, ASBCA
No. 41089, Apr. 23, 1998, 98-2 BCA ¶29,740
(“pursuant to long-standing precedent of
this Board and other tribunals... .”) 1998
ASBCA LEXIS 126, *4 (emphasis added). But
see Gulf & Western Industries, Inc. v.
United States, 230 Ct. Cl. 1, 671 F.2d 1322;
1982 U.S. Ct. Cl. LEXIS 70, 29 Cont. Cas.
Fed. (CCH) ¶82,274 (noting that the Canons
of Judicial Conduct might not apply to BCA
judges).
(C)
Comptroller General. It is clear that the
General Accounting Office sees itself as a
bid protest Tribunal. See Information
Processing Services, Inc., B-282220, Jun.
10, 1999, 99-1 CPD ¶109 (“Our Office is not
the proper tribunal ... .”) 1999 U.S. Comp.
Gen. LEXIS 92, *9 (emphasis added).
Creative Editing in Briefs.
(A)
Selective and out-of-context quotation of
evidence, “reflects a lack of the candor
required by [Model Rule 3.3], wastes the
time of the court and of opposing counsel,
and imposes unnecessary costs on the parties
and on fellow citizens whose taxes support
[the Court of Appeals for the Federal
Circuit] and its staff.” Amstar Corp. v.
Envirotech Corp., 730 F.2d 1476, 1486 (Fed.
Cir. 1984).
(B)
REMEDY: Doubled costs assessment.
Because Envirotech's brief relies on a
reverse statement of the law of
infringement, ignores the numerous and
19-12
unanimous contrary authorities called
to its attention by Amstar's main
brief, distorts a quotation, and
presents an estoppel argument based on
that distortion, Envirotech shall pay
to Amstar an amount equating to double
Amstar's costs on this appeal.
Id.
(3)
Adverse Case Law From Noncontrolling
Jurisdiction. Where the controlling jurisdiction
has not decided an issue, counsel may have to
disclose precedent from another jurisdiction
where:
(A)
the lawyer knows of the adverse precedent;
(B)
the precedent has not been disclosed by
opposing counsel;
(C)
the tribunal would reasonably consider it
important to resolve the issue.
AR 3.3 cmt. See, Professional Responsibility
Note, Disclosing Adverse Case Law From
Noncontrolling Jurisdictions, 1996 Army Law. 56
(1996).
(4)
The Limits of Advocacy: Armed Services Board's
View.
It is the professional responsibility
of counsel to set forth all of the
material and relevant facts adduced at
the hearing and found in the
documentary evidence, not just those
facts which support an advocate's
position. After all of the facts have
been set forth counsel may argue the
weight to be accorded or any other
matters in support of his/her position.
Counsel may not, however, fail to
mention established facts simply
because they do not support the
position he/she advocates.
19-13
...
[P]rofessional responsibility mandates
that counsel assures that the
statements he/she makes are accurate
....
W.B. & A., Inc., ASBCA No. 32524, Feb.
27, 1989, 89-2 BCA ¶21,736, 1989 ASBCA
LEXIS 89, *183.
E.
(5)
The COFC admonished counsel for failing to
advise the court of controlling authority
even when the court was actually aware of
the precedent. Estrada v. Sec’y of Health
and Human Services, 29 Fed. Cl. 78, 1993
U.S. Claims LEXIS 123 (1993). Duty to
provide zealous representation does not
excuse failure to follow Rule 3.3(a)(3);
counsel presumed to have actual knowledge of
controlling authority in case in which he
appeared as counsel. 1993 U.S. Claims LEXIS
123, *10. Issue: would a different trial
attorney in the same Government legal office
be presumed to have actual knowledge of
adverse precedent in a case involving his or
her office?
(6)
Evasiveness Puts IRS Lawyers in Big Jam: A
Cautionary Tale for the Ethically Daring.
Improvident hardball tactics involving lack
of candor by Government counsel in tax trial
results in dismissal by trial judge. Rescue
of case by circuit court small comfort to
lawyer tainted with lack of candor.
Barnhill v. United States, 11 F.3d 1360
(7th. Cir. 1993) accord Genentech v. United
States Int’l Trade Commission, 122 F.3d 1409
(Fed. Cir. 1997).
Statements to Others
Truthfulness in Statements to Others
In the course of representing a client a lawyer shall
not knowingly:
19-14
(a)
make a false statement of material fact or law to
a third person; or
(b)
fail to disclose a material fact to a third
person when disclosure is necessary to avoid
assisting a criminal or fraudulent act by a
client, unless disclosure is prohibited by Rule
1.6 [Confidentiality of Information].
(1)
Discovery Misrepresentation Leads to Board
Sanctions Against the Air Force.
(2)
F.
(A)
Appellant made repeated requests for
documents, the existence of which was denied
by the Government, because of a belief that
the documents were privileged.
(B)
The documents were then used by the
Government at trial. Appellant filed a
motion for sanctions. The Government
asserted a claim of privilege in response to
the motion.
(C)
HELD:
(1)
The Board decides whether a privilege
applies, not the parties. In any
event, it was wrong to lie to
Appellant.
(2)
Sanctions granted –- the Government was
precluded from using the documents at
the hearing or in its brief, and the
testimony of an important Government
witness was given no weight by the
Board. Charles G. Williams
Construction, Inc., ASBCA No. 33766,
Feb. 27, 1989, 89-2 BCA ¶21,733, 1989
ASBCA LEXIS 86.
What Are the Limits of Puffery in
Court/ADR/Negotiations?
Fairness to Opposing Party and Counsel
19-15
RULE 3.4 Fairness to Opposing Party and Counsel
A lawyer shall not:
(a)
unlawfully obstruct another party's access to
evidence or unlawfully alter, destroy, or conceal
a document or other material having potential
evidentiary value. A lawyer shall not counsel or
assist another person to do any such act;
(b)
falsify evidence, counsel or assist a witness to
testify falsely, or offer an inducement to a
witness that is prohibited by law;
(c)
knowingly disobey an obligation to an opposing
party and counsel under the rules of a tribunal,
except for an open refusal based on an assertion
that no valid obligation exists;
(d)
in pretrial procedure, make a frivolous discovery
request or fail to make reasonably diligent
effort to comply with a legally proper discovery
request by an opposing party;
(e)
in trial, allude to any matter that the lawyer
does not reasonably believe is relevant or that
will not be supported by admissible evidence,
assert personal knowledge of facts in issue
except when testifying as a witness, or state a
personal opinion as to the justness of a cause,
the credibility of a witness, the culpability of
a civil litigant, or the guilt or innocence of an
accused; ... .
(1)
Violation of Rule 3.4(b) Has Bearing on Board’s
Evaluation of Witness Credibility. Melville
Energy Systems, Inc., ASBCA No. 33890, Jul. 1,
1987, 87-3 BCA ¶19,992, 1987 ASBCA LEXIS 739
(“Our view of [a contingent fee witness’s]
credibility is influenced too by the ethical
considerations which guide our profession since
they demonstrate to us that a contingent fee
arrangement with an expert witness is a factor to
be considered in evaluating the expert’s
credibility.”) 1987 ASBCA LEXIS 739, *14.
19-16
(2)
Reasonably Diligent Efforts to Comply with
Discovery Requests. Colorado v. Holmes, 921 P.2d
44; 1996 Colo. LEXIS 252; 20 BTR 113 (1996)
(violation of Rule 3.4(d) to fail properly to
prepare a witness for deposition, and to show up
45 minutes late).
(3)
Not Unlawful Foulplay Does Not Violate Rule
3.4(a). Barnhill v. United States, 11 F.3d 1360
(7th Cir. 1993) (where party improperly served a
subpoena but witness showed up anyway, 7th
Circuit reverses trial court ruling that Rule
3.4(a) was violated when opposing counsel told
witness to go home).
(4)
Use of Extra-Record Evidence Draws Stinging
Rebuke and Harsh Sanction. Gary Aircraft Corp.,
ASBCA No. 21731, Dec. 5, 1989, 91-3 BCA ¶24,122,
1989 ASBCA LEXIS 541. The Government and
Appellant agreed to the contents of the record
and the Government then made numerous references
to evidence outside the stipulated record. The
Board said of this circumstance:
The parties to a dispute must have the
responsibility of providing a record which
is clear, readable, of a size consistent
with the complexity of the issues, and
limited to the issues. In briefing we
expect the parties to make specific
reference to each remaining document which
they contend supports their position. In the
absence of such specific reference, parties
risk documents not being considered in
reaching our decision.
The Government's brief totally violates
the rules by which we agreed to proceed. We
disregard the Government's brief in its
entirety and proceed as though the
Government filed no brief herein.
1989 ASBCA LEXIS 541, *18-19 (emphasis added).
G.
Impartiality and Decorum of the Tribunal
19-17
RULE 3.5 Impartiality and Decorum of the Tribunal
A lawyer shall not:
(a)
seek to influence a judge, court member, member
of a tribunal, prospective court member or member
of a tribunal, or other official by means
prohibited by law;
(b)
communicate ex parte with such a person except as
permitted by law; or
(c)
engage in conduct intended to disrupt a tribunal.
(1)
ASBCA.
(A)
ASBCA Rule 34. Ex parte Communications
No member of the Board or of the
Board's staff shall entertain, nor
shall any person directly or indirectly
involved in an appeal, submit to the
Board or the Board's staff, off the
record, any evidence, explanation,
analysis, or advice, whether written or
oral, regarding any matter at issue in
an appeal. The provision does not apply
to consultation among Board members or
the ex parte communications concerning
the Board's administrative functions or
procedures.
(B)
Ex parte communication not limited to
verbal media. Louis Gordon (Ariana),
ASBCA Nos. 26652 and 26724, Jun. 6,
1983, 83-2 BCA P16,616, 1983 ASBCA
LEXIS 360, *27 (Board refused to
consider extra-record submission of a
textile sample as an ex parte
“communication.”
(B)
Late Submission of Evidence Tantamount
to ex parte Communication. United
Technologies Corp., ASBCA No. 25501,
Jun. 26, 1986, 86-3 BCA ¶19,171, 1986
ASBCA LEXIS 675 (Appellant submitted
19-18
computer spreadsheets generated after
the record was closed, and supplemented
or explained them with off the record
comments to the board).
(3)
GAO.
(A)
Guidance.
Parties should not attempt to engage in
ex parte communications with the GAO
attorney assigned to the protest, or
with any other GAO employee. An ex
parte communication refers to any oral
or written communication with a GAO
official, which excludes one or more
parties to a protest, about the merits
of the protest, or about significant
issues which might affect the outcome
of the protest. Although it may be
necessary during the proceedings to
clarify a fact in the record or to
explain in greater detail a party's
position in the case, GAO will not
entertain, and no one may submit to
GAO, off the record, any evidence,
explanation, analysis, or advice,
whether written or oral, regarding any
substantive matter affecting the
disposition of the protest. Where it
is necessary to discuss any substantive
issue with GAO, a telephone conference
should be requested. A copy of all
written submissions to GAO, redacted
where necessary, should be provided to
all parties to the protest.
Bid Protests at GAO: A Descriptive Guide 32-33,
GAO/OGC-96-24 (6th ed. 1996).
(B)
Late Delivery of Communication Not ex parte.
Memorex Corp., B-213430.2, Oct. 23, 1984,
84-2 CPD ¶432, 1984 U.S. Comp. Gen. LEXIS
350 (no ex parte violation where protester
eventually received communication to GAO).
19-19
H.
(4)
Mediator often explicitly authorized to
conduct ex parte communications with
parties. See Rule 204(c)(1), Rules of
procedure of the General Services Board of
Contract Appeals (“(1) Mediation. The Board
Neutral, as mediator, aids the parties in
settling their case. The mediator engages in
ex parte discussions with the parties and
facilitates the transmission of settlement
offers. Although not authorized to render a
decision in the dispute, the mediator may
discuss with the parties, on a confidential
basis, the strengths and weaknesses of their
positions. No judge who has participated in
discussions about the mediation will
participate in a Board decision of the case
if the ADR is unsuccessful.”)
(5)
Board Judge Chastised for ex Parte
Communication. Gulf & Western Industries,
Inc. v. United States, 230 Ct. Cl. 1, 671
F.2d 1322; 1982 U.S. Ct. Cl. LEXIS 70, 29
Cont. Cas. Fed. (CCH) ¶82,274 (Board judge
improperly attempts to influence handling of
appeal of a board decision appealed to the
Court of Claims.
Lawyer as a Witness
RULE 3.7 Lawyer as Witness
(a)
(b)
A lawyer shall not act as advocate at a trial in
which the lawyer is likely to be a necessary
witness except where:
(1)
the testimony relates to an uncontested
issue;
(2)
the testimony relates to the nature and
quality of legal services rendered in the
case; or
(3)
disqualification of the lawyer would work
substantial hardship on the client.
A lawyer may act as advocate in a trial in which
19-20
Another lawyer in the lawyer’s office is likely
to be called as a witness unless precluded by
[the general conflict of interest rule] Rule 1.7
or [the conflict of interest: former client rule]
Rule 1.9.
(1)
ASBCA Expresses Doubt as to Whether the Rule
Applies to Non-Jury Trials Such as Board
Hearings. In EAJA application, Appellant sought
reimbursement for fees paid to a lawyer who
testified at trial and performed normal
litigation functions outside of the hearing.
Facts that: issue not raised at hearing; no
precedent cited for enforcement; board unsure of
its authority, were among reasons for not denying
EAJA reimbursement for fees of attorney-witness.
Application under the Equal Access to Justice Act
of Gaffny Corp., ASBCA Nos. 39740, 46025, 46027,
46028, 46029, Oct. 25, 1995, 96-1 BCA ¶28,060,
1995 ASBCA LEXIS 314.
(2)
Issue: Is an ADR proceeding a “trial?” See
Carrie Menkel-Meadow, Ethics in ADR
Representation: A Road Map of Critical Issues,
Dispute Resolution Magazine, Winter 1997.
(3)
The COFC applied ABA Model Rule 3.7 (identical to
AR 3.7), holding that if the conflict of interest
rules, would disqualify a lawyer because the
testimony of the lawyer as witness would be
adverse to the client, then no other lawyer in
the firm could serve as advocate in the case.
Thus, where the lawyer shows that his testimony
would not be adverse to the client, Rule 3.7 will
not disqualify the witness/lawyer. Syscon Corp.
v. United States, 10 Cl. Ct. 200, 1986 U.S. Cl.
Ct. LEXIS 851, *6 (1986).
(4)
GSBCA: Rule 3.7(b) is not a rule of general
imputed disqualification. B.G.W. Limited
Partnership, GSBCA No. 10501, Aug. 28 1991, 91-3
BCA ¶24,336, 1991 GSBCA LEXIS 401, *18 (rule is
intended to provide protection to the client, not
disqualification rights to the opposing party).2
2
N.B. Rule 3.4(b) of the DC Rules of Professional Responsibility provide
that the imputed disqualification does not apply at all “if the lawyer who is
19-21
I.
(5)
Rule against lawyer/witnesses not applied by
DOTBCA to disqualify Government counsel where
disqualification motion filed on eve of trial,
the lawyer’s testimony would address discovery
issues (waiver of a privilege), and
disqualification would create undue hardship for
the client. Ford Aerospace & Communications
Corp., DOTBCA Nos. 1559, 1606, Feb. 5, 1986, 86-1
BCA ¶18,718, 1986 DOT BCA LEXIS 105.
(6)
Disqualification Does Not Preclude Further
Participation. Integrated Systems Analysts,
Inc., GSBCA Nos. 10750-P, 10757-P, Sep. 12, 1990,
91-1 BCA ¶ 23,330, 1990 GSBCA LEXIS 448
(disqualified lawyer could still have access to
protected material and participate as the
agency’s “client representative.”) 1990 GSBCA
LEXIS 448, *5-6.
Dealings with Represented Persons.
RULE 4.2 Communication with Person Represented by
Counsel
In representing a client, a lawyer shall not
communicate about the subject of the representation
with a party the lawyer knows to be represented by
another lawyer in the matter, unless the lawyer has
the consent of the other lawyer or is authorized by
law to do so.
(1)
Party represented by more than one lawyer. It is
not improper to communicate with a person
represented by more than one lawyer as long as at
least one lawyer is present and consents. TDC
Management Corp., DOTBCA No. 1802, Jul. 11, 1990,
90-3 BCA ¶ 23,099, 1990 DOT BCA 26.
(2)
Issue: Are former employees of a party
represented by counsel?
(A)
Former security guard employees: NO. The
Swanson Group, Inc., ASBCA No. 47675, Oct.
appearing as an advocate is employed by, and appears on behalf of, a
Government agency.”
19-22
11, 1995, 96-1 BCA ¶27,972, 1995 ASBCA LEXIS
282, *4.
(B)
Not necessarily. ABA Formal Opinion
91-359, CONTACT WITH FORMER EMPLOYEE OF
ADVERSE CORPORATE PARTY, March 22, 1991.
III. SUMMARY AND CONCLUSION
19-23
PROFESSIONAL RESPONSIBILITY
IN
CIVIL LITIGATION
NOTES
FACTS
Last year's defense appropriations act included
funding for an Air Force Reserve B-2 Bomber maintenance
facility at Sugar Grove Naval Communications Station. The
maintenance facility is a nuclear-hardened, reinforced
concrete, underground hanger. The specifications for the
facility required the contractor to smooth finish all cast
concrete that is exposed to public view. The National Guard
Bureau (NGB), assisted by an Army contracting officer and
legal advisor, administers the construction contract. The
legal advisor is new to the agency and she does not have any
experience in government contracts.
The prime contractor, Fluor-Daniels, was the successful low
offeror in the limited competition. Several months into the project, Fluor's
concrete subcontractor finished pouring the first walls in the facility.
When the forms were removed, the Air Force's on-site representative,
Lieutenant Stephen Dooley, noticed that the interior walls had a very
rough finish, which he brought to the attention of the NGB's inspector.
Lieutenant Dooley, the contracting officer, the government inspector, and
the legal advisor, met to review the specifications. After considerable
argument over whether the interior walls were "exposed to the public,"
they concluded that the concrete work did not conform to the
specifications. Lieutenant Dooley prepared a detailed memorandum for
record (MFR) of the meeting. The NGB inspector rejected the work the
following week.
Fluor's project manager was livid. He screamed that smooth finish
was not required because the public would never see any part of these
walls. In any event, he could have smooth-finished the walls by hand if
the government had told him about the problem earlier. After sending the
contracting officer appropriate notice of the fact that it would incur
additional costs to comply with the government's direction to change the
surface of the concrete, Fluor ordered the concrete subcontractor to begin
the very expensive process of chipping off the old surface and hand
resurfacing the walls to a smooth finish, while maintaining very tight
dimensional tolerances. The contracting officer received Fluor's claim for
this work shortly thereafter, and in due course, denied it. The dispute is
now at the Armed Services Board of Contract Appeals (ASBCA).
While preparing the Rule 4 file, the legal advisor interviewed the
inspector and Lieutenant Dooley. She obtained copies of all the
inspection records and asked the two to prepare written statements. The
inspector did so, while Lieutenant Dooley, the Air Force representative,
forwarded a copy of his earlier MFR to the lawyer. Lieutenant Dooley,
anxious to assist in the litigation, decided to get more information for "his"
lawyer. At the next opportunity on the job site, he questioned the foreman
for the concrete subcontractor. The subcontractor's foreman said that he
thought the whole dispute was the fault of Fluor's chief cost estimator
because job site rumor indicated that the chief cost estimator had been
fired shortly after his promotion to vice president.
Lieutenant Dooley passed this on to the legal advisor. The legal
advisor was pleased with this information and asked Stephen for the
former employee's name and address. Stephen obtained this information
on his next trip to the job site where, while waiting to speak with the
Project Manager about the selection of a plumbing fixture, he thumbed
through a Fluor phone listing which he found by the phone in the project
manager's office trailer. As a reward for his hard work, the legal advisor
asked the handsome Lieutenant out to dinner, which led to a brief but
intimate relationship.
After completing the answer and submitting the Rule 4 file, the
legal advisor decided to interview Fluor's former Chief Cost Estimator
personally. The estimator, rather upset by the callous way he was fired,
stated that he had prepared two estimates for the B-2 hanger concrete
work - one for rough finish interior concrete and one for smooth finish
interior concrete. At the final meeting to set the bid price, Fluor went with
the lower, rough finish estimate after its general counsel opined that the
specifications were, at best, ambiguous. The "vice president for a week"
also showed the legal advisor the entries in his daily calendar
summarizing the bid meeting.
When questioned about his dismissal, the cost estimator described
an interview he had with Fluor's outside counsel and general counsel who
were preparing Fluor's claim. He said that after he talked to the two, he
was on the street the next day. The legal advisor, writing furiously, asked
for and received copies of the pertinent entries from the estimator's diary.
In its initial wave of discovery, Fluor's attorney requested
production of all documents relating to, and the identity of all persons
with personal knowledge of, the concrete surfacing claim.
The legal advisor responded by noticing the deposition of Fluor's
outside counsel and corporate counsel. The legal advisor asked the special
agent in charge of the local Criminal Investigation Command (CID) field
office if he would like to send an agent to attend the depositions with her.
Discuss all of the potential professional responsibility issues
involved in this scenario.
1. What ethical rules apply to the agency’s legal advisor?
2. Who is the client? Lieutenant Dooley? The contracting officer?
The Air Force? The Army? The United States?
3. What is the scope of the legal advisor’s representation?
4. Does the legal advisor’s role change once the dispute becomes an
appeal?
5. Is there an ethical problem because the attorney has not had any
experience in this matter?
6. Is there any other reason why this legal advisor should not defend
the agency in this matter?
7. Is it proper for the legal advisor to defend the agency’s position
that the walls must have a smooth finish?
8. What if the contracting officer agrees that smooth walls were not
required by the original specifications, but wants to make the
contractor incur legal fees and other administrative costs before he
agrees to the change? What if the contracting officer agrees that the
specifications were defective and that the contractor is entitled to
extra money, but denies the claim because he does not have the
funding to pay for the claim?
9. Was it permissible for the legal advisor to use the information
obtained by Lieutenant Dooley? What about his interview of the
Chief Cost Estimator?
10. What about getting the phone number and address from the
Project Manager’s trailer?
11. Does it make any difference that the inquiry was performed by
Lieutenant Dooley, not the legal advisor?
12. Was it permissible for the legal advisor to date Lieutenant Dooley?
13. What about the legal advisor’s discovery response?
14. Was it proper to notice Fluor’s attorneys for depositions? To ask
CID to accompany her to the depositions?
CHAPTER 6
WRITTEN AND DOCUMENT DISCOVERY
I.
INTRODUCTION.................................................................................................................................. 1
A.
Goal .................................................................................................................................................... 1
B.
Learning Objectives............................................................................................................................ 1
II.
General Considerations........................................................................................................................... 1
A.
Obtaining information other than through discovery.......................................................................... 1
B.
Timing of Discovery........................................................................................................................... 3
C.
Rules................................................................................................................................................... 3
III.
Discovery Plans. ................................................................................................................................. 5
A.
Goal of a Plan ..................................................................................................................................... 5
B.
Factors. ............................................................................................................................................... 5
C.
Timing. ............................................................................................................................................... 6
IV.
Interrogatories..................................................................................................................................... 6
A.
Purpose.. ............................................................................................................................................. 6
B.
Drafting and Responding.................................................................................................................... 6
C.
Wave Concept. ................................................................................................................................. 11
D.
Use of Interrogatories. ...................................................................................................................... 11
V.
Production of Documents or Objects.................................................................................................... 11
A.
Scope. ............................................................................................................................................... 11
B.
Drafting Pointers. ............................................................................................................................. 12
C.
Production vs. Access....................................................................................................................... 13
D.
Screening Documents. ...................................................................................................................... 13
E.
Reviewing Appellant's Documents................................................................................................... 15
VI.
Requests for Admissions. ................................................................................................................. 17
A.
Purpose. ............................................................................................................................................ 17
B.
Scope. ............................................................................................................................................... 17
C.
Examples. ......................................................................................................................................... 17
D.
VII.
Time for Response............................................................................................................................ 17
Remedies. ......................................................................................................................................... 18
A.
Motions and Board Orders. .............................................................................................................. 18
B.
Sanctions. ......................................................................................................................................... 19
VIII.
Graded Exercise................................................................................................................................ 20
IX.
Conclusion........................................................................................................................................ 20
CHAPTER 6
WRITTEN AND DOCUMENT DISCOVERY
I.
II.
INTRODUCTION.
A.
Goal. To obtain what you need to resolve a case as quickly as possible
with minimal investment of time and money.
B.
Learning Objectives.
1.
The student will understand how FOIA and discovery standards
compare.
2.
The student will understand the importance of a Discovery Plan.
3.
The student will understand the basic written discovery tools used
in litigation.
GENERAL CONSIDERATIONS.
A.
Obtaining information other than through discovery.
1.
Freedom of Information Act (FOIA) (5 U.S.C. § 552).
a.
Contractors can obtain information through a FOIA
request. ABA Electromechanical Systems, Inc., NASA
BCA No. 1081-13, 83-1 BCA ¶ 16,440 (Appellant may use
both FOIA and discovery procedures to obtain
information); B.D. Click Co., Inc., ASBCA Nos. 25,609
and 25,972, 83-1 BCA ¶ 16,328.
b.
The FOIA is not intended to supplement or displace the
rules of discovery. John Doe Agency v. John Doe Corp.,
493 U.S. 146 (1989).
MAJ Jon Guden
Disputes & Remedies
February 2001
c.
As a general notion, information available under the FOIA
is likely available through discovery. Culinary Foods, Inc.
v. Raychem Corp., 150 F.R.D. 122 (N.D. Ill. 1993).
d.
Information unavailable under the FOIA is not necessarily
unavailable through discovery. Culinary Foods, Inc. v.
Raychem Corp., supra.
(1)
Under FOIA, the requesting party's need for the
information is irrelevant.
(2)
When a privilege is asserted under discovery, the
litigant's need for the information is an important
factor.
(3)
Where discovery privileges are paralleled by certain
FOIA exemptions, the balancing test weighing the
litigant's need for information against the
government's interest in confidentiality should be
combined with the policies underlying the FOIA
exemption. ACLU v. Brown, 609 F. 2d 277 (7th
Cir. 1979).
e.
Courts and Boards exercising jurisdiction under the
Contract Disputes Act do not have authority to resolve
FOIA disputes. Bay Area Crane - Hoist Company, Inc.,
NASA BCA No. 387-7, 87-2 BCA ¶ 19,828 (Despite
allegation that a FOIA request violated the Board's
discovery order, the Board declined to issue a protective
order or impose sanctions because FOIA is not a discovery
procedure within the Board's jurisdiction).
f.
The Government must process FOIA requests, even during
litigation. Rights under the FOIA are neither increased nor
diminished because the requester is a party to litigation.
National Presto Industries, Inc. v. U.S., 218 Ct. Cl. 696
(1978).
6-2
g.
2.
B.
C.
Local attorneys and trial attorneys must be cognizant of the
FOIA requests and responses. To the extent appellant has
already received documents under FOIA, it should not seek
them again in discovery. Bay Area Crane - Hoist
Company, Inc., supra, (Board directed appellant to avoid
requesting documents under Rule 15 that it possessed from
its FOIA request).
The Government requests and obtains information prior to the
contracting officer's final decision.
a.
DCAA audits.
b.
Additional evidence supporting the contractor's claim.
Timing of Discovery.
1.
The complaint must be filed before discovery may start. ASBCA
Rules 14, 15.
2.
Methods of discovery may be used in any sequence. However, this
is the typical framework for contract litigation:
a.
Written interrogatories.
b.
Document production.
c.
Depositions.
d.
Requests for admissions.
Rules.
1.
Armed Services Board of Contract Appeals (ASBCA).
6-3
a.
Rules 14 (Discovery -Depositions), 15 (Interrogatories to
Parties, Admission of Facts, and Production and Inspection
of Documents), 21 (Subpoenas), and 35 (Sanctions).
b.
The ASBCA applies the Federal Rules of Civil Procedure
(Fed. R. Civ. P.) when the Board rules are silent on a
procedural issue.
c.
The rules encourage voluntary discovery. Rule 14(a).
d.
e.
(1)
Once the pleadings are filed, discovery is typically
left to the parties to control.
(2)
A judge, once assigned to a case, typically holds a
conference at which the parties discuss discovery
needs. The judge will issue an order establishing
deadlines.
Protective orders.
(1)
The Board may make an order to protect a party or
person from annoyance, embarrassment, or undue
burden or expense.
(2)
The order may include limits on scope, method,
time, and place for discovery, and provisions for
protecting the secrecy of confidential information or
documents.
Board rulings on discovery issues.
(1)
Most discovery rulings are non-binding,
unpublished, interlocutory decisions of an
individual judge.
(2)
The Boards follows the Federal Rules of Civil
Procedure. If you can't find a Board case
concerning a discovery issue, cite Federal court
cases interpreting the Federal Rules.
6-4
2.
III.
Court of Federal Claims (COFC).
a.
Rules (RCFC) 26-37 (Depositions and Discovery).
b.
The rules provide for Discovery conferences. RCFC 26(f).
The judge may direct the parties to appear at a conference
any time after commencement of the action, and may hold
a conference on proper motion by the attorney for any
party.
c.
The COFC may issue protective orders. RCFC 26(c).
DISCOVERY PLANS.
A.
B.
Goal of a Plan. Identify what you need to resolve the case. The
Discovery Plan is a significant piece of a trial attorney's overall "Business
Plan" for litigating the case.
1.
See what you have before asking for it from the other side.
Inspection of government documents and discussions with key
employees is an essential first step.
2.
The effort expended in producing a quality contracting officer's
final decision can minimize the need for formal discovery.
a.
What documents were compiled to address the claim?
These documents should be in the Rule 4.
b.
Has a DCAA audit been completed?
c.
Did the contracting officer discuss issues with key
government employees? This information should be in the
Trial Attorney's Litigation File (TALF).
Factors. The plan varies in each case and is dependent upon the following
factors:
6-5
C.
1.
Dollar value of the case;
2.
Information already in the Government's possession;
3.
Number of issues;
4.
Government or contractor claim.
Timing.
1.
Optimally you will develop your plan while answering the
complaint. You can amend as required during the course of
litigation.
2.
The trial attorney should coordinate with the field attorney and
contracting officer.
3.
IV.
a.
Identify Government employees who can fill in information
gaps, or identify contractor sources for the information.
b.
Discuss the projected time to be invested in discovery.
c.
Discuss the projected costs of discovery.
The Government should attempt to serve its first set of written
discovery on or about the date the answer is filed. At a minimum,
the request should include interrogatories and requests for
document production.
INTERROGATORIES.
A.
Purpose. To identify deponents and location of documents.
B.
Drafting and Responding.
1.
Drafting Tips.
6-6
1
a.
There is no limit on the number of interrogatories a party
may serve on its opponent.1 However, only ask for what
you need.
b.
Seek factual information. Avoid questions that seek
opinions or legal conclusions.
c.
Don't use legal terms such as "relevant," as in "provide all
relevant documents."
d.
Seek only one item of information per interrogatory.
e.
Use words and phrases such as "identify," "state the
location of," and "list."
f.
Instructions and definitions.
(1)
If you use, make sure the terms used in the
interrogatories are consistent with those in the
instructions and definitions.
(2)
You may wish to make the instructions available on
request. Some parties will answer your
interrogatories without requiring instructions.
g.
Use subheadings to organize your Interrogatories. For
example, "The Complaint" and "The Claim." Reference
statements made in the claim and the complaint when
asking questions.
h.
When seeking the identity of individuals, request current
addresses and phone numbers.
i.
Request production of documents at the same time you
serve interrogatories.
The Fed. R. Civ. P 33(a) limits parties to twenty-five (25) interrogatories, to include discrete subparts.
6-7
2.
Responding.
a.
ASBCA Rule 15. Written interrogatories are to be
answered separately in writing, signed under oath and
answered or objected to within 45 days after service. The
ASBCA may allow a shorter or longer time.
(1)
(2)
(3)
Separately in writing. You can use one of two
formats.
(a)
Response only.
(b)
Interrogatory and response.
Objections.
(a)
The burden is on the objecting party to
establish a basis for withholding discovery.
(b)
Objections should be specific and supported
by detailed explanations.
(c)
Examples of common objections:
(i)
Privileged or otherwise protected
material requiring a protective order.
(ii)
Relevance.
(iii)
Unduly burdensome (i.e., the burden
is disproportionate to the need).
Answers.
6-8
(a)
Option to produce business records. If the
answer may be derived from a business
record, and the burden of deriving the
answer is substantially the same for both
parties, it is sufficient to identify the records
from which the answer may be derived.
Fed. R. Civ. P. 33(c).
(b)
The signature of the attorney constitutes a
certification that to the best of the signer's
knowledge, information and belief, formed
after a reasonable inquiry, the disclosure is
complete and correct as of the time it is
made. Fed. R. Civ. P. 26(g)(1).
(c)
Duty to supplement. Fed. R. Civ. P. 26(e)
requires supplementation of responses in the
following instances:
(i)
When the discovery requested the
identity and location of persons
having knowledge of discoverable
matters;
(ii)
When the discovery requested the
identity of each person expected to
be called as an expert witness at trial,
the subject matter on which the
expert witness is expected to testify,
and the substance of the expert
witness' testimony;
(iii)
When the party learns that the
response is in some material respect
incomplete or incorrect and the
additional or corrective information
has not been made known through
the discovery process or in writing;
6-9
(iv)
(4)
b.
When the court (Board) imposes an
order, the parties have an agreement,
or at any time prior to trial through
new requests for supplementation of
prior responses. See W.M. Schlosser
Company, Inc., ASBCA No. 44778,
96-2 BCA ¶28,587 (Government
timely notified Appellant of identity
of expert witness on Board ordered
deadline).
Enlargement of time to respond.
(a)
Parties typically work out extensions
between themselves.
(b)
If the opponent does not agree to an
extension of time, the requesting party
should seek an extension from the Board.
(5)
The responses must be signed under oath. Northern
Pacific Contractors, Inc., ASBCA No. 49350, 97-1
BCA ¶ 28,769 (Board threatened to dismiss appeal
with prejudice for failure to prosecute if appellant
failed to submit its answers signed under oath.);
(6)
It is not necessary to submit interrogatories or
answers to the Board, unless a party wishes to
introduce into evidence or have the Board rule on
adequacy of a response.
COFC. RCFC 33(a).
(1)
The COFC requires responses to interrogatories
within 30 days after service. It also may allow a
shorter or longer time.
(2)
The answers are to be answered separately and fully
in writing under oath.
6-10
(3)
C.
D.
V.
The answers are to be signed by the person making
them, and the objections signed by the attorney
making them.
Wave Concept.
1.
Review the responses to the first set of interrogatories.
2.
Quickly send a letter to the opponent concerning questions that
were not answered satisfactorily.
3.
Submit successive rounds of interrogatories as necessary.
4.
Keep the interrogatories in numerical order. If your first set of
interrogatories ended with number 30, start the second set with
number 31.
Use of Interrogatories.
1.
Introduce interrogatory responses as part of the record upon which
the Board will decide the case. Rule 13(a). They are especially
useful in record submissions (without a hearing) under Rule 11.
2.
A response to an interrogatory can be dispositive. See Polote
Corporation, ASBCA No. 31115, 86-1 BCA ¶ 18,640
(Government bound by initial admission to interrogatory despite
supplementing response three days before hearing).
3.
Responses to interrogatories can be considered in deciding a
motion for summary judgment. Adamation, Inc., ASBCA No.
22495, 80-1 BCA ¶ 14,385 (Board granted motion after finding
that Appellant's responses established that it had provided no
notice to the government of its asserted claims prior to final
payment).
PRODUCTION OF DOCUMENTS OR OBJECTS.
A.
Scope.
6-11
1.
Serve only on a party. Use a subpoena duces tecum for nonparties. Rule 21(a)(iii).
2.
Third-party documents within the Government.
3.
B.
a.
The contracting officer may have to obtain relevant
documents from other agencies.
b.
Request for the documents should be specific.
Equally accessible documents. Generally not required to be
disclosed or produced.
Drafting Pointers.
1.
Documents that may be relevant:
a.
Financial records;
b.
Bid or proposal documents;
c.
Daily logs or notebooks;
d.
Purchase orders and invoices.
2.
Use an expansive definition of document, e.g. include drafts,
nonidentical copies, attachments, annexes, appendices, enclosures,
facsimile documents, software, databases, tape recordings,
photographs.
3.
Request that appellant provide a privileged document log that
describes all documents withheld.
4.
Don't forget to ask for electronic media. You may need the help of
a consultant to find and review this data.
6-12
C.
Production vs. Access.
1.
2.
D.
Production.
a.
Used mostly in small document and pro se cases.
b.
Possessor of documents makes copies of the requested
documents and sends to requesting party.
Access.
a.
This is the likely route when dealing with many documents.
b.
If you are prepared, this is preferable to having the other
side produce documents.
c.
The parties should prepare an agreement in advance,
addressing the following points:
(1)
Where the documents will be made available;
(2)
The period of time the documents will be available;
(3)
Who will be reviewing the documents;
(4)
How the documents will be reproduced;
(5)
Who will pay the costs of reproduction;
(6)
What to do in case of inadvertent disclosure of
privileged or protected documents.
Screening Documents.
1.
Government Documents.
6-13
a.
b.
Before granting access to the appellant, the documents
must be screened by counsel. Disclosure of privileged
documents, even inadvertently, may result in waiver of the
privilege. See Carter v. Gibbs, 909 F.2d 1452 (Fed. Cir.
1990). But see National Helium Corp. v. U.S., 219 Ct. Cl.
612 (1979)(no per se waiver rule for inadvertent
disclosure).
(a)
An inadvertent disclosure agreement can
avoid waiver of a privilege.
(b)
Best to get a bilateral agreement, but can put
it in a letter to give notice to the other party.
Withhold all privileged documents.
(1)
Look for documents marked with a protective
legend. However, not all documents requiring
protection will be so marked, nor will all documents
so labeled be entitled to protection.
(2)
Look for documents involving attorneys. However,
not all correspondence, such as correspondence
concerning routine business matters, will receive
protection.
(3)
For purposes of work product, the ASBCA does
"not view the contracting officer's final decision as
the automatic line of demarcation between routine
contract administration and preparation for
litigation." B.D. Click Co., Inc., ASBCA Nos.
25,609 and 25,972, 83-1 BCA ¶ 16,328.
(4)
Opinion work product receives greater protection
than fact work product. AT&T v. General Services
Administration, GSBCA No. 14732, 99-2 BCA
¶ 30,580.
6-14
(5)
c.
Withhold third-party proprietary documents until the
parties obtain a protective order.
d.
Prepare a privileged document log that includes:
e.
E.
Some documents may have to be produced after
redaction. Sierra Rock v. Regents of Univ. of
California, EBCA No. C-9705223, 98-2 BCA
¶ 30,083 (ordering disclosure of certain documents
after redacting portions subject to the attorney-client
privilege).
(1)
Identity of individuals party to the communication;
(2)
Date of the document;
(3)
Enough information to allow for independent
evaluation of the claimed privilege (attorney-client,
work product, etc.).
Disputed documents may require the Board's in camera
review.
Reviewing Appellant's Documents.
1.
Develop a plan.
a.
Identify the quantity of documents.
b.
Identify who will review the documents (e.g., contracting
officer or specialist, engineers, auditors, experts).
c.
Provide guidance on what to look for.
d.
Identify the most efficient way to review and tag
documents for copying.
6-15
2.
Methods of Conducting Document Discovery.
a.
b.
3.
Manual.
(1)
Method most often used.
(2)
Parties look at documents and tag with tape flags,
BATE stamp, or similar method.
(3)
Ensure you have a list describing the documents
marked, to compare to the documents actually
received.
Automated.
(1)
Useful when trying a large document case.
(2)
Requires special equipment and/or personnel.
(3)
Consider hiring a commercial firm to do this.
(4)
Can scan full text of documents, or code a
document (by issue, witness name, etc.)
Receipt of Documents.
a.
Compare documents received with documents marked.
b.
Decide whether to pursue withheld documents after
reviewing appellant's rationale for withholding.
c.
Decide which documents you will use to conduct
depositions, supplement the Rule 4 file, introduce at the
hearing, or archive.
6-16
VI.
REQUESTS FOR ADMISSIONS.
A.
Purpose. To expedite trial by narrowing the issues to be litigated. Rust
Mfctg., Inc., ASBCA No. 27511, 84-3 BCA ¶ 17,518.
B.
Scope.
C.
D.
1.
Requests for Admissions should be matters of fact.
2.
A proper request can also seek admission of the authenticity of a
document.
3.
Facts that are in dispute are not proper subjects for a Request for
Admission. Rust Mfctg., Inc., ASBCA No. 27511,
84-3 BCA ¶ 17,518.
4.
Require the answering party to state reasons for its denial of a
Request for Admission, and to produce any documents relied upon
in making the denial.
Examples.
1.
Admit or deny that Contract DABA60-99-C-0001 required XYZ
Corporation to deliver 50 widgets to Fort Swampy on 1 July 2000.
2.
Admit or deny that XYZ Corporation failed to deliver 50 widgets
under Contract DABA60-99-C-0001 to Fort Swampy on 1 July
2000.
Time for Response.
1.
ASBCA.
a.
Responses or objections are due within 45 days of service,
or a shorter or longer time as decided by the Board.
6-17
b.
2.
Failure to timely respond could result in the admission of
the factual statements in the requests. The party seeking
the sanction must show prejudice due to the late response.
Rust Mfctg., Inc., ASBCA No. 27511, 84-3 BCA ¶ 17,518
(Board refused to deem facts admitted where government
was one month late in responding and the appellant showed
no prejudice).
COFC. Responses or objections are due within 30 days of service,
or a shorter or longer time as decided by the Court.
VII. REMEDIES.
A.
Motions and Board Orders.
1.
2.
Motions to Compel.
a.
Requests Board to order the party to answer discovery or
produce documents.
b.
Requesting party should articulate the time elapsed since
serving discovery on the nonresponsive party, and the
efforts made to obtain discovery responses.
Motion to Dismiss for Failure to Prosecute. ASBCA Rule 31.
a.
A party is required under ASBCA Rule 31 to take steps
showing its intention to prosecute or defend the appeal.
b.
Failure of appellant to respond to notices or comply with
orders from the Board should lead to a motion to dismiss.
c.
The Board will generally allow the party an opportunity to
cure the defect or show cause before dismissing the case
with prejudice. Failure to respond at this stage can lead to
dismissal. Ellis Constr. Co., Inc., ASBCA No. 50091, 98-1
BCA ¶ 29,552.
6-18
B.
Sanctions.
1.
ASBCA Rule 35. "If any party fails or refuses to obey an order
issued by the Board, the Board may then make such order as it
considers necessary to the just and expeditious conduct of the
appeal."
2.
A board order is not a prerequisite for the application of sanctions.
Charles G. Williams Constr., Inc., ASBCA No. 33766, 89-2 BCA
¶ 21,733 (sanctions appropriate where Air Force falsely denied that
it conducted a technical evaluation of appellant's claims).
3.
Types of sanctions.
a.
Dismiss case with prejudice. This sanction is a drastic step
which is employed only in the most extreme cases. Ellis
Constr. Co., Inc, supra; Tech-Tron Constructors, ASBCA
No. 46367, 97-1 BCA ¶ 28,746 (Appellant failed to submit
affidavit with response to motion).
b.
Bar offending party from using withheld evidence. Charles
G. Williams Constr., Inc., supra.
c.
Preclude party from presenting evidence that was subject of
interrogatory. American Ballistics Co., Inc., ASBCA No.
38578, 92-3 BCA ¶ 25,056.
d.
If the evidence sought through an interrogatory is first
disclosed at hearing, the party seeking the evidence should
move to strike. Grumman Aerospace Corp., ASBCA Nos.
46834, 48006, 51526, 1999 ASBCA LEXIS 174 (Board
declined to strike hearing testimony).
e.
Treat unanswered requests for admissions as admitted.
American Ballistics Co., Inc, supra.
6-19
f.
Adverse inferences due to lost or destroyed documents.
Nation-Wide Check v. Forest Hills Distributors, 692 F.2d
214 (1st Cir. 1982); Hughes Aircraft Company, ASBCA
No. 46321, 97-1 BCA ¶ 28,972; Dalmo Victor Division of
General Instrument Corporation, ASBCA No. 39718, 92-3
BCA ¶ 25,176.
g.
Costs. The Board does not have the authority to impose
monetary sanctions. E-Systems, Inc., ASBCA No. 46111,
97-1 BCA ¶ 28,975.
VIII. GRADED EXERCISE.
A.
Written discovery is due at 0800 on 13 March 2001.
B.
Your discovery request shall include interrogatories, requests for
production, and requests for admissions.
C.
There is no minimum page requirement for this assignment. Fifteen pages
is the maximum.
D.
IX.
1.
A submission of between five and ten pages likely will be
sufficient, assuming the requests are specific and not simply
boilerplate.
2.
You need not include instructions with your request. If you choose
to include instructions, they will not count toward your 15-page
limit.
3.
While the ASBCA does not place a limit on the number of
interrogatories that may be posed, you want to be sure each
interrogatory and request has a purpose. Quality, not quantity, is
the key to good written discovery.
This appeal will be decided on the record pursuant to Rule 11. Bear that
in mind when crafting your discovery.
CONCLUSION.
6-20
CHAPTER 7
DEPOSITIONS
I.
INTRODUCTION .................................................................................................................. 1
A.
What Is a Deposition?...............................................................................................................1
B.
Reasons for Taking Depositions...............................................................................................1
C.
Additional Considerations ........................................................................................................3
II.
RULES FOR CONDUCTING DEPOSITIONS IN CASES BEFORE
THE U.S. COURT OF FEDERAL CLAIMS........................................................................ 3
A.
General Provisions Governing Discovery................................................................................3
B.
Persons Before Whom Depositions May Be Taken ................................................................5
C.
Stipulations Regarding Discovery Procedures.........................................................................5
D.
Depositions upon Oral Examination ........................................................................................6
E.
Use of Depositions in Court Proceedings ..............................................................................10
F.
Failure to Cooperate in Discovery..........................................................................................11
G.
Expert Witnesses.....................................................................................................................14
III.
RULES FOR CONDUCTING DEPOSITIONS IN CASES BEFORE
THE ARMED SERVICES BOARD OF CONTRACT APPEALS.................................... 15
A.
General Policy and Protective Orders ....................................................................................15
B.
Timing .....................................................................................................................................15
C.
Use as Evidence ......................................................................................................................16
D.
Expenses..................................................................................................................................16
E.
Subpoenas ...............................................................................................................................17
F.
Motions ...................................................................................................................................19
IV.
CONDUCTING DEPOSITIONS......................................................................................... 20
A.
The Ground Rules...................................................................................................................20
B.
Taking Depositions .................................................................................................................21
C.
Defending Depositions ...........................................................................................................25
V.
LIMITS ON DISCOVERY .................................................................................................. 28
A.
Relevance ................................................................................................................................28
B.
Undue Burden .........................................................................................................................28
C.
Attorney Work Product Rule..................................................................................................29
D.
Attorney-Client Privilege .......................................................................................................29
VI.
DISCOVERY EXPENSES .................................................................................................. 29
A.
Funding Issues ........................................................................................................................29
B.
Contracting Issues...................................................................................................................29
VII.
EXPERT WITNESSES ........................................................................................................ 30
A.
The Government’s Expert Witness(es) ..................................................................................30
B.
The Appellant’s Expert Witness(es).......................................................................................30
VIII.
CONCLUSION..................................................................................................................... 32
CHAPTER 12
DEPOSITIONS
I.
INTRODUCTION.
A.
B.
What Is a Deposition?
1.
A deposition is “[t]he testimony of a witness taken upon oral questions or
written interrogatories . . . reduced to writing . . . and intended to be used
in preparation and upon the trial of a civil action or criminal prosecution.”
BLACK’S LAW DICTIONARY 440 (6th ed. 1990).
2.
A deposition is a flexible, spontaneous, and dynamic discovery tool.
Reasons for Taking Depositions.
1.
Trial/Hearing Preparation.
a.
Depositions force you to start preparing your case.
b.
Depositions give you direct, unfiltered access to the other party’s
witnesses.
c.
Depositions allow you to probe the other party’s position on key
issues.
d.
Depositions allow you to seek out additional evidence.
e.
Depositions allow you to minimize the possibility of surprise
testimony at the trial/hearing by exhausting the knowledge of the
other party’s witnesses.
MAJ John Siemietkowski
Disputes & Remedies
February 20, 2001
f.
Depositions allow you to gauge the skills, traits, and demeanor of
the other party’s witnesses.
g.
Depositions allow you to secure admissions and “lock in”
testimony.
2.
Motion Practice. Depositions provide a factual record for motions.
3.
Settlement.
4.
a.
Depositions force both sides to analyze the strengths and
weaknesses of their case.
b.
Depositions may narrow the issues in dispute.
c.
Depositions may influence the other party by:
(1)
Highlighting damaging or unflattering evidence; or
(2)
Demonstrating the expense and emotional rigor of
protracted litigation. See Time Contractors, J.V., DOT
CBA Nos. 1669, 1691, 86-1 BCA ¶ 18,559 (refusing to
allow the appellant to shift deposition costs to the
government based on a “naked allegation of financial
hardship).
Trial/Hearing.
a.
Depositions preserve the testimony of witnesses who may not be
able to appear at the trial/hearing because of age, illness, or
distance.
b.
Depositions provide a basis for contradicting or impeaching
witnesses at the trial/hearing.
7-2
C.
II.
Additional Considerations.
1.
Depositions are expensive and time consuming.
2.
Friendly Witnesses. You should avoid deposing a friendly witness unless
you need to preserve the witness’s testimony.
3.
Hostile Witnesses. If a hostile witness has already given you a detailed
statement in the presence of a third party, you may not want to depose the
witness.
RULES FOR CONDUCTING DEPOSITIONS IN CASES BEFORE
THE U.S. COURT OF FEDERAL CLAIMS.
A.
General Provisions Governing Discovery. FED. R. CIV. P. 26. COFC Rule 32.
1.
Methods of Discovery. FED. R. CIV. P. 26(a)(5). The parties may obtain
discovery by oral or written depositions.
2.
Discovery Scope and Limits. FED. R. CIV. P. 26(b).
a.
The parties may discover any matter that is:
(1)
Not privileged; and
(2)
Relevant to the subject matter of the pending action.1
1
The information sought does not have to admissible at the trial. It only has to be “reasonably calculated to lead to
the discovery of admissible evidence.” FED. R. CIV. P. 26(b)(1).
7-3
b.
3.
4.
The court may limit discovery if:
(1)
The discovery sought is unreasonably cumulative or
duplicative;
(2)
The party seeking the discovery can obtain it from a more
convenient, less burdensome, or less expensive source;
(3)
The party seeking the discovery has had ample opportunity
to obtain the information sought; or
(4)
The burden or expense of the proposed discovery
outweighs its likely benefit.
Protective Orders. FED. R. CIV. P. 26(c). The court in the district where a
party plans to take a deposition may issue an order “to protect a party or
person from annoyance, embarrassment, oppression, or undue burden or
expense.”
a.
The party or a person from whom the discovery is sought must
request the protective order.
b.
The moving party must certify that he/she has attempted to resolve
the dispute without court action.
c.
The moving party must show “good cause.”
Timing and Sequence of Discovery. FED. R. CIV. P. 26(d).
a.
The parties may not seek discovery from any source until they
have met and conferred pursuant to Federal Rule of Civil
Procedure (FRCP) 26(f).2
2
A person may take a deposition before bringing an action in court under certain circumstances. See FED. R. CIV.
P. 27(a).
7-4
b.
5.
B.
C.
3
After the parties have met and conferred pursuant to FRCP 26(b),
the parties may:
(1)
Conduct discovery simultaneously; and
(2)
Use any of the discovery methods available to them in any
sequence.3
Supplementation of Responses. FED. R. CIV. P. 26(e). See W.M.
Schlosser Co., Inc., ASBCA No. 44778, 96-2 BCA ¶ 28,587 (refusing to
impose sanctions after finding no evidence that the government
purposefully waited to the last permissible moment to inform the appellant
that it intended to retain an expert witness).
Persons Before Whom Depositions May Be Taken. FED. R. CIV. P. 28. See FED.
R. CIV. P. 29 and FED. R. CIV. P. 30(b)(4).
1.
A party within the United States must take a deposition “before an officer
authorized to administer oaths by the laws of the United States or of the
place where the examination is held . . . .”
2.
A person who has a personal, professional, or financial interest in the
action may not take a deposition.
Stipulations Regarding Discovery Procedures. FED. R. CIV. P. 29. The parties
may stipulate regarding:
1.
The person(s) before whom the parties will take depositions;
2.
The time and place where the parties may take depositions;
3.
Any required notice;
Upon motion, the court may dictate the sequence or order of the discovery. FED. R. CIV. P. 26(d).
7-5
D.
4.
The manner in which the parties may take depositions; and
5.
The manner in which the parties may use depositions.
Depositions upon Oral Examination.4 FED. R. CIV. P. 30.
1.
2.
Who May a Party Depose? FED. R. CIV. P. 30(a).
a.
As a general rule, a party may depose “any person.”
b.
A party must obtain leave of the court, however, if:
(1)
The party wants to depose a prisoner;
(2)
The party wants to take more than 10 depositions;
(3)
The party wants to depose a person who has already been
deposed in the case; or
(4)
The party wants to depose a person before the parties have
met and conferred regarding a proposed discovery
schedule.
Notice of Examination. FED. R. CIV. P. 30(b).
a.
The party seeking the deposition must give reasonable notice, in
writing, to every other party to the action.
4
A party can also take depositions upon written questions; however, this rarely occurs. FED. R. CIV. P. 31. See
FED. R. CIV. P. 30(C).
7-6
b.
c.
3.
4.
The notice must state:
(1)
The time and place where the party will take the
deposition;
(2)
The name and address of each person the party plans to
depose;5 and
(3)
The method the party plans to use to record the deponent’s
testimony (e.g., sound, sound-and-visual, stenographic
means, etc.).6
The notice may include a request for the production of documents.
FED. R. CIV. P. 30(b)(5).
Expenses. FED. R. CIV. P. 30(b)(2) and (g).
a.
The party taking the deposition must pay the cost of recording the
deposition.
b.
If the party that noticed the deposition fails to appear (or fails to
subpoena the witness and the witness fails to appear), the court
may order that party to pay the other party’s reasonable expenses,
including reasonable attorney’s fees. See FED. R. CIV. P. 37(d).
Telephonic Depositions. FED. R. CIV. P. 30(b)(7). The parties may agree
to take a deposition by telephone or other remote electronic means. See
Time Contractors, J.V., supra (urging the parties to consider using
telephonic depositions).
5
If the party does not know a deponent’s name and address, the party must provide a general description that
identifies the deponent or the class/group to which the deponent belongs. FED. R. CIV. P. 30(b)(1).
6
Another party may designate an additional method of recording the deponent’s testimony, provided the party is
willing to pay for it. FED. R. CIV. P. 30(b)(3).
7-7
5.
Examination and Cross-Examination. FED. R. CIV. P. 30(c).
a.
The witness must testify under oath.
b.
Objections. See FED. R. CIV. P. 30(d)(1); FED. R. CIV. P. 32(d).
(1)
The officer taking the deposition will note any objections
on the record.
(2)
A party must state its objections in a concise,
non-argumentative, and non-suggestive manner.
(3)
A party may only instruct a deponent not to answer to:
(4)
(a)
Preserve a privilege;
(b)
Enforce a court-ordered limitation; or
(c)
Present a motion showing that the examination is
being conducted:
(i)
In bad faith; or
(ii)
A manner calculated to unreasonably annoy,
embarrass, or oppress the deponent.
Subject to FRCP 28(b) and FRCP 32(d)(3), a party may
object to the use of deposition testimony at a trial/hearing
for the same reasons that the party could object if the
witness was present and testifying.
7-8
(a)
(b)
A party will waive the following errors,
irregularities, and objections unless the party raises
them promptly:
(i)
Errors and irregularities in the deposition
notice;
(ii)
Objections based on the qualifications of the
officer before whom the party is taking the
deposition; and
(iii)
Errors or irregularities in the manner in
which the testimony was transcribed, or the
deposition prepared, signed, certified,
sealed, indorsed, transmitted, or filed.
A party will waive the following errors,
irregularities, and objections if a timely objection
would have obviated, removed, or cured the error,
irregularity, or grounds for objection:
(i)
Objections based on the manner in which
the deposition was taken;
(ii)
Objections based on the form of the
questions or answers;
(iii)
Errors or irregularities in the oath or
affirmation; and
(iv)
Objections based on the conduct of the
parties.
7-9
(c)
6.
E.
A party will not waive the following objections
unless a timely objection would have obviated or
removed the grounds for objection:
(i)
Objections based on the competency of the
witness; or
(ii)
Objections based on the competency,
relevancy, or materiality of the testimony.
Review of Transcript by Witness. FED. R. CIV. P. 30(e).
a.
If the deponent or a party requests the deponent to review the
transcript, the deponent will have 30 days to do so.
b.
The deponent may make changes; however, the deponent must
sign a statement that details the deponent’s reasons for making
them.
Use of Depositions in Court Proceedings. FED. R. CIV. P. 32.
1.
Any party may use a witness’s deposition testimony to contradict or
impeach the witness’s in-court testimony.
2.
An adverse party may use a party’s deposition testimony for any purpose.
See Ryan-Walsh, Inc. v. United States, 39 Fed. Cl. 305 (1997) (permitting
the plaintiff to offer the depositions of the administrative contracting
officer and the assistant contracting officer as substantive testimony at
trial because they were party-opponent admissions); Weaver-Bailey
Contractors, Inc. v. United States, 19 Cl. Ct. 474 (1990) (admitting the
deposition testimony of two government employees over the
government’s “strenuous objections”).
7-10
3.
F.
Any party may use a witness’s deposition testimony for any purpose if the
court finds that:
a.
The witness is dead. See Ryan-Walsh, Inc. v. United States, 39
Fed. Cl. 305 (1997) (permitting the plaintiff to offer a deceased
witness’s deposition as substantive testimony at trial).
b.
The witness is more than 100 miles from the place of the
trial/hearing.
c.
The witness is unable to attend or testify because of age, illness,
infirmity, or imprisonment. See International Gunnery Range
Servs, Inc., ASBCA No. 34152, 90-1 BCA ¶ 22,601 (permitting
the government to introduce the deposition testimony of a witness
who had suffered a heart attack and was advised by his doctor not
to testify at the hearing).
d.
The party offering the deposition testimony could not procure the
witness’s attendance by subpoena.
e.
Exceptional circumstances justify the use of the deposition
testimony in the interest of justice. But see Ryan-Walsh, Inc. v.
United States, 39 Fed. Cl. 305 (1997) (refusing to permit the
plaintiff to offer depositions as substantive testimony based solely
on cost, trial efficiency, or speculation that the government may
not call the witness as planned).
Failure to Cooperate in Discovery. FED. R. CIV. P. 37.
1.
Motions to Compel. FED. R. CIV. P. 37(a)(2).
a.
If a deponent fails to answer a question during a deposition, the
party asking the question may move for an order compelling an
answer.
7-11
b.
2.
(1)
The moving party must certify that it has made a good faith
effort to confer with the deponent—or the person
responsible for the deponent’s failure to answer the
question—in an attempt to resolve the situation without
court action.
(2)
The party asking the question may either complete or
adjourn the deposition.
A party may treat an evasive or incomplete response as a failure to
answer.
Expenses. FED. R. CIV. P. 37(a)(4).
a.
If the motion to compel is granted, the court may require the
deponent—or the party responsible for the deponent’s failure to
answer the question—to pay the moving party’s reasonable
expenses, including attorney’s fees.
b.
If the motion to compel is denied, the court may:
c.
(1)
Issue a protective order; and
(2)
Require the moving party to pay the deponent’s—or the
opposing party’s—reasonable expenses, including
attorney’s fees.
If the motion to compel is granted in part and denied in part, the
court may:
(1)
Issue a protective order; and
(2)
Apportion the parties’ reasonable expenses in a just
manner.
7-12
3.
Sanctions. FED. R. CIV. P. 37(b).
a.
Sanctions by Court in District Where Deposition Taken. FED. R.
CIV. P. 37(b)(1). If a deponent fails to answer a question after
being directed to do so by the court, the court may hold the
deponent in contempt of court.
b.
Sanctions by Court in Which Action Pending. FED. R. CIV. P.
37(b)(2). If a party fails to provide or permit discovery after being
directed to do so, the court may take one or more of the following
actions:
(1)
Order that designated facts be taken as established for
purposes of the action.
(2)
Refuse to allow the disobedient party to support or oppose
designated claims or defenses.
(3)
Refuse to allow the disobedient party to introduce
designated facts into evidence. See Thomas S. Rhoades
and Steven L. Schluneger, ENG BCA Nos. 6025, 6062,
6097, 95-1 BCA ¶ 28,215 (refusing to permit Mr.
Schluneger to testify at the hearing because of his failure to
comply with a Board order to make himself available for an
oral deposition).
(4)
Strike pleadings in whole or in part.
(5)
Stay further proceedings until the order is obeyed.
(6)
Dismiss the action in whole or in part. But see Thomas S.
Rhoades and Steven L. Schluneger, ENG BCA Nos. 6025,
6062, 6097, 95-1 BCA ¶ 28,215 (refusing to dismiss the
appellants’ appeal despite its failure to comply with various
discovery requests because two of the three appeals were
principally subcontractor claims, and the third appeal was a
government claim).
7-13
G.
(7)
Enter a default judgment against the disobedient party.
(8)
Hold the disobedient party in contempt of court.
(9)
Order the disobedient party—or the attorney advising that
party—to pay the other party’s reasonable expenses,
including attorney’s fees.
Expert Witnesses. FED. R. CIV. P. 26(b)(4).
1.
A party may depose any person the other party has identified as an expert
whose opinions that party may present at the trial.7
2.
The party seeking the deposition is entitled to a copy of any written report
the expert prepared pursuant to FRCP 26(a)(2) before the deposition
begins.8
3.
The party seeking the deposition must pay the expert a reasonable fee for
the time the expert spent preparing for and attending the deposition unless
a manifest injustice would result. See Copy Data Sys, Inc., ASBCA No.
44058, 98-1 BCA ¶ 29,390 (requiring the government to pay the
appellant’s expert a reasonable expert witness fee as a “matter of basic
fairness” because the government noticed the deposition to prepare for its
own cross-examination of the witness)
7
A party may also depose experts that the other party does not intend to call as witnesses under certain “exceptional
circumstances” (e.g., where the party seeking to depose the experts cannot obtain the facts known or the opinions
held by the experts by other means). FED. R. CIV. P. 26(a)(4)(B). See FED. R. CIV. P. 35(b); cf. Donald C. Hubbs,
Inc., DOT CBA Nos. 2012, 2013, 2014, 2015, 89-2 BCA ¶ 21,740 (requiring the appellant to give the government
access to test results conducted by a non-testifying expert upon which a testifying expert relied, but declining to
permit the government to actually depose the non-testifying expert).
8
FRCP 26(a)(2)(B) requires witnesses retained or employed to provide expert testimony to prepare and sign a
written report that contains: (1) a complete statement of all of the witness’s opinions; (2) the basis and reasons for
those opinions; (3) the data or other information the witness considered in forming those opinions; (4) any exhibits
the witness plans to use to summarize or support those opinions; (5) the witness’s qualifications, including a list of
all of the publications authored by the witness during the preceding 10 years; (6) the compensation the witness is
receiving for the witness’s study and testimony; and (7) a list of any other cases in which the witnesses has testified
during the preceding 4 years. FED. R. CIV. P. 26(a)(2)(B).
7-14
III.
RULES FOR CONDUCTING DEPOSITIONS IN CASES BEFORE
THE ARMED SERVICES BOARD OF CONTRACT APPEALS
A.
B.
General Policy and Protective Orders. ASBCA Rule 14(a).
1.
The Board encourages the parties to engage in voluntary discovery
procedures.
2.
The Board may issue an order “to protect a party or person from
annoyance, embarrassment, or undue burden or expense.”
a.
The order may limit the scope, method, time, and place for
discovery. See Meredith Relocation Corp., GSBCA Nos. 8956,
9124, 9295, 9844, 10077, 90-2 BCA ¶ 22,747 (refusing to grant
the appellant’s motion for a blanket order permitting it to take
depositions via videotape over the objection of the deponent).
b.
The order may also include provisions for protecting the secrecy of
confidential information or documents.
Timing. ASBCA Rules 14(b) and (c).
1.
2.
The parties may start taking depositions as soon as:
a.
The Board dockets the appeal; and
b.
One of the parties (normally the Appellant) files the complaint.
The parties will generally agree to a voluntary deposition schedule;
however, either party may request the Board to order depositions and
impose a schedule.9
9
The application for an order must specify whether the deposition is a discovery deposition or an evidentiary
deposition. ASBCA Rule 14(b).
7-15
C.
The Board may order the deposition of “any person.”
b.
The Board may order oral or written depositions.
Use as Evidence. ASBCA Rule 14(d).
1.
2.
D.
a.
The Board will not consider deposition testimony as evidence in a hearing
until the testimony is offered and received.
a.
As a general rule, the Board will not receive deposition testimony
in a hearing if the witness is present and available to testify. See
International Gunnery Range Services, Inc., ASBCA No. 34152,
90-1 BCA ¶ 22,601 (permitting the government to introduce the
deposition testimony of a witness who had suffered a heart attack
and was advised by his doctor not to testify at the hearing).
b.
A party, however, may use a witness’s deposition testimony to
contradict or impeach the witness’s hearing testimony.
The Board may receive deposition testimony to supplement the record if
the parties agree to submit the case on the written record pursuant to
ASBCA Rule 11.
Expenses. ASBCA Rule 14(e). Each party must bear its own expenses. See
Duckels Constr. Co., AGBCA No. 89-1-218-1, 90-1 BCA ¶ 22,955 (requiring the
government to pay all of the costs of a deposition it initiated, even though the
appellant’s cross-examination allegedly consumed 61% of the total deposition
time); Time Contractors, J.V., supra (refusing to allow the appellant to shift
deposition costs to the government based on a “naked allegation of financial
hardship); cf. Copy Data Sys, Inc., supra (requiring the government to pay the
appellant’s expert a reasonable expert witness fee as a “matter of basic fairness”
because the government noticed the deposition to prepare for its own
cross-examination of the witness).
7-16
E.
Subpoenas. ASBCA Rule 14(f) and ASBCA Rule 21.
1.
2.
The Board expects the parties to cooperate by:
a.
Making witnesses and evidence under their control available
without the issuance of a subpoena; and
b.
Securing the voluntary attendance of third-party witnesses.
Either party may request the Board to issue a subpoena pursuant to
ASBCA Rule 21 if a subpoena is necessary to ensure the attendance of a
witness at a deposition.
a.
b.
Administrative Requirements. ASBCA Rule 21(a) and (c).
(1)
The party requesting the subpoena must do so in writing.
(2)
The party requesting the subpoena must normally submit
the request 15 days before the scheduled deposition date.10
(3)
The party requesting the subpoena must state the
reasonable scope and general relevance of the testimony or
evidence sought.
Service. ASBCA Rule 21(f).
(1)
The party requesting the subpoena must arrange for service.
(2)
The subpoena may be served by:
(a)
10
A U.S. marshal or deputy marshal; or
The Board may honor a “late” request for a subpoena. ASBCA Rule 21(c)(ii).
7-17
(b)
(3)
c.
d.
(i)
Not a party; and
(ii)
More than 18 years of age.
The person serving the subpoena must:
(a)
Personally deliver a copy of the subpoena to the
witness; and
(b)
Tender the allowance and travel fees specified in
18 U.S.C. § 1821.11
Refusal to Obey a Subpoena. ASBCA Rule 21(g).
(1)
The Board does not have any direct contempt power over a
witness who fails to obey a subpoena.
(2)
If a person refuses to comply with a subpoena, the Board
may apply for an order requiring the person to appear and
give testimony or produce evidence.12
(3)
If the person refuses to comply with the order, the court
that issued the order may punish the person for contempt.
Requests to Quash or Modify a Subpoena. ASBCA Rule 21(d).
(1)
11
Any person who is:
A party may move to quash a subpoena within 10 days of
service, but no later than the time specified in the subpoena
for compliance.
The government does not have to tender the allowance and travel fees in advance. ASBCA Rule 21(f)(2).
12
The Board applies through the Attorney General to the United States District Court for the district where the
person resides, is found, or transacts business. ASBCA Rule 21(g).
7-18
(2)
F.
The Board may quash a subpoena for good cause (e.g.,
where the subpoena is unreasonable and/or oppressive).
See W.G. Yates & Sons Constr. Co., ASBCA Nos. 49398,
49399, 98-1 BCA ¶ 29,655 (finding “no compelling
argument” to grant a motion to quash a subpoena
compelling the presence of the appellant’s “professional
claims preparer” for a deposition); see also Truswal Sys.
Corp. v. Hydro-Air Eng’g, Inc., 813 F.2d 1207 (Fed. Cir.
1987 (concluding that the district court abused its
discretion when it quashed the plaintiff’s motion based
solely on the plaintiff’s failure to cite case authority to
support its discovery of sales information from a nonparty
witness).
Motions. ASBCA Rule 5(b). The Board may entertain and rule upon
“appropriate motions.”
1.
Motions to Compel. If you cannot resolve your dispute without judicial
intervention, ask the Board to issue an order requiring the opposing party
to respond by a specified date. See American Telephone & Telegraph
Co., Federal Sys. Advanced Tech., DOT CBA No. 2479, 94-1 BCA ¶
26,305 (granting the government’s motion to compel the testimony of a
witness after the witness’s attorney inappropriately directed the witness
not to answer the government’s questions); Tera Advanced Servs. Corp.,
GSBCA No. 6713-NRC, 84-1 BCA ¶ 16,936 (granting the government’s
motion to compel the testimony of three witnesses despite the appellant’s
claim of attorney-client privilege); cf. Nero & Assocs., Inc., GSBCA No.
6484-ED, 83-1 BCA ¶ 16,174 (noting that the government cannot refuse
to permit the appellant to depose government witnesses based on its
unilateral perception that the appellant provided evasive or incomplete
answers to its interrogatories).
7-19
2.
IV.
Motions for Sanctions. ASBCA Rule 35. Seek sanctions if the opposing
party fails to comply with a discovery order. See Space Craft, Inc.,
ASBCA No. 47997, 96-2 BCA ¶ 28,485 (refusing to permit the appellant
to present testimonial or documentary evidence during the hearing
because the appellant refused to make its president available for a
deposition); But cf. Taisei Rotec Corp., ASBCA No. 50669, 98-2 BCA ¶
30,070 (refusing to grant the appellant’s motion to dismiss absent a Board
order requiring the government to produce documents, answer
interrogatories, or make witnesses available); W.M. Schlosser Co., Inc.,
ASBCA No. 44778, 96-2 BCA ¶ 28,587 (stating that “[e]xclusion of
evidence, such as expert witness testimony is a drastic action which
generally should only occur when bad faith or willfulness in failing to
comply with a court order is shown); Praught Constr. Corp., ASBCA No.
46135, 96-1 BCA ¶ 28,058 (refusing to grant the appellant’s motion for a
default judgment absent a Board order requiring the government to
produce documents or otherwise furnish discovery).
CONDUCTING DEPOSITIONS.
A.
The Ground Rules.
1.
There are no generally accepted ground rules for conducting depositions.
2.
Therefore, you should:
a.
Review the ground rules on the record at the beginning of every
deposition;
b.
Make sure you know and understand the ground rules before the
deposition begins; and
c.
Make sure the appellant (and the appellant’s attorney) knows and
understands the ground rules before the deposition begins.
7-20
B.
Taking Depositions.
1.
Your goal is to expose biases and obtain admissions.
2.
Prepare for a deposition like you would prepare for a hearing.
a.
Decide the purpose of the deposition.
b.
Do background research.
c.
Decide who to depose and when to depose them.
d.
Decide where to conduct the deposition.
e.
Decide how to conduct the deposition (e.g., oral vs. written
depositions; personal vs. telephonic depositions; etc.).
f.
Decide whether to negotiate any stipulations.
(1)
Negotiating stipulations in advance may avert conflicts and
avoid delays during the deposition.
(2)
The parties may agree to take a deposition before any
person, at any time, at any place, upon any notice, and in
any manner. See FED. R. CIV. P. 29.
(3)
Other common stipulations include:
(a)
Reserving all objections except as to form;
(b)
Waiving the requirement to sign the transcript; and
(c)
Permitting the deponent to sign the transcript before
any notary.
7-21
g.
Prepare a loose outline and “witness sheet.”
h.
Organize your documents.
i.
j.
3.
(1)
The use of documents can make or break a deposition.
(2)
Mark documents in advance, if possible.
(3)
Ensure that you have an adequate number of clean,
identical, and legible copies of each document you plan to
use during the deposition.
Organize your deposition notebook.
(1)
Your deposition notebook should contain a scripted
opening, your outline, and copies of the documents/exhibits
you plan to use during the deposition.
(2)
Update your deposition notebook after each deposition.
If you anticipate problems, provide the Board with written notice
of the deposition schedule and arrange to have a judge available to
resolve any conflicts.
Examining the Witness.
a.
Create a relaxed atmosphere.
(1)
Be friendly and try to establish a rapport with the witness.
(a)
Maintain eye contact.
(b)
Demonstrate your interest in what the witness is
saying.
7-22
(c)
(2)
b.
Do not fight with opposing counsel.
General Strategies/Techniques.
(1)
c.
Ask the witness to help you understand difficult
concepts/terms.
Work from a loose outline.
(a)
You should have a list of the topics you want to
cover, but do not insist on covering them in any
particular order.
(b)
Let the witness dictate the order.
(2)
Let the witness ramble.
(3)
Allow a moment of silence after each answer. Some
witnesses cannot stand silence and will fill the void by
expanding their answers.
(4)
Listen!!
Suggested Order/Pattern of Questioning.
(1)
Begin by asking the witness broad, open-ended questions
that permit the witness to tell a story (e.g., who, what,
where, when, how).
(2)
Follow-up with specific questions that commit the witness
to a particular position or force an admission.
(3)
Wrap up with questions that pin the witness down.
7-23
d.
e.
Avoiding Late Recollections by the Witness.
(1)
Ask the witness about any documents the witness reviewed
to prepare for the deposition.
(2)
Ask the witness about other things that might refresh the
witness’s memory.
Dealing with Obstreperous Opponents.
(1)
(2)
f.
If your opposing counsel engages in objectionable behavior
(e.g., angry outbursts, threatening gestures, continuous
objections calculated to disrupt your examination, etc.):
(a)
Describe what is your opposing counsel is doing on
the record.
(b)
Repeat the description as many times as necessary
to compel your opposing counsel to discontinue the
objectionable behavior.
(c)
Consider taking a break to clear the air.
If your opposing counsel persists, make a motion to compel
and/or a motion for sanctions.
Miscellaneous Tips.
(1)
Maintain control.
(a)
Do not permit your opposing counsel to bully you
out of a legitimate question.
7-24
C.
(b)
Do not permit your opposing counsel’s objections
to distract you from gathering discoverable
information. Note the objections for the record and
continue.
(c)
Do not explain your rationale for asking a particular
question if you can avoid it.
(d)
Do not forfeit legitimate areas of inquiry to be
agreeable or accommodate the witness’s or your
opposing counsel’s schedule. Postpone the
deposition and finish it later, if necessary.
(2)
Stay on the record as much as possible.
(3)
Remember that you are making a written record.
(a)
Be careful with documents and gestures.
(b)
Avoid showmanship and theatrics.
Defending Depositions.
1.
You must fully defend the government’s position at every deposition.
2.
Your goal is should be to:
a.
Protect the witness from your opponent’s clever tricks; and
b.
End the deposition as quickly as possible with as little useful
information on the record as possible.
7-25
3.
Prepare your witness in advance.
a.
Make sure the witness is thoroughly familiar with the parties’
claims and defenses.
b.
Discuss the deposition process.
c.
Teach the witness the “golden rules.”
d.
(1)
Tell the truth.
(2)
Think before you speak.
(3)
Answer the question, but do not volunteer information.
(4)
Listen carefully.
(5)
Do not answer questions that you do not understand.
(6)
Beware of tricky questions.
(7)
Do not advocate the government’s case.
(8)
Do not guess or speculate.
(9)
Examine documents and exhibits carefully and completely
before you answer questions about them.
(10)
Do not argue with the appellant’s attorney.
(11)
Correct mistakes as soon as possible.
Do a “dry run.”
7-26
4.
Protect your witness during the deposition.
a.
Take regular breaks.
b.
Make appropriate objections . . . BUT
c.
5.
(1)
Do not coach the witness; and
(2)
Do not end the deposition (or direct the witness not to
answer a question) unless you have no choice.
Move to limit or end the deposition pursuant to FRCP 30(d) if your
opposing counsel is conducting the deposition:
(1)
In bad faith; or
(2)
In a manner intended to annoy, embarrass, or oppress the
deponent.
Do not cross-examine your own witness unless:
a.
You know the witness will not be available at the hearing;
b.
There are matters on the record that require correction or
clarification; or
c.
A brief examination will resolve an important point in the
government’s favor.
7-27
V.
LIMITS ON DISCOVERY.
A.
Relevance. See FED. R. CIV. P. 26(b)(1).
1.
2.
B.
For discovery purposes, information is “relevant” if it:
a.
Concerns the subject matter of the appeal; or
b.
Is reasonably likely to lead to the discovery of admissible
evidence.
This is a very LOW standard.
Undue Burden. See FED. R. CIV. P. 26(b)(1).
1.
The Board will weigh the requesting party’s need against the burden on
the other party.
2.
In so doing, the Board may consider:
a.
The size and complexity of the appeal;
b.
The amount in controversy;
c.
The likelihood that the length of the hearing will be reduced, trial
presentations simplified, or substantive settlement negotiations
advanced; and
d.
Any limitations on the parties’ resources.
7-28
VI.
C.
Attorney Work Product Rule. See FED. R. CIV. P. 26(b)(3). This privilege
protects work done for a party in anticipation of litigation. See generally B.D.
Click Co., Inc., ASBCA Nos. 25609, 25972, 83-1 BCA ¶ 16,328; Ingalls
Shipbldg. Div., Litton Sys., Inc., ASBCA No. 17717, 73-2 BCA ¶ 10,205. But
see W.G. Yates & Sons Constr. Co., supra (finding no evidence to support the
appellant’s claim that the opinions of the appellant’s “professional claims
preparer” were covered by either the attorney-client privilege or the work product
privilege).
D.
Attorney-Client Privilege. This privilege protects attorney-client communications
undertaken for the purpose of seeking or giving legal advice. See generally B.D.
Click Co., Inc., ASBCA Nos. 25609, 25972, 83-1 BCA ¶ 16,328; Ingalls
Shipbldg. Div., Litton Sys., Inc., ASBCA No. 17717, 73-2 BCA ¶ 10,205. But
see Tera Advanced Servs. Corp., GSBCA No. 6713-NRC, 84-1 BCA ¶ 16,936
(granting the government’s motion to compel the testimony of three witnesses
despite the appellant’s claim of attorney-client privilege).
DISCOVERY EXPENSES.
A.
B.
Funding Issues.
1.
Discovery expenses are generally the responsibility of the contracting
activity.
2.
Avoid making an unauthorized commitment of funds to purchase a
deposition transcript.
3.
Plan for the travel expenses of non-government employees.
Contracting Issues.
1.
The contracting activity must contract for the services of a court reporter.
2.
Consider procurement lead-time and competition requirements when
setting the deposition schedule.
7-29
3.
Recognize the contractual implications of changing the deposition
schedule—particularly at the last minute.
VII. EXPERT WITNESSES.
A.
B.
The Government’s Expert Witness(es).
1.
Involve the government’s expert witness(es) in the deposition process.
2.
Have the government’s expert witness(es) prepare deposition questions.
3.
Consider having a government expert present during depositions.
The Appellant’s Expert Witness(es).
1.
2.
Discovering the Appellant’s Expert Witness(es).
a.
Use interrogatories to identify the appellant’s expert witness(es)
early in the discovery process. See FED. R. CIV. P. 26(b)(4)(B).
b.
Ask the government’s expert witness(es) what they know about the
appellant’s expert witness(es).
Deposing the Appellant’s Expert Witness(es).
a.
Your goal is to discover:
(1)
The witness’s credentials;
(2)
How familiar the witness is with the case; and
(3)
Potential bases for impeachment.
7-30
b.
Possible Scenarios.
(1)
(2)
(3)
The Worst Case Scenario—The Hired Gun.
(a)
Lock the witness into as many extreme positions as
possible.
(b)
Attempt to lay a foundation for conflicts.
The Best Case Scenario—The Painfully Honest Expert
Witness.
(a)
Not all opposing witnesses are the enemy.
(b)
Nothing is more effective than proving your case
with the appellant’s expert witness(es).
(i)
Determine whether the appellant’s expert
witness(es) bolsters the conclusions drawn
by the government’s expert witness(es).
(ii)
Consider calling the appellant’s expert
witness(es) at the hearing if the appellant
chooses not to base on the deposition
testimony.
The Generalist. Watch out for expert witnesses that have
outstanding credentials, but no hands-on experience or
familiarity with the critical facts of the case.
(a)
Challenge the foundations upon which the witness’s
conclusions are based.
7-31
(b)
Seek to establish that:
(i)
The appellant (or the appellant’s attorney)
exerted undue influence over the witness.
(ii)
The witness lacks personal knowledge.
(iii)
The witness’s source information is
unreliable.
(iv)
The witness had inadequate time to prepare.
(v)
The witness’s assumptions, methodology, or
calculations are erroneous or flawed.
c.
Challenge expert witnesses who seek to testify about the ultimate
legal issue in the appeal. See, e.g., Litton Sys, Inc., Applied Tech.
Div., ASBCA No. 36976, 93-2 BCA ¶ 25,705; Lockheed Corp.,
ASBCA Nos. 36420, 37495, 39195, 91-2 BCA ¶ 23,903.
d.
Ask expert witnesses about their fees. See Cosmic Constr. Co.,
ASBCA Nos. 24014, 24036, 88-2 BCA ¶ 20,623 (indicating that
the Board would “carefully scrutinize and evaluate” an expert’s
testimony where the expert was receiving a contingent fee for his
testimony); Melville Energy Sys, Inc., ASBCA No. 33890, 87-3
BCA ¶ 19,992 (indicating that the Board would consider a
contingent fee arrangement in evaluating an expert’s credibility).
e.
Do not spend all of your time taking notes!!
VIII. CONCLUSION.
7-32
Air Force
Alternative Dispute Resolution
(ADR) Reference Book
(Acquisition)
January 2001
DRAFT
Air Force Alternative Dispute Resolution (ADR) Reference Book
January 2001
Foreword
The Air Force has a superb and well-trained acquisition workforce. So do our industry partners. However,
no acquisition or resulting contract is perfect. When disagreements occur we cannot afford to conduct
business in an adversarial and litigious manner. As a result, the Air Force is taking the “A” out of ADR by
making ADR forums, the primary and preferred method for resolving contract issues that have not been
resolved through the normal negotiation process. This effort to strengthen our ADR program constitutes a
major policy shift and will have a significant—and hopefully beneficial impact—both to the warfighter and
to contractors of all sizes doing business with the Air Force.
The Air Force ADR program has already successfully accomplished the following:
•
Resolved contract issues valued at approximately $1 billion and increased the number of ADR cases
four-fold—with a 97% success rate.
•
Created an ADR Division of 10 attorneys at Wright-Patterson AFB and expanded the Directorate of
Contract Dispute Resolution’s mission to fully implement the new “ADR First” policy.
•
Converted 52% of appeals being litigated before the Armed Services Board of Contract Appeals
(ASBCA) to ADR.
•
Engaged with industry and signed 17 Corporate-level ADR agreements that commit the parties to
using “ADR First,” before resorting to litigation. (See Section 1.3.2.1)
•
Executed 88 program-level agreements, covering all Acquisition Category I & II programs,
committing senior program leadership to using ADR. (See Section 1.3.2.2)
•
Expanded the ADR infrastructure, by placing ADR Champions in every Major Command and at
each Center within Air Force Materiel Command.
The Air Force developed this reference book to further assist the acquisition, sustainment and operational
contracting communities in understanding ADR and the myriad of ways in which it can be used to resolve
issues. This reference book: (1) defines ADR; (2) explains Air Force policy on ADR; (3) summarizes
various methods of ADR available along with the characteristics of some cases that might call for ADR; (4)
recommends methods for deciding when to select an ADR option, as well as the process of selecting a thirdparty Neutral; and (5) summarizes practical issues to consider in using ADR.
This handbook is not intended to be an exhaustive list of ADR methods or situations appropriate for ADR.
Rather it is intended to provide the issue resolution team (program manager, requiring activity, contracting
officer, and attorney) with a basic understanding of what ADR offers as a tool for resolving contract issues in
controversy. Any attempt to use ADR should begin with contacting the appropriate experts to help facilitate
your efforts. Points of contact are provided in this handbook.
The warfighter—and the entire acquisition community wish you good luck and successful issue resolution!
DARLEEN A. DRUYUN
Principal Deputy Assistant Secretary,
(Acquisition & Management)
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Air Force Alternative Dispute Resolution (ADR) Reference Book
Table of Contents
Foreword........................................................................................................................................................ i
1 The Air Force Alternative Dispute Resolution (ADR) Program ............................................................... 1
1.1 What is ADR?.................................................................................................................................... 1
1.2 Why Use ADR? ................................................................................................................................. 1
1.2.1 Business Reasons for Using ADR .............................................................................................. 1
1.2.2 Legal and Policy Mandates to Use ADR.................................................................................... 2
1.2.3 Air Force Implementation of National ADR Policy................................................................... 2
1.3 Who are the Players in the Air Force ADR Program?....................................................................... 4
1.3.1 Air Force..................................................................................................................................... 4
1.3.1.1 SAF/GC Responsibilities..................................................................................................... 5
1.3.1.2 SAF/AQ Responsibilities .................................................................................................... 5
1.3.1.3 ADR Advisory Team........................................................................................................... 5
1.3.1.4 ADR Champions.................................................................................................................. 6
1.3.1.4.1 Air Force Materiel Command (AFMC) ADR Champions ........................................... 6
1.3.1.4.2 Operational MAJCOM ADR Champions..................................................................... 6
1.3.1.4.3 ADR Champion Roles and Responsibilities................................................................. 7
1.3.1.5 ADR Legal Experts ............................................................................................................. 7
1.3.1.5.1 Directorate of Contract Dispute Resolution ( AFMC LO/JAB) ................................... 7
1.3.1.5.2 Commercial Litigation Division (AFLSA/JACN) ....................................................... 8
1.3.1.6 Contract Issues Resolution Team ........................................................................................ 8
1.3.2 The Contractor.......................................................................................................................... 10
1.3.2.1 Corporate-Level ADR Agreements ............................................................................... 10
1.3.2.2 Program-level ADR Agreements (Lightning Bolt 99-4) ............................................... 11
1.3.3 ADR Resources in the Private-Sector....................................................................................... 13
2 Factors to Consider in Assessing Whether ADR is Appropriate............................................................. 14
2.1 Air Force ADR Criteria ................................................................................................................... 14
2.1.1 What Are Our Business Objectives With Regard to this Issue?............................................... 14
2.1.2 Why Did Negotiations Reach Impasse? ................................................................................... 14
2.1.3 Are There Pragmatic Concerns about Whether ADR Will Work?........................................... 15
2.1.3.1 Factors Favoring Use of ADR ........................................................................................... 15
2.1.3.2 Factors that Weigh Against the Selection of ADR ............................................................ 15
3 How to Engage in ADR........................................................................................................................... 16
3.1 The Importance of Decision Quality Information ........................................................................... 16
3.2 Subcontractor Claims ...................................................................................................................... 16
3.3 GAO Bid Protests ............................................................................................................................ 16
3.4 How to Engage in ADR:.................................................................................................................. 17
3.4.1 Notifying the ADR Advisory Team ......................................................................................... 17
3.5 Preparation for ADR:....................................................................................................................... 19
3.5.1 Information Exchange. ............................................................................................................. 19
3.5.2 The Participants ........................................................................................................................ 19
3.5.2.1 The Principal(s) ................................................................................................................. 19
3.5.2.2 The Attorney(s) ................................................................................................................. 20
3.5.2.3 Other Members of the Business Team............................................................................... 20
3.6 Advice on Preparing the Air Force for an ADR Proceeding ........................................................... 20
4 Fitting the “Form to the Fuss:” Choosing Appropriate ADR Techniques............................................. 22
4.1 ADR Techniques Designed to Assist Negotiations ......................................................................... 22
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January 2001
4.1.1 Mediation.................................................................................................................................. 23
4.1.2 Early Neutral Evaluation .......................................................................................................... 24
4.1.3 Mini-trials ................................................................................................................................. 25
4.2 Sample Plan for a Non-Binding ADR Process ................................................................................ 25
4.3 ADR Techniques that Result in a Binding Decision ....................................................................... 26
4.3.1 Arbitration ................................................................................................................................ 26
4.3.2 Summary Trial With Binding Decision.................................................................................... 27
4.3.2.1 Air Force Use of Binding Arbitration In a Pre-Appeal ADR ............................................ 27
4.4 ADR Process Selection Matrix........................................................................................................ 28
5 Neutrals................................................................................................................................................... 29
5.1 Definition of a Neutral..................................................................................................................... 29
5.2 Tenure of Neutrals ........................................................................................................................... 29
5.3 Qualifications of Neutrals................................................................................................................ 29
5.4 Choosing a Neutral .......................................................................................................................... 30
5.5 Using Senior-level Officials to Resolve the Issue ........................................................................... 31
5.6 Paying For the Services of A Neutral .............................................................................................. 32
6 Putting It All Together: Elements of an Issue-Specific ADR Agreement ............................................. 33
6.1 Issues Defined, Methods of Presentations,Resolution, and Schedule ............................................. 33
6.2 Appointment of a Neutral ................................................................................................................ 33
6.3 Stay or Suspension of Litigation ..................................................................................................... 33
6.4 Audit ................................................................................................................................................ 33
6.5 Exchange of Information ................................................................................................................. 33
6.6 Confidentiality Concerns................................................................................................................. 34
6.7 Other Considerations ....................................................................................................................... 35
6.8 Closure............................................................................................................................................. 35
7 Fiscal/Monetary Considerations ............................................................................................................. 36
7.1 Who Pays for the Cost of an ADR Procedure?................................................................................ 36
7.2 Funding Judgments.......................................................................................................................... 36
7.3 Funding Settlements ........................................................................................................................ 37
7.3.1 General Principals and Anti-Deficiency Act (ADA) Concerns................................................ 37
7.3.2 Source of Settlement Funds...................................................................................................... 38
7.4 Other Issues Associated with the Cost of ADR............................................................................... 39
7.4.1 Interest ...................................................................................................................................... 39
7.4.2 Payment of Attorney’s Fees ..................................................................................................... 39
7.4.3 Allowability of Claim Preparation Costs.................................................................................. 39
8 Best Practices.......................................................................................................................................... 40
8.1 Assembling the ADR Team............................................................................................................. 40
8.1.1 Identifying A Principal ............................................................................................................. 40
8.1.2 Identifying Team Members Who Should Participate And When............................................. 40
8.1.3 Obtaining Neutrals/Mediators .................................................................................................. 40
8.2 Other Issues and Concerns .............................................................................................................. 41
8.2.1 Be Sure to Consult Your Air Force Attorney ........................................................................... 41
8.2.2 Need for Well-Drafted Procedures Regarding Information Exchanges ................................... 41
8.2.3 Need for Well-Drafted Settlement Agreements........................................................................ 41
8.3 Conducting Successful ADR ........................................................................................................... 41
8.4 Avoiding and Managing Contract Issues in Controversy................................................................ 42
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List of Tables
Table 1
Table 2
Table 3
Table 4
Table 5
Table 6
Table 7
Table 8
Air Force Acquisition ADR Plan.................................................................................................... 4
Type of Issue or ADR Assistance................................................................................................... 9
ACAT I & II Program Level ADR agreements............................................................................ 12
ADR Timing and Settlement Alternatives.................................................................................... 18
Issue Resolution Continuum......................................................................................................... 22
Business Goals.............................................................................................................................. 28
Department of Justice - Guidelines for Selecting Neutrals........................................................... 30
Limitations on Neutral’s Authority .............................................................................................. 31
List of Figures
Figure 1
Figure 2
Figure 3
Figure 4
Mediation Process ....................................................................................................................... 23
Early Neutral Evaluation Process................................................................................................ 24
Mini-Trial Process....................................................................................................................... 25
Summary Trial Process ............................................................................................................... 27
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1 The Air Force Alternative Dispute Resolution (ADR) Program
1.1 What is ADR?
Alternative Dispute Resolution (ADR) refers to a variety of streamlined resolution techniques designed to
resolve issues in controversy more efficiently when the normal negotiation process fails. FAR 33.201
defines ADR as “…any type of procedure or combination of procedures voluntarily used to resolve issues
in controversy. These procedures may include, but are not limited to, conciliation, facilitation, mediation,
fact-finding, mini-trials, arbitration and the use of ombudsmen.” FAR 33.201defines an “issue in
controversy” as a material disagreement between the Government and the contractor which: (1) may
result in a claim; or (2) is all or part of an existing claim. It is not “giving away the farm,” “paying a
premium”, or an “easy way out.” It is a disciplined approach to resolving contract issues. It is important
to note that ADR is not the first step to litigation, rather it is an extremely effective business tool available
to the Contracting Officer and Program Manager to resolve contract issues in controversy long before
litigation is contemplated.
1.2 Why Use ADR?
Effective use of ADR makes good business sense. It is national policy and the policy of the Department
of the Air Force to use ADR to the maximum extent practicable and appropriate to resolve issues in
controversy at the earliest stage feasible, by the most efficient and least expensive method possible, and at
the lowest possible organizational level.1
1.2.1 Business Reasons for Using ADR
There are a number of common-sense business reasons to consider using ADR.
Fitting the Form to the Fuss: ADR permits the parties to fashion a process that is custom-tailored
to resolving their issue.
Keeping Control: ADR permits the parties to fashion agreements that address the time and effort
they need to resolve their issue. It also ensures the parties mutually resolve the issue rather than
relinquish control to a disinterested (and probably less knowledgeable) third party.
Flexibility: ADR processes permit business and requirements personnel to help design a resolution
process that can adapt, as necessary, to changing circumstances in order to remain effective.
Facilitating Open Communication and Information Exchange: ADR processes can significantly
reduce the adversarial nature of resolving an issue, improve the productivity of face-to-face
discussions between stakeholders, and typically permit expedited information exchanges.
Tangible Benefits: ADR processes significantly reduce resolution cycle times and transaction costs
associated with protracted litigation.
Intangible Benefits: The impact of protracted litigation can lead to inefficiencies and distractions
that can materially impact the quality of performance on existing and future contracts. In addition,
many ADR processes directly involve stakeholders. This direct involvement which can increase
buy-in for the results, and enhance the long-term relationships of the parties.
1
See Air Force Policy Directive 51-12 (April 1999), Para. 3
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Air Force Alternative Dispute Resolution (ADR) Reference Book
ADR Works: Armed Services Board of Contract Appeals (ASBCA) judges serving as third-party
Neutrals in hundreds of ADR proceedings confirm that ADR works. Over the last five years, the
ASBCA has been asked to resolve more than 400 Department of Defense appeals using ADR.
They have successfully resolved over 95% of these appeals.
1.2.2 Legal and Policy Mandates to Use ADR
By statute, contracting officers are authorized to use any “alternative means of dispute resolution….”2 In
addition, the Contracts Dispute Act (CDA) requires contracting officers to explain in writing why they
have declined a contractor’s request to use ADR.3 FAR Part 33 was amended to implement the foregoing
statutory authorization/requirement4 and provides that it is Government policy to:
[R]esolve all contractual issues in controversy by mutual agreement at the contracting
officer's level. Reasonable efforts should be made to resolve controversies prior to the
submission of a claim. Agencies are encouraged to use ADR procedures to the maximum
extent practicable.5
1.2.3 Air Force Implementation of National ADR Policy
Air Force Five Year-Plan: Air Force Policy Directive (AFPD) 51-12 requires the development of an Air
Force Five-Year ADR plan to ensure that various functional offices determine the goals, shape and size of
the ADR effort for their functional area. In July of 1999, the Assistant Secretary of the Air Force for
Acquisition (SAF/AQ) approved the acquisition community’s Five-Year ADR plan6 Its goals are:
•
To use ADR to the maximum extent practicable and appropriate to resolve contractual issues in
controversy at the lowest level possible using the least expensive means appropriate.
•
To develop coordinated strategies for the management of contract controversies to include mission
need, legal, and fiscal issues.
•
To promote creative, efficient and sensible outcomes to contractual disagreements.
•
To track and measure the efficiency, effectiveness and overall usage of ADR, and to continuously
seek process improvements. This last goal recognizes the need to track our results in order to
realize the Air Force’s overarching goal of reducing “tangible and intangible costs, in time and
resources, associated with dispute resolution.” 7
Corporate and Program ADR Agreements: The Air Force has entered into Corporate-level agreements
with 17 of its largest suppliers to use ADR before resorting to litigation. (See section 1.3.2.1). While
there is some variation in the wording used in these Corporate Agreements, each of them essentially
establishes the following commitment by senior-level decision-makers:
2
See 41 U.S.C. 605(d)
See 41 U.S.C. 605(e)
4
A copy of the FAR provisions that were amended can be found on the web at:
http://www.adr.af.mil/iadrwg/far.html
5
Certain factors, however, may make the use of ADR inappropriate (See 5 U.S.C. 572(b)).
6
A complete copy of the Five-Year Plan can be found on the ADR Program web site at
http://www.safaq.hq.af.mil/contracting/toolkit/adr/AQ5yr_plan_Final.htm
7
See AFPD 51-12, Para. 2.3
3
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Air Force Alternative Dispute Resolution (ADR) Reference Book
January 2001
In the event an issue cannot be resolved through negotiation, the parties shall, in lieu of
litigation, endeavor to use ADR to facilitate resolution. Air Force and Corporate
management will be kept advised of the progress in resolving the issue whether through
negotiation or through ADR techniques.
Both the Air Force and the contractors take these agreements seriously and intend to use these agreements
to promote conflict resolution. Pursuant to Lightning Bolt 99-4, the Air Force entered into program-level
ADR Agreements covering most of its major weapon system contracts. These agreements commit senior
program management to using ADR before resorting to litigation. (See section 1.3.2.2) A complete
listing of programs having ADR program-level ADR Agreement, along sample program-level ADR
agreements, is available on the Air Force ADR Program web site:
http://www.safaq.hq.af.mil/contracting/toolkit/adr/lightning.html
Creation of an Air Force Infrastructure: Pursuant to the AQ ADR Plan, the Air Force has created a
multi-disciplinary and multi-agency ADR Advisory Team and placed ADR Champions at each Center
within the Air Force Materiel Command (AFMC) and each Major Command Headquarters. Additionally,
the legal community created an ADR Division within the Air Force Directorate of Contract Dispute
Resolution (previously known as the Air Force Trial Team) to emphasize the importance of using ADR
techniques. The AQ ADR plan is ambitious in its size and scope. While there is significant ongoing
effort required by this plan, much of the preliminary structure is in place as indicated in Table 1 below:
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Air Force Alternative Dispute Resolution (ADR) Reference Book
Table 1 Air Force Acquisition ADR Plan
Plan Element
Engagement with Industry
ADR Infrastructure
AF/JA ADR Support Services
Integrating Fiscal Concerns
into ADR
Summary
• Executed 17 Corporate and 88 Program-level Agreements
• HQ AFMC/JA Hosted Corporate Counsel (Jun 00)
• On-going Interchange with industry associations (Aug 00 –
present)
• On-going Joint Air Force-Industry ADR Integrated Product Team
(IPT) (Aug 00-present)
• Established the ADR Advisory Team & ADR Division.
• Appointed ADR Champions and Facilitators.
• Created ADR Program web Site at http://www.adr.af.mil
• HQ AFMC/JA initiated major new initiative to use ADR in all
pending contract litigation and to provide Trial Team support
ADR use pre-contracting officer final decision.
• Completed 29 ADRs (Jan-Sep 00)
Included SAF/FMB and SAF/AQX representatives as members of
ADR Advisory Team.
ADR Case Screening
• Established pre-appeal criteria-- See Section 2.
• Established post-appeal criteria-- See section 1.3.1.5.1
Data Collection &
Infrastructure Funding
Approved funding for infrastructure FY00 – FY07
Air Force ADR Program
Marketing & Training
•
•
•
•
Extensive Air Force ADR training effort underway
ADR website http://www.adr.af.mil -- over 200,000 hits
Industry briefings and ADR Program marketing effort underway
Continuing efforts with industry to address joint training
In short, ADR use is national policy and the Air Force has engaged with industry to secure its
commitment to using ADR. Equally important, the Air Force has created an infrastructure to support this
program that includes a network of offices and personnel who can assist Air Force personnel in using
ADR techniques.
1.3 Who are the Players in the Air Force ADR Program?
1.3.1 Air Force
The basic decisions concerning whether to use ADR in a particular case, the type of ADR to use, and the
selection of an ADR Neutral generally are made by the parties. These decisions may also be made by an
“Integrated Product Team” -- a team comprised of, but not limited to, agency contracting officials,
program managers/user communities, and agency procurement attorneys. The Air Force has created a
network of personnel and offices that are designed to ensure Air Force personnel capitalize on prior
experiences each time they consider the use of ADR. As discussed more completely below, the ADR
Advisory Team, ADR Champions, and the ADR Division of the AF Contract Dispute Resolution team are
tasked to ensure Air Force ADR needs are matched with appropriate resources. The text that follows
provides more information about the ADR Program players and their roles in helping Air Force business
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Air Force Alternative Dispute Resolution (ADR) Reference Book
January 2001
teams employ the use of ADR. For more information of the Air Force ADR Program, resources and
specific points of contact see the Air Force ADR website (http: //www.adr.af.mil).
1.3.1.1 SAF/GC Responsibilities
The Secretary of the Air Force appointed the Principal Deputy General Counsel (SAF/GC) the Air Force
Dispute Resolution Specialist (AFDRS) in 51-12 AFPD 51-12. The AFDRS has overall responsibility for
developing and implementing Air Force ADR policy and initiatives. The AFPD deals with a wide range
of ADR activities, the major ones being in the areas of acquisition, personnel and environmental disputes.
The AFDRS is tasked with coordinating the efforts of SAF/GC with representatives from, SAF/AQ,
SAF/MI, AF/DP and AF/JA, among others, (collectively known as the “Air Force ADR Steering
Committee”). Together the AFDRS and the ADR Steering Committee are responsible for implementing
ADR initiatives throughout the Air Force. A senior attorney in the Air Force Office of the General
Counsel was appointed the Deputy Dispute Resolution Specialist (AFDDRS) responsible for ADR
Program management, implementation, and legal advice.
The ADR Program Office is located in SAF/GCQ and can be contacted by phone at (937) 693-7286
(DSN 223) or via email at gcqadr@pentagon.af.mil
1.3.1.2 SAF/AQ Responsibilities
SAF/AQ is responsible for the development and implementation of effective execution of ADR within the
Acquisition community. SAF/AQ:
• Is responsible for developing and executing the Air Force Five Year Plan for acquisition ADRs.
• Provides the vision, guidance and leadership to implement the acquisition and business processes
ADR initiatives.
• Funds the infrastructure associated with acquisition ADR efforts
1.3.1.3 ADR Advisory Team
The ADR Advisory Team is a key part of SAF/AQ’s effort to establish a support structure to facilitate the
use of ADR. The Advisory Team is a multi-disciplinary team of senior Government officials who can
help in designing and implementing efforts to use ADR. The ADR Advisory Team helps ensure that each
time the Air Force engages in ADR, that it benefits from “lessons learned” and helps acquisition
professionals match existing Air Force resources with their unique ADR needs.
The SAF/AQ Five-Year ADR Plan provides that the ADR Advisory Team will:
•
•
•
•
•
•
•
•
•
Develop and maintain an ADR practical application guide
Coordinate and monitor corporate agreements and program-level agreements
Facilitate and provide assistance on ADR process design
Maintain a centralized register of third-party Neutrals, their preferred ADR techniques and
experience, and an evaluation of their performance
Communicate lessons learned throughout the Air Force via web site
Manage the ADR training program, developing and providing training as needed
Coordinate responses to media and/or congressional inquires
Establish metrics and identify continuous improvement opportunities
Maintain on-going assessment of Air Force ADR environment
The Chief of Contracting Policy (SAF/AQCP) currently chairs the ADR advisory team. This individual
works closely with SAF/GCQ, HQ AFMC/JABA, DCAA, DMCA, financial experts, and other members
of the Advisory Team to help identify resources and overcome obstacles for parties interested in using
ADR to resolve issues in controversy. The membership of the ADR Advisory Team and phone numbers
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for its members are posted on the Air Force ADR Program web site at:
http://www.safaq.hq.af.mil/contracting/toolkit/adr/newpocs/.
1.3.1.4 ADR Champions
ADR Champions are the key to ensuring Air Force ADR needs are matched with appropriate resources.
Because Air Force contracting organizations focus on acquisition and sustainment programs, and
operational contracting, the ADR Champions reflect the different organizations and chains of command
for each area. Accordingly, the Air Force placed ADR Champions at each Center in Air Force Materiel
Command and at the headquarters of each operational command. A list of the ADR
Champions/Facilitators and their phone numbers are posted on the Air Force ADR program web site at:
http://www.safaq.hq.af.mil/contracting/toolkit/adr/newpocs/
1.3.1.4.1 Air Force Materiel Command (AFMC) ADR Champions
SAF/AQ and AFMC/CC have designated the Director of the Centralized Acquisition Support Team
(CAST) to be the OPR for implementing ADR policy within the Air Force Materiel Command’s
Acquisition Community. Center AR Champions are intended to be the first source of advice for Program
Offices in all ADR procedures and the key to matching individual Air Force ADR needs with corporate
Air Force resources. Each Center has an Acquisition Support Team (AST). The ASTs are “multifunctional” and provide “life-cycle” support to Air Force acquisition professionals. The CAST is charged
with training, organizing and equipping the ASTs in implementation of the Air Force ADR program.
Specifically, the CAST will:
•
•
•
•
•
•
•
•
•
Provide a link to field ASTs and facilitate prioritization and allocation of resources.
Prioritize and allocate CAST resources to support AST implementation of the Air Force ADR
Plan.
Train ADR Champions/Facilitators and key members of ADR team.
Coordinate efforts of ADR Champions across the command.
Develop and maintain ADR training modules.
Augment local ASTs in assisting Special Program Offices (SPO) match individual Air Force
ADR needs with appropriate Air Force Resources, e.g., the ADR Advisory Team, ADR Division
and Contract Issue Resolution Team (CIRT).
Collect ADR lessons learned and transmit them to the ADR Advisory Team for dissemination
across the Air Force.
Assist the ADR Advisory Team in creating and maintaining the ADR Reference Book.
Function as liaison between ASTs and SAF/AQC, SAF/GCQ, HQ AFMC/JAB, CIRT and the
ADR Advisory Team.
In accordance with AFMC/CC letter dated 26 September, 2000, the Chief or Deputy of each AST is
designated as the Center ADR Champion. The Center ADR Champion has received ADR training in
order to match individual ADR needs with the available resources. In addition, each Center will also
have one ADR Facilitator -- a more knowledgeable “expert” on the mechanics of ADR. The facilitator
would normally be assigned within the AST. However, an AST can appoint facilitators outside the AST
by mutual agreement. The ADR Facilitator will assist programs in resolving contract issues in
controversy at the lowest possible level, as early as possible, through the use of ADR techniques using
appropriate Air Force resources, e.g., the ADR Advisory Team, the ADR Division and the CIRT. A list of
the ADR Champions/Facilitators and their phone numbers are posted on the Air Force ADR Program web
site at: http://www.safaq.hq.af.mil/contracting/toolkit/adr/newpocs/.
1.3.1.4.2 Operational MAJCOM ADR Champions
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SAF/AQC directed that senior-level contracting personnel in the headquarters of every Air Force Major
Command (except AFMC) be appointed as the ADR Champion in that command. Operational ADR
Champions are intended to be the first source of advice for operational contracting officers within their
respective commands and are the key to matching individual Air Force ADR needs with Air Force
resources. The Operational MAJCOM ADR Champions have received intensive ADR training to match
individual ADR needs with the available resources. These Operational MAJCOM ADR Champions will
be supported by the ADR Division of the Air Force Directorate of Contract Dispute Resolution. Each
ADR Champion will be paired with one or more members of the ADR Division’s experts to provide ADR
assistance as needed. Operational contracting ADR Champions and their phone numbers, as well as the
membership of the ADR Division, are posted on the Air Force ADR Program web site at:
http://www.safaq.hq.af.mil/contracting/toolkit/adr/newpocs/.
1.3.1.4.3 ADR Champion Roles and Responsibilities
These ADR Champions, working with their Facilitators within AFMC or their ADR Division experts
within the operational commands, must be able to:
• Understand what alternative dispute resolution is and the benefits it can provide
• Understand when ADR is appropriate and the importance of designing an ADR process that “fits
the form to the fuss”
• Understand the resources the Air Force can bring to bear in an ADR effort and who to call to help
match your ADR needs with appropriate Air Force resources.
In addition, ADR Champions will be expected to:
• Collect and interject Lessons-Learned into future acquisition strategies
• Arrange for or provide ADR training to contracting officers and/or offices on an as needed basis
• Collect and maintain metrics on the implementation of ADR.
In short, ADR Champions are intended to be the first source of advice for contracting officers and
program managers within their respective commands and the key to matching individual Air Force ADR
needs with Corporate Air Force ADR resources. ADR Champions and their phone numbers, as well as
Facilitators and the membership of the ADR Division, are posted on the Air Force ADR Program web site
at: http://www.safaq.hq.af.mil/contracting/toolkit/adr/newpocs/.
1.3.1.5 ADR Legal Experts
Legal counsel can provide advice on applicable law, Neutrals, range of appropriate ADR forums and
techniques, and litigation risk. They can assist in fact-finding, document review, analysis and strategy.
Your local legal office should be the first legal office consulted for such assistance and then, if needed the
contract dispute resolution experts at the Directorate of Contract Dispute Resolution (AFMC LO/JAB
“Air Force Trial Team”) and the Office of General Counsel (SAF/GCQ).
1.3.1.5.1 Directorate of Contract Dispute Resolution (AFMC LO/JAB)
The Air Force Directorate of Contract Dispute Resolution, located at Wright Patterson Air Force Base,
serves as the Air Force representative for all Air Force contract claims appealed to the Armed Services
Board of Contract Appeals (ASBCA). They are dispute resolution specialists and now experts in ADR
forums and techniques. Traditionally, the Air Force Trial Team has been involved with program
managers and contracting officers only at the final decision stage and then again if the contractor appeals
the Contracting Officer Final Decision (COFD). The Air Force Trial Team’s mission has expanded to
include pre-final decision and pre-appeal assistance. To better support program management and the
contracting officer, the Air Force Trial Team has been reorganized and is now divided into two
geographic divisions (East and West, divided by the Mississippi River) and an ADR Division. The ADR
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Division handles all PEO and DAC cases and is the point of contact for ADR. Overseas cases are
assigned across divisions. Attorneys in all the divisions are doing ADR, with over half of the disputes
presently before the ASBCA on an ADR track. The Air Force Trial Team can be reached at (937) 2556111 (DSN 785), Ext 252. The trial team can support program management and the contracting officer
by providing:
•
•
•
•
•
•
•
•
Legal analysis and litigation risk assessment
Fact-finding, document review and witness interviews
Advice on resolution strategies and forums
ADR agreement preparation/negotiation
Assistance in conducting a mediation, mini-trial or summary trial
Assistance in securing a Neutral and/or coordinating with the ASBCA
Assistance in drafting settlement agreements and releases
Interface with experts, technical consultants and resources.
1.3.1.5.2 Commercial Litigation Division (AFLSA/JACN) 8
The Department of Justice (DOJ) takes control of the litigation on behalf of the Government when a
contractor appeals a contracting officer’s final decision at the United States Court of Federal Claims
(Court of Federal Claims). DOJ has the responsibility for litigating the case and is vested with settlement
authority. Stated differently, Air Force contracting officers do not exercise settlement authority in cases
filed before this Court.
The Air Force cooperates closely with DOJ in cases pending before the Court of Federal Claims. In order
to support DOJ in cases appealed to this Court, and to provide a single point of contact for interfacing
with DOJ, the Air Force has a division of attorneys within the Commercial Litigation Division of the Air
Force Legal Services Agency (AFLSA/JACN).
Use of ADR in the Court of Federal Claims requires agreement with DOJ, the Air Force and the
contractor. All communication with DOJ in cases pending before the Court of Federal Claims must be
coordinated with JACN, (703) 696-9063 (DSN 426).
1.3.1.6 Contract Issues Resolution Team
The Contract Issue Resolution Team (CIRT) is an Air Force organization located at Wright-Patterson
AFB, Ohio, with state-of-the-art document collection and analysis capability. The Air Force has made
funding available to ensure that the CIRT’s capabilities are used to support its ADR efforts. Requests for
CIRT support for an ADR effort are currently made through the ADR Division or the ADR Advisory
Team. The technological and analytical capabilities of the CIRT can play a key role in helping the parties
collect, analyze and communicate the information needed to facilitate resolution.
1.3.1.7 Summary of Air Force Sources of ADR Assistance
The basic thrust of the Air Force ADR Program is to help Air Force personnel match their ADR needs
with Air Force resources. To illustrate this point, Table 2 summarizes the types of ADR assistance that
can be provided by various organizations. “P” denotes primary sources(s) of assistance and “c” denotes
secondary sources of assistance.
8
An ADR division was created within AFLSA/JAC to implement the ADR program within the Department.
However, ADR related to contract disputes have been worked through the Directorate of Contract Disputes
Resolution, AFMC LO/JAB, or AFLSA/JACN.
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Table 2 Type of Issue or ADR Assistance
Type of Issue or ADR Assistance
Needed
The Issue in controversy involves a PEO
or DAC Program and is:
(1) likely to result in litigation; or
(2) more than 12 months old
then the concerned organization or ADR
Champion should contact the ADR
Advisory Team
The Issue in controversy involves an
operational contract issue and is:
(1) likely to result in litigation; or
(2) more than 12 months old
then the concerned organization or ADR
Champion should contact the ADR
Division
The Issue in Controversy is neither likely
to result in litigation nor more than 12
months old and ADR assistance is
needed
To obtain joint ADR training
contractor(s) in preparation for an
upcoming ADR
To obtain the latest ADR guidance
material
Need help selecting a third-party Neutral
Need assistance in identifying funds to
pay for a settlement (after consulting
with appropriate local and MAJCOM
points of contact)
To obtain the latest ADR lessons learned
To respond to a congressional or media
inquiry about using ADR
To obtain the latest information about
ADR metrics
To view sample ADR agreements
To view Corporate or Program-level
ADR Agreements
To identify sources for ADR Skills
Training
ADR
Champion
(Section
1.3.1.4)
ADR
Advisory
Team
(Section
1.3.1.3)
ADR
Division
(AFMC/
JABA)
(Section
1.3.1.5.1)
ADR
Program
(SAF/GC)
(Section
1.3.1.1)
ADR Web
Site
(Section
1.3.1)
P
P
C
C
C
P
C
P
C
C
C
C
P
P
C
P
C
P
C
P
C
P
C
C
C
P
C
C
P
C
P
C
C
C
P
C
P
P
C
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1.3.2 The Contractor
Successful ADR requires all parties to make a good faith effort to help the process work. As a result the
contractor is a key player. Like the Air Force, most of the major DoD contractors have adopted ADR as a
preferred method of resolving issues in controversy. Many of these DoD contractors have committed to
use ADR with the Air Force by executing Corporate and program specific ADR agreements.
1.3.2.1 Corporate-Level ADR Agreements
Corporate-level Agreements are generally signed by a corporation’s CEO or COO and SAF/AQ.
Seventeen companies have committed to the Air Force that they will use ADR techniques to resolve
issues. Collectively these companies account for a majority of the total Air Force procurement budget in
any one year. They are:
•
•
•
AlliedSignal, Inc.
Alliant Techsystems Inc.
DynCorp
•
•
•
•
•
•
•
•
•
GE Aircraft Engines
GTE Government Systems
Harris Corporation
ITT Industries, Defense & Electronics
Litton Industries Inc.
Lockheed Martin Corporation
•
•
•
•
•
Northrop Grumman Corporation
Raytheon Company, Inc.
Science Application International
Corporation
Sverdrup Corporation
The Boeing Company
Tracor Aerospace, Inc.
TRW Inc.
United Technologies Corporation
A current list of these agreements may be viewed at the ADR Program web site
at:http://www.safaq.hq.af.mil/contracting/toolkit/adr/corpagree/index.html
Corporate-level ADR Agreements establish an overarching ADR process that generally requires the
parties to:
1. Use a cooperative philosophy throughout the acquisition life cycle. In furtherance of this
principle, all Air Force/corporate teams are encouraged to conduct joint reviews of the contract’s
goals and objectives identify potential obstacles to timely and effective completion, and to
periodically assess progress toward overcoming these obstacles.
2. Resolve all contract issues at the lowest possible level. This principle recognizes that the detailed
knowledge of the issues is generally at the program level and the resolution of problems at that
level fosters teamwork in pursuing mutually satisfactory solutions.
3. In the event an issue cannot be resolved through negotiation, the parties shall, in lieu of litigation,
endeavor to use ADR to facilitate resolution. The parties’ management will be kept advised of
the progress in resolving the issues whether through negotiation or through ADR techniques.
4. Consistent with FAR 33.214, the parties will, before initiation of the use of ADR for a particular
matter, agree in writing to specific ADR collaborative techniques, timelines and identification of
Neutrals appropriate for the issues in controversy.
5. In the event either party believes a particular issue is not well-suited to ADR, or is dissatisfied
with progress being made in a particular ADR proceeding, that party may, after good faith efforts
to resolve the issue, elect to opt out of the ADR processes and proceed as otherwise provided
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under contract, regulation or statute. Nothing in these agreements should be deemed to prevent
either party from exercising their legal rights and remedies during the ADR process.
Air Force personnel who are working on contracts with a signatory to a Corporate-Level ADR Agreement
must attempt to use ADR in lieu of litigation.
1.3.2.2 Program-level ADR Agreements (Lightning Bolt 99-4)
Lightning Bolt 99-4 required each Acquisition Category (ACAT) I and II program to establish program
level ADR implementation agreements with their prime contractor(s) by the end of FY99. Among other
things, the stated purpose of this Lightning Bolt was to initiate the Air Force ACAT I and II program
portion of an Air Force-wide initiative to expand the appropriate use of ADR, e.g., Corporate ADR
Agreements and the Air Force Five-Year ADR Plan.
Air Force personnel who are working on a contract with a Program-level ADR Agreement must attempt
to use ADR. The ADR Program ADR Agreements are consistent with the Corporate-ADR Agreements
but are tailored for the specific program. They generally require the parties to conduct a two-step process.
In the first step the parties attempt to resolve all issues in controversy arising under or related to the
contract by negotiation and mutual agreement at the contracting officer's level. If negotiations reach an
impasse, the parties proceed to an ADR step. While the specific type of ADR is not specified, the parties
have agreed upon certain parameters:
•
The Parties further agree that any ADR process must be structured to allow sufficient time to
exchange and analyze any information necessary to obtain and justify a settlement.
•
The parties will prepare and agree to a specific, written ADR Agreement appropriate to the
controversy, before the ADR process begins.
•
The agreement should normally address the following (as appropriate): authorized representatives
for each party; ADR techniques and processes to be utilized and procedures to be followed;
methods for the exchange of information; a schedule and procedures for any discovery
proceedings, including how to limit discovery/factual exchange; appointment and payment of
Neutrals; whether and to what extent to stay or suspend any pending litigation; possible audit
requirements; confidentiality; at what point the parties will begin negotiations; and a provision for
termination of the agreement.
•
In the event either party believes a particular issue is not well-suited to ADR, or is dissatisfied
with progress being made in a particular ADR proceeding, that party may, after good faith efforts
to resolve the issue, elect to opt out of the ADR process and proceed as otherwise provided under
contract, regulation or statute. Nothing in these agreements should be deemed to prevent either
party from preserving and exercising its legal rights and remedies during the ADR process.
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Table 3 ACAT I & II Program level ADR Agreements
AC-130U Gunship
Advanced Cruise Missile
(AGM-126A)
AGM-130
Air Force Mission Support
System
Airborne Laser
AMRAAM
B1-B
Evolved Expendable Launch
Vehicle
F-15
F-16
F-22
Global Air Traffic
Operations
Global Transportation
Network
Ground Theater Air Control
System
JASSM
JDAM
Joint Strike Fighter
B-2
C-17
Defense Meteorological
Sat. Prog.
Defense Support Program
JSOW
E-3 AWACS
Joint STARS
MILSATCOM
Minuteman III GRP/ICBM
PIC
NAVSTAR
Predator UAV
Satellite and Launch Control
SBIRS High Component
SBIRS Low PD
Sensor Fused Weapon
T-1A
T-6 Airframe
Theater Battle Management
Core System
Training Systems Program
1.3.2.3 Establishing Additional ADR Agreements
In general, the Air Force believes additional ADR agreements can be valuable tools but should be focused
on program and operational level agreements. As additional agreements are executed they should be
forwarded to the ADR website at http://www.safaq.hq.af.mil/contracting/toolkit/adr The following
provides some guidance for establishing additional agreements.
Corporate-level ADR Agreements: While generally not anticipated, if a CEO or COO of a corporation
wishes to enter into a corporate-level ADR Agreement with the Air Force, his or her staff should contact
the Chief of the ADR Advisory Team. The corporation initiating this request should be prepared to
commit to all the material terms found in the Corporate ADR Agreement template located on the Air
Force ADR Program web site at http://www.safaq.hq.af.mil/contracting/toolkit/adr/corpagree/index.html
Corporate-level ADR Agreements are generally signed by the following officials:
For the Government – Principal Deputy Assistant Secretary for Acquisition and Management
(SAF/AQ)
For the Contractor – The appropriate counterpart (e.g., CEO or COO)
Program-level ADR Agreements: Any program managers for Acquisition Category I-III (ACAT)
program may execute a Program-level ADR Agreement. That agreement should conform to the material
terms of the agreement template found on the Air Force ADR Program web site. Program-level ADR
Agreements require signatures from the following officials:
For the Government – Government’s System Program Director (SPD) and the chief of contracting
For the Contractor – Their appropriate counterparts
Individual Contract Agreements for Operational Contracts: The Air Force encourages ADR
agreements with contractors supporting operational installations and would expect these agreements to
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track the language of the ADR Program-level agreements. Individual Contract Agreement for
Operational Contracts will require the following signatures:
For the Government - Contracting officer and head of the office that generated the contract
requirements (the customer)
For the Contractor - Project manager and chief of the business unit
1.3.3 ADR Resources in the Private-Sector
In addition to the Government ADR resources and organizations addressed in this section, there are
numerous other resources available in the private sector. (See the Air Force ADR web Site
www.adr.af.mil)). These private-sector ADR resources can provide innovative solutions and different
ADR models.
1.3.3.1 General ADR Information for Small and Medium-Sized Businesses
If you are approached by a small or medium-sized company regarding an issue, and they are not familiar
with ADR, you can refer them to the Centralized Acquisition Support Team Legal Advisor at (937) 6560816 (DSN 986) for more information.
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2 Factors to Consider in Assessing Whether ADR is Appropriate
This section discusses characteristics of cases that may help to determine their suitability for ADR. These
characteristics are necessarily broad, as ADR is useful in many types of issues in controversy. Air Force
personnel can refer to these characteristics to make a preliminary assessment of the possibility of using
ADR in a particular case, as well as in a discrete portion or issue in a case.
2.1 Air Force ADR Criteria
Use ADR as early in the life cycle of an issue in controversy as possible. The following three-part test
can help determine whether ADR is suitable for your issue.
• What are the business objectives with regard to this issue?
• Why did negotiations reach impasse?
• Are there pragmatic concerns about whether ADR will work?
2.1.1 What Are Our Business Objectives With Regard to this Issue?
If the following list characterizes our business objectives, then use of ADR often makes sense:
• Continuing relationships between the parties need to be maintained.
• Desire for early problem solving by use of creative alternatives.
• Flexibility desired in shaping relief. (For example, the parties may want to achieve a more
comprehensive resolution involving other issues, which are not part of the contract controversy).
• Need for swifter resolution than could be achieved by litigation.
• Need to minimize disruption to other programs or mission areas by diversion of resources to
support litigation.
2.1.2 Why Did Negotiations Reach Impasse?
We should not use ADR if our face-to-face negotiations with a contractor are producing results. However
if our negotiations with the contractor have reached impasse, then we need to ask why that happened. For
example, the American Bar Association developed the following list9 of some common causes of
impasse and what a Neutral can do to help the parties overcome the problem:
Communications Difficulties Between or Among Parties: Impasse has been reached or is likely to
develop because of personality conflicts or a history of poor or non-existent communications among the
participants (including attorneys). A skilled ADR Neutral can bridge the parties' communications gap.
Communications Difficulties Between Lawyers and Their Clients: Clients may be resistant to settlement
overtures, even if endorsed by their counsel, without first obtaining from an impartial Neutral a candid
appraisal of the merits and the parties' respective legal positions.
Factual or Technical Complexity/Uncertainty: The parties would benefit from reliance on the expertise
of a third-party expert for technical assistance and/or fact-finding. Obtaining such expert Neutral
assistance could facilitate more meaningful discussion and resolution of a complex matter.
Ultimate Outcome Uncertain: The parties are confused about the likely outcome, should the matter
proceed through litigation. Negotiations, to be productive, require a better grasp of litigation risks. A
knowledgeable ADR Neutral can provide the parties with needed insights as to those risks.
9
This list was developed by the American Bar Association Public Contract Law Section’s Special Committee on
ADR in a Monograph entitled, Alternative Dispute Resolution: A Practical Guide for Resolving Contract
Controversies.
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This analysis will help us focus on designing an ADR process that matches the right ADR technique, or
combination of techniques, to help us overcome the barriers to settlement.
2.1.3 Are There Pragmatic Concerns about Whether ADR Will Work?
Even if the first two parts of our analysis indicate that ADR use makes sense, there are a number of
pragmatic concerns that could hinder the ADR process.
2.1.3.1 Factors Favoring Use of ADR
If any of the considerations listed below apply to your issue in controversy, use of ADR may be
appropriate:
•
•
•
•
•
Need a factual interpretation or the parties are polarized into an “all or none” position and believe
that an evaluation by a third party Neutral could help resolve the matter.
Reasonably clear that some entitlement exists and the real task is negotiating or agreeing to a
reasonable amount. If lack of funds, or cancelled funds, preclude meaningful negotiations, the
ADR Advisory Team may help identify potential sources of funds.
One party’s view of the case is unrealistic, and a realistic appraisal of the situation by a Neutral
third party may help.
ADR could speed anticipated settlement by streamlining or limiting the exchange of information
and time needed to resolve the matter.
Bad facts, bad law or other factors make avoiding an adverse precedent desirable.
2.1.3.2 Factors that Weigh Against the Selection of ADR
Under the Administrative Dispute Resolution Act of 1996, Congress requires agencies to consider the
following factors in deciding if a case is appropriate for ADR.10 If any of the considerations listed below
apply to your issue in controversy, use of ADR may not be appropriate:
• A definitive and authoritative decision is needed as a precedent.
• The matter involves significant issues of Government policy and ADR will not assist policy
development.
• Maintaining established policy and avoiding variations in implementation is of special
importance.
• The matter significantly affects non-parties.
• A full public record of the proceeding or resolution is important.
• The agency must maintain continuing jurisdiction over the matter with the right to alter the
resolution as circumstance demands.
In addition, allegations of fraud may prohibit the contracting officer from proceeding with an ADR.
10
See 5 U.S.C. § 572(b)
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3 How to Engage in ADR
3.1 The Importance of Decision-Quality Information
An issue will not be ready for ADR unless decision-quality information is accessible using available
resources within the time frame contemplated. This is because the parties must have sufficient knowledge
of the facts to determine their business interests and make a credible ADR presentation. Accordingly,
each party must be conscious of the other party’s need for reliable information sufficient to support a
rational decision to conclude the matter and should cooperate in furnishing this information.
Audit input on financial matters is often critical to establish facts needed to justify a settlement. Many
contract controversies stem from audit exceptions. These issues are often complex and require in-depth
knowledge of accounting and related regulations. To fully understand the financial consequences of
decisions, government procurement professionals should include auditors as part of the ADR team in
appropriate cases. Seek audit assistance whenever equitable adjustment proposals or claims are included
in the ADR. The ADR agreement should address the type of information and documents to be provided
to the auditor and whether there are any restrictions on the use of the information or documents provided.
The Air Force Trial Team at Wright Patterson AFB has extensive ADR experience. If you are unsure of
whether your process will produce decision-quality information, contact the Chief of the ADR Division
(937) 255 –6111 (DSN 785), Ext 244 for assistance. The Air Force ADR Division can also assist Air
Force personnel in accessing the services offered by the Contract Issue Resolution Team (CIRT). The
CIRT has a tremendous range of technical, financial, and program experts to consult and state-of-the- art
document collection and analysis capabilities that can provide many of the services needed to develop
decision-quality information as quickly as possible.
3.2 Subcontractor Claims
Except in very limited cases,11 subcontract claims cannot be considered by the Air Force unless the prime
contractor sponsors the claim.12 This rule applies because the Air Force has no direct contractual
relationship (privity of contract) with the subcontractor. As a result, the only contractual relationship is
through the prime contractor. Therefore any negotiations or ADR procedures used to resolve a
subcontractor issue in controversy must involve or be processed through the prime contractor.
3.3 GAO Bid Protests
The General Accounting Office (GAO) will make its attorneys available to serve as third-party Neutrals
before and after a bid protest is filed with the GAO. The two ADR methods used by GAO attorneys who
act as ADR Neutrals are: (1) negotiation assistance (mediation); and (2) outcome prediction (Early
Neutral Evaluation -- ENE).
Virtually all of the Air Force’s ADRs before the GAO have been of the ENE variety. When using this
technique, the GAO attorney assigned to the case will, in coordination with his or her supervisor, provide
the parties with a candid assessment of the likely outcome of the protest. Because they will be the ones
who will write the GAO’s opinion about the protest, their assessment of the case means they are
essentially telling the parties who will prevail. (A more detailed description of the ADR process before
the GAO can be found in an article by the GAO's Daniel I. Gordon, Esq. entitled “GAO's Use of
‘Negotiation Assistance’ and ‘Outcome Prediction’ as ADR Techniques” at
11
Although Small Business Administration 8(a) contracts are technically subcontracted through the SBA,
contractors under SBA 8 (a) program may file claims directly with the Air Force.
12
See FAR 44.203
16
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http://www.adr.af.mil/iadrwg/gordon.html.) To date, the Air Force’s ADR practice before the GAO
enjoys a 100% resolution rate and provides a resolution of the bid protest in 20-45 days versus the 100
days normally required to receive a written decision from the GAO.
If counsel represents a protestor, then the Air Force Office of the General Counsel (SAF/GCQ) takes the
lead in representing the Air Force before the GAO. Accordingly, the use of ADR in such matters must be
coordinated with SAF/GCQ. However, if an attorney does not represent a protestor, then the Chief of the
Contract Support Division (SAF/AQCX), within the Office of the Deputy Assistant Secretary for
Contracting has the lead in representing the Air Force before the GAO. Accordingly, the use of ADR in
such cases must be coordinated with SAF/AQCX.
3.4 How to Engage in ADR:
The procedural steps used on a particular ADR may depend on when you use ADR. The FAR provides
that the parties may agree to use ADR when an issue first arises or a claim is submitted.13 Because only a
few business personnel in the Air Force have participated in ADR processes, the Air Force ADR Program
has a number of experienced and trained personnel to assist you in using ADR. (See “ADR Program
Players” in Section 1.3. above and Table 2.) Your ADR Champion can assist you in understanding what
ADR is and how it can be used. But for more assistance on designing an ADR process and drafting an
ADR agreement, your ADR Champion will put you in contact with the ADR Advisory Team or the ADR
Division. These organizations can provide expert advice so that you do not have to “re-invent the wheel”
and will ensure your ADR process benefits from the lessons learned by the Air Force in other ADRs. In
addition, these organizations can help you obtain resources necessary to help support your ADR effort.
3.4.1 Notifying the ADR Advisory Team
If you intend to use ADR, your command ADR Champion must contact the ADR Advisory Team. This
will ensure any new policies or lesson learned can be disseminated and incorporated into future business
practices. Likewise, upon completion of the ADR, the lessons learned will be posted on the Air Force
ADR Program web site.
Table 4, below, is designed to give you an overview of how the posture of your issue in controversy
determines who needs to be involved and what needs to be done to commence an ADR process. It
assumes you have contacted your ADR Champion. Note that the FAR Disputes process may still impose
procedural or timing requirements, regardless of whether ADR is being used. If you seek more detailed
information or assistance, contact the ADR Advisory Team or the ADR Division, as appropriate.
13
FAR 33.214(a)(1); FAR 52.233-1 - Disputes.
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Table 4 ADR Timing and Settlement Alternatives
Status
If ADR is Appropriate:
ADR Resolves the Issue:
ADR Fails,
Pre-CO
Final
Decision
(COFD)
Parties execute an ADR Agreement and
proceed according to the terms of the ADR
agreement. See FAR 33.214(a)
Execute a settlement, bi-lateral
modification and appropriate releases. If
necessary, Air Force pays the contractor
Note: Often the best time to use ADR. If the
issue in controversy is more than $10 million
or has remained unresolved for more than 12
months, be sure to coordinate your effort
with the ADR Advisory Team.
http://www.safaq.hq.af.mil/contracting/toolki
t/adr/newpocs/
Same as above, but note that the contractor’s
time limits for filing an appeal are not
suspended. See FAR 33.214(c)
Resume the
normal
Contract
Disputes Act
process, e.g.,
issue a COFD
Execute a settlement, bi-lateral
modification and appropriate releases. If
necessary, Air Force pays the contractor
Resume the
normal CDA
process, e.g.,
contractor
appeals the
COFD
Resume
litigation
process at the
ASBCA
PostCOFD,
but PreAppeal
Post
Appeal of
a COFD
to the
Armed
Services
Board of
Contract
Appeals
(ASBCA)
(1) Work with the Air Force attorney at
HQ AFMC/JAB who is representing the Air
Force at the ASBCA
(2) The JAB attorney will coordinate the
execution of an ADR agreement with the
ASBCA and the other party (or parties)
(3) The parties then suspend the proceeding
and proceed to ADR according to the terms
of the ADR agreement
(1) If negotiated settlement, execute a
modification and appropriate releases
and, if necessary, Air Force pays the
contractor if contract funds or expired
funds are available. If funds have
cancelled or are not available within the
Air Force, ASBCA incorporates the
settlement into a Consent Judgment,
paid by the Judgment fund.
(2) If you get a binding decision on sum
certain, the Judgment Fund normally
pays the contractor. The CO may issue
a modification.
(3) When the Judgment Fund is used,
the Air Force reimburses the Judgment
Fund from “current year” funds
Post
Appeal of
a COFD
to the
Court of
Federal
Claims
(CFC)
(1) Work with the Air Force attorney at
AFLSA/JACN assigned to handle the case
(2) The JACN attorney will coordinate with
the Department of Justice attorney assigned
to the case to engage with the appropriate
CFC judge and the other party (or parties) to
execute an ADR agreement
(3) The parties then proceed according to
the terms of the ADR agreement
Execute a modification and appropriate
releases and, if necessary, Air Force
pays the contractor if contract funds or
expired funds are available. Otherwise
CFC incorporates the settlement in a
Consent Judgment, paid by the
Judgment fund. When the Judgment
Fund is used, the Air Force reimburses
the Judgment Fund from “current year”
funds
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3.5 Preparation for ADR:
Non-binding ADR leads to agreement, not judgment. Always keep in mind that the process will not
succeed unless the parties agree to the terms of a resolution. Therefore ensure you have a process that
builds bridges necessary for resolution. Preparation for ADR will depend upon the type of ADR to be
used.
3.5.1 Information Exchange.
In order for the parties to prepare for any ADR proceeding, they must have a grasp of the facts and an
understanding of the other party's positions on the issues in controversy. For the parties to achieve the
comfort level needed to reach a negotiated settlement, they must first do an appropriate amount of factfinding. The ADR Neutral can aid them in structuring a sensible schedule of ADR fact-finding in the
form of document exchanges, informal meetings and formal depositions of critical personnel. Bottom
line, most contractors are willing to give information in an information exchange if they know the
Government is serious about seeking a resolution and that it is needed to help justify a settlement.
Based on the Air Force’s experience to date, the following guidance may be helpful:
•
Identify the issues in controversy.
•
Identify the documents needed to intelligently discuss and value each issue, and to obtain decision
quality information.
•
Once the potential universe of information is identified, establish a timeline for the exchange of
that information.
•
Consider building joint binders with information relevant for each issue (“One Book”) concept to
make it easier for the parties and the Neutral to access relevant documents. Note: The CIRT may
be able to provide assistance in this effort.
•
Identification of incurred costs is critical to the ability of the Government to reach a resolution and
justify a settlement. Generally the Government must receive a contractor proposal adequate for
the DCAA to do a meaningful audit to justify a settlement. Otherwise the Government may lack
authority to settle the issue at the amounts proposed.
•
In complex cases, you may need to develop a common statement of the legal theories to
support/defend the position of each side and the elements needed to prove each theory. Next agree
upon the information needed to support each elements. Finally, organize the information
exchange to fill in the missing information.
3.5.2 The Participants
At one level, a non-binding ADR process can be viewed as a series of trust building measures between
the parties. When using a non-binding ADR process, it is essential to carefully consider the interpersonal as well as technical skills as you select the members of the team that will conduct the ADR
process.
3.5.2.1 The Principal(s)
Each side will normally appoint principal negotiating representatives (“principals”) for the proceeding.
The principals should have sufficient authority to commit their organizations to a settlement of the
controversy. Equally important, the principals must possess strong leadership and conflict management
skills to help: (1) keep the ADR team together; (2) focus the ADR process on reaching a resolution; and
(3) help maintain trust between the parties.
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3.5.2.2 The Attorney(s)
The role of counsel is to support the principals and other members of the business team in the ADR
process. This role normally includes providing the following:
•
Drafting the ADR Agreement.
•
Assisting the business team in the design of the ADR process.
•
Ensuring that confidentiality protections sought by the Air Force business team are effective.
•
Ensuring that privileged, or otherwise protected information, is not disclosed.
•
Assisting the business team in the selection of a Neutral the business team agrees is both effective
and unbiased.
•
Assessing legal entitlement and litigation risk. One approach to assessing legal entitlement is to
group the contractor’s theories into the following four groups:
-
Accept the theory and note that most of the facts are present.
Accept the theory, but note that some facts are missing.
Accept the theory but no facts to support it.
Reject the theory.
•
Based on the foregoing groupings, the attorney can then assign his or her litigation risk
assessment to each issue by:
- Evaluating causation -- Who is responsible for what?
- Assisting in the evaluation of damages – Were the costs incurred and are they allocable?
- Putting forth affirmative Government defenses and assessing whether these defenses negate
any or all of the contractor’s theory (or theories) of entitlement.
- Identifying the differences in the positions of the parties.
•
Assisting in drafting and, if appropriate, presenting the positions.
•
Helping to identify the underlying interests of the parties.
•
Providing a reality check of the goals and approach to ADR..
•
Ensuring that the settlement agreement is legally enforceable and defensible.
•
Ensuring that payment is based on the contract at issue or another one that is linked to the issue.
Although legal advice is essential for a successful ADR, the ultimate decision to settle and the amount of
that settlement is not a legal decision, it is a business decision.
3.5.2.3 Other Members of the Business Team
At a minimum, the Air Force should ensure that members of the business team include personnel with
first-hand knowledge of the issue(s) in controversy. The Air Force should supplement its team, as
necessary, with personnel from DCMA and DCAA. In addition, in many cases the input of a senior price
analyst is absolutely critical. Technical experts may also be required to clarify issues.
3.6 Advice on Preparing the Air Force for an ADR Proceeding
When using a non-binding ADR process, the principals should meet with the Neutral jointly or separately
at the beginning and end of each day of the joint presentation phase to make adjustments as necessary to
keep the ADR process on track.
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In addition to the ADR position statements, it is frequently helpful for both parties to develop and have
available for ADR initial settlement offers and “fall back” negotiating positions. These, of course, will be
subject to modification, based on the facts that emerge from the ADR proceeding.
When preparing the Air Force presentation here are some helpful lessons learned.
• Power point presentations are very effective.
• Demonstrative evidence (i.e., maps, charts, models, etc.) is very effective.
• Direct exchanges between experts and program officials are very helpful.
Agency representatives should also identify in advance of any ADR proceeding the sources of funding
that will be available should the parties be able to settle their differences through ADR. Familiarity with
the types of funding that may be accessed as well as with the use of the Judgment Fund administered by
the Treasury Department is advisable. See Section 7.
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4 Fitting the Form to “the Fuss”: Choosing Appropriate ADR Techniques
This section describes the techniques most commonly used, how they work, some problems that may be
encountered in their use and the relationship of each technique to negotiation and litigation. The table
below provides a framework for organizing your thinking about ADR. From left to right is the issue
resolution continuum, ranging from unassisted negotiation on the left to litigation on the right. In
between these two extremes are a number of resolution forums, collectively referred to as ADR. As
indicated in the shaded area near the top of the chart, ADR techniques fall into three broad categories
based on the type of assistance the parties need: 1) assisted negotiation; 2) outcome prediction; and 3) a
binding decision. Moving from left to right, the chart depicts increasingly adversarial, costly and timeconsuming modes of issue resolution. Equally important, moving from left to right, the parties lose some,
or all, control of the process and its outcome.
Table 5 Issue Resolution Continuum
NEGOTIATION
Unassisted
Negotiations
Traditional
negotiation
methods
ALTERNATIVE DISPTUE RESOLUTION
Assisted
Outcome
Binding ADR
Negotiations
Prediction
Assistance
LITIGATION
Litigation
Mediation
Early Neutral
Evaluation
Binding
Arbitration
Court of
Federal Claims
Mini-Trial
Dispute
Review
Boards14
Summary
Trial with
Binding
Decision
Boards of
Contract
Appeals
Federal
Appellate
Courts
In many ways, effective ADR use depends on the tailoring of the procedures outlined above, alone or in
combination, to provide the process and input needed to resolve the issue.
4.1 ADR Techniques Designed to Assist Negotiations
All too frequently, parties reaching impasse on an issue in controversy can no longer effectively
communicate and need a Neutral third person to act as a conduit. In such instances, mediation,
facilitation, or a structured settlement procedure offers viable options.
14
A Dispute Review Board (DRB) is usually a three-member panel selected by agreement of the parties that
evaluates controversies as they arise during the course of a contract and are rarely used in the Air Force. The DRB
is often established soon after contract award. The members typically attend meetings between the parties and are
privy to contract administration issues as they arise, giving them an understanding of the contract requirements and
a familiarity with the parties. Obviously, a DRB comes with an associated, sometimes substantial, overhead cost to
maintain the DRB. Therefore, establishment of a DRB may not be economically feasible unless the associated
contract is large enough to justify the required expenditures in view of the anticipated benefits. The Joint Direct
Attack Munition Program has a contract clause that contemplates the use of a Dispute Review Board and that clause
can be viewed on the web at: http://www.safaq.hq.af.mil/contracting/toolkit/adr/adr_docs/CC.html
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4.1.1 Mediation
Mediation is an ADR forum using the assistance of a neutral third party with no stake in the result and
used when the parties have “room to settle”, but have been unsuccessful with traditional negotiations.
The Neutral in this process is called a mediator. The mediator is not authorized to impose a settlement
upon the parties, but rather assists the parties in fashioning a mutually satisfactory solution to resolve the
issue in controversy. Parties may seek facilitative mediation, in which the mediator simply facilitates
discussions between or among the parties and does not provide any form of evaluation of the merits of
their respective positions. Alternatively, some parties may prefer evaluative mediation (outcome
prediction), in which the mediator provides the parties with his/her views as to the strengths and
weaknesses of their respective positions, in conjunction with the mediator's efforts to help the parties
fashion a mutually acceptable resolution to the controversy.
Mediation is one of the most widely used ADR techniques in the private sector. Mediation is favored
because the flexibility and informality of the mediation process makes it useful in a wide variety of
matters. In addition, the parties in a mediation are voluntary participants who do not surrender control of
the ultimate resolution of an issue in controversy so that matters of authority and control do not become
obstacles to resolution.
The Mediation process can be designed in a manner that meets the needs of the parties. Typically it
begins with all parties meeting in joint “session” where the respective interests and positions are shared.
The process often includes a private “caucus” session with the mediator to allow further discussion of the
case. At times, particularly when emotions run high, the mediator may choose to keep the parties
separated and to conduct “shuttle diplomacy.” The mediator will work with the parties to identify
common interests and to narrow the gap between the parties' respective positions. The dynamics of
mediation process and its unique features are captured in Figure 1, below.
Figure 1 Mediation Process
Mediation
Process Dynamics:
Third-party assisted
negotiations
N
P1
P2
N
N
P1
P2
Unique Feature:
Confidential caucuses
Decisionmakers:
The parties
P1
I nte grity - Se rvic e - E x c e lle nce
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The mediator serves to structure negotiations, acts as a catalyst between the parties, focuses the
discussions, facilitates exchange between the parties, and serves as an assessor - not a judge - of the
positions taken by the parties during the course of the negotiations. In some cases, the mediator may
propose specific suggestions for settlement; in other cases the mediator helps the parties generate more
creative settlement proposals. Nevertheless, as in traditional negotiation, the parties retain the power to
resolve the issues through an informal, voluntary process in order to reach a mutually acceptable
agreement. If settlement is possible, the mediator’s role is to bring the parties to closure. A sample
mediation agreement can be reviewed on the ADR Program web site at:
http://www.adr.af.mil/iadrwg/samples.html
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4.1.2 Early Neutral Evaluation
Early Neutral Evaluation (also referred to as “outcome prediction” or the “settlement judge” approach)
has many of the same features as mediation. It adds a Neutral's: (1) review of the parties' positions and
the information they provide; and (2) evaluation of the relative strengths and weaknesses of each party's
position. These evaluations can be given to the parties individually or jointly. In this non-binding
process, the parties generally select a Neutral with subject matter expertise and whose opinion they
respect. Often settlement is based in large part on the Neutral’s opinion. This is one of the reasons the
parties involved in government procurement issue in controversy often use a sitting ASBCA judges to
perform this function. The basic elements of an early neutral evaluation are captured in Figure 2, below:
Figure 2 Early Neutral Evaluation Process
Early Neutral Evaluation
N
Process Dynamics:
Third-party assistance
with negotiations
P1
P2
Unique Feature:
- evaluation of likely outcome
- assessment of facts and/or
methodology
Decisionmakers:
The parties
As of: 18 Oct 00
P1
+
P2
Integrity - Service - Excellence
A sample settlement judge agreement can be reviewed on the ADR Program web site at:
http://www.adr.af.mil/iadrwg/samples.html
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4.1.3 Mini-trials
A Mini-trial is not a small trial. It is a more structured process that includes the use of senior principals.
Mini-trials permit the parties to present their case or an agreed upon portion of the case to principals who
have authority to settle the issue in controversy, often with the assistance of a third-party neutral advisor.
The Neutral may thereafter meet with the principals to attempt to mediate a settlement. The mini-trial
may also be a prelude to the Neutral's issuance of either a formal written non-binding advisory opinion or
to the Neutral's rendering of a binding decision. Limited discovery (as outlined in the ADR agreement)
ordinarily precedes the case presentation.
The presentation itself may be a summary or abbreviated hearing with or without oral testimony as the
parties agree. Often, following the presentation, the principals begin negotiations with the aid of the
Neutral as mediator or facilitator. The role of the Neutral is defined in the written ADR Agreement. The
Neutral generally presides at the presentation of the case, setting the ground rules and seeing that the
proceeding is conducted according to the ADR Agreement. The Neutral often has expertise in evidence
and the substantive law and may be called upon for advisory rulings on questions likely to arise if the
matter proceeds to litigation. If the Neutral has subject matter expertise the Neutral may also question
presenters and witnesses to focus the parties’ attention on specific matters. This ADR mechanism is
useful in focusing factual issues or mixed questions of law and fact, and in highlighting the strengths and
weaknesses of the case. Settlement authority in mini-trial is the same as in negotiated settlements. The
basic elements of a mini-trial are captured in Figure 3, below:
Figure 3 Mini-Trial Process
Mini-Trial
Mini-Trial Panel
Process Dynamics:
Hybrid settlement negotiation process
combining senior- decisionmakers
with mediation
SP1
P1
SP2
P2
N
Unique Feature:
Involvement of senior-decisionmakers
SP2
SP1
Decisionmakers:
The parties
As of: 18 Oct 00
N
SP1
+
SP2
I nte grity - Se rvic e - E x c e lle nce
At the conclusion of the presentation the decision-makers may adjourn to negotiate the matter in
controversy. The Neutral may be called upon to act as advisor, mediator or fact-finder in this subsequent
session depending upon the terms of the ADR Agreement and the desires of the parties. A sample minitrial agreement can be reviewed on the ADR Program web site at:
http://www.adr.af.mil/iadrwg/samples.html
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4.2 Sample Plan for a Non-Binding ADR Process
The following is a generalized plan that needs to be tailored to your circumstances.
Meet and Discuss (Government Only) -- Air Force and, if appropriate, DCMA and DCAA, principal(s)
meet and discuss roles and responsibilities, including funding and the Air Force’s position on (a)-(f) in
paragraph 2, below.
Meet and Discuss (Government and Contractor) -- Government and the contractor meet and discuss the
use of ADR to determine:
a. The contractor’s willingness to engage in ADR process,
b. The type of process to be used,
c. Whether and what extent they will use a third-party Neutral,
d. How to exchange information,
e. To what extent proceedings should be stayed (if the matter is before a Board or Court), and
f. The schedule for resolution.
Draft ADR Agreement & Selection of the Third-Party Neutral -- Based on guidance received from the
principals and the third-party Neutral where relevant, counsel for the Government and the contractor draft
the ADR Agreement. Assure the 3rd party Neutral can utilize the proposed agreement. There are sample
ADR agreements on the Air Force ADR Program web site that can be accessed.
http://www.adr.af.mil/iadrwg/samples.html
Stay of Proceedings -- If applicable, Government and contractor counsel jointly ask board/court to stay
proceedings to the extent and manner agreed.
Statement of Issues -- Counsel for the parties jointly draft preliminary statement of issues. (Probably
several issues, but this document is normally only two to three pages.)
Exchange of Documents -- The parties exchange types of documents in accordance with schedule in ADR
Agreement.
Compilation of Facts and Documents -- The parties jointly compile facts and documents related to each
issue.
Presentation of Positions -- The parties present positions on the issues to the principals for each side and
to the Neutral, including a rebuttal, if necessary.
Identification of Unresolved Issues -- Parties meet and confer to see if issues have been narrowed through
presentations. Jointly draft statement of unresolved issues.
Employ Resolution Mechanisms -- This is a critical part of any ADR process. Use any one of a number
of techniques that may be appropriate to the issue and the dynamics of the process at the time:
•
•
•
•
•
•
Additional fact finding
Expert assistance
Neutral facilitation
Joint discussions or presentations
Advisory opinion or outcome prediction by the Neutral
Additional considerations
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Negotiate Agreement -- Get buy-in from all necessary Government personnel and agree with the
contractor on resolution.
Draft Settlement Document -- Reduce resolution to writing.
Obtain Judgment (if necessary to fund the settlement) -- Counsel for the parties file a stipulation to with
the Court or Board. The Court or Board enters judgment and issues written order of judgment.
4.3 ADR Techniques that Result in a Binding Decision
When the parties need a binding decision to resolve the issues a Summary Trial with Binding Decision
using the ASBCA is the appropriate forum. In this procedures, the ASBCA Judge acts as the Neutral. If
the parties need a binding decision pre-appeal, the ASBCA will work with the parties to accommodate
this need.
4.3.1 Arbitration
Arbitration is an issue resolution process whereby a neutral third party is empowered by agreement of the
parties to issue a binding decision on the controversy. In this process the Neutral is called an arbitrator.
Arbitration is commonly used in the private sector. However, there are significant legal restrictions on its
use within DoD. Until those restrictions are modified, the only binding ADR method available to the Air
Force is the summary trial before an ASBCA judge (see para. 4.3.2 below). DoD personnel are not
currently authorized to use a binding ADR proceeding that does not involve the ASBCA.
4.3.2 Summary Trial with Binding Decision15
This is a binding ADR arbitration-type procedure offered by Boards of Contract Appeals. The parties
design the summary trial process (format, timing, rules, etc.), unlike in a traditional “trial” before the
ASBCA, with the assistance of the judge (who is often selected by the parties).
A summary trial with binding decision permits the parties to expedite the appeal schedule and to try their
appeal informally before an administrative judge or panel of judges. Generally, the parties elect to have
the one judge decide the case (instead of a three judge panel used in traditional hearings), submit prehearing position papers (instead of post hearing briefs) and opt for more streamlined evidentiary
presentations. The Judge(s) will issue a “bench” decision upon conclusion of the proceeding or a
summary written decision at an agreed-to time following the receipt of a trial transcript. For most, this is
one of the greatest advantages of the ADR summary trial process. In a traditional ASBCA trial, a
judgment is rendered only after the parties submit post trial briefs and two other judges review the trial
record and briefs. It is difficult to determine how long this process will take but it can easily exceed a
year – and then the decision can still be appealed. The decision by a judge in a summary trial cannot be
appealed so expeditious finality is a certainty. The basic elements of a Summary Trial with Binding
Decision are captured below in Figure 4. A sample Summary Trial with Binding Decision ADR
agreement can be reviewed on the ADR Program web site at: http://www.adr.af.mil/iadrwg/samples.html
15
At least one respected former ASBCA judge questions the authority of the ASBCA to use this procedure and
questions the government’s authority to waive an appeal prior to the final decision of the Board. This is a minority
viewpoint. The Air Force has examined the matter and decided that the ASBCA does have the requisite authority
and that the appeal may be waived.
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Figure 4 Summary Trial Process
Summary Trial with Binding
Decision
N
Process Dynamics:
Case presented to third-party in
an expedited manner and third-party
makes a decision
Unique Feature:
Binding decision
Binding Decision
Decisionmakers:
The ASBCA Judge
As of: 18 Oct 00
P2
P1
N
I nte grity - Se rvic e - E x c e l le nc e
4.3.2.1 Air Force Use of Binding Arbitration in a Pre-Appeal ADR
Since an ASBCA judge is the only Neutral who can enter a binding decision in an arbitration-like forum,
use of arbitration pre-appeal is limited, 16 however not out of the question. There have been a number of
occasions where the parties have agreed and the board has consented to resolve pre-appeal claims in a
summary trial on other claims. Also, if the parties agree, the board will expedite the process to perfect an
appeal in order to have the required jurisdiction to enter a binding judgment.
16
There is one exception that we are currently aware of -- disputes governed by the Randolph-Sheppard Act
(RSA), 20 U.S.C. § 107 et. seq. The RSA establishes a cooperative federal/state vocational rehabilitation program
designed to promote economic opportunity and self-sufficiency in blind persons through the operation of vending
facilities on federal property. Under the RSA, qualified blind vendors are to receive “permits” to operate vending
facilities and contracts to operate cafeterias on eligible federal properties. Dispute arising under the RSA may be
submitted to binding arbitration. Under the RSA, Contracting Officers must submit to binding arbitration..
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4.4 ADR Process Selection Matrix
The table below attempts to help organize your thinking about how to match your business objective with
the appropriate ADR tool. Bear in mind that these ADR processes are not mutually exclusive, but rather,
may be used in combination. This is why the Air Force believes it was necessary to create a network of
Air Force personnel with extensive training and experience in this area to assist you in designing and
implementing your ADR process. Table 6, below, is designed to help you fit the form to the fuss:
Table 6 Business Goals
Business Goals
Enhance/
Preserve Relationship
Want to Maintain
Control
Need to Deal with
Strong Emotions
Want a “Hearing on the
Merits” and a nonbinding Evaluation
Want to Keep the
Process Simple
Need or Want a Third
party Neutral Decision
Very Quickly
Need to Establish
Precedent
Mediation
MiniTrial
Early
Neutral
Evaluation
Summary
Trial with
Binding
Decision
X
X
X
X
X
X
X
X
X
X
Litigation
X
X
X
X
X
X
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5 Neutrals
5.1 Definition of a Neutral
A Neutral is an impartial third party who serves as a mediator, fact finder, arbitrator, or otherwise assists
the parties in resolving the issues in controversy. A Neutral may be a permanent or temporary officer or
employee of the Federal Government or any other individual who is acceptable to the parties.17 Neutrals
can be drawn from a number of sources, inside or outside the Government: sitting or retired judges;
academics; retired in-house counsel of defense corporations; Air Force Reserve Officers; or wellrespected Government contract professionals or attorneys in the private sector. The ADRA of 1996
authorizes agencies to enter into contracts for the services of Neutrals.18
5.2 Tenure of Neutrals
Neutrals serving as conciliators, facilitators or mediators serve at the will of the parties.19 Early neutral
evaluators, fact-finders, mini-trial Neutrals or arbitrators also serve at the will of the parties.
5.3 Qualifications of Neutrals
A Neutral must have no official, financial, or personal conflict of interest with respect to the issues in
controversy, unless such interest is fully disclosed in writing to all parties and all parties agree to use that
Neutral. Subject to the limitations listed above, the market dictates the qualifications of a Neutral. This
means that the admonition “buyer beware” applies to those entering the marketplace for Neutrals’
services. The Department of Justice (DOJ) has established general guideline questions for selecting
Neutrals and published this guidance in the Federal Register and on DOJ’s ADR web site:
http://www.usdoj.gov/crt/adr/notice.html . DOJ guidance on Neutral selection is summarized in Table 7,
below.
17
18
19
See FAR 33.201
5 U.S.C. § 573(e)
5 U.S.C. § 573(b)
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Table 7 Department of Justice - Guidelines for Selecting Neutrals
Neutrality, and Related Ethics Standards
• Is the ADR provider unbiased, acting in good faith, diligent, and not seeking to advance his
or her own interest at the expense of the parties?
• Will the ADR provider deal fairly with the parties, be reasonably available to the parties,
show no personal interest in the content of the settlement?
• Does the Neutral know counsel, and if so, what is the nature and context of that knowledge?
• Is the Neutral subject to disqualification on grounds analogous to those found within 28
U.S.C. § 455?
• Check Society of Professionals in Dispute Resolution's Ethical Standards.
Training
• What kind and extent of training for the particular ADR process has the Neutral received?
• Has the Neutral been trained by a well-recognized program?
Experience
• ADR Experience: Number of cases the Neutral conducted, the dollar amount in controversy,
diversity of processes, complexity of the issues, years of experience in a particular
process(es), breadth of experience in types of disputes, experience in multi-party and/or
multi-issue disputes, affiliation with court-annexed programs.
• Litigation Experience: Is the Neutral an attorney? Type of legal practice, years of
experience, complexity of cases and issues, experience in Government litigation.
Factors Favoring Subject-Matter Expertise:
• Highly technical areas of law are central for understanding the dispute and/or issues and the
fashioning of the options for resolution of the dispute (e.g. patent, subspecialties of science or
medicine).
• Issue is one of damages--when offers are far apart, expertise in typical damage awards and in
standard components of damage calculation may bring parties’ offers closer (e.g. certain
attorney fees, personal injury disputes).
• When the parties and attorneys are hesitant to use ADR for a particular case, and expertise
will build credibility for them.
• There is an impasse over discrete factual and/or legal issues.
• Expertise is central to a particular kind of ADR process -- e.g., case evaluation on factual
issues, mini-trial, arbitration.
5.4 Choosing a Neutral
When seeking assistance of a third party neutral, always choose an individual with a reputation for
unquestioned integrity, someone that can be trusted to be impartial and unbiased. The Neutral should
have ample knowledge and experience in the resolution of federal contract-related controversies,
preferably experience with the kinds of issues, contract type and subject matter that your controversy
involves.
To date the Air Force has used sitting Armed Services Board of Contract Appeals judges to serve as thirdparty Neutrals in appeals docketed before the ASBCA and for contract controversies that have not been
appealed to the Board. The Air Force and contractors’ experience with using ASBCA judges has been
excellent. Air Force personnel seeking to use an ASBCA judge as a Neutral should contact the ADR
Division Chief of the Air Force Trial Team for assistance.
If the ASBCA is unable to support a request to use one of its judges as a Neutral, there are procedures in
place that permit us to request the services of a judge from one of the other Boards of Contract Appeals.
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Such requests should only be made after the chairman of the ASBCA has had an opportunity to consider
and decline a request to make one of his judges available to serve as a Neutral.
There are a large number of private-sector organizations and individuals that provide Neutrals services.
Many of these organizations and individuals have excellent qualifications and track records in resolving
commercial contract issues, especially commercial construction contract issues. The costs of hiring a
private-sector Neutral can range from $1,000 a day to $9,000 a day. Air Force personnel interested in
procuring the services of a private-sector Neutral should contact the ADR Program Office for assistance.
Given the foregoing, it is Air Force preference to apply the following priorities in selecting an ADR
Neutral:
• An ASBCA judge appointed by the Chairman (generally no added costs involved).
• A judge from another Board of Contract Appeals, appointed by its Chairman (may have to pay
costs and salaries; but see, the Boards of Contract Appeals (BCA) ADR Sharing Arrangement.)20
• A third-party Neutral not affiliated with a Board of Contract Appeals (generally must pay for cost
and or fees).
When using an ASBCA judge as a Neutral, you should get them involved early. Otherwise, if you are
seeking the services of a Neutral, then you should agree to the use of a particular ADR procedure or
combination of procedures before selecting the Neutral. The parties then typically agree to use one of the
following processes:
• Exchange a list of names of Neutrals until they reach agreement on a particular Neutral;
• Each party picks another individual. The selected individuals then meet and select a Neutral; or
• Employ the services of an organization to provide a Neutral. See 10 U.S.C. § 2304(c)(3)(c).
Only ASBCA judges or CFC judges are authorized to access the Judgment Fund to pay for a settlement.
Table 8 Limitations on Neutral’s Authority
Type of Neutral
Private-Sector
Neutral
ASBCA Judge
Court of Federal
Claims Judge
Board (nonASBCA) Judge
Non-Binding ADR
Binding ADR
X
X
X
X
X
Authorized to Access the Judgment Fund
No. However, once binding arbitration
guidelines are issued by the Air Force, then
this may change.
Yes, if the ASBCA has jurisdiction (has an
appeal before it).
Yes, if the CFC has jurisdiction (has an
appeal before it)
No, if the Board does not have jurisdiction,
then the Judge is not authorized to access
the Judgment Fund
5.5 Using Senior-level Officials to Resolve the Issue
In some instances, agencies have developed mechanisms for using high-level agency procurement
officials as Neutrals to review the merits of controversies and assisting the parties in resolving their
differences. High-level agency and contractor officials can also serve jointly in given cases, either as co20
The text of the BCA ADR agreement can viewed at: http://www.adr.af.mil/iadrwg/sharing.html
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mediators or as a mini-trial panel. Although mini-trials typically involve the assistance of a third-party
Neutral, the parties, as a first step, will try to resolve their controversy with a structured settlement
process that uses the mini-trial forum without the Neutral. Although these individuals are not technically
“Neutrals” since they are employed by parties to the controversy, if they have not had direct involvement
with the matters at issue, they can maintain a considerable degree of impartiality. Moreover, in some
instances, their involvement is all that is required to settle a controversy.
5.6 Paying For the Services of A Neutral
If the contracting officer determines, in consultation with an Air Force attorney, to use an ADR procedure
then funds to payment for the Neutral's services must be considered. Opposing parties should bear a
share of ADR costs equal to the Air Force except in unusual circumstances. At the very least, opposing
parties should bear some of the costs of ADR. For smaller cases, SAF/GCQ may have funds sufficient to
pay for the services. This policy will ensure that these parties have a stake in the process and a vested
interest in its success. It is important that the exact financial terms with all parties be reduced to writing
before the initiation of ADR procedures.
If you decide to procure the services of a Neutral be advised that the services can be obtained “by name”
using “Other than Full and Open Competition.”21
21
FAR 6.302-3 (a)(2)(iii)
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6 Putting It All Together: Elements of an Issue-Specific ADR Agreement
The ADR agreement provides the framework and procedures for the parties to follow during and after the
proceeding. A well-drafted agreement allows the parties to avoid or resolve many of the potential issues
that can arise during the proceeding. You should consider some or all of the following issues for
inclusion in the ADR agreement.
6.1 Issues Defined, Methods of Presentations, Resolution, and Schedule
Include in the agreement identification of the details surrounding the issue, including the parties,
contracts, definition of issues and amounts at issue, as well as the ground rules. Consider inclusion of the
type of ADR process, order and procedures of the presentation (including number and sequence of both
witnesses and issues), schedule (time limitations and location), and methods of resolution contemplated.
Also, the agreement should address the allocation of fees and expenses.
6.2 Appointment of a Neutral
If you use a third-party Neutral, provisions in the ADR agreement should address the appointment, role
and payment of the party (including costs of facilities used and other similar expenses, if any).
The agreement should spell out the role the third party is anticipated to fulfill (mediator, fact finder,
arbitrator, etc.). In the case of a mediator the parties may specify whether they desire the mediator to be
“evaluative” or “facilitative”. The Neutral should be disqualified as a witness in subsequent litigation.
The agreement should also specify the nature, subject and permissibility of ex parte communications
[communications between the Neutral and one party without the other party present]. If the Neutral has
been selected in advance and has a set of preferred “ground rules”, these rules may also be included in the
agreement.
6.3 Stay or Suspension of Litigation
If applicable, suspension or stay of the litigation should be addressed in the agreement. It should spell
out the duration of the stay (whether indefinite or linked to specific events or dates), the manner in which
the Court or Board will be informed of the agreement and how the parties will obtain concurrence of the
forum. If there is to be no stay, the agreement should also state that fact.
6.4 Audit
If a request for equitable adjustment (REA) or claim needs to be audited, provide for the audit in the
agreement. The agreement should address the types of information and documents are to be provided to
the auditor and whether there are any restrictions on the use of the information or documents provided.
6.5 Exchange of Information
The ADR agreement should set out provisions allowing for discovery and document exchange. What is
to be allowed? What type of limits (schedule, time, relevance to issues/subjects, types and number of
requests) are necessary? May witnesses previously deposed be deposed again? Also address records
retention, future use and the effect on future access/discovery. How will discovery issues, if any, be
resolved? Can matters disclosed be used in future litigation? Please remember that if litigation is filed,
any alteration of discovery schedules must be coordinated with and approved by the Court or Board.
Provisions for control of statements, briefs, opening offers or position papers can also be included in the
agreement. Do the parties submit confidential position statements only to the Neutral? What are the
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length and format requirements for the position statements? May the Neutral respond with ex parte
communications?
The agreement should also mandate an exchange of information required to justify and support any
settlement reached. This could include an audit of costs incurred and certified cost and pricing data.
6.6 Confidentiality Concerns
The issue of confidentiality should be addressed in the ADR agreement, more particularly whether nonparticipants may gain access to any information exchanged during the ADR process. Confidentiality is
addressed both in the ADRA of 1996 and in FAR 33.214(e). A related issue concerns whether any
information developed or exchanged during the ADR process may be utilized during any adjudication
that may occur if the ADR is not successful. Use of settlement discussions in litigation is governed by the
Federal Rules of Evidence, Rule 408. All of these confidentiality issues should be spelled out clearly in
the ADR agreement. The provision should be tailored to the circumstances of each individual case.
Participants in ADR should understand that Government agencies may be required to make available
ADR-related documents pursuant to a request under the Freedom of Information Act (FOIA). However,
documents may qualify for FOIA Exemptions or may be covered by the limited confidentiality
protections afforded for dispute resolution communications under the ADRA of 1996.
FAR 33.214 provides that ADR proceedings will be protected pursuant to the confidentiality provisions
of the ADRA.22 Air Force personnel should be cautious about relying on the ADRA’s confidentiality
provisions. The wording of the section is very precise. For example, a mini-trial conducted without the
appointment of a Neutral does not qualify as a “dispute resolution proceeding” under the ADRA.23
The ADRA generally provides for the non-disclosure of: (1) confidential communications to a Neutral;
and (2) dispute resolution communications. 24 A “dispute resolution communication” is “any oral or
written communication prepared for the purposes of a dispute resolution proceeding . . .” 25 Absent an
exception or provision for disclosure, a Neutral may not disclose a confidential communication or a
dispute resolution communication and a party may not disclose a dispute resolution communication.26
However, there are numerous exceptions to the foregoing non-disclosure requirements, i.e., court order,
waiver, statute, public knowledge, matters otherwise discoverable, etc. The ADRA’s confidentiality
provision, that is, its non-disclosure rule, does operate as a narrowly defined FOIA exemption.27
The parties are also authorized to agree to and impose confidentiality provisions on the Neutral different
from those set out in the ADRA.28 However, those provisions cannot provide less disclosure than
provided for by ADRA.29
This discussion is not intended to be exhaustive. It is intended to illustrate the complexity of
confidentiality issues related to drafting an ADR agreement. You should engage the services of an Air
Force lawyer to ensure that any confidentiality concerns are properly addressed. If you want more
information about confidentiality see the Air Force ADR website at: http://www.adr.af..mil
22
23
24
25
26
27
28
29
5 U.S.C. § 574
5 U.S.C. § 571(b) and the confidentiality provisions of the act do not apply in such a proceeding.
5 U.S.C. § 574
5 U.S.C. § 571(5)
5 U.S.C. § 574(a) and (b)
5 U.S.C. § 574(j)
5 U.S.C. § 574(d)
5 U.S.C. § 574
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6.7 Other Considerations
An ADR agreement may provide for the waiver of recovery of fees under Equal Access to Justice Act
(EAJA). Also, a provision may be included addressing interest, waiver of attorney fees, and the use or
the waiver of transcripts. In the alternative, the parties' agreement may specify that the parties and the
Neutral at the close of the ADR proceeding will address any or all of these costs. Also see Section 7.4.
6.8 Closure
Closing out a successful ADR is important, therefore it should be decided whether to address this topic in
the agreement. If limitations exist affecting closure, such as funding limitations imposed by law or a
particular time period, consider putting a provision in the agreement to cover this situation.
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7 Fiscal/Monetary Considerations
7.1 Who Pays for the Cost of an ADR Procedure?
Each party to an issue in controversy bears the cost of their own internal ADR preparation (i.e., fact
finding, document control, expert witnesses, etc.). The program office, on a systems contract, or the
requiring activity, on an operational contract, would fund these preparation costs. JA generally funds
attorney TDY costs. The parties usually share the cost of the private sector Neutral. The Air Force has a
preference for using judges at the Armed Services Board of Contract Appeals (ASBCA) to serve as
Neutrals in ADR proceedings, and there is no cost to either party when an ASBCA judge serves in this
capacity. Some central funding to support ADR may be available on a case-by-case basis from
SAF/GCQ.
7.2 Funding Judgments
A judgment is an order from the ASBCA or U.S. Court of Federal Claims (or higher court following an
appeal of the original decision) directing the Air Force to pay an amount of money because Appellant has
prevailed in at least part of its case. The Contract Disputes Act,30 provides, “[a]ny monetary award to a
contractor by an agency board of contract appeals shall be paid promptly in accordance with the
procedures contained in [the Judgment Fund statute]....” Judgments can be funded from available
contract funds, the Indefinite Judgment Fund (this is a special fund established for this purpose), 31 or
other available, like-type, current funds. Expired account funds cannot be used to reimburse the
Judgment Fund although, depending on the circumstances, they may be used to fund a settlement.
If contract funds are exhausted, and there is no expired money a “consent judgment” and payment from
the judgment fund may be the only option to avoid an Anti-Deficiency Act (ADA) violation (consult
finance and your legal counsel). Also note that even in this situation, the Air Force will be required to
reimburse the Judgment Fund with “current year” funds.
Congress created the judgment fund as a source of funds to pay judgments against the United States
Government.32 The Judgment Fund certification of payment function has been transferred from the
General Accounting Office (GAO) to the Financial Management Service (FMS), Department of the U.S.
Treasury. This change only affects the administrative procedures for tapping the Judgment Fund and
does not impact the substantive guidance on the appropriate use of the Judgment Fund.
The U.S. Treasury requires that, when the Armed Services Board of Contract Appeals renders a monetary
award to a contractor, a certificate of finality be executed by the parties (certifying neither party
contemplates an appeal or further action on the appeal) and three Treasury Department forms be
completed by the contracting officer: Treasury FMS Form 195, Judgment Fund Payment Request; FMS
Form 196, Judgment Fund Award Data Sheet; and FMS Form 197A, Voucher for Payment.
The ASBCA will include copies of the FMS forms (195, 196, and 197A) and certificates of finality for
completion by the parties when it forwards a decision making a monetary award to a contractor. The Air
Force Trial Team docket clerk will forward these forms to the contracting officer upon receipt of the
authenticated copy of the Board’s decision. The contracting office, using FMS Form 195 as a transmittal
letter, should send the completed forms and certificates of finality along with a copy of the Board’s
30
41 U.S.C. § 612
31 U.S.C. § 1304
32
31 U.S.C. § 1304
31
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decision to the address listed on FMS Form 195 if the award is to be paid from the Judgment Fund (as
opposed to other funds currently available to the contracting officer such as surplus contract funds).
The Treasury Department will send payment to the contracting office, not to the contractor or the
contractor’s attorney. Each Form 197A should contain the name, address, and telephone number of the
person in the contracting office to whom payment should be sent. The contracting office will be
responsible for delivering the payment to the contractor or the contractor’s representative. The Treasury
Department also requires that all check or wire transfers have the payee’s Taxpayer Identification or
Social Security Number on the payment. If the payee is the contractor’s attorney, include the attorney’s
tax identification number.
The Contract Disputes Act requires the contracting activity listed on the certificate of finality reimburses
the Judgment Fund out of current appropriations or obtain additional appropriations from Congress for
the judgment.33 Such reimbursement must be out of current year funds unless a specific appropriation is
obtained. Reimbursements come from funds available for obligation when the judgment is entered.34 The
rationale for Congress requiring agencies to reimburse the Judgment Fund is to foster responsible agency
decision making during the claims resolution process.
As mentioned above, the Judgment Fund cannot be reimbursed with expired account funds. The Air
Force will normally seek the necessary funds from the local base or MAJCOM involved to reimburse the
Judgment Fund after the Air Force has reimbursed the Treasury.
7.3 Funding Settlements
7.3.1 General Principals and Anti-Deficiency Act (ADA) Concerns
Funds associated with a settlement fall into one of three categories: (1) current, (2) expired, or (3)
cancelled.
Current year funds are funds whose availability for new obligations has not expired under the terms of the
applicable appropriation. For example, procurement funds are current for three years, R&D funds for two
years and O&M funds for one year.
Expired funds are those funds whose availability for new obligations has expired but they retain their
fiscal year identity for five years after expiration and are available to adjust and liquidate obligations
already incurred. The FY91 National Defense Authorization Act generally phased out the previous
merged or “M” account funds. As partial replacement, the Act extended the life of “expired” accounts
from 2 to 5 years. Funds move from current to expired status after a varying number of years depending
on their type. For example, O&M funds “expire” and can no longer be obligated, after 1 year from the
time the funds are first appropriated; RDT&E after 2 years; procurement after 3 years; and MILCON after
5 years. Both obligated and unobligated funds in the expired accounts are available for settlements and inscope changes so long as the fiscal year identity of the funds and the fund types are respected.
Canceled funds are funds that are no longer available for any purpose. Funds become canceled after their
five-year period in an expired account. The Anti-Deficiency Act prohibits the use of canceled funds.
Any payments beyond the expired phase must be taken from currently available appropriations and
cannot exceed one percent of current Air Force appropriations without congressional approval.
33
34
41 U.S.C. § 612(c)
AFR 170-8, para. 28.b
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7.3.2 Source of Settlement Funds
A contracting officer entering into settlement negotiations should determine the source of the settlement
funds and have a fairly good estimate of how long it will take to actually make the payment after the
parties agree to settle.
In general, settlements can be paid from available contract funds, available expired accounts, or other
available, like-type, current funds. Most of our cases that result in monetary relief to the contractor occur
when settlement discussion among the parties results in an agreed-to compromise of the ASBCA appeal
and underlying claim(s). In this instance, the settlement is normally effected by bilateral agreement
between the parties and modification to the contract. The settlement amount is normally paid by the
contracting officer from the appropriation available to fund the contract. In certain cases, this settlement
payment may come from expired money on a “relation back” theory.
However, in some settlements, the parties have may agree to a stipulated judgment (the parties agree to
the facts and the amount of the judgment) or a consent judgment (one party consents to the facts and
amount of judgment to which the other party raises no objection). These judgments are then adopted by
the ASBCA in an order of award that is satisfied from the Judgment Fund. However, the Judgment Fund
cannot be used to directly fund settlements.
Use of stipulated or consent judgments to be paid from the Judgment Fund may be advantageous to the
Government when: (1) the appropriation which funded the contract is no longer available or is exhausted;
(2) the contracting officer must obtain funds from higher headquarters which may involve substantial
delay and the unnecessary incurrence of interest charges on the CDA claim; (3) the delay in obtaining
funds from higher headquarters may jeopardize an otherwise advantageous settlement for the
Government; or (4) reimbursement of the award from subsequent annual appropriations would have a
“cash flow” advantage to the contracting agency.
There are disadvantages in the use of stipulated or consent judgments.. Reimbursement of the Judgment
Fund, which is necessary when stipulated or consent judgments are used, must be from current year
funds, whereas payment of settlements by the contracting officer may occur on a “relation back” theory
from expired funds. Any decision to use a stipulated or consent judgments should be coordinated with
the Air Force financial community prior to execution
In summary:
•
If contract funds are still available, they are the preferred source to fund settlements.
•
If contract funds are exhausted, determine availability of obligated or unobligated funds in “expired”
accounts.
•
If expired accounts are not available (insufficient amount of the correct FY or type); current year
funds must be used.
•
If current or expired year funds are not available, but settlement is determined to be most
advantageous to the Government, consult with the assigned trial attorney to prepare a motion to the
board. This motion should seek to have the board adopt the settlement as its decision in the case, and
have the settlement, now a “judgment,” paid by the Judgment Fund. As discussed previously, the
Judgment Fund will have to be repaid by the Air Force. In most instances the Air Force will look to
the appropriate requiring activity to reimburse the fund.
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7.4 Other Issues Associated with the Cost of ADR
Air Force personnel should be familiar with a number of cost allowability issues that may arise under
certain types of contracts and in certain types of cases. The text below is designed to briefly address this
area so that Air Force personnel can begin to make informed choices regarding how to proceed. None of
these matters alone are likely to tip the scales on when to pursue ADR if it is appropriate. They are
matters that should be considered in entering into ADR, writing the ADR Agreement and in preparing
settlement documents.
7.4.1 Interest
The Contract Disputes Act of 1978 (CDA) entitles contractors to interests on their claims. Accrual of
CDA interest begins on the date the contracting officer receives a proper claim under the CDA.35 Interest
prior to the submission of a contractor’s claim is generally unallowable.36 Generally, settlements should
address the issue of interest and the settlement agreement should reflect the terms to which the parties
have agreed i.e., define the exact terms of the agreement rather than relying upon general statements such
as “ interest is due”.
7.4.2 Payment of Attorney’s Fees
Although as a general rule of law parties to litigation are not entitled to attorney’s fees and costs,
government contractors may be entitled to attorney’s fees and costs under certain circumstances. The
Equal Access to Justice Act (EAJA) provides that government contractors who meet specified eligibility
requirements relating to business size may be permitted to recover attorney fees and associated litigation
costs.37 EAJA can apply to the ADR process as well. As a result, the issue of attorney’s fees and costs
must be considered in any ADR and addressed within any ADR settlement agreement. The effects of the
EAJA also play a role in the timing of ADR. EAJA fees are imposed upon the granting of a “final
judgment”; however, an “order of settlement” is considered a final judgment for the purposes of the Act.38
As a result, ADR should be timed to avoid or minimize EAJA attorney fees when possible and any
settlement should contain language waiving or satisfying any EAJA fee obligation. Resolution prior to a
CO Final Decision is normally desirable if EAJA fees are a primary concern.
7.4.3 Allowability of Claim Preparation Costs
The cost of preparation and presentation of claims against the government are not reimbursable
(allowable) costs as part of an equitable adjustment or damage award.39 However, costs associated with
contract administration, such as preparation of a request for equitable adjustment etc, are generally
reimbursable expenses. Unfortunately, there is rarely a bright line between claims preparation and
contract administration in practice. Consequently, every case is unique and requires a case-by-case
determination. Additionally, application of legal precedent in this area can be very technical and
complex. Therefore, if the parties have questions about the allowability of costs in their particular
controversy, they should contact their legal counsel and ADR Champion for additional guidance.
35
41 U.S.C. § 611; FAR 33.208
FAR 31.205-20
37
5 U.S.C. § 504. EAJA has two effects: (1) it waives the immunity of the United States to claims for attorney fees
in situations in which other civil litigants would be subject to such fees, and, (2) it applies fees to the United States
when they would not ordinarily apply if the individual opposed to the United States meets certain income criteria
defined by the Act.
38
23 U.S.C. § 2412(d)(2)(a)
39
FAR 31.205-47
36
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8 Best Practices
8.1 Assembling the ADR Team
8.1.1 Identifying A Principal
Both the Air Force and the contractor should each designate a person to act as the principal negotiating
representative. This person should have the authority to negotiate a settlement. It is also important that
this person be able to approach the ADR proceeding objectively, with an open mind. It is preferable to
resolve matters at the contracting officer’s level (see FAR 33.204). However, there may be occasions
(due to the emotional nature of a particular controversy) when it may be helpful if the person selected has
had little or no prior involvement in the day-to-day contract administration or with the matter in
controversy. As a result, the person can view the facts with fresh eyes and without having to justify their
own previous positions or actions.
On the other hand, if the principals already know each other, their prior experiences may have been
cordial and thus have a positive effect. If the prior relations have been “unfriendly,” it may be more
productive not to involve them in either the presentation phase of the ADR proceeding or in direct faceto-face negotiations. A more effective approach in the “unfriendly situation” may be to keep the
principals in separate rooms, and for the Neutral to mediate between them by means of “shuttle
diplomacy.”
8.1.2 Identifying Team Members Who Should Participate And When
Be prepared to have the people with direct, first-hand knowledge of the facts attend the ADR proceeding.
Their participation is key in helping the principal understand the other side’s position. Similarly, these
people can also assist the Neutral more accurately assess the strengths and weaknesses of the other side’s
position. This is critical where credibility becomes an issue. Another reason to include the people who
have been involved in the issue since its inception is that this can bring about some emotional closure.
Keep in mind, a large number of people may hinder negotiations. Therefore, the number of participants
should be kept to a necessary minimum. Again, only those people most knowledgeable about the issues
to be presented should be involved. In addition, these people should be available to respond to questions
throughout the course of any presentation phase of the ADR proceeding, and should remain available
throughout the negotiation phase, unless released by their principals or the Neutral. Also, sometimes the
people who have the most direct experience and knowledge of the issues are too emotionally involved
with the issue to participate effectively (objectively) in the negotiations.
8.1.3 Obtaining Neutrals/Mediators
The Air Force has made extensive use of judges from the Armed Services Board of Contract Appeals
(ASBCA) as Neutrals. This has several advantages. First, ASBCA judges are experts in government
contracts. Second, an ASBCA judge is viewed as impartial by both sides. Third, using ASBCA judges is
far less expensive than using private-sector Neutrals. Fourth, having a sitting ASBCA judge adds
credibility to the process, and can help justify any settlement that may emerge from the ADR process.
Finally, ASBCA judge involvement enables them to determine if the final agreement falls within a zone
of reasonableness and allows them to use a Consent Decree - thereby giving access to the Judgment Fund
and potentially avoiding an ADA violation.
There are, however, a number of potential sources of Neutrals from sitting Board or Court judges to hosts
of distinguished private-sector Neutrals for hire. The key is to understand the role you want the Neutral
to play and then to be sure you secure the highest quality Neutral possible.
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January 2001
8.2 Other Issues and Concerns
8.2.1 Be Sure to Consult Your Air Force Attorney
In two cases Air Force contracting personnel attempted to use ADR techniques that resulted in significant
additional work to resolve the issue in controversy. In on case, senior program officials from the Air
Force and the contractor sought to “keep the lawyers out of it” and negotiate a settlement of their issue in
controversy. The result was several years of negotiations and subsequent litigation. In the second case,
Air Force technical personnel sought to enter into a Partnering Agreement with a contractor. An
agreement was executed. When an issue in controversy arose, the contractor’s attorneys argued that the
language of the Partnering Agreement superseded the Disputes clause and provided the sole process for
resolving the issue in controversy. The result was a dispute about the ADR agreement itself.
The lesson learned in both cases is that consultation with Air Force attorneys can avoid needless delay
and confusion surrounding the terms of the ADR Agreement.
8.2.2 Need for Well-Drafted Procedures Regarding Information Exchanges
In a recent ADR proceeding, a Government ADR team was surprised by new evidence submitted by the
contractor only hours before the two sides were to present their case in a Summary Trial with binding
decision. The Judge allowed the evidence to be heard and its effect was significant. Lesson learned: Be
sure your submission agreements have a cut-off date for the submission of evidence.
In several other cases the parties agreed to limit the time allotted for discovery. Counsel for the
contractor then attempted to turn time limited discovery to their advantage by overwhelming government
counsel with discovery requests. Lesson learned: Ensure that your ADR Agreement does not allow the
other side to overwhelm you.
These examples explain why the Air Force has created an ADR Advisory Team and an ADR Division of
the Air Force Trial Team. These organizations stay abreast of lessons learned and are prepared to help
ensure that you reach clear agreement on information exchange provisions and avoid repeating past
mistakes made by other Government personnel.
8.2.3 Need for Well-Drafted Settlement Agreements
After working hard to reach a settlement, the parties too often consummate their settlement with a
handshake. This can lead to significant problems in finalizing the details of the settlement agreement. In
one large-dollar case, the Navy and a contractor did precisely this. It then took counsel for both parties
several months to hammer out the details of the settlement. In several other cases, the parties hurriedly
crafted the release language of their bilateral contract modification. The contractor, upon reflection,
sought to get out of the agreement by challenging the release language as over-broad. The lessons
learned in both types of cases are that if one of the parties has second thoughts about the merits of the
settlement reached, they will seek to vitiate some or perhaps all of the terms of the settlement by
challenging the release language in the bilateral contract modification. These challenges typically allege
the release language was too broad or too narrow. In addition, parties may allege that someone has done
something that is inconsistent with the terms of the release.
Simply stated, if immediate execution of the contract modification is not possible, the parties should
ensure their written settlement agreement is comprehensive.
8.3 Conducting Successful ADR
The vast majority of ADRs result in resolution. However, ADR may not be quick and easy. If resolving
the issue were quick and easy, normal negotiations would have been adequate. Therefore, make sure you
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are committed to providing the necessary resources, time and effort to make the ADR effort a success.
The following “lessons learned” were gleaned from past successes and are helpful to keep in mind for
future ADR efforts.
•
Information exchange and realistic schedules are essential.
•
Ensure the right business principals are involved.
•
Be sure the Government members function as cohesive team.
•
Begin with the end in mind Settlement mechanics and payment issues need to be addressed early
in the process.
•
Be Flexible. Change things that are not working and keep those that are.
•
If either side is not prepared, the ADR may fail. Both sides need to justify a settlement to their
management.
•
Make sure you carefully evaluate potential Neutrals.
•
Be sure the Neutral is familiar with the controversy and is prepared to engage with the parties.
•
While the Rules of Evidence do not apply—legally admissible evidence (especially if it comes
from the contractor’s documents) can be very effectively used in ADR.
•
Demonstrative evidence (such as graphs, charts, diagrams, photographs, models, illustrations) is
very effective in ADR.
•
Ex Parte communications (one side speaking to the Neutral without other side being present) can
be beneficial in certain types of ADR (like mediation).
•
Neutrals will (depending on the type of ADR used) frequently provide candid assessments of a
case. This assessment should not weaken a strong case or strengthen a weak one.
8.4 Avoiding and Managing Contract Issues in Controversy
The ultimate goal of ADR is to avoid issues in the first place. Although issues are bound to arise, they
can be minimized. Recent revisions to the DoD 5000 series place increased emphasis on life-cycle risk
assessment and management on major weapon system programs (DoD 5000.1 Para 4.1.4). While not
new, emphasizing risk management as a continual process appropriately applies the concept across the
entire life cycle of an acquisition effort and makes it an integral part of the program approval and decision
process.
The AFMC Acquisition Support Teams (ASTs) routinely employ the risk assessment process to focus
integrated product teams on program risks during the pre-award phase of a program. Here the risk
assessment is used to shape both the request for proposal and the source selection criteria. Both proposal
risk and performance risk are assessed and rated during source selection and are considered by the
decision authority when the selection is made. This use of risk focused processes has proven effective
and extremely useful in selecting competent and qualified sources.
Unfortunately, program teams frequently fail to follow through with risk management once a selection
has been made and the contract is awarded. The day-to-day pressures of program execution often relegate
the team’s activities to problem management rather than focusing on problem prevention. However post
award risk management is a potentially effective means of preventing contract issues. The basic premise
of risk management is to focus management emphasis on those critical parts of a program that could cause
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January 2001
cost, schedule, and performance problems. By applying preventative measures, problems are avoided or
effectively mitigated and the probability of an issue is reduced.
The post-award risk management effort needs to begin with the post award conference and must continue
through the full duration of the effort. This presents an excellent opportunity for the program team to
establish an issue resolution process for the program. A joint government/contractor team should be
established and chartered to oversee the risk management effort. This team would ideally be comprised
of functional area experts and either co-led by the government and contractor program managers or
structured to report directly to them. This approach to risk management is program unique and can take
many forms. However, it is important, to maintain a joint risk management plan and a joint risk list that
are reviewed and updated at each program review. Risk measurement can and should be integrated with
other program metrics wherever possible so that it becomes a routine part of the program management
process.
A good source of information on risk management is the Risk Management Guide for DoD Acquisition
published by the Defense Systems Management College Press at Fort Belvoir, VA 22060-5565. The
guide is available online at http://www.dsmc.dsm.mil/pubs/gdbks/risk_management.htm. Other sources
of information on risk management are the ASTs located at each of the AFMC product, logistics, and test
centers and the Centralized Acquisition Support Team (CAST) located at HQ AFMC.
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Draft
CHAPTER 8
DRAFTING AND FUNDING SETTLEMENT AGREEMENTS
I.
INTRODUCTION........................................................................................................ 1
A. Government Policy.. ................................................................................................. 1
B. Settlement Agreements.. ........................................................................................... 1
II. NEGOTIATION OF A SETTLEMENT AGREEMENT. ........................................... 1
A. Authority to Settle..................................................................................................... 1
B. Settlement Timing..................................................................................................... 3
C. Preparations for Negotiations. .................................................................................. 4
D. Conducting Negotiations. ......................................................................................... 5
E. Finality of Agreement. .............................................................................................. 5
III.
DRAFTING A SETTLEMENT AGREEMENT. ..................................................... 6
A. Goals. ........................................................................................................................ 6
B. Elements of a Settlement Agreement........................................................................ 7
IV.
FISCAL ISSUES. ................................................................................................... 12
A. Importance in Litigation. ........................................................................................ 12
B. Definitions............................................................................................................... 13
C. Types of Appropriations Described by Period of Availability. .............................. 13
D. Rules for Obligation of Funds................................................................................. 14
E. Settlement Agreements. .......................................................................................... 14
F. Funding Judgments or Awards. .............................................................................. 15
G. Equal Access to Justice Act (EAJA) Fees. ............................................................. 15
H. Funds Received from the Contractor. ..................................................................... 15
V. LITIGATION ISSUES............................................................................................... 16
A. Jurisdiction over Settlement Agreements. .............................................................. 16
B. Review. ................................................................................................................... 17
C. Miscellaneous Issues............................................................................................... 17
VI.
CONCLUSION....................................................................................................... 17
CHAPTER 8
DRAFTING AND FUNDING SETTLEMENT AGREEMENTS
I.
II.
INTRODUCTION.
A.
Government Policy. Try to resolve all contractual issues in controversy by
mutual agreement at the contracting officer's level. Reasonable efforts
should be made to resolve controversies prior to the submission of a claim.
FAR 33.204.
B.
Settlement agreements. Most contract disputes are settled. The
government must take great care to ensure it crafts an agreement that
reflects the parties' intentions and protects the government.
NEGOTIATION OF A SETTLEMENT AGREEMENT.
A.
Authority to Settle.
1.
Government. Actual authority is required. Federal Crop Insurance
Co. v. United States, 332 U.S. 380 (1947).
a.
Contracting officer.
(1)
Under FAR 33.210, contracting officers are
authorized to decide or resolve all claims that are
within the specific limitations of their warrants,1
except:
(a)
Claims or disputes for penalties or
forfeitures prescribed by statute of
regulation that another Federal agency is
specifically authorized to administer, settle,
or determine; or
1
The agency may require the approval of a settlement at a level higher than the contracting officer. See
Construcciones Electromecanicas S.A., ASBCA No. 41413, 94-1 BCA ¶ 26,296 (motion for summary
judgment denied where settlement agreement had not received required approval of Directorate of
Contracting Headquarters Tactical Air Command).
MAJ Jon Guden
Disputes & Remedies
March 2001
(b)
(2)
b.
The settlement, compromise, payment or
adjustment of any claim involving fraud.2
In the Army, the contracting officer is required to
advise the Chief Trial Attorney (CTA) of all offers
of settlement made by the contractor, and must
consult with the CTA prior to accepting an offer of
settlement or making an offer of settlement.
AFARS 33.212-90-7(a).
Trial Attorney.
(1)
A trial attorney has no inherent authority to settle a
claim. John C. Grimberg Company, Inc. and The
Hartford Fidelity & Bonding Company, ASBCA
No. 51693, 99-2 BCA ¶ 30,572 (board unwilling to
assume trial attorney has authority to settle an
appeal); J.H. Strain & Sons, Inc., ASBCA No.
34432, 88-3 BCA ¶ 20,909 (contracting officer
refused to approve a "tentative settlement
agreement" reached by trial attorney); Cf. Defoe
Shipbuilding Co., ASBCA No. 17095, 74-1 BCA ¶
10,537 (board found trial attorney lacked authority
to concede liability in the government's brief, and
allowed withdrawal of concession).
(2)
Agency regulations may address the scope of a trial
attorney's authority. See AFARS 33.212-90-7.
(3)
The Chief Trial Attorney (CTA) of the Army has all
necessary authority to conclude settlement
agreements with the concurrence of the contracting
officer, the reviewing official designated by the
Head of the Contracting Activity, or the Deputy
Assistant Secretary of the Army for procurement
(DASA(P)). AFARS 33.212-90-7(b).
2
Where some aspect of fraud touches on the contract dispute, the agency should coordinate with the
attorney(s) from the U.S. Department of Justice handling the civil or criminal actions.
8-2
2.
B.
Contractor.
a.
Principal. The government should obtain the signature of a
person authorized to bind the contractor.
b.
Attorney. An attorney retained for litigation purposes is
presumed to possess express authority to enter into a
settlement agreement on behalf of the client, and the client
bears the burden of rebutting this presumption with
affirmative proof that the attorney lacked settlement
authority. Amin v. Merit Systems Protection Bd., 951 F.2d
1247 (Fed. Cir. 1991); HNV Central River Front
Corporation v. United States, 32 Fed. Cl. 547 (1995).
Settlement Timing.
1.
Settle when government believes it is advantageous.
2.
Factors to Consider.
a.
The issue(s) at stake.
(1)
Will the case make good or bad law?
(2)
Stem the tide of future claims.
b.
The amount in controversy.
c.
The cost of defending.
d.
Strength of the respective cases.
e.
Existence of other claims, and willingness to resolve
multiple claims.
f.
Interests of third parties, such as subcontractors, trustees in
bankruptcy, Department of Justice.
8-3
3.
4.
C.
g.
Signals from the judge.
h.
Continuing relationship with the contractor.
Advantages of Early Settlement.
a.
The government has not expended a lot of time or money.
b.
The contractor may not be entrenched in its position.
c.
The contractor may not know full strength of its claim.
d.
Contractor more willing to take less money to get money
now.
Advantages of Late Settlement.
a.
Through discovery the government knows more about the
case.
b.
Contractor may see weaknesses in its case because of
discovery.
Preparations for Negotiations.
1.
2.
Prepare a position.
a.
Use litigation risk assessment.
b.
Use DCAA audit findings.
c.
Know funding limitations.
Predict Opponent's Position.
8-4
3.
D.
E.
a.
Use claim, complaint, discovery, conversations.
b.
Understand their alternatives.
Identify members of the settlement team. Always include the
contracting officer.
Conducting Negotiations.
1.
Negotiations can take place in person, in writing, or by telephone.
2.
Regardless of the method, consider the following:
a.
Maintain a record of negotiations.
b.
It is best to make and withdraw offers in writing.
c.
Bargain in good faith.
d.
Ask for support of dollar positions.
e.
Be able to justify agreements reached on individual points.
f.
Make approval requirements clear to the other side.
Finality of Agreement.
1.
In writing.
a.
The settlement agreement should be drafted as a document
separate from a contract modification.
8-5
b.
2.
III.
FAR 43.301 requires use of the Standard Form (SF) 30 for
supplemental agreements. Incorporate the settlement
agreement by reference and attach to a (SF) 30 to evidence
the bilateral modification to the contract.
Oral agreements.
a.
Courts and boards have found binding settlement
agreements where the parties have yet to reduce them to
writing. Essex Electro Engineers, Inc., ASBCA Nos.
30118, 30119, 88-1 BCA ¶ 20,440 (relying on price
negotiation memoranda to find an agreement which Navy
later refused to fund based on perceived bad deal); Kurz &
Root Company, Inc., ASBCA No. 17146, 74-1 BCA ¶
10,543; Brookfield Construction Co. v. United States, 661
F.2d 159 (Ct. Cl. 1981)(in dicta, citing with approval the
decision in Kurz).
b.
"The issue here is not whether a written executed
settlement agreement memorialized on a Standard Form 30
would be 'better.' The issue is whether, looking at the
totality of the discussions between the parties and the
written record, can we determine whether a bargain was
struck, and if so, what it was?" Essex Electro Engineers,
Inc., supra.
c.
An "agreement in principle" does not signify a contractual
relationship. John C. Grimberg Company, Inc. and The
Hartford Fidelity & Bonding Company, ASBCA No.
51693, 99-2 BCA ¶ 30,572 (denying motion for summary
judgment where parties had only reached "agreement in
principle to settle the case").
DRAFTING A SETTLEMENT AGREEMENT.
A.
Goals.
1.
Resolve the dispute.
a.
Address all issues concerning the dispute.
8-6
b.
2.
B.
Clearly delineate the rights and obligations of the parties.
Avoid future problems.
a.
Establish mechanisms to address foreseeable problems,
such as payment of interest if payment is made after a
certain date. Decker & Co. GmbH, ASBCA Nos. 44932,
44933, 94-2 BCA ¶ 26,629 (denying bad faith allegation
where government paid contractor four months after
execution of agreement which provided for interest on late
payment); Essex Electro Engineers, Inc., ASBCA No.
46047, 94-1 BCA ¶ 26,457 (contractor entitled to interest
where agreement did not provide for contingency of delay
in issuing contract modification on SF 30).
b.
Draft the agreement clearly to avoid interpretation
problems. Beware of using form agreements--have a
purpose for using every clause in the agreement.
Elements of a Settlement Agreement.
1.
Title.
2.
Recitations.
a.
The "Whereas" clauses.
b.
These clauses provide the factual basis for the settlement
agreement. The parties should recite relevant facts, such as
the contract number and the docketing number, such as
ASBCA No. 12345.
c.
If a hearing, ADR proceeding, or negotiations led to the
settlement, identify the event and date.
d.
The recitations can help a judge resolve a dispute
concerning the settlement agreement.
8-7
3.
Payment clause.
a.
Spell out how much the government will pay the
contractor, to include any non-monetary relief.
b.
State that the payment is made in full satisfaction of all
claims to include costs, attorney's fees, and interest arising
under or relating to the Contract and the ASBCA appeal.
c.
Specify when the contractor will be paid (e.g., within 30
days after receipt of a proper invoice following execution
of the contract modification which incorporates this
settlement agreement).
d.
Specify the remedy should the payment be late (e.g.,
interest shall be paid at the statutory rate applicable to the
Prompt Payment Act).
e.
Payments under a settlement agreement can have tax
consequences to the contractor. Talley Industries, Inc. v.
Commissioner of Internal Revenue, No. 27826-92, 1999
Tax Ct. Memo LEXIS 237 (T.C. June 18, 1999)
(disallowing income tax deduction of a $2.5 million
payment made in settlement of civil and criminal false
claims where agreement silent as to penalty or
compensation for losses).
4.
Dismissal with prejudice. The party filing the appeal should agree
to request dismissal of the case with prejudice.
5.
General Release.
a.
This is the most important clause for the government. Its
drafting may determine whether the release operates as a
bar to future claims.
b.
An accord and satisfaction is a concept different from a
release.
8-8
(1)
Accord and Satisfaction.
(a)
Requires proper subject matter, competent
parties, meeting of the minds, and
consideration. Brock & Blevins Co. v. U.S.,
170 Ct. Cl. 52 (1965); Computer Associates
International, Inc., ASBCA No. 46922, 96-2
BCA ¶ 28,470.
(b)
The contract modification or agreement is
the accord, the subsequent performance is
the satisfaction. Safeco Credit v. U.S., 44
Fed. Cl. 406 (1999).
(c)
Use language such as:
This agreement constitutes an accord and
satisfaction and represents payment in full
(for both time and money) for any and all
costs, impact effect, and/or delays arising
out of, or incidental to, the subject matter of
ASBCA No. 12345. See Safeco Credit v.
U.S., supra.
(2)
c.
Release. An agreement of a contracting party that
the other party will not be liable if claims are
asserted in the future.
A release will bar claims existing prior to the date of the
release when the maker of the release had knowledge of the
claims and failed to reserve its rights. Johnson, Drake &
Piper, Inc. v. United States, 531 F.2d 1037 (Ct. Cl. 1976);
General Dynamics Land Systems, Inc., ASBCA No. 44622,
96-1 BCA ¶ 28,099.
8-9
d.
A contractor's exception to a release is construed narrowly
because the purpose of a release is to end the matter in
controversy. Mingus Constructors, Inc., v. United States,
812 F.2d 1387 (Fed. Cir. 1987)(contractor failed to except a
claim when it stated its intent to file a claim in
undetermined amounts); S&J Contractors, VABCA No.
3743, 93-3 BCA ¶ 26,022 (release and referenced letter
mentioning breach of contract, liquidated damages, and
business losses did not put government on notice of any
specific claims).
e.
Make sure the release language bars any future claims or
causes of action associated with the contract and the appeal.
See Peterson Construction Company, Inc., ASBCA No.
44,197, 93-2 BCA ¶ 25,571 (contractor permitted to claim
an equitable adjustment for a subcontractor's claim received
after signing release that discharged "claims, demands, or
causes of action . . . which the contractor has against the
government arising out of this contract"; release applied
only to claims the contractor had against the government as
of effective date of modification).
f.
It is questionable whether a release that purports to include
"unknown" claims is an effective bar to a future claim.
Inland Empire Builders, Inc., ASBCA No. 8077, 67-1 BCA
¶ 6162 ("However conclusive the language of the release
may appear to be, it cannot be read to comprehend claims
wholly unknown to the parties at the time of execution.")
(1)
A board or court will focus on the intent of the
parties at the time the release is executed, and intent
will be sought from the settlement agreement.
Futuronics Corporation, ASBCA No. 29324, 85-2
BCA ¶ 18,137.
(2)
Tie the recitations in with the release language to
provide support for a broad release.
8-10
(3)
g.
h.
6.
A release that states "all parties agree that this
represents full compensation for any and all time,
delays, and costs, known and unknown, arising out
of [the contract work]," may operate as a final
disposition of all claims. Neal and Company, Inc.,
DOT BCA No. 2084, 90-2 BCA ¶ 22,789
(contractor barred from seeking interest).
Equal Access to Justice Act (EAJA) fees.
(1)
When a party releases claims arising under or
relating to a contract, such a release ordinarily
excludes EAJA applications, which arise under 5
U.S.C. § 504.
(2)
An EAJA claim arises out of an ASBCA appeal.
Therefore, a release of claims arising under or
related to an ASBCA appeal will bar an EAJA
claim. Application Under the Equal Access to
Justice Act of Hexatron Engineering Co., Inc.,
ASBCA No. 48674, 97-2 BCA ¶ 29,324.
Mutual release. The Army typically includes language
releasing the contractor "to the extent permitted by law."
Integration Clause.
a.
Integrated Agreement Defined. A writing or writings
constituting a final expression of one or more terms of an
agreement. Restatement (Second) of Contracts, § 209.
b.
Form. No particular form is required. A contract may
include an explicit declaration that there are no other
agreements between the parties. Id.
8-11
IV.
c.
Parol evidence rule. Renders inoperative any prior or
contemporaneous written and oral agreements that
contradict or are otherwise inconsistent with the terms of a
supplemental agreement, provided the supplemental
agreement has been adopted as a binding integrated
agreement. Restatement (Second) of Contracts,
§ 213, comment a; Triple "A" South, ASBCA No. 35824,
90-1 BCA ¶ 22,567.
d.
A board or court may consider evidence of prior or
contemporaneous agreements and negotiations to determine
whether a writing is an integrated agreement. Triple "A"
South, supra. See also D&R Machine Company, ASBCA
No. 50730, 98-1 BCA ¶ 29,462 (government not entitled to
summary judgment where no showing settlement
agreement was an integrated agreement); United
Technologies Corporation, Pratt & Whitney Group,
Government Engines & Space Propulsion, ASBCA Nos.
46880, 46881, 97-1 BCA ¶ 28,818.
7.
No Admission of Liability. Include a clause stating that the
settlement agreement does not constitute an admission of liability
by the government.
8.
Signatures.
a.
Prior to signature, provide the draft to the contracting
officer and opposing counsel for review. Army trial
attorneys provide to the CTA a settlement memorandum3
and the draft settlement agreement for review.
b.
Obtain the signatures of the contracting officer and a
contractor's authorized representative, and the dates of
signatures.
FISCAL ISSUES.
A.
Importance in Litigation.
3
The memorandum includes a statement of facts, a discussion section identifying litigation risk and other
factors influencing the decision to settle, and a recommendation whether to settle.
8-12
B.
C.
1.
Different funds are used to pay for settlements and judgments.
2.
Consider these matters at an early stage of litigation. See U.S.
Army Contract Appeals Division Practice Tip: Funding
Considerations in Contract Disputes.
Definitions.
1.
Unexpired appropriations (current funds). An appropriation
account available for obligation during the current fiscal year.
DFAS-IN 37-1, Glossary, p. 57.
2.
Expired appropriations. Appropriations whose availability for new
obligations has expired, but which retain their fiscal identity and
are available to adjust and liquidate previous obligations. 31
U.S.C. § 1553(a); DFAS-IN 37-1, Glossary, p. 37.
3.
Closed appropriations. Appropriations that are no longer available
for any purpose. An appropriation is closed five years after the
end of its period of availability as defined by the applicable
appropriations act. 31 U.S.C. § 1552(a).
Types of Appropriations Described by Period of Availability.
1.
2.
Annual DOD Appropriations.
a.
Operations & Maintenance (O&M); and
b.
Personnel.
Multiple Year DOD Appropriations.
a.
Research, Development, Test and Evaluation (RDT&E) 2 years;
b.
Procurement - 3 years;
8-13
D.
E.
c.
Shipbuilding and conversion - Navy - 5 years, except the
navy may incur certain obligations over longer periods;
d.
Military construction - 5 years;
e.
Chemical Agents and Munitions Destruction, Defense various periods;
f.
Multiple Year - Varies up to five years depending on the
program. For example, DOD has a two-year O&M
appropriation for humanitarian assistance;
g.
Stock and Industrial Funds (Working Capital Funds) indefinite (no year).
Rules for Obligation of Funds.
1.
In-scope contract changes (the "relation-back theory"). Claims
arising out of an in-scope change to a contract are funded from the
appropriation available at the time of the original contract. DOD
7000.14-R, vol. 3, ch. 8, para. 080304 E; DFAS-IN 37-1, Table 97; The Honorable Andy Ireland, House of Representatives, B245856.7, 71 Comp. Gen. 502 (1992)("the liability relates back to
the original contract and the price increase to pay the liability is
charged to the appropriation initially obligated by the contract.").
2.
Out-of-scope changes. Use funds current when the obligation was
incurred.
Settlement Agreements.
1.
Obligate funds using the same obligation rules that are used for
normal contracts. DFAS-IN 37-1, Table 9-6, para. 14.
a.
Use original funds on the contract. Use of expired funds
requires written documentation. See DFAS-IN 37-1, Table
9-7, note 1.
8-14
b.
F.
2.
When a case goes into litigation, be aware of the availability of
expired funds. Don't forfeit your opportunity to settle by delaying
action on the case and allowing contract funds to become closed.
3.
Identify the funds before you attempt to settle. Don't find yourself
with a binding settlement agreement, but no money to pay.
Funding Judgments or Awards.4
1.
2.
G.
H.
4
If original funds have closed, obligate current funds.
Permanent Indefinite Judgment Fund. 31 U.S.C. § 1304.
a.
Agencies can pay judgments or awards through the
Judgment Fund.
b.
Agencies are required to reimburse the fund out of
available funds, or must obtain additional appropriations.
41 U.S.C. § 612 (c).
Current funds. An agency may pay the judgment or monetary
award with funds current at the time of judgment or monetary
award. DFAS-IN 37-1, Table 9-6, para. 15.
Equal Access to Justice Act (EAJA) Fees.
1.
Judgment Fund. Attorneys fees and costs are not payable by the
judgment fund.
2.
The agency must use funds current at the time of the award.
5 U.S.C. § 504d; DFAS-IN 37-1, Table 9-6, para. 16.
Funds Received from the Contractor.
Courts make judgments and boards of contract appeals make monetary awards. See 41 U.S.C. 612.
8-15
V.
1.
Miscellaneous Receipts Statute (MRS). 31 U.S.C. § 3302(b).
Most funds received from a source outside the appropriations
process must be deposited in the General Fund of the United States
Treasury.
2.
Exceptions. Exceptions to the MRS are scattered throughout the
United States Code and public law.
a.
Funds received in settlement of property damage have to be
forwarded to the Treasury as miscellaneous receipts.
Defense Logistics Agency--Disposition of Funds Paid In
Settlement of Contract Action, B-226553, 67 Comp. Gen.
129 (Dec. 11, 1987).
b.
For more on the MRS and its exceptions, see Major
Timothy D. Matheny, Go On, Take the Money and Run:
Understanding the Miscellaneous Receipts Statute and Its
Exceptions, ARMY LAW., Sep. 1997, at 31.
LITIGATION ISSUES.
A.
Board Jurisdiction over Settlement Agreements.
1.
Jurisdiction under Contract Disputes Act (CDA). TDC
Management Corp., DOT BCA No. 1802, 90-3 BCA ¶ 23,099
(modification to an existing contract).
2.
Jurisdiction exists under Contract Disputes Act (CDA), but parties
must comply with the requisite CDA procedures. Barnes, Inc.,
AGBCA Nos. 97-111-1, 97-112-1, 97-2 BCA ¶ 29,237 (requiring
claim and final decision).
3.
Lack of jurisdiction. Rimar Construction Co., AGBCA Nos. 88231-1, 88-232-1, 89-3 BCA ¶ 22,974 (not a contract within the
meaning of 41 U.S.C. § 602(a)).
8-16
4.
B.
C.
VI.
A court or board can't order specific performance of the agreement,
but it can recognize and uphold the agreement for the benefit of the
party seeking to perform the agreement. G.E.T. Construction,
ASBCA Nos. 24234, 28709, 84-2 BCA ¶ 17,464 (refusing to
reinstate appeal for failure of payment due to appellant's own
breach).
Review.
1.
The interpretation of a settlement agreement, i.e., a contract, is a
question of law. Augustine Medical, Inc. v. Progressive
Dynamics, Inc., 194 F.3d 1367 (Fed. Cir. 1999).
2.
An agreement that is complete on its face and reflects the
contractor's unqualified acceptance and agreement with its terms
will not be disturbed in the absence of fraud or other special
circumstances such as mutual mistake, collusion, or duress.
Klondike Enterprises, Inc., ASBCA 46572, 95-1 BCA ¶ 27,564;
M.G. Technology Corporation, ASBCA No. 35249, 90-1 BCA ¶
22,575 (no duress where contractor agreed to default termination
remaining in effect in return for award of reprocurement contract
to its subcontractor).
Miscellaneous Issues.
1.
Discovery. A board may order production of documents
concerning the negotiation or drafting of a settlement agreement,
notwithstanding the existence of an attorney-client privilege, where
a party is alleging unilateral or mutual mistake of fact or in
integration of the settlement agreement. B.G.W. Limited
Partnership v. General Services Administration, GSBCA No.
10501, 93-1 BCA ¶ 25,244.
2.
Intervention. Under the CDA, a third party has no right to
intervene and set aside a settlement agreement. Leland Stanford
Junior University, ASBCA Nos. 43761, 46136, 46970, 46971, 951 BCA ¶ 27,335 (denying right of qui-tam relator to intervene).
CONCLUSION.
8-17
CHAPTER 9
ASBCA PROCEDURES
I.
INTRODUCTION.
A.
B.
II.
ASBCA Rule 8. After the parties have filed their pleadings, they advise the
ASBCA whether they desire a hearing or submission of the case on the record
without a hearing.
1.
Hearing. Rules 17-25.
2.
Record Submission. Rule 11.
Facts are King!
THE RECORD.
A.
ASBCA Rule 13. The Board will render a decision based on the following:
1.
Documents furnished and admitted in evidence under Rules 4 and 12;
2.
Pleadings;
3.
Prehearing conference memoranda or orders;
4.
Prehearing briefs;
5.
Depositions or interrogatories received in evidence;
6.
Admissions or stipulations;
MAJ Jon Guden
Disputes and Remedies
March 2001
B.
III.
7.
transcripts of conferences and hearings;
8.
hearing exhibits;
9.
post-hearing briefs;
10.
documents the Board specifically designates to be part of the record.
Closing of the Record. Rule 13(b).
1.
Conclusion of Oral Hearing.
2.
Board notice that case is ready for decision in case submitted on the
record.
3.
Board in its discretion may keep record open or reopen record.
HEARING PROCEDURES.
A.
Administrative Preparation.
1.
Direct the contracting activity to issue travel orders for government
witnesses.
2.
Arrange for a “Government Hotel” and, if necessary, for use of an office
or conference room in a local government office.
3.
Obtain ASBCA subpoenas for recalcitrant witnesses.
4.
The good news is that it is different than being a trial counsel in military
justice matters. You do not have to worry about:
a.
The judge, the court reporter, the appellant, or the appellant’s
witnesses.
9-2
b.
B.
Scheduling the Hearing. ASBCA Rules 17 and 18.
1.
The hearing for an appeal will be held at such places as determined by the
Board (presiding judge) to serve the interests of the parties.
2.
The hearing will be scheduled at the discretion of the Board. The
presiding judge usually will honor the hearing date(s) and location
requested by the parties.
3.
The hearing date may be adjusted for good cause (obtain concurrence of
opposing side).
4.
Parties receive (at least) 15 days notice of the time and place of the
hearing.
5.
Site selection factors.
6.
C.
What if the appellant has requested the presence of a specific
government employee?
a.
Status of appellant (small business).
b.
Status of appellant’s representation.
c.
Amount in dispute.
d.
Location of witnesses.
The Board, at its discretion, may bifurcate the proceeding.
Conduct of the Hearing. ASBCA Rule 20.
1.
Hearings shall be as formal or informal as may be reasonable and
appropriate under the circumstances.
9-3
2.
3.
The unexcused absence at the hearing of party will not justify a delay.
a.
The hearing will proceed and the case is regarded as submitted on
the record (pursuant to ASBCA Rule 11) by the absent party.
ASBCA Rule 19.
b.
The party that fails to attend a scheduled hearing risks having its
opponent introduce, without objection, evidence which otherwise
would not have been admitted. Similarly, the missing party loses
its right to cross-examine.
CDA-based hearings are de novo proceedings. Wilner v. United States,
24 F.3d 1397 (Fed. Cir. 1994).
a.
The government is not bound by the findings or reasoning in the
Contracting Officer’s final decision.
b.
The government may argue any theory/claim as long as the facts
supporting it existed at the time of the final decision.
4.
Order of Presentation. The order of presentation is dependent typically on
which party has the burden of proof.
5.
Scope of hearing factors.
6.
a.
Issues to be tried.
b.
Consolidation of appeals.
c.
Entitlement and/or quantum.
Opening proceedings.
a.
Admit the Rule 4 file documents (including the Supplemental Rule
4 file) into evidence unless previously objected to.
9-4
7.
b.
Stipulations of fact or expected testimony agreed upon by the
parties may be regarded and used as evidence.
c.
The parties may present an opening statement.
Presentation of Evidence.
a.
b.
c.
Parties may offer such evidence as would be admissible under the
Federal Rules of Evidence. ASBCA Rule 20.
(1)
The Federal Rules of Evidence are not applied strictly in a
hearing where one party is not represented by a lawyer or
where small sums of money are in dispute.
(2)
The Board dislikes documents prepared in anticipation of
litigation. See Structural Painting Corp., ASBCA No.
33841, 89-3 BCA ¶ 21, 969.
Expert Witnesses.
(1)
Identity must be disclosed prior to the hearing.
(2)
Parties must disclose any written reports prepared by
experts.
(3)
The Board may require that the expert’s testimony be
reduced to writing, in which case the Board may deny the
request to conduct direct examination.
(4)
The credibility of an expert witness is lessened when the
witness has a financial interest in the outcome of the
litigation. Melville Energy Sys., Inc., ASBCA No. 33890,
87-3 BCA ¶ 19,992.
Normally, the Board accepts hearing exhibits into evidence as they
are introduced during the witness’ testimony. Keep a checklist to
ensure that all exhibits are admitted into evidence.
9-5
d.
8.
IV.
Voluntary Production of Witnesses. ASBCA Rule 21(b).
(1)
Generally, the parties agree to produce their own
employees as witnesses at no expense to the opposing
party.
(2)
Where the burden is disproportionate, a party should insist
on obtaining witness expenses, or a more convenient
hearing location. The Board will consider the relevance of
the testimony, military necessity, costs of production, and
other matters before ordering a party to produce a witness.
(3)
The board may allow for telephonic testimony.
(4)
Where the Board directs production of a witness, the Board
speaks as a representative of the Secretary of Defense.
Eagle Mgmt., Inc., ASBCA No. 35902, 90-1 BCA
¶ 22,513 (Board granted a claim after Air Force failed to
comply with a Board order requiring production of mess
hall superintendent).
Transcript of Proceedings. ASBCA Rule 24.
a.
Testimony and argument is reported verbatim, unless the Board
orders otherwise.
b.
The government attorney receives a copy of the transcript at no
cost.
c.
Appellant must pay for its copy of the transcript.
d.
Transcripts are ready approximately 2-6 weeks after the hearing.
SMALL CLAIMS PROCEDURES.
A.
Expedited Claims.
9-6
B.
1.
At the sole election of the contractor, it may elect small claims
(Expedited) Procedures when the amount in dispute is $50,000 or less.
41 U.S.C. § 608; ASBCA Rule 12.2.
2.
The Board uses streamlined procedures (accelerated filings, limited
discovery) to process the case within the statutory time limit. If appellant
wants more procedure, it must withdraw its election.
3.
The presiding judge decides the appeal. The presiding judge may issue an
oral decision followed by a memorandum. The judge must decide within
120 days from the date of appellant’s election.
4.
Neither party has the right to appeal an adverse decision in the absence of
fraud, and the decision has no precedential value. Fossitt Groundwork,
Inc., ASBCA No. 45358, 96-2 BCA ¶ 28,527 (collateral estoppel does not
apply because Rule 12.2 procedures do not provide requisite due process).
Accelerated Claims Procedure. 41 U.S.C. § 607(f); ASBCA Rule 12.3.
1.
At the sole election of the contractor, it may elect the accelerated
procedure when the amount in dispute is $100,000 or less.
2.
The presiding judge hears the appeal and drafts the decision. The
presiding judge decides, with the concurrence of a vice chairman, or by a
majority among these two and the chairman, in case of disagreement.
3.
The Board encourages parties to limit briefs and discovery.
4.
The Board shall resolve the case, whenever possible, within 180 days from
the date of appellant’s election, unless appellant withdraws its election.
5.
Either party may appeal to the Court of Appeals for the Federal Circuit
within 120 days. The government needs the consent of the U.S. Attorney
General. 41 U.S.C. § 607(g)(1).
9-7
V.
RECORD SUBMISSIONS.
A.
B.
VI.
ASBCA Rule 11.
1.
Either party may elect to waive a hearing or to submit its case upon the
record as settled pursuant to ASBCA Rule 13.
2.
Submission of a case without a hearing does not relieve a party from the
necessity of proving its allegations or defenses.
3.
The parties may supplement the record with affidavits, depositions,
admissions, answers to interrogatories, and stipulations.
4.
The Board may permit the parties to supplement the documentary
evidence by oral arguments (transcribed if desired) and briefs arranged
pursuant to ASBCA Rule 23.
Selecting Cases for Record Submissions. Factors in deciding to waive a hearing
and to submit the case upon the record:
1.
Small dollar value.
2.
Dispute can be decided based on documentary evidence.
3.
Litigation costs do not warrant a hearing.
4.
Witness considerations – availability, location, poor demeanor.
DECISIONS.
A.
The Board will issue a written decision. ASBCA Rule 28.
B.
The Board will forward copies of the decision simultaneously to the parties.
9-8
VII. CONCLUSION.
9-9
CHAPTER 10
PRIVILEGES IN CONTRACT LITIGATION
I.
INTRODUCTION.
A.
More than any other area of litigation practice, privileges presents a trove of
"traps for the unwary." Succumbing to these assures outcomes ranging from
client dissatisfaction and wasted attorney time to the compromise of national
security.
B.
Scope: This class will describe the most-frequently encountered privileges,
present the issues their invocation might raise, suggest practical concerns, and
discuss several knotty problems.
C.
Applicable Rules.
D.
1.
Fed. R. Civ. P. 26(b)(1) - "Parties may obtain discovery regarding any
matter, not privileged, which is relevant to the subject matter involved in
the pending action . . . [or any matter that] appears reasonably calculated
to lead to the discovery of admissible evidence."
2.
COFC rule 26(b) is identical.
3.
ASBCA permits discovery of "documents or objects not privileged, which
reasonably may lead to the discovery of admissible evidence." Rule 15.
Otherwise, board follows Fed. R. Civ. P. Appeal of Ingalls Shipbuilding
Division, Litton Systems, Inc., ASBCA No. 17717, 73-2 BCA ¶ 10,205.
Privileges Most Commonly Encountered in Contract Litigation.
1.
Attorney-Client.
2.
Attorney Work Product.
3.
Governmental.
a)
State Secret.
b)
Deliberative Process.
c)
Others.
LTC Steven Gillingham
Disputes & Remedies Elective
March 2001
E.
(1)
Informant's.
(2)
Investigatory Files.
(3)
Privilege For Information Given To The Government On A
Pledge Of Confidentiality.
(4)
Confidential Report.
(5)
Presidential Communications.
(6)
Bank Examination.
General Principles.
1.
“[A]ssertion of privileges is strictly construed because privileges impede
full and free discovery of the truth.” Energy Capital Partners Ltd. v. U.S.,
45 Fed. Cl. 481, 483 (2000) (citing cases).
2.
"Washington Post Rule" - Before invoking privilege, realize that you are
the face of the government. Consider that the plaintiff is among the
governed. In short, within the bounds of your duty to your client,
consider whether a claim of privilege, which, in essence, is an assertion of
government secrecy, comports with the larger public interest and whether
the public would think so.
3.
Before invoking privilege consider first whether the document is
responsive to the requests at issue, but construe them liberally, or pay the
price of nonadmissibility, the judge's wrath, and perhaps sanctions later.
4.
Rule of relevance - FRCP 26(b)(1) (only matters "relevant to the subject
matter involved in the pending action" or "reasonably calculated to lead to
the discovery of admissible evidence" are discoverable.)
a)
But, relevancy is broadly construed. "No longer can the timehonored cry of 'fishing expedition' serve to preclude a party from
inquiring into the fact underlying his opponent's case." Hickman
v. Taylor, 329 U.S. 495, 507 (1947). Accord Oppenheimer Fund,
Inc. v. Sanders, 437 U.S. 340, 351 (1978) (discovery exceeds
"issues raised in pleadings"); Appeal of Ingalls Shipbuilding, 73-2
BCA
¶ 10,205. As a practical matter, judges loathe having to decide
whether something is discoverable and even more so deciding that
6-2
it IS non-discoverable.
5.
II.
b)
Very much ad hoc, but remember what is good for the goose is
good for the gander, so be careful where you set the bar. It will
limit your advocacy for more liberal treatment later on. (On the
other hand, don't expect your generosity to be repaid in kind).
c)
Special case of terminations where project continues in parallel to
the litigation.
(1)
A practical suggestion: cut off everything involving only
litigation administration.
(2)
For purposes of work product, the ASBCA does "not view
the contracting officer's final decision as the automatic line
of demarcation between routine contract administration and
preparation for litigation." Appeal of B.D. Click Co., Inc.,
ASBCA Nos. 25,609 and 25,972, 83-1 ¶ BCA 16,328.
Party asserting privilege has the burden. E.g., Fisher v. United States, 425
U.S. 391 (1976); Appeal of Southwest Marine, Inc., DOTBCA Nos. 1497
et al, 87-2 BCA ¶ 19,769.
ATTORNEY-CLIENT PRIVILEGE.
A.
Rationale.
1.
B.
Encourage solicitation of legal advice "to promote broader public interests
in the observance of law and administration of justice." Upjohn Co. v.
United States, 449 U.S. 383, 389 (1991).
Elements.
1.
Protect communications between an "attorney" (acting as a lawyer) and
one who is or seeks to become a "client" in order to obtain legal assistance
or a legal opinion that reasonably is expected and intended to be
confidential (i.e., not to be disclosed to third persons) that has been
claimed and not waived. Upjohn, 449 U.S. at 395; Appeal of B.D. Click,
83-1 BCA ¶ 16,328 (citing United States v. Shoe Machinery Corporation,
89 F. Supp. 357, 358 (D. Mass. 1950).
a)
Includes the United States. United States v. Procter & Gamble,
356 U.S. 677, 681 (1958).
6-3
C.
D.
E.
Who is the client?
1.
Government employees serving in official capacity. Deuterium Corp. v.
U.S., 19 Cl. Ct. 697, 699-700 (1990); Appeal of Storage Technology
Corp, GSBCA No. 11306-P, 91-3 BCA ¶ 24,253 at 121,257
(communications to government counsel from government employees "at
all levels" eligible); Appeal of B.D. Click, 83-1 ¶ BCA 16,328 at 81,173.
2.
One who seeks to become a client. Standards of conduct "briefing" by
JAG attorneys to officer re: conflict of interest regulations held covered
where officer completed card describing himself as client and attorneys
answered his questions. United States v. Schaltenbrand, 930 F.2d 1554
(11th Cir.), cert. denied, 112 S. Ct. 640 (1991).
3.
The agency attorney as client. Cities Service Helix, Inc. v. U.S., 216 Ct.
Cl. 470, 476 (1978); Town of Norfolk v. U.S. Army Corps of Eng'rs., 968
F.2d 1438 (1st Cir. 1992) (DOJ letters to agency protected).
4.
Can extend to former employees.
What Is Protected?
1.
The lawyer's and the client's communication. Upjohn, 449 U.S. at 383,
390-91. Appeal of B. D. Click, 83-2 BCA ¶ 16,328 (communication
protected if it "exposes the confidentiality expected by the client," and
includes the fact the communication was made, the facts contained in the
communication, and the manner in which it was described, including the
order and omission of facts). But see Carter v. Gibbs, 909 F.2d 1450 (Fed.
Cir. 1990) (privilege applies only to client communications).
2.
Which communications? Depends on circuit. Spectrum ranges from
those that might reveal the confidence to all related to the purpose of the
confidence. See "The Attorney-Client Privilege and The Work Product
Doctrine - March 1994 OGC Deskbook," Department of the Navy
(Barlow et al) (1984) (unpublished), 4-8.
3.
Attorney may be deposed under proper circumstances. Sparton
Corporation v. United States, 44 Fed. Cl. 557 (1999) (citing three-part test
of Shelton v. American Motors Corp., 805 F.2d 1323, 1327 (8th Cir.
1986)).
Must be disclosed in order to obtain legal advice or assistance. Thus, mere
communication of information to a lawyer is not protected. E.g., Appeal of
6-4
Ingalls Shipbuilding, 73-2 BCA ¶ 10,205 (but look for implied request).
F.
Must be made in confidence and expected to be retained in confidence.
1.
May be disclosed to agents of the attorney and others assisting the
attorney in providing legal advice, if intended to remain in confidence.
2.
In-house persons? Coastal States Gas Corp. v. Department of Energy, 617
F.2d 854, 863 (D.C. Cir. 1980) ("If facts have been made known to
persons other than those who need to know them, there is nothing on
which to base a conclusion that they are confidential").
3.
Detailed factual showing needed to establish that independent contractors
have special relationship to corporation and transaction giving rise to the
need for legal services, Energy Capital, 45 Fed. Cl. 481, 490-91.
4.
Joint defense.
a)
G.
An extension of the A-C privilege. E.g., B.E. Meyers & Co.,
Inc.v. United States, 41 Fed. Cl. 729, 731 (1998). Applies to
clients in a litigated or non-litigated matter, represented by
separate attorneys, who agree to exchange information concerning
the matter.
Waiver
1.
Must be asserted and protected at all turns. (Thus, fair interrogatory is:
"for any claim of privilege, identify all occasions on which the privileged
matter was disclosed to any person other than the attorney to whom the
communication was originally made.")
2.
It is the client, not the attorney who may waive. Cities Service Helex, Inc.
v. U.S., 219 Ct. Cl. 765 (1977); Appeal of B.D. Click, 83-1 BCA
¶ 16,328; Appeal of Ingalls Shipbuilding, 73-2 BCA ¶ 10,205.
3.
The A-C privilege “can be waived by the client or prospective client only
if the communication is later disclosed to a third party and the client either
did not take adequate steps in the circumstances to prevent the disclosure .
. . .” B.E. Meyers & Co., Inc.v. United States, 41 Fed. Cl. 729, 731
(1998).
4.
Putting advice in issue. E.g., United States v. Mendelsohn, 896 F.2d 1183
(9th Cir. 1990) (defendant made attorney advice an issue by asserting that
the advice confirmed his activities were lawful - only advice about that
6-5
matter required to be disclosed).
H.
5.
Discussion of attorneys' advice among management does not waive
privilege. Appeal of B.D. Click, 83-1 BCA ¶ 16,328.
6.
Putting the protected information at issue and denying opponent
information vital to defending that issue requires a finding of waiver.
Afro-Lecon, Inc. v. United States, 820 F.2d 1198, 1204-05 (Fed. Cir.
1987).
7.
What is waived?
a)
Depends on circuit, ranging from only matter communicated to all
communications on subject matter. In re Sealed Case, 877 F.2d
976 (D.C. Cir. 1989) (company's disclosure to government auditor
= waiver, even if inadvertent; district court to determine scope of
subject matter).
b)
Genentech v. United States Int’l. Trade Comm’n., 122 F.3d 1409
(Fed. Cir. 1997). Court considered whether 12,000 pages of
documents inadvertently released in district court proceeding,
found by lower court to have been released due to lax screening
procedure, waived A-C privilege and work product protection.
Considered whether breach of confidence should be limited to
district court, and rejected the idea, noting that “a small number of
courts” have done so, but Fed. Cir. never has. Cited Carter v.
Gibbs for proposition that “[g]enerally disclosure of confidential
communications or attorney work product . . . constitutes a waiver
of privilege as to those items.” Genentech at 1415. Later in the
opinion stated: “[o]nce the attorney-client privilege has been
waived, the privilege is generally lost for all purposes and in all
forums.” Id. at 1416.
Inadvertent Waiver.
1.
What is it?
a)
National Helium Corp. v. U.S., 219 Ct. Cl. 612 (1979) (no per se
waiver for inadvertent disclosure. Test is whether "the [screening]
procedure followed was so lax, careless, or inadequate that
plaintiff must objectively be considered as indifferent to disclosure
or anything which happened to be shown to the Government).
b)
Where appellant assembled 137,142 pages of documents in a 316-6
day period, it had ample time (government performed its review in
two days). Failure of appellant to demonstrate that it had a
screening technique or undertook any limited review did not
support claim that disclosure was "inadvertent." Appeal of
General Dynamics, DOTBCA No. 1232, 83-1 BCA ¶ 16,284.
2.
Does it waive? Depends upon circuit.
a)
Federal Circuit - ??
(1)
Cat's out of the bag approach. Carter v. Gibbs, 909 F.2d
1452 (Fed. Cir. 1990). Appeal of Pinner Construction, VA
BCA Nos. 1712, 1852, 2273, 2274 & 2301, 87-2 BCA ¶
19,886 (citing Appeal of Southwest Marine, Inc., 87-2)
(agreeing with DOTCAB that "weight of authority and
better reasoned cases" hold that intent to waive is not a
precondition to waiver and that it can occur inadvertently;
VABCA also recognized that inadvertent disclosure may
not constitute waiver where effectively compelled, such as
an order to produce 17 million pages in three months).
(2)
National Helium Corp., 219 Ct. Cl. 612 (no per se waiver
for inadvertent disclosure).
(3)
IBM v. U.S., 37 Fed. Cl. 599 (1997) (Carter v. Gibbs did
not overrule National Helium because the former was not
decided en banc, as is necessary to overrule Court of
Claims precedent).
3.
Effect of inadvertent waiver agreements.
4.
Basis for advocacy.
5.
a)
Intent. National Helium, 219 Ct. Cl. at 616 (test is did "the client
wish to keep back the privileged materials and did he take
adequate steps in the circumstances to prevent disclosure of such
document."). See also United States v. Moscony, 927 F.2d 742
(3rd Cir.). cert. denied, 111 S. Ct. 2812 (1991) (unsophisticated lay
person held not to understand that he was waiving).
b)
Care shown. National Helium, 219 Ct. Cl. at 615.
If shown to witness to refresh recollection before trial, different analysis.
See FRE 612.
6-7
I.
Particular Situations.
1.
Updates not following a client communication?
2.
Staff meeting with attorney present.
3.
Letter forwarded to attorney "FYI."
4.
Should you advise clients not to put sensitive matters in writing?
5.
Providing common-sense business advice?
a)
6.
J.
III.
No. E.g., Cabot v. United States, 35 Fed. Cl. 442, 444-445 (1996).
KO testifies her decision was not an abuse of discretion because she relied
upon advice of counsel (beware of opponent attempting to boot strap, by
asking "did you rely on advice of counsel?" and then asking about advice.)
Conclusion. - There is plenty of room for advocacy by the seeker and no room for
complacency of the communicator.
WORK-PRODUCT DOCTRINE.
A.
Rule.
1.
Generally, a qualified protection for work performed by a party when
litigation is anticipated or underway, which can be overcome by a
showing of necessity.
2.
Hickman v. Taylor, 329 U.S. 495 (1947). Attorneys and plaintiffs ordered
imprisoned for failure to disclose witness statements taken from third
parties. Affirming appellate court reversal of district court, Supreme
Court held: "Here is simply an attempt, without purported necessity or
justification, to secure written statements, private memoranda and
personal recollections prepared or formed by an adverse party's counsel in
the course of his legal duties. As such, it falls outside the arena of
discovery and contravenes the public policy underlying the orderly
prosecution and defense of legal claims. Not even the most liberal of
discovery theories can justify unwarranted inquiries into the files and the
mental impressions of an attorney."
a)
Court noted that, with respect to the lawyer's remembrance or
6-8
selective notes of oral statements, "we do not believe any showing
of necessity can be made." 329 U.S. at 512-513.
B.
b)
The doctrine protects the tangible things sought (written
statements, notes, recordings), but not the underlying facts learned.
Id. at 504. Accord Appeal of Ingalls Shipbuilding, 73-2 BCA
¶ 10,205 (citing Fed. R. Civ. P. 26 and 33 (requiring responses to
interrogatories and requests for admissions regarding opinions and
application of law to facts)).
c)
Court acknowledged, contrary to appellate court's opinion, these
materials were not covered by A-C privilege, but were protected.
d)
The burden of showing necessity is on the discovering party.
3.
Subsequent codification. Fed. R. Civ. P. 26(b)(3). ("party may obtain
discovery of [materials] prepared in anticipation of litigation of for trial by
or for another party or by of for that other party's representatives
(including the other party's attorney, consultant, surety, indemnitor,
insurer, or agent) only upon a showing that the party seeking discovery
has a substantial need of the materials in he preparation of the party's case
and that the party is unable without undue hardship to obtain the
substantial equivalent of the materials by any other means. In ordering
discovery of such materials when the required showing has been made, the
court shall protect against disclosure of the mental impressions,
conclusions, opinions, or legal theories of an attorney or other
representative of a party concerning the litigation.").
4.
Protection does not extend to documents prepared in the normal course of
business. E.g., B.D. Click, 83-1 BCA ¶ 16,328.
Rationale.
1.
It's not Cricket.
a)
“In performing his various duties, however, it is essential that a
lawyer work with a certain degree of privacy, free from
unnecessary intrusion . . . . Were such materials open to opposing
counsel on mere demand, much of what is now put down in
writing would remain unwritten. An attorney's thoughts,
heretofore inviolate, would not be his own. Inefficiency,
unfairness and sharp practices would inevitably develop in the
giving of legal advice and in the preparation of cases for trial. The
effect on the legal profession would be demoralizing. And the
6-9
interests of the clients and the cause of justice would be poorly
served.” Hickman v. Taylor, 329 U.S. 495 at 510.
b)
2.
Sparton, 44 Fed. Cl. 557, 565 (citing United States v. Noble, 422
U.S. 225 91975) (“work product doctrine is a practical one
grounded in the realities of litigation in our adversary system.”).
Promotes full preparation of case - even during a period when discovery
might be feared.
C.
Applies to Government. Kaiser Aluminum & Chem. Corp. v. United States, 141
Ct. Cl. 38, 49 (1958).
D.
Anticipation of Litigation Must Be A Reasonable Possibility.
E.
1.
Deuterium Corp. v. U.S., 19 Cl. Ct. 697 (1990); Appeal of Ingalls
Shipbuilding, 73-2 BCA ¶ 10,205 at 48,104.
2.
Inquiry should focus on the "primary motivating purpose behind the
creation of the document." United States v. Gulf Oil Corp., 760 F.2d 292,
296 (Temp. Emer. Ct. App. 1985).
3.
"[T]he mere fact that a [REA] has been filed and is being analyzed does
not bring the matter in close enough proximity to litigation to trigger the
automatic application of the work product rule . . . . [the] question does
not lend itself to hard rules." Appeal of B.D. Click, 83-1 BCA ¶ 16,328.
4.
NB: Extends to non-attorneys, but their involvement raises question of
whether their work was prepared for litigation or in ordinary course.
Waiver.
1.
Waiver of attorney-client communication does not necessarily require
waiver of work product based upon the disclosure.
2.
Inadvertent disclosure rules apply, but the inadvertent discloser could
probably effectively argue that a complex analysis should be returned on
grounds that other party could perform its own analysis. Of course, the
underlying facts will have been disclosed.
3.
Example - McDermott v. United States, No. 93-9C (Fed. Cl.) (production
of factual interview notes, pursuant to subpoena duces tecum, with small
amount of documents, in plain sight, throughout depo, of producing party's
attorney, not objected to until half way through examination).
6-10
IV.
GOVERNMENTAL PRIVILEGES.1
A.
Introduction.
1.
B.
Courts generally accept evidentiary privileges "'only to the very limited
extent that permitting a refusal to testify or excluding relevant evidence
has a public good transcending the normally predominant principle of
utilizing all rational means for ascertaining truth.'" Trammel v. United
States, 445 U.S. 40, 50 (1980) (quoting Elkins v. United States, 364 U.S.
206, 234 (1960) (Frankfurter, J., dissenting)).
State Secrets.
1.
The state secret privilege encompasses matters (not just communications)
which, if disclosed, would harm the nation's defense capabilities,2 disclose
intelligence gathering methods or capabilities,3 or disrupt diplomatic
relations with foreign governments.4 See generally Ellsberg v. Mitchell,
709 F.2d 51, 57 (D.C. Cir. 1983), cert. denied sub nom. Russo v. Mitchell,
465 U.S. 1038 (1984).
2.
Applicable when "there is a reasonable danger that compulsion of the
evidence will expose military matters which, in the interest of national
security, should not be divulged." Reynolds, 345 U.S. at 10.
3.
It is not necessary to show that harm will inevitably flow from disclosure.
1
This portion of the outline is excerpted from "The Governmental Privileges Outline"
(October 1999), an outline authored by Sandra Spooner, Deputy Director, Commercial Litigation
Branch, Civil Division, Department of Justice. This outline does not represent the views of DOJ.
2
See United States v. Reynolds, 345 U.S. 1, 6-7, 10 (1953).
3
See Black v. United States, 62 F.3d 1115 (8th Cir. 1995) (state secret privilege exempted
from disclosure information that would confirm or deny alleged contacts with government
officers, including identities, nature and purpose of contacts, and locations of contacts), cert.
dismissed, 517 U.S. 1154 (1996); Halkin v. Helms ("Halkin II"), 690 F.2d 977, 993 (D.C. Cir.
1982); Halkin v. Helms ("Halkin I"), 598 F.2d 1, 8-9 (D.C. Cir. 1978); Monarch Assurance v.
United States, 36 Fed. Cl. 324 (1996) (state secret privilege upheld when confirmation or denial
of relationship with CIA would jeopardize intelligence sources and result in loss of intelligence).
4
See Halkin II, 690 F.2d at 990 n.53, 993; Attorney General v. The Irish People, Inc., 684
F.2d 928 (D.C. Cir.), cert. denied, 459 U.S. 1172 (1983).
6-11
Northrop Corp. v. McDonnell Douglas Corp. 751 F.2d 395, 402 (D.C.
Cir. 1984). Instead, the government attorney's goal should be to present
necessarily "speculative projections" of harm that the court can credit.
See generally Ellsberg v. Mitchell, 709 F.2d at 58 n.35.
C.
4.
"In each case, the showing of necessity which is made will determine how
far the court should probe in satisfying itself that the occasion for invoking
the privilege is appropriate." Reynolds, 345 U.S. at 11.
5.
Once it is established that state secrets are involved, the privilege is
absolute. In re United States, 1 F.3d 1251 (Fed. Cir. 1993) (unpublished
opinion); Ellsberg v. Mitchell, 709 F.2d at 57.
6.
The Supreme Court has made it clear that, when a court is satisfied that
production of the evidence will expose matters which should not, in the
interest of national security, be divulged, the security of the privilege
should not be jeopardized by an examination of the evidence in camera.
Reynolds, 345 U.S. at 10.
Deliberative Process.
1.
Applicable to evidence that is: (1) predecisional and (2) deliberative in
nature,5 containing opinions, recommendations, or advice about agency
decisions.6 Renegotiation Board v. Grumman Aircraft Engineering Corp.,
5
The terms "predecisional" and "deliberative" are discussed at length in Access Reports v.
DOJ, 926 F.2d 1192 (D.C. Cir. 1991). The court of appeals suggests that "predecisional" is a
threshold requirement that the document, as a whole, play a role in the decision-making process,
while "deliberative" refers to that portion of the document which is privileged, i.e., non-factual.
Id. at 1195. As to precisely what counts as nonfactual material, the court stated:
[T]he opinion-fact line that we have often used as a rough guide to
separate exempt from non-exempt material grows out of the
"deliberative" requirement. . . . The "key question" in identifying
"deliberative" material is whether disclosure of the information
would "discourage candid discussion within the agency."
Access Report, 926 F.2d at 1192 (quoting Dudman Communications Corp. v. Department of the
Air Force, 815 F.2d 1565, 1567-68 (D.C. Cir. 1987)); see also A. Michael's Piano, Inc. v. FTC,
18 F.3d 138, 147 (2d Cir.) ("[A]dvisory reports by individuals without authority to issue final
agency dispositions are predecisional."), cert. denied, 513 U.S. 1015 (1994).
6
In the Freedom of Information Act, Congress codified the deliberative process privilege in
Exemption No. 5. See EPA v. Mink, 410 U.S. 73, 86-87 (1973). It provides that FOIA's affir6-12
421 U.S. 168, 184 (1975); In re Sealed Case, 121 F.3d 729, 735-36 (D.C.
Cir. 1997) and cases cited; Walsky Construction Co. v. United States, 20
Cl. Ct. 317 (1990).
2.
See also National Wildlife Fed'n. v. Forest Service, 861 F.2d 1114, 111819 (9th Cir. 1988) ("recommendations, draft documents, proposals,
suggestions, and other subjective documents which reflect the personal
opinions of the writer rather than the policy of the agency," as well as
documents that would "inaccurately reflect or prematurely disclose the
views of the agency").
3.
Factual material that does not reflect deliberative processes is not
protected. EPA v. Mink, 410 U.S. at 87-89; Redland Soccer Club, Inc. v.
Department of the Army, 55 F.3d 827, 854 (3d Cir. 1995), cert. denied,
516 U.S. 1071 (1996).
4.
Unlike the state secrets privilege, the deliberative process privilege is not
absolute. Redland Soccer Club, Inc. v. Department of the Army, 55 F.3d
827, 853 n.18 (3d Cir. 1995), cert. denied, 516 U.S. 1071 (1996). After
concluding that the privilege is properly invoked, the court must balance
the public interest in nondisclosure with the individual need for the
information as evidence. Redland Soccer Club, Inc., 55 F.3d at 854;
Committee for Nuclear Responsibility, Inc. v. Seaborg, 463 F.2d 788, 791
(D.C. Cir. 1971).
a)
5.
E.g., Dominion Cogen, D.C., Inc. v. District of Columbia, 878 F.
Supp. 258, 268 (D.D.C. 1995) (an exception to the deliberative
process privilege exists where "the deliberative process itself [is]
directly in issue").
Rationale.
a)
"Free and open comments on the advantages and disadvantages of
a proposed course of governmental management would be adversely affected if the civil servant or executive assistant were
compelled by publicity to bear the blame for errors or bad
judgment properly chargeable to the responsible individual with
power to decide and act." Kaiser Aluminum & Chemical Corp. v.
United States, 157 F. Supp. 939, 945-46 (Ct. Cl. 1958).
mative disclosure provisions do not apply to "inter-agency or intra-agency memorandums or
letters which would not be available by law to a party other than an agency in litigation with the
agency." 5 U.S.C. ∋552(a)(5).
6-13
b)
6.
D.
Disclosure of inter-agency and intra-agency deliberations and
advice is injurious to the federal government's decision-making
functions because it tends to inhibit the frank and candid
discussion necessary to effective government. NLRB v. Sears,
Roebuck & Co., 421 U.S. 132, 150-51 (1975); EPA v. Mink, 410
U.S. 73, 87 (1973).
Examples.
a)
Deliberations concerning whether to initiate litigation. United
States v. Farley, 11 F.3d 1385, 1389 (7th Cir. 1993) (referral
memorandum from FTC to DOJ).
b)
"Discussions among agency personnel about the relative merits of
various positions which might be adopted in contract negotiations
are as much a part of the deliberative process as the actual
recommendations and advice agreed upon." Mead Data Central,
Inc. v. Air Force, 566 F.2d 242, 257 (D.C. Cir. 1977).
c)
Drafts are almost always considered privileged. They represent
the personal opinion of the author, not yet adopted as the final
position of the agency. Thus, by their nature, they are deliberative.
Lead Industry Ass'n., Inc. v. OSHA, 610 F.2d 70, 86 (2d Cir.
1979); Judicial Watch, Inc. v. Clinton, 880 F. Supp. 1, 13 (D.D.C.
1995), aff'd, 76 F.3d 1232 (D.C. Cir. 1996); Grossman v. Schwarz,
125 F.R.D. 376, 385 (S.D.N.Y. 1989) (Lee, Mag.).
Others.
1.
Confidential Informant.
a)
Applicability.
(1)
Allows the Government to withhold the identity of persons
who furnish information about violations of the law to
officers charged with law enforcement. Roviaro v. United
States, 353 U.S. 53 (1957).
(2)
Does not protect the information disclosed unless its
disclosure would reveal identity, Roviaro, 353 U.S. at 60.
(3)
[A] source may be considered confidential "if the
informant's relation to the circumstances at issue supports
6-14
an inference of confidentiality." Cofield v. LaGrange, 913
F. Supp. 608, 618 (D.D.C. 1996) (citing Department of
Justice v. Landano, 508 U.S. 165 (1993)). "[C]ourts may
look to the risks an informant might face were her identity
disclosed, such as retaliation, reprisal or harassment, in
inferring confidentiality." Massey v. FBI, 3 F.3d 620, 623
(2d Cir. 1993). "An employee-informant's fear of employer
retaliation can give rise to a justified expectation of
confidentiality." United Technologies v. NLRB, 777 F.2d
90, 94 (2nd Cir. 1985). In addition, "serious and damaging
allegations of misconduct that could initiate criminal
investigations or lead to other serious sanctions can reflect
an implied assurance of confidentiality." Ortiz v. DHHS,
70 F.3d 729, 734 (2d Cir. 1995), cert. denied, 517 U.S.
1136 (1996).
(4)
b)
Privilege is qualified.
(1)
2.
E.g., R.C.O. Reforesting v. United States, 42 Fed. Cl. 405
(1998) (implied assurance of confidentiality when
informants' communications led to a criminal investigation
of the company by whom they were employed).
Government must show that its interest in effective law
enforcement outweighs the litigant's need for the
information.7 Roviaro v. United States, supra;
Investigatory Files.
a)
Applicability.
(1)
Protects investigatory files compiled for law enforcement
purposes. Friedman v. Bache Halsey Stuart Shields, Inc.,
738 F.2d 1336, 1341 (D.C. Cir. 1984); Black v. Sheraton
Corp. of America, 564 F.2d 531 (D.C. Cir. 1977).8
7
See, e.g., Rovario v. United States, 353 U.S. 53, 60-61 (1957) (if disclosure is "relevant and
helpful to the defense of an accused, or is essential to a fair determination of a cause, the
privilege must give way"); United States v. Gutierrez, 931 F.2d 1482, 1490-91 (11th Cir.), cert.
denied, 502 U.S. 916 (1991)(Government was not required to disclose informant's identity
because he was always with at least one agent who could testify to everything that occurred
except for a few instances, and because Government's affidavit indicated that threats had been
made against informant); United States v. Smith, 780 F.2d 1102 (4th Cir. 1985).
8
See also Exemption 7 of the FOIA. 5 U.S.C. ∋552(b)(7). Exemption 7 covers "records or
6-15
b)
Rationale.
(1)
c)
3.
Disclosure of investigatory files would undercut the
Government's prosecution by disclosing investigative techniques, forewarning suspects of the investigation, deterring
witnesses from coming forward, and prematurely revealing
the facts of the Government's case. In addition, disclosure
could prejudice the rights of those under investigation. 40
Op. A.G. 45 (1941).
Privilege is qualified.
(1)
Can be overcome if a litigant's need is sufficiently great.
(2)
See Friedman v. Bache Halsey Stuart Shields, 738 F.2d
1336, 1341 (D.C. Cir. 1984) (setting out factors to
consider: (1) the extent to which disclosure will thwart
governmental processes by discouraging citizens from
giving the government information; (2) the impact upon
persons who have given information of having their
identities disclosed; (3) the degree to which governmental
self-evaluation and consequent program improvement will
be chilled by disclosure; (4) whether the information
sought is factual data or evaluative summary; (5) whether
the party seeking discovery is an actual or potential
defendant in any criminal proceeding either pending or
reasonably likely to follow from the incident in question;
(6) whether the police investigation has been completed;
(7) whether any intradepartmental disciplinary proceedings
have arisen or may arise from the investigation; (8) whether
the plaintiff's suit is non-frivolous and brought in good
faith; (9) whether the information sought is available
through other discovery or from other sources; and (10) the
importance of the information sought to the plaintiff's
case).
Privilege For Information Given To The Government On A Pledge Of
information compiled for law enforcement purposes" under six specified conditions. DOJ v.
Landano, 508 U.S. 165 (1993); John Doe Agency v. John Doe Corp., 493 U.S. 1064 (1989)
(exemption for law enforcement records does not require that the records be originally compiled
for law enforcement purposes).
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Confidentiality.
a)
Applicability.
(1)
b)
Rationale.
(1)
c)
"[W]hen discovery of investigative reports obtained in
large part through promises of confidentiality would
hamper the efficient operation of an important Government
program and perhaps even as the Secretary here claims,
impair the national security by weakening a branch of the
military, the reports should be considered privileged.”
Machin v. Zuckert, 316 F.2d 336, 339 (D.C. Cir.), cert.
denied, 375 U.S. 896 (1963), cited with approval in United
States v. Weber Aircraft Corp., 465 U.S. 792, 796 (1984).
Privilege is qualified.
(1)
4.
United States v. Weber Aircraft Corp., 465 U.S. 792, 801
(1984) (while Exemption 5 of the FOIA might not
implicate "novel" privileges, it certainly covers "wellsettled" privileges like the one protecting confidential
statements made to accident investigators). See generally
Badhwar v. Department of the Air Force, 829 F.2d 182
(D.C. Cir. 1987).
Can be overcome by a strong showing of need. Machin v.
Zuckert, 316 F.2d at 339.
Confidential Report.
a)
Applicability.
(1)
In Association for Women in Science v. Califano
("AWIS"), 566 F.2d 339 (D.C. Cir. 1977), the court of
appeals recognized a governmental privilege termed the
"confidential report privilege," also known as the "required
reports" or "official information" privilege. Id. at 343-44.9
9
See Note, The Required Reports Privilege, 56 NW. L. Rev. 283 (1961); Note, Discovery of
Government Documents and the Official Information Privilege, 76 Colum. L. Rev. 142, 149-52
(1976).
6-17
(2)
It is not sufficient for the government to maintain
confidentiality or denominate the information as
confidential. There must be some statutory basis, other
than a general housekeeping statute, for maintaining
confidentiality.
(a)
b)
Rationale.
(1)
c)
5.
Baldridge v. Shapiro, 455 U.S. 345, 361-62 (1982),
statutory prohibition against release of raw census
data creates a privilege to protect such data from
disclosure during discovery.
Foster governmental interest in protecting the free flow of
information to the Government. Baldridge, 455 U.S. 345.
Privilege is qualified.
(1)
Agency must make a "substantial threshold showing" that
particularized harms are likely to flow from the disclosure
before a court will consider balancing the Government's
interest in secrecy against the moving party's interest in
disclosure. See, e.g., Morrissey v. City of New York, 171
F.R.D. 85, 90-91 (S.D.N.Y. 1997).
(2)
Must be lodged formally by the head of the relevant
agency. AWIS, 566 F.2d at 347.
Presidential Communications.
a)
Applicability.
(1)
b)
United States v. Nixon, 418 U.S. 683 (1974) (there is "a
presumptive privilege for Presidential communications,"
founded on "a President's generalized interest in
confidentiality.") Id. at 708, 711.
Rationale.
(1)
To ensure that the "President and those who assist him [are]
free to explore alternatives in the process of shaping
policies and making decisions . . . in a way many would be
unwilling to express except privately."
6-18
E.
Issues With Governmental Privileges.
1.
2.
Sufficiency of the Affidavit.
a)
For state secrets privilege: "[1] There must be a formal claim of
privilege, [2] lodged by the head of the department which has
control over the matter, [3] after actual personal consideration by
that officer." Reynolds, 345 U.S. at 7-8. See also Monarch
Assurance v. United States, 36 Fed. Cl. 324, 326 (1996) (affidavit
required from Director of Central Intelligence; affidavit from
Associate Deputy Director for Operations of the CIA not
sufficient).
b)
Almost all courts require that any claim of governmental privilege
be accompanied by an affidavit from the head of the agency that
has control over the documents. See United States v. Reynolds,
345 U.S. at 7-8; Zuckerbraun v. General Dynamics Corp., 935
F.2d 544, 546 (2d Cir. 1991); CACI Field Services, 12 Cl. Ct. 680,
687 (1987).
c)
Affidavit not required until matter placed before court by motion
to compel motion for a protective order. In re Sealed Case, 121
F.3d 729, 741 (D.C. Cir. 1997) (White House was not obliged to
"formally invoke its [executive] privileges in advance of the
motion to compel;" it was sufficient that it said, in response to a
subpoena, that it "believed the withheld documents were
privileged."). Accord Abramson v. United States, 39 Fed. Cl. 290,
294 n.3 (1997)("procedural requirements generally are satisfied
through the production of a declaration or affidavit by the agency
head . . . in response to a motion to compel.").
Content of affidavit.
a)
Affiant's credentials, description of documents, statement that
affiant has personally reviewed them,10 claim of privilege.
b)
Object is to avoid in camera inspection. Thus, specificity of
description of documents is critical.
10
For a case in which the court concluded that the agency's affiant had not, in fact, conducted
the requisite personal review, see Yang v. Reno, 157 F.R.D. 625 (M.D. Pa. 1994).
6-19
3.
Comparisons to the Freedom of Information Act.
a)
The Freedom of Information Act, 5 U.S.C. §∋ 552(b), provides that
the Government "shall make available to the public," upon
demand, agency records not falling within certain specified
exemptions. In many instances, the exemptions are analogous to
the governmental discovery privileges.11
b)
There also are significant differences between the FOIA and the
evidentiary privileges applicable to the Executive Branch.12
Accordingly, care must be exercised in relying upon principles that
underpin FOIA rulings.13
(1)
4.
Cases construing Exemption (b)(5) are authoritative with
respect to the deliberative process privilege because the
exemption specifically provides that inter- and intra-agency
memos are available under FOIA to the same extent they
would be available in litigation. See NLRB v. Sears,
Roebuck & Co., 421 U.S. at 149 n.16 (1975).
c)
"FOIA neither expands nor contracts existing privileges, nor does
it create any new privileges." Association for Women in Science
v. Califano, 566 F.2d 339, 342 (D.C. Cir. 1977).
d)
Discovery rules are applied to FOIA decisions only by "rough
analogies." EPA v. Mink, 410 U.S. at 86. Differences include the
fact that, in discovery matters, the courts consider the needs of the
requesting party. That assessment is not part of the FOIA analysis.
North v. Walsh, 881 F.2d at 1095; Baldridge v. Shapiro, 455 U.S.
345, 360 n.15 (1982)
Waiver.
11
See Note, Discovery of Government Documents and the Official Information Privilege, 76
Colum. L. Rev. 142, 152 (1976).
12
See Culinary Foods, Inc. v. Raychem Corp., 150 F.R.D. 122 (N.D. Ill. 1993), for a
discussion of the distinctions between civil discovery and access to government information
under FOIA.
13
Most courts have held that the FOIA exemptions do not create "privileges" within the
meaning of the Federal Rules of Civil Procedure. See Baldridge v. Shapiro, 455 U.S. 345, 360
n.15 (1982).
6-20
V.
a)
Because "executive privilege exists to aid the governmental
decisionmaking process, a waiver should not be lightly inferred."
In re Sealed Case, 121 F.3d 729, 741 (D.C. Cir. 1997) .
b)
Thus, the rule applied to many privileges that disclosure is a
waiver, not only as to the disclosed document, but also as to all
related documents, "has not been adopted with regard to executive
privileges generally, or to the deliberative process privilege in
particular. Instead, courts have said that release of a document
only waives these privileges for the document or information
specifically released, and not for related materials." In re Sealed
Case, 121 F.3d at 741, and cases cited.
ASSERTING/RESISTING PRIVILEGES.
A.
Pre-litigation Planning/ Litigation Administration.
1.
2.
Control Your Forces.
a)
Ensure those working on the litigation know the "rules of
engagement."
b)
Ensure "interested persons" not working on the litigation know the
rules.
c)
Leaks - limit disclosures from litigation to non-litigation
personnel.
d)
Establish permissible lines of communication and limits on intrateam communications (if an agency analyst/attorney discloses
information or shares documents with a testifying expert, including
DCAA, warn the analyst that s/he might as well make a copy right
then and there for opposing counsel).
e)
Understand that nondisclosure is not the goal of litigation and that
efficient work practices may entail an acceptable level of risk of
disclosure. Just ensure everyone knows the risk exists.
Mark Documents.
a)
Issue written instructions.
6-21
b)
Purpose.
(1)
Prevent inadvertent disclosure.
(2)
Assist those reviewing for privilege.
3.
Identify who the attorneys were/are.
4.
Document the anticipation of litigation and purpose of pre-litigation work
product.
B.
Authority. Make sure you have it (to waive or assert).
C.
Privilege Logs.
D.
1.
See Fed. R. Civ. P. 26(b)(5) (party withholding must describe "the nature
of the . . . things not produced . . . without revealing information itself
privileged or protected, [so as to] enable other parties to assess the
applicability of the privilege or protection").
2.
Provide sufficient information to describe the document uniquely
(normally date, to/from, serial number, and/or title/subject). Must be
document by document, unless particular collections involve identical
material.
3.
Provide sufficient information to substantiate the privilege, e.g., "To John
Smith, Attorney")
4.
Ensure that the log or description itself does not reveal what you are trying
to protect or otherwise invite unwanted attention.
Redaction.
1.
E.
When privileged matter is severable, e.g., handwritten notes on an
otherwise non-privileged document, redact the privileged material, and
produce the document. E.g. Sierra Rock v. Regents of Univ. of
California, EBCA No. C-9705223, 98-2 BCA & 30,083.
In Camera Inspection.
1.
Ellsberg v. Mitchell, 709 F.2d at 63-64 ("before conducting an in camera
examination of the requested materials, the trial judge should be sure that
the government has justified its claims in as much detail as is feasible (and
would be helpful) without undermining the privilege itself").
6-22
2.
Error to release following in camera inspection when no prima facie
showing by nonprivileged evidence sufficient to show need for such an
inspection. United States v. De La Jara, 973 F.2d 746 (9th Cir. 1992).
Accord Linder v. NSA, 94 F.3d 693, 696-97 (D.C. Cir. 1996) (if agency
meets its burden through affidavits, in camera inspection is neither
necessary not appropriate); Xerox Corp. v. U.S., 12 Cl. Ct. 93, 95 n.3
(1987); Appeal of Federal Data Corp., DOTBCA No. 2389, 91-3 BCA &
24,063.
3.
In camera inspection "not automatic" and "possibly a dilution of a
properly asserted privilege." Appeal of B.D. Click, 83-1 BCA ¶& 16,328
(ordering in camera inspection where requesting party would require
"clairvoyance" to respond to privileged party's affidavit concerning the
material, and allegations of fraud and conspiracy made document
potentially relevant ").
a)
4.
F.
G.
amount of detail in affidavit in support of privilege may preclude
this sort of situation.
If you lose the in camera battle, recusal?
Protective Orders.
1.
Rule 26(c) - "any order that justice requires to protect from annoyance,
embarrassment, oppression, or undue burden or expense."
2.
Fashion orders to limit further disclosure of documents.
3.
Limits may concern: place of review, copying of documents, who may
review, disposition of documents after litigation, special marking of
documents, and certificates of non-use/non-disclosure of protected
materials.
Resisting An Assertion Of Privilege.
1.
Can the privilege be assessed from the log? Was one produced?
2.
Does it clearly meet the standard of proof for the privilege claimed? E.g.,
is the author/recipient of the communication entitled to the protection?
3.
Did the owner claim (Was it properly asserted?).
4.
Did the owner waive?
6-23
5.
VI.
Is the privilege qualified?
a)
Does the claim serve the principle giving rise to the privilege?
b)
Are your clients needs greater?
6.
Demand an in camera inspection.
7.
Are there alternatives sources of the information?
8.
Will a redaction or protective order obviate the privilege?
9.
Horse trade.
SELECTED PROBLEMS
A.
Experts.
B.
DCAA.
6-24
CHAPTER 10
LITIGATION IN THE COURT OF FEDERAL CLAIMS
I.
INTRODUCTION.
II.
WHAT IS THE COFC? WHERE DID IT COME FROM?
A.
Jurisdiction – Suits primarily for money, arising out of money-mandating statutes,
Constitutional provisions, executive orders, executive agency regulations, and
contracts.
1.
33% - Government contracts.
2.
25% - tax refunds (concurrent jurisdiction with United States district
courts).
3.
10% - Fifth Amendment takings, including environmental and natural
resource issues.
4.
Balance.
a.
b.
c.
d.
B.
civilian and military pay.
intellectual property.
Indian tribe claims.
various claims pursuant to statutory loan guarantee or benefit
programs, including those brought by states and localities, and foreign
governments.
Remedies Available.
1.
Generally, money damages.
LTC Steven Gillingham
Disputes and Remedies Elective
March 2001
2.
Generally, COFC has no authority to issue injunctive relief or order
specific performance.
a.
b.
3.
C.
Pursuant to the Tucker Act, the court may provide limited forms of
equitable relief, including:
(1)
Reformation in aid of a monetary judgment, or rescission
instead of monetary damages. John C. Grimberg Co. v.
United States, 702 F.2d 1362 (Fed. Cir. 1983); Paragon
Energy Corp. v. United States, 645 F.2d 966 (Ct. Cl. 1981);
Rash v. United States, 360 F.2d 940 (1966).
(2)
“[T]o grant declaratory judgments and such equitable and
extraordinary relief as it deems proper, including but not
limited to injunctive relief" in bid protest cases. 28 U.S.C.
§ 1491(a)(3).
(3)
Correct records incident to a monetary award, such as
correcting military records to reflect a court finding of
unlawful separation. See 28 U.S.C. § 1491(a)(2).
Pursuant to the CDA, COFC also may entertain certain
nonmonetary disputes.
The court may award EAJA attorneys fees. 28 U.S.C. § 2412.
The Court. 28 U.S.C. §§ 171-172.
1.
Composed of 15 judges (and now has 9 more in senior status).
a.
Chief Judge is Lawrence Baskir (since 2001, appointed, 1998).
b.
President appoints judges for 15-year term with advice and consent
of Senate. President may reappoint after initial term expires.
10-2
c.
D.
Special Orders.
1.
E.
F.
The CAFC may remove a judge for incompetence, misconduct,
neglect of duty, engaging in the practice of law, or physical or
mental disability.
All of the below is tempered by the fact that RCFC 1 permits the judges to
“regulate the applicable practice in any manner not inconsistent with these
rules.” To date, at least 12 judges have adopted specialized procedural
orders, regulating enlargements of time, dispositive motions in lieu of
answers, other dispositive motion requirements, mandatory disclosure,
joint preliminary status reports, preliminary status conferences, discovery,
experts, and pretrial submissions.
Location.
1.
717 Madison Place, N.W., Washington, D.C. (across from White House
and Treasury).
2.
Trials routinely scheduled throughout the country, 28 U.S.C. §§ 403(c),
2505, and conducts telephonic hearings, motions, and status conferences.
Case Load.
1.
According to the court: “The 2,200 plus pending cases involve claims
currently estimated in the tens of billions of dollars, making the average
claim well over one million dollars.”
G.
Web site (includes judge’s bios): http://www.law.gwu.edu/fedcl/
H.
Historical - Pre-Civil War.
1.
Before 1855, Government contractors had no forum in which to sue the
United States.
10-3
I.
J.
2.
In 1855, the Congress created the Court of Claims as an Article I
(legislative) court to consider claims against the United States and
recommend private bills to Congress. Act of February 24, 1855,
10 Stat. 612.
3.
However, the service secretaries continued to resolve most contract
claims.
a.
As early as 1861, the Secretary of War appointed a board of three
officers to consider and decide specific contract claims. See
Adams v. United States, 74 U.S. 463 (1868).
b.
Upon receipt of an adverse board decision, a contractor’s only
recourse was to request a private bill from Congress.
Civil War Reforms.
1.
In 1863, Congress expanded the power of the Court of Claims by
authorizing it to enter judgments against the United States. Act of March
3, 1863, 12 Stat. 765.
2.
In 1887, Congress passed the TUCKER ACT to expand and clarify the
Court of Claims’ jurisdiction. Act of March 3, 1887, 24 Stat. 505
(codified at 28 U.S.C. § 1491).
a.
The COFC has jurisdiction “to render judgment upon any claim
against the United States founded either upon the Constitution, or
any Act of Congress or any regulation of an executive department,
or upon any express or implied contract with the United States, or
for liquidated or unliquidated damages in cases not sounding in
tort.” 28 U.S.C. § 1491(a)(1).
b.
For the first time, a Government contractor could sue the United
States as a matter of right.
Final Decisions.
10-4
K.
L.
M.
1.
Agencies responded to the Court of Claim’s increased oversight by adding
clauses to government contracts that appointed specific agency officials
(e.g., the contracting officer or the service secretary) as the final
decision-maker for questions of fact.
2.
The Supreme Court upheld the finality of these officials’ decisions in
Kihlberg v. United States, 97 U.S. 398 (1878).
3.
The tension between the agencies’ desire to decide contract disputes
without outside interference and the contractors’ desire to resolve disputes
in the Court of Claims continued until 1978.
4.
This tension resulted in considerable litigation and a substantial body of
case law.
The Supreme Court Weighs In.
1.
In a series of cases culminating in Wunderlich v. United States, 342 U.S.
98 (1951), the Supreme Court upheld the finality (absent fraud) of factual
and legal decisions issued under the disputes clauses by agency boards of
contract appeals.
2.
The Supreme Court further held that the Court of Claims could not review
board decisions de novo.
Congress Reacts.
1.
In 1954, Congress passed the Wunderlich Act, 41 U.S.C. §§ 321-322,
to reaffirm the Court of Claims’ authority to review factual and legal
decisions by agency boards of contract appeals.
2.
At about the same time, Congress changed the Court of Claims from an
Article I (legislative) court to an Article III (judicial) court. Pub. L. No.
83-158, 67 Stat. 226 (1953).
The Supreme Court Weighs In Again.
10-5
N.
O.
P.
1
1.
In United States v. Carlo Bianchi & Co, 373 U.S. 709 (1963), the Supreme
Court held that boards of contract appeals were the sole forum for disputes
“arising under” a remedy granting clauses in the contract.
2.
Three years later, the Supreme Court reaffirmed its conclusion in Utah
Mining and Constr. Co. v. United States, 384 U.S. 394 (1966).
3.
As a result, agency boards of contract appeals began to play a more
significant role in the resolution of contract disputes.
The Contract Disputes Act (CDA) of 1978, Pub. L. No. 95-563, 92 Stat. 2383
(codified as amended at 41 U.S.C. §§ 601-613).
1.
In 1978, Congress passed the CDA to make the claims and disputes
process more consistent and efficient.
2.
The CDA replaced the previous disputes resolution system with a
comprehensive statutory scheme.
Federal Courts Improvement Act of 1982, Pub. L. No. 97-164, 96 Stat. 25
(codified as amended in scattered sections of 28 U.S.C.).1
1.
In 1982, Congress overhauled the Court of Claims and created a new
Article I (legislative) court—named the United States Claims Court—
from the old Trial Division of the Court of Claims.
2.
Congress then merged the old Appellate Division of the Court of Claims
with the Court of Customs and Patent Appeals to create the Court of
Appeals for the Federal Circuit (CAFC).
Federal Courts Administration Act of 1992, Pub. L. No. 102-572, 106 Stat. 4506.
For legislative history, see, inter alia, S. Rep. No. 102-342, 102d Cong., 2d Sess.
(July 27, 1992); H. Rep. No. 102-1006 (October 3, 1992); Senator Heflin’s
remarks, Volume 138 Cong. Rec. No. 144, at S17798-99 (October 8, 1992).
The Act substantially revised the jurisdiction of the new courts.
10-6
1.
In 1992, Congress changed the name of the Claims Court to the United
States Court of Federal Claims (COFC).
2.
In addition, Congress expanded the jurisdiction of the COFC to include
the adjudication of nonmonetary disputes.
a.
Q.
R.
The COFC has jurisdiction “to render judgment upon any claim by
or against, or dispute with, a contractor arising under section
10(a)(1) of the Contract Disputes Act of 1978, including a dispute
concerning termination of a contract, rights in tangible or
intangible property, compliance with cost accounting
standards, and other nonmonetary disputes on which a
decision of the contracting officer has been issued under section
6 of that Act.” Federal Courts Administration Act of 1992, Pub. L.
No. 102-572, 106 Stat. 4506 (codified at 28 U.S.C. § 1491(a)(2)).
The Federal Acquisition Streamlining Act of 1994 (FASA), Pub. L. No. 103-355,
108 Stat. 3243 (1994), slightly altered the court’s jurisdiction.
1.
The COFC may direct that the contracting officer render a decision. The
Boards of Contract Appeals (BCAs) no longer have exclusive authority
under the CDA to entertain a request that the contracting officer be
directed to issue a final decision in the event of undue delay by the
contracting officer. FASA § 2351(e), amending 41 U.S.C. § 605(c)(4).
2.
District courts may request advisory opinions from BCAs. On matters
concerning contract interpretation (any issue that could be the proper
subject of a contracting officer’s final decision), district courts may
request that the appropriate agency BCA provide (in a timely manner) an
advisory opinion. FASA § 2354, amending 41 U.S.C. § 609. (It is
interesting to note that the statute did not permit a Federal district court
to request an advisory opinion from the COFC.)
The Administrative Dispute Resolution Act of 1996 (ADRA), Pub. L. No. 104320, § 12 (1996), significantly altered the COFC’s and U.S. District Courts’ bid
protest jurisdiction. See 28 U.S.C. § 1491(b).
1.
Concurrent Jurisdiction of COFC and District Courts
10-7
III.
2.
Statutorily-Prescribed Standing Requirement
3.
APA Standard of Review
4.
Sunset Provision on District Court Jurisdiction (1/1/2001)
DAY-TO-DAY ADMINISTRATION.
A.
The Judge. 28 U.S.C. § 173.
1.
One judge presides and decides - NO JURY TRIALS
a.
2.
B.
C.
NB: different than ASBCA.
Judges not bound by the decisions of the other COFC judges. Are bound
by Fed. Cir. and Court of Claims decisions.
The Plaintiff. RCFC 81(d)(8).
1.
Individuals may represent themselves or members of their immediate
family. Any other party must be represented by an attorney who is
admitted to practice in the COFC.
2.
Note: at ASBCA atty. not required.
The Defendant = “The United States.”
1.
Represented by the Department of Justice (DOJ). 28 U.S.C. §§ 516, 518519. The DOJ has plenary authority to settle cases pending in the COFC.
See 28 U.S.C. § 516; see also Executive Business Media v. Department of
Defense, 3 F.3d 759 (4th Cir. 1993).
a.
A section of the Civil Division’s Commercial Litigation Branch
represents the Government in all contract actions.
10-8
b.
2.
3.
D.
The section has 130 trial attorneys and is located at 1100 L Street,
N.W., Washington, D.C.
Practical Effect Upon Agency.
a.
The AGENCY loses authority over the case’s disposition.
b.
This CONTRACTING OFFICER loses authority to decide or
settle claims arising out of the same operative facts. The Sharman
Co., Inc. v. United States, 2 F.3d 1564 (1993).
c.
AGENCY COUNSEL, because there is only one “attorney of
record” per party, appears “of counsel,” and plays a different role
than s/he would at the board or even a district court, where
SAUSA appointments are common place.
d.
NB: at ASBCA, agency is respondent and conducts the litigation.
This is one of the features contractors consider in deciding whether
to elect COFC.
Effect of “United States” as defendant. Who is DOJ’s client?
The Rules.
1.
The Rules of the Court of Federal Claims (RCFC) – formerly the Rules of
the United States Claims Court (RUSCC) -- became effective on October
1, 1982, and were last revised on March 15, 1992. They are based upon
the Federal Rules of Civil Procedure (Fed. R. Civ. P.) and are published as
an appendix to Title 28 of the United States Code.
2.
Supplemented by General Orders.
a.
GO 13 - ADR – mandatory notice of ADR options, voluntary
participation, outlines methods.
10-9
IV.
b.
GO 33 – court’s name changed w/o legal effect – all prior rules
applicable, cited as “Fed. Cl.,” rules as RCFC.
c.
GO 34 - complaints of judicial misconduct – 43 pages (you wish
you had these many rights).
d.
GO 35 – student practice w/ supervisory atty. (no fee for service
allowed).
e.
GO 36 – Statement of related cases required (same parties, K), CJ
may reassign cases in interest of economy.
f.
GO 37 – price of admission to bar = $30 (hand-calligraphed cert. =
$25).
g.
GO 38 – Standard practice for bid protests (at discretion of judge)
– see discussion below concerning bid protests.
BID PROTESTS - THE AGENCY COUNSEL’S ROLE: YOU’VE
GOT THE POINT.
A.
Nature: Request for Injunctive Relief (halting the award). Protestor must prove:
1.
Plaintiff will suffer irreparable harm;
2.
Plaintiff’s harm outweighs the harm to the government;
3.
Public interest favors equitable relief; and
4.
Plaintiff is likely to succeed on the merits.
10-10
B.
C.
Standard of Review. The ADRA incorporates by reference the Administrative
Procedure Act’s Standard of Review. 28 U.S.C. § 1491(b)(4). That is, the CFC
will examine whether the agency’s actions were arbitrary, capricious, an abuse of
discretion, or otherwise not in accordance with law. 5 U.S.C. § 706. In applying
this standard, the CFC will examine whether:
a.
There was subjective bad faith by the agency;
b.
The agency decision had a reasonable basis;
c.
The amount of the agency’s discretion given by statute or
regulation; and
d.
The agency violated statute or regulation.
Managing the Shock
1.
The Administrative Record (G.O. 38(G)).
a.
Government must produce by the date set at the status conference.
The GO requires it to be submitted “as promptly as circumstances
permit.”
b.
Must include all relevant core documents. No “all-encompassing”
definition of the administrative record.
c.
The COFC should generally have before it the same information
that was before the agency when it made its decision. Mike
Hooks, Inc. v. United States, 39 Fed. Cl. 147, 154 (1997). Thus,
the COFC should focus on “the ‘whole record’ before the agency;
that is, all the material that was developed and considered by the
agency in making its decision.” Cubic Applications, Inc. v. United
States, 37 Fed. Cl. 339, 342 (1997).
10-11
d.
The COFC has permitted protesters to supplement this record
through discovery in limited circumstances: “The administrative
record is a post facto recreation of a procurement’s documentary
trail. If and when the administrative record does not, or cannot,
serve to explain or defend a party’s position, the record may be
supplemented by other documents, including affidavits, or
testimony.” Alfa Laval Separations, Inc. v. United States, 40 Fed.
Cl. 215, 220 n.6 (1998); see also GraphicData, LLC v. United
States, 37 Fed. Cl. 771, 780 (1997).
e.
In deciding whether to permit the supplementation of the record,
the COFC considers the eight factors articulated in Esch v.
Yeutter, 876 F.2d 976 (D.C. Cir. 1989):
(1)
f.
2.
(1) when agency action is not adequately explained in the
record before the court; (2) when the agency failed to
consider factors which are relevant to its final decision; (3)
when an agency considered evidence which it failed to
include in the record; (4) when a case is so complex that a
court needs more evidence to enable it to understand the
issues clearly; (5) in cases where evidence arising after the
agency action shows whether the decision was correct or
not; (6) in cases where agencies are sued for a failure to
take action; (7) in cases arising under the National
Environmental Policy Act; and (8) in cases where relief is
at issue, especially at the preliminary injunction stage. See,
e.g., Cubic Applications, Inc. v. United States, 37 Fed. Cl.
339 (1997) (stating that protester’s failure to seek to
question a witness before the GAO weakened protester’s
contention that it was necessary to do so at the COFC).
GAO Proceedings - by statute, all documents that are part of a
GAO protest are considered part of the record before the COFC.
31 U.S.C. § 3556. Not binding, but RCFC 34(d) permits COFC to
issue a call order to GAO to issue an advisory opinion on a protest.
See Howell Constr. v. United States, 12 Cl. Ct. 450 (1987).
Scheduling.
a.
24 hr. advance notice.
10-12
3.
b.
Scheduling Conference
c.
Decide:
(1)
Whether the agency can stay contract performance or
award pending a hearing on the TRO/PI motion, which
often happens (see, e.g., Aero Corp. v. United States, 38
Fed. Cl. 739, 746 (1997)); and
(2)
Whether to consolidate final hearing on the merits with the
PI hearing.
Protective Orders (G.O. 38(F)).
a.
Order limiting the disclosure of source selection, proprietary, and
other protected information to those persons admitted to that order.
The order also governs how such information is to be identified
and disposed of when the case is over. The COFC regularly issues
these orders, although in at least one case, the COFC denied the
request of the government and the apparent awardee to issue a
protective order and ordered the release of the government’s
evaluation documentation relating to the protester’s proposal to the
protester. See Pike’s Peak Family Housing, Inc. v. United States,
40 Fed. Cl. 673 (1998).
b.
Once the order is issued, one gets admitted to the order by
submitting an appropriate application. General Order 38 contains
a model protective order and model applications for access by
outside counsel, inside counsel, and outside experts.
c.
Ordinarily, objections must be made within 2 days of receipt of a
given application. In deciding whether to admit an applicant
against whose admission an objection has been lodged, the COFC
will consider:
(1)
Nature and sensitivity of the information;
10-13
(2)
The party’s need for access to the data to effectively
represent its client;
(3)
The overall number of applications; and
(4)
Other concerns that may affect the risk of inadvertent
disclosure.
(a)
V.
See U.S. Steel Corp. v. United States, 730 F.2d
1465 (Fed. Cir. 1984) (discussing that those who
give advice or participate in competitive decisionmaking on behalf of a party should not be admitted
to protective orders).
d.
COFC, DOJ, and agency personnel are automatically admitted.
e.
Most judges request or accept proposed redactions from court
orders and opinions and decide what protected information to
redact. See, e.g., WinStar Communications, Inc. v. United States,
41 Fed. Cl. 748, 750 n.1 (1998).
CONTRACT CLAIMS.
A.
The Contract Disputes Act of 1978. 41 U.S.C. §§ 601-613.
1.
Applicability. 41 U.S.C. § 602.
a.
The CDA applies to all express or implied contracts an executive
agency enters into for:
(1)
The procurement of property, other than real property in
being;
(2)
The procurement of services;
10-14
b.
2.
(3)
The procurement of construction, alteration, repair or
maintenance of real property; or
(4)
The disposal of personal property.
The CDA does not normally apply to contracts funded solely with
nonappropriated funds (NAFs). However, the CDA applies to
Army and Air Force Exchange Service (AAFES), Navy Exchange,
and Marine Corps Exchange contracts. 41 U.S.C. § 602(a).
Actions in the COFC. 41 U.S.C. § 609.
a.
The CDA permits a contractor to appeal directly to the COFC.
41 U.S.C. § 609(a)(1).
b.
Absent a Government claim (e.g., termination, LDs), the contractor
must meet the same claim and final decision requirements as it
must before the board.
(1)
c.
NB: no CDA interest is due unless the contractor submits a
claim. The contractor may submit a claim even if a
Government claim is at issue.
The COFC considers the case de novo. 41 U.S.C. § 609(a)(3).
3.
Consolidation of Suits. 41 U.S.C. § 609(d). The COFC may order the
consolidation of suits—or transfer suits to or among agency boards of
contract appeals—if 2 or more suits arising from 1 contract are filed in the
COFC or 1 or more boards of contract appeals.
4.
The Election Doctrine. 41 U.S.C. §§ 606 and 609.
a.
The CDA provides alternative forums for challenging a contracting
officer’s final decision.
10-15
B.
b.
Once a contractor files its appeal with a particular forum, this
election is normally binding and the contractor may no longer
pursue its claim in the other forum. See Bonneville Assocs. v.
United States, 43 F.3d 649 (Fed. Cir. 1994) (dismissing the
contractor’s suit because the contractor originally elected to
proceed before the GSBCA); see also Bonneville Assocs. v.
General Servs. Admin., GSBCA No. 13134, 96-1 BCA ¶ 28,122
(refusing to reinstate the contractor’s appeal), aff’d, Bonneville
Assoc. v. United States, 165 F.3d 1360 (Fed. Cir. 1999).
c.
However, the “election doctrine” does not apply if the forum
originally selected lacked subject matter jurisdiction over the
appeal. See Information Sys. & Networks Corp. v. United States,
17 Cl. Ct. 527 (1989) (holding that the contractor’s untimely
appeal to the Agriculture Board of Contract Appeals did not
preclude it from pursing a timely suit in the Claims Court).
Statute of Limitations.
1.
In 1987, the CAFC decided that the Tucker Act’s six-year (from accrual of
action, not COFD) statute of limitations did not apply to CDA appeals.
Pathman Constr. Co. v. United States, 817 F.2d 1573 (Fed. Cir. 1987).
2.
In 1994, Congress revised the CDA to impose a six-year statute of
limitations on contract claims. Federal Acquisition Streamlining Act of
1994, Pub. L. No. 103-355, 108 Stat. 3243 (codified at 41 U.S.C.
§ 605(a)).
3.
a.
Beginning with contracts awarded on or after 1 October 1995, a
contractor must submit its CLAIM within six years of the date the
claim accrues.
b.
This statute of limitations provision does not apply to Government
claims based on contractor claims involving fraud.
Once it has met this six-year SOL, the contractor also must meet a 12
month COFC filing SOL.
10-16
4.
The contractor must initiate its action in the COFC within 12 months of
the date it received the contracting officer’s final decision (COFD). 41
U.S.C. § 609(a)(3). See Janicki Logging Co. v. United States, 124 F.3d
226 (Fed. Cir. 1997) (unpub.); K&S Constr. v. United States, 35 Fed. Cl.
270 (1996); White Buffalo Constr., Inc. v. United States, 28 Fed. Cl. 145
(1992); Structural Finishing, Inc. v. United States, 14 Cl. Ct. 447 (1988).
a.
The COFC generally considers the Clerk of Court’s records of
receipt to be final and conclusive evidence of the date of filing.
b.
However, the court will deem a late complaint timely if the
plaintiff:
(1)
Sent the complaint to the proper address by registered or
certified mail, return receipt requested;
(2)
Deposited the complaint in the mail far enough in advance
of the due date to permit its delivery on or before that date
in the ordinary course of the mail; and
(3)
Exercised no control over the complaint from the date of
mailing to the date of delivery.
See B.D. Click Co. v. United States, 1 Cl. Ct. 239 (1982) (holding
that the contractor failed to demonstrate the applicability of
exceptions to timeliness rules).
5.
Contrast this with BCA practice:
a.
BCA appeals must be initiated within 90 days;
b.
Timeliness is based upon the mailing of the notice of appeal (vice
receipt at COFC). 41 U.S.C. § 609(a). Structural Finishing, Inc. v.
United States, 14 Cl. Ct. 447 (1988).
10-17
VI.
INITIATING SUIT (WHAT YOU’RE LIKELY TO GET AND
WHEN).
A.
Action Commenced With A Complaint.
1.
2.
B.
VII.
A “short and plain” statement of jurisdiction, demonstrating entitlement,
and demanding judgment for the entitled remedy. In addition, the
complaint must contain:
a.
a statement regarding any action taken on the claim by Congress, a
department or agency of the United States, or another tribunal;
b.
a clear citation to any statute, regulation, or executive order upon
which the claim is founded; and
c.
a description of any contract upon which the claim is founded.
NB: At BCAs, action commenced with notice of appeal.
The “Call Letter.” 28 U.S.C. § 520.
1.
The Attorney General must send a copy of the petition (i.e., the complaint)
to the responsible military department, along with a request for all of the
facts, circumstances, and evidence concerning the claim that are within the
possession or knowledge of the military department.
2.
The responsible military department must then provide the Attorney
General with a “written statement of all facts, information, and proofs.”
DOJ RESPONSE (WHAT DOJ EXPECTS AND WHY).
A.
The Answer. RCFC 8, 12, and 13.
10-18
1.
The Government must file its answer within 60 days of the date it receives
the complaint.
2.
The Government must admit or deny each averment in the complaint.
3.
a.
If the Government lacks sufficient knowledge or information to
admit or deny a particular averment, the Government must say so.
b.
If the Government only intends to oppose part of an averment, the
Government must specify which part of the averment is true and
deny the rest.
c.
The Government may enter a general denial if it intends to oppose
the plaintiff’s entire complaint, including the plaintiff’s averments
regarding the court’s jurisdiction. But see RCFC 11.
d.
Generally, DOJ files bare bones admissions and denials. Compare
with ASBCA practice. However, each such statement must be
supportable. See discussion of Rule 11, below.
Defenses. RCFC Nos. 8 and 12.
a.
If a responsive pleading is required, the Government must plead
every factual and legal defense to a claim for relief.
b.
The Government may assert the following defenses by motion:
(1)
c.
Lack of subject matter jurisdiction; Lack of personal
jurisdiction; Insufficiency of process; and Failure to state a
claim upon which the court may grant relief.
The Government must plead the following affirmative defenses:
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(1)
4.
Counterclaims. RCFC 13.
a.
b.
B.
“accord and satisfaction, arbitration and award, discharge
in bankruptcy, duress, estoppel, failure of consideration,
fraud, illegality, laches, license, payment, release, res
judicata, statute of frauds, statute of limitations, waiver,
and any other matter constituting an avoidance or
affirmative defense.” RCFC 8(c).
The Government must state any claim it has against the plaintiff as
a counterclaim if:
(1)
The claim arises out of the same transaction or occurrence
as the plaintiff’s claim; and
(2)
The claim does not require the presence of third parties for
its adjudication.
The Government may state any claims not arising out of the same
transaction or occurrence as the plaintiff’s claim as counterclaims.
Signing Pleadings, Motions, and Other Papers. RCFC 11.
1.
The attorney of record must sign every pleading, motion, and other paper.
2.
The attorney’s signature constitutes a certification that:
[T]he attorney . . . has read the pleading, motion, or other paper;
that to the best of the attorney’s . . . knowledge, information, and
belief formed after reasonably inquiry it is well grounded in fact
and is warranted by existing law or a good faith argument for the
extension, modification, or reversal of existing law; and that it is
not interposed for any improper purpose, such as to harass or to
cause unnecessary delay or needless increase in the cost of
litigation . . . . [emphasis added].
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C.
D.
3.
The COFC will strike a pleading, motion, or other paper if the attorney
does not promptly sign it after the omission of the attorney’s signature is
brought to the attorney’s attention.
4.
The COFC will impose appropriate sanctions against the attorney and/or
the represented party if the attorney signs a pleading, motion, or other
paper in violation of this rule.
Early Meeting of Counsel. RCFC, App. G, Pt. II. The parties must meet within
15 days of the date the Government files its answer to:
1.
Identify each party’s factual and legal contentions;
2.
Discuss each party’s discovery needs and discovery schedule; and
3.
Discuss settlement.
4.
As a practical matter, DOJ orchestrates this.
Preparing The Joint Preliminary Status Report (JPSR). RCFC, App. G, Pt. III.
1.
The parties must file a JPSR NLT 30 days after they meet.
2.
The JPSR must set forth answers to the following questions:
a.
Does the court have jurisdiction?
b.
Should the case be consolidated with any other action?
c.
Should trial of liability and damages be bifurcated?
d.
Should further proceedings be deferred pending consideration of
another case?
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3.
e.
Will a remand or suspension be sought?
f.
Will additional parties be joined?
g.
Does either party intend to file a motion to dismiss for lack of
jurisdiction, failure to state a claim, or summary judgment?
h.
What are the relevant issues?
i.
What is likelihood of settlement?
j.
Do the parties anticipate proceeding to trial? If so, does any party
want to request expedited trial scheduling?
k.
Is there any other information of which the court should be made
aware?
l.
What do the parties propose for a discovery plan and deadline.
As a practical matter, DOJ orchestrates this.
VIII. BASIS FOR DOJ RESPONSE - THE LITIGATION REPORT.
A.
The agency is required, by statute, to file a litigation report. 28 U.S.C. § 520(b).
1.
Not a Rule 4 File. Counsel, rather than the contracting officer, should
prepare the litigation report. Neither the CFC nor the plaintiff sees the
report. Err on the side of inclusion, not exclusion. Stamp “Attorney Work
Product.”
2.
AR 27-40, “Litigation.” Chapter 3.9, “Litigation Reports.”
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a.
Statement of Facts. - a complete statement of the facts upon
which the action and any defense thereto are based. Where
possible, support facts by reference to documents or witness
statements. Include details of previous administrative actions, such
as the filing and results of an administrative claim.
b.
Setoff or Counterclaim. Identify with supporting facts.
c.
Responses to Pleadings. Prepare a draft answer or other
appropriate response to the pleadings. (See fig 3-1, Sample
Answer). Discuss whether allegations of fact are well-founded.
Refer to evidence that refutes factual allegations
d.
Memorandum of Law. “Include a brief statement of the applicable
law with citations to legal authority. Discussions of local law, if
applicable, should cover relevant issues such as measure of
damages . . . . Do not unduly delay submission of a litigation
report to prepare a comprehensive memorandum of law.”
e.
(1)
Identify jurisdictional defects and affirmative defenses.
(2)
Assess litigation risk. Do not hesitate to form (and
support) a legal opinion. Give a candid assessment of the
potential for settlement.
Potential witness information. “List each person having
information relevant to the case and provide an office address and
telephone number. If there is no objection, provide the individual's
social security account number, home address, and telephone
number. This is "core information" required by Executive Order
No. 12778 (Civil Justice Reform). Finally, summarize the
information or potential testimony that each person listed could
provide.”
(1)
DOJ probably does not care about SSNs, but REALLY
cares about a witness’s expected availability (retiring?
PCS’ing to Greenland?)
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f.
Exhibits – “Attach a copy of all relevant documents . . . .Copies of
relevant reports of claims officers, investigating officers, boards, or
similar data should be attached, although such reports will not
obviate the requirement for preparation of a complete litigation
report . . . Where a relevant document has been released pursuant
to a Freedom of Information Act (FOIA) request, provide a copy of
the response, or otherwise identify the requestor and the records
released.
g.
Draft an answer.
h.
Identify documents and information targets for discovery. Think
about things you know exist or must exist that will help the agency
position as well as things that might exist that might undermine the
agency’s position.
i.
Consider drafting a motion to dismiss for lack of jurisdiction,
RCFC 12(b)(1), or for failure to state a claim, RCFC 12(b)(4).
j.
Consider drafting motion for summary judgment, RCFC 56, App.
H.
(1)
B.
RCFC 56(d) requires that the moving party file a separate
document entitled Proposed Findings of Uncontroverted
Fact, and that the responding party file a “Statement of
Genuine Issues,” and permits the responding party to file
proposed findings of uncontroverted facts.
Above All, Be A Good Intel Analyst.
1.
THEM: If the plaintiff’s position is unbelievable, there is a good chance
the agency has simply misunderstood it (perhaps because the position was
poorly presented). Identify the questions that will assure the Government
understands the contractor’s point so we can target discovery, properly
respond, and be assured the Government will not be blind-sided at trial.
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2.
IX.
US: Identify any agency concerns, uncertainty, hard or soft spots (the CO
will fight to the death vs. the CO was surprised the contractor never called
to negotiate), witness problems or biases, and anything else you would
like to know if you were trying the case.
AGENCY ROLE THROUGHOUT DISCOVERY.
A.
General Provisions. RCFC 26.
1.
Methods of Discovery. RCFC 26(a). The parties may obtain discovery by
depositions upon oral examination or written questions, written
interrogatories, requests for the production of documents, and requests for
admissions.
2.
The Court May Limit Discovery If:
3.
B.
a.
The discovery sought is unreasonably cumulative or duplicative;
b.
The party seeking the discovery may obtain it from a more
convenient, less burdensome, or less expensive source;
c.
The party seeking the discovery has had ample opportunity to
obtain the information sought; or
d.
The burden or expense of the proposed discovery outweighs its
likely benefit.
Protective Orders. RCFC 26(c) and App. G. The court may make “any
order which justice requires to protect a party or person from annoyance,
embarrassment, oppression, or undue burden or expense.”
Depositions.
1.
Offensive - Preparation.
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a.
b.
2.
3 essential components:
(1)
Purpose – lock in testimony, pure exploration, testing a
theory, confirming a negative.
(2)
Questions.
(3)
Documents.
Agency has a role to play in all three, such as coordinating with
fact/technical witnesses, but be careful to preserve those efforts as
work product.
Defensive – Notice.
a.
Agency counsel should coordinate service.
(1)
b.
3.
If the party that gave notice of the deposition failed to
attend (or failed to subpoena a witness who failed to
attend), the court may order that party to pay the other
party’s reasonable expenses, including reasonable
attorney’s fees.
Prior employees who acted within scope of duties are entitled to
representation by DOJ. Agency counsel should identify such
circumstances and ensure DOJ forms are completed and returned.
Defensive – G2ing.
a.
DOJ should take lead in preparing witnesses, including how much
and how to prepare.
(1)
Agency may be asked to identify relevant documents and
likely questions.
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b.
4.
All contact with witness must be coordinated with DOJ.
Submission of Transcript to Witness. RCFC 30(e).
a.
The deponent must examine and read the transcript unless the
witness and the parties waive the requirement.
(1)
b.
5.
C.
The deponent may make changes; however, the deponent
must sign a statement that details the deponent’s reasons
for making them.
Agency counsel should coordinate this.
Obtaining Transcripts.
a.
Expenses. RCFCs 28(d) and 30(g). The party taking the
deposition must pay the cost of recording the deposition.
b.
Tell DOJ what you will need: disk; condensed (with word index);
full. Making copies may or may not be permitted.
Interrogatories. RCFC 33.
1.
The Government may serve interrogatories on the plaintiff after the
plaintiff files the complaint, and the plaintiff may serve interrogatories on
the Government after the Government receives the complaint.
2.
The party upon whom the interrogatories have been served (i.e., the
answering party) must normally answer or object to the interrogatories
within 30 days of service.
3.
The answering party may answer an interrogatory by producing business
records if:
a.
The business records contain the information sought; and
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b.
The burden of deriving or ascertaining the answer sought is
substantially the same for both parties.
(1)
4.
The responding party must be specific about where the
information can be located. Otherwise, the burden is not
the same.
The answering party must sign a verification attesting to the truth of the
answers. The answering party’s attorney must sign the objections.
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D.
E.
F.
Requests for the Production of Documents. RCFC 34.
1.
The rules are similar to the rules for interrogatories.
2.
The party producing the records for inspection/copying may either:
a.
Produce them as they are kept in the usual course of business; or
b.
Organize and label them to correspond to the production request.
Requests for Admission. RCFC 36.
1.
The rules are similar to the rules for interrogatories.
2.
The answering party must:
a.
Specifically deny each matter; or
b.
State why the answering party cannot truthfully admit or deny the
matter.
3.
The answering party cannot allege lack of information or knowledge
unless the answering party has made a reasonable inquiry into the matter.
4.
If the answering party fails to answer or object to a matter in a timely
manner, the matter is admitted.
5.
Admissions are conclusive unless the court permits the answering party to
withdraw or amend its answer.
Agency Counsel Role in Responding to Interrogatories, Requests for Production
and Admissions.
1.
Identify Who Should Answer.
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2.
Inform all potential witnesses and affected activities that a lawsuit has
been filed; that, as a normal part of discovery, plaintiff is entitled to
inspect and copy all related documents; that “documents” includes
electronic documents, such as email and “personal” notes kept in
performing official duties, such as field notebooks; that witnesses are not
to dispose of any such documents; that they should begin to collect and
identify all files related to the lawsuit – including those at home.
3.
Clients also should be told they are represented by DOJ and the contractor
is represented by counsel, and they should not talk to the contractor or its
attorneys about the lawsuit.
4.
Discovery Planning Conference.
a.
Agency counsel and answering witnesses should discuss with DOJ
atty. concerning a strategy for responding. E.g.:
(1)
Objections in lieu of responses (what we won’t tell them);
(2)
Objections with limited responses (what we will tell them),
e.g., requests for “all documents” or “all information
related to.”
(3)
In which cases will we produce documents instead of
responding to an interrogatory IAW RCFC 33(c).
(4)
How documents will be organized and stamped, including
adoption of a stamping protocol (e.g.. “HQDA0001 . . . ,”
“AMC0001 . . . .”) to identify source of produced
documents and to identify them as having been subject to
discovery effort.
(5)
How copying and inspection will be handled – security
concerns? Cost concerns?
10-30
b.
G.
Preparation of a privilege log. All relevant documents not
produced and not covered by an objection must be listed on a
privilege log furnished to the other side. Typically, they list to,
from, date, subject, and privilege claimed. They should be
sufficiently detailed so that the basis for the privilege is evident but
does not disclose the privileged matter. E.g., Ltr. From MAJ
Jones, AMC Counsel, to Smith, CO re: claim.
Failure to Cooperate in Discovery. RCFC 37.
1.
Motion to Compel Discovery. RCFC 37(a)(2). If a party or a deponent
fails to cooperate in discovery, the party seeking the discovery may move
for an order compelling discovery.
2.
Expenses. RCFC 37(a)(4). The court may order the losing party or
deponent to pay the winning party’s reasonable expenses, including
attorney fees.
3.
Sanctions. RCFC 37(b).
a.
If a deponent fails to answer a question after being directed to do
so by the court, the court may hold the deponent in contempt of
court.
b.
If a party fails to provide or permit discovery after being directed
to do so, the court may take one or more of the following actions:
(1)
Order that designated facts be taken as established for
purposes of the action;
(2)
Refuse to allow the disobedient party to support or oppose
designated claims or defenses;
(3)
Refuse to allow the disobedient party to introduce
designated facts into evidence;
(4)
Strike pleadings in whole or in part;
10-31
X.
(5)
Stay further proceedings until the order is obeyed;
(6)
Dismiss the action in whole or in part;
(7)
Enter a default judgment against the disobedient party;
(8)
Hold the disobedient party in contempt of court; and
(9)
Order the disobedient party—and/or the attorney advising
that party—to pay the other party’s reasonable expenses,
including attorney’s fees.
TRIAL – YOU’RE NOT DONE YET.
A.
Pretrial Conference. RCFC, App. G, Pt. V.
1.
Preparatory Actions.
a.
The parties must exchange the following information through their
attorneys NLT 60 days before the pretrial conference:
(1)
(2)
All exhibits (except exhibits to be used for impeachment);
(a)
Exceptions based upon practicalities, particularly
WRT documents already produced. Generally, a
list of documents will meet this requirement.
(b)
No rule on demonstrative exhibits.
(c)
What about FRE 1006 compilations.
A final witness list.
10-32
b.
c.
2.
B.
The parties must also confer to:
(1)
Resolve any evidentiary objections;
(2)
Disclose all contentions as to applicable facts and law;
(3)
Engage in good-faith, diligent efforts to enter into factual
stipulations; and
(4)
Exhaust all possibilities of settlement.
Ordinarily, the parties must file:
(1)
A Memorandum of Contentions of Fact and Law;
(2)
A joint statement setting forth the factual and legal issues
that the court must resolve NLT 21 days before the pretrial
conference;
(3)
A witness list;
(4)
An exhibit list.
The attorneys who will try the case must attend the pretrial conference.
PreTrial Preparation.
1.
Contacting all witnesses -- ensuring none will be gone during trial and
that former Government employees have signed representation agreements
if they wish to.
2.
Outlining Witness Testimony.
3.
Preparing Witnesses.
10-33
C.
XI.
4.
Preparing FRE 1006 summaries.
5.
Copying and organizing documents.
Offers of Judgment. RCFC 68.
1.
The Government may make an offer of judgment at any time more than 10
days before the trial begins.
2.
If the offeree fails to accept the offer and the judgment the offeree finally
obtains is not more favorable than the offer, the offeree must pay any costs
the Government incurred after it made the offer.
SETTLEMENT.
A.
Attorney General has authority to settle and has delegated that authority
depending upon dollar value of settlement. 28 C.F.R. § 0.160, et seq., .e.g., AAG,
Civil Division may settle a defensive claim when the principal amount of the
proposed settlement does not exceed $2 million. The AAG has redelegated office
heads and U.S. Attorneys, but redelegation subject to exceptions, including case
where agency opposes settlement.
B.
Agencies must be consulted regarding “any significant proposed action if it is a
party, if it has asked to be consulted with respect to any such proposed action, or
if such proposed action in a case would adversely affect any of its policies.” U.S.
Attorney’s Manual, para.4-3.140C (available at www.usdoj.gov).
C.
Assume a Discussion About Settlement Is Coming.
1.
The agency has little influence on the process when the agency counsel is
not sufficiently familiar with case developments to offer a persuasive
opinion.
2.
Prepare your “clients” that ADR and, if warranted, settlement are more
arrows in the quiver for resolving the dispute.
10-34
3.
Explain that settlement should be used when it avoids injustice, when the
defense is unprovable, when a decision can be expected to create an
unfavorable precedent; and when settlement provides a better outcome
(including the fact it might include consideration that a court judgment
will not) than could be expected from a trial. The availability of expiring
contract funds might also be considered.
a.
4.
D.
In that regard, help client understand difference between their
believing a fact, and it being legally significant and provable.
Identify early on who within the agency has authority to recommend
settlement, and who within the agency has the natural interest or “pull” to
affect that recommendation, such that they should be continually updated
on the litigation.
Alternative Dispute Resolution (ADR). General Order No. 13.
1.
The COFC has implemented two ADR methods for use in appropriate
cases.
a.
Use of a Settlement Judge.
b.
Mini-Trial.
(1)
Each party presents an abbreviated version of its case to a
neutral advisor, who then assists the parties to negotiate a
settlement.
(2)
Suggested procedures are set forth in the General Order.
2.
Both ADR methods are designed to be voluntary and flexible.
3.
If the parties want to employ one of the ADR methods, they should notify
the presiding judge as soon as possible.
10-35
a.
If the presiding judge determines that ADR is appropriate, the
presiding judge will refer the case to the Office of the Clerk for the
assignment of an ADR judge.
b.
The ADR judge will exercise ultimate authority over the form and
function of each ADR method.
c.
If the parties fail to reach a settlement, the Office of the Clerk will
return the case to the presiding judge’s docket.
XII. POST JUDGMENT.
A.
Unless timely appealed, a final judgment of the court bars any further claim, suit,
or demand against the United States arising out of the matters involved in the case
or controversy. 28 U.S.C. § 2519.
B.
New Trials. 28 U.S.C. § 2515; RCFC 59.
1.
The COFC may grant a new trial or rehearing or reconsideration based on
common law or equity.
2.
The COFC may grant the Government a new trial—and stay the payment
of any judgment—if it produces satisfactory evidence that a fraud, wrong,
or injustice has been done to it:
a.
While the action is pending in the COFC;
b.
After the Government has instituted proceedings for review; or
c.
Within 2 years after final disposition of the action.
C.
Appeals. A party may appeal an adverse decision to the CAFC within 60 days of
the date the party received the decision. 28 U.S.C. § 2522. See RCFC 72.
D.
Payment of Judgments.
10-36
1.
2.
An agency may access the “Judgment Fund” to pay “[a]ny judgment
against the United States on a [CDA] claim.” 41 U.S.C. § 612(a). See
31 U.S.C. § 1304; cf. 28 U.S.C. § 2517.
a.
The Judgment Fund also pays compromises under the Attorney
General’s authority.
b.
If an agency lacks sufficient funds to cover an informal settlement
agreement, it may “consent” to the entry of a judgment against it.
Bath Irons Works Corp. v. United States, 20 F.3d 1567, 1583
(Fed. Cir. 1994).
An agency that accesses the Judgment Fund to pay a judgment must repay
the Fund from appropriations that were current at the time the judgment
was rendered against it. 41 U.S.C. § 612(c).
XIII. CONCLUSION.
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CHAPTER 11
BRIEF WRITING
I.
INTRODUCTION. ...............................................................................................................1
II.
DIFFERENT TYPES OF BRIEFS. ......................................................................................1
A.
General...............................................................................................................................1
B.
Pre-hearing Briefs. .............................................................................................................1
C.
Post-hearing Briefs. ...........................................................................................................3
D.
Reply Briefs. ......................................................................................................................3
E.
Briefs Submitted in Lieu of a Hearing...............................................................................4
III. PREPARATION OF A BRIEF.............................................................................................4
A.
Assembling Evidence.........................................................................................................4
B.
Format and Content............................................................................................................5
IV. ADVOCACY TECHNIQUES............................................................................................10
V.
A.
Making the Judge’s Job Easier. .......................................................................................10
B.
No Evidence is a Fact.. ....................................................................................................10
C.
Humanize Your Argument...............................................................................................10
D.
Follow the Real Order of Precedence. .............................................................................10
E.
Repeat Offenders. ............................................................................................................11
CONCLUSION....................................................................................................................11
CHAPTER 11
BRIEF WRITING
I.
INTRODUCTION.
II.
DIFFERENT TYPES OF BRIEFS.
A.
B.
General.
1.
Purpose. In contract disputes before the Armed Services Board of
Contract Appeals, briefs replace closing arguments for summarizing the
evidence presented, drawing inferences and conclusions from the
evidence, and advocating conclusions of law.
2.
Facts v. law.
a.
Good legal arguments will not overcome a weak factual
presentation. Most cases are won or lost on the facts.
b.
Make sure you separate facts from legal argument.
3.
Format. There is no required format for briefs. The Army, however, has
developed a standard format for post-hearing briefs.
4.
Length. The Board may place page limits on briefs. In all cases, briefs
should be well-organized, concise, and thorough. They should address all
relevant factual and legal issues. Normally, the proposed findings of fact
(“PFF”) are much more extensive than the legal arguments.
Pre-hearing Briefs. ASBCA Rule 9.
1.
The Board may order the parties to file pre-hearing briefs in any case in
which a hearing has been requested. They may be requested before an
ADR proceeding, such as a summary trial with binding decision.
MAJ Jon Guden
Disputes & Remedies
April 2001
2.
Generally, the Board will request pre-hearing briefs whenever the record
does not set forth the issues adequately.
3.
The Board may request pre-hearing briefs to encourage the parties to
simplify or to settle the issues.
4.
When the Board does not require pre-hearing briefs, either party may,
following timely notice to the other party, file a pre-hearing brief.
5.
Pre-hearing briefs are due to the Board at least 15 days prior to the hearing
date, and a copy is due to the other party simultaneously.
6.
Contents.
7.
a.
Proposed findings of fact.
b.
Statement of the legal issues.
c.
Summary of legal argument.
There are advantages to filing a pre-hearing brief.
a.
It requires the trial attorney to assemble evidence and identify
weaknesses and strengths in the case earlier in the proceedings.
b.
It helps to simplify the issues in dispute.
c.
It makes stipulations of fact easier to prepare.
d.
It educates the presiding judge on the facts and law.
e.
It makes the post-hearing brief easier to prepare.
11-2
C.
D.
Post-hearing Briefs. ASBCA Rule 23.
1.
The post-hearing brief replaces the final argument. The primary purpose
of a post-hearing brief is to provide the Board with proposed findings of
fact and legal argument to support a decision in favor of the client.
2.
Briefs are submitted upon the terms set by the presiding judge.
a.
The parties may submit post-hearing briefs simultaneously
(general rule), or sequentially, with the party with the burden of
proof submitting its brief first.
b.
Parties typically submit the original post-hearing brief, and three
copies, to the Board. The Board will forward a copy to the
opposing party.
c.
Parties should not attempt to supplement the record with exhibits
attached to the post-hearing brief.
Reply Briefs.
1.
The reply brief is the last opportunity to persuade the Board to reach a
decision favorable to the client. Don’t underestimate the importance of
the reply brief-it may well be the first thing read by the board judges.
2.
The reply brief has two main purposes. It should:
3.
a.
Rebut the opponent’s facts and arguments as set forth in its brief.
b.
Reemphasize the merits of the Government’s case.
A reply brief should not merely repeat arguments made in the original
brief.
11-3
4.
E.
III.
Generally, a party may not supplement the record with attachments to the
reply brief. However, you may want to supplement proposed findings of
fact.
Briefs Submitted in Lieu of a Hearing. ASBCA Rule 11.
1.
Parties may supplement the record with affidavits, depositions,
admissions, answers to interrogatories, and stipulations.
2.
Make sure you get what you need into the record. See ARCO
Engineering, Inc., ASBCA No. 52450, 01-1 BCA ¶ 31,218 (appeal of
reprocurement cost assessment sustained where Government included
only the first two pages of the reprocurement contract in the record for
R11 submission).
PREPARATION OF A BRIEF.
A.
Assembling Evidence.
1.
Although brief writing is an adversarial process, the brief must propose
only factually correct findings of fact. You should have ensured that the
required evidence was placed into the record, either through documents or
hearing testimony.
2.
First, assemble and review pleadings, admissions, stipulations, hearing
exhibits, transcripts, and Rule 4 documents (including the Supplemental
Rule 4 file).
3.
Second, draft the proposed findings of fact, with citation to the factual
sources supporting the fact. Citation can be to multiple sources, such as to
a document and testimony.
4.
Next, review your legal support and the proposed findings of fact to
ensure you have enough factual support for your legal arguments.
5.
Finalize the proposed findings of fact; then finalize legal arguments.
11-4
6.
B.
If time permits, have the contracting officer, field attorney, and key
witnesses review a draft copy of the brief.
Format and Content. One should tailor the brief to present the Government’s case
in the best possible light. A normal brief would include the following.
1.
2.
3.
Table of Contents.
a.
Begins at page i.
b.
Provides an outline of the Government’s case, including
arguments, while making the brief readable and easy to use.
Table of Authorities.
a.
Immediately follows the last page of the table of contents.
b.
Lists cases alphabetically and by court of decision (e.g., U.S.
Supreme Court, Court of Appeals for the Federal Circuit, U.S.
Court of Federal Claims) and Boards of Contract Appeals.
c.
May be omitted when a brief is short and there are few authorities
cited.
Introduction.
a.
Summarizes the matters in dispute.
b.
Summarizes the respective positions of the parties.
c.
States whether the hearing was limited to the issue of entitlement
or included matters of quantum.
d.
Indicates whether a hearing was held or waived. If a hearing was
held, it should state the date(s) and location(s) of the hearing.
11-5
4.
5.
e.
Identifies any conventions used when referring to the evidentiary
record.
f.
Includes other preliminary matters, as appropriate.
Statement of the Issues.
a.
Identifies the issues discussed in the Argument section of the brief,
in the order discussed.
b.
Frames the issues in the light most favorable to the Government.
Proposed Findings of Fact.
a.
The Board is essentially a fact-finding body. A detailed,
supportable statement of the facts is critical to success.
b.
Well-prepared, neutral, proposed findings of fact enable the Board
to incorporate the Government’s facts verbatim into the decision.
c.
Support proposed findings of fact (PFF) by reference to the source
of the facts. Follow Judge Ting’s guide for citation.
d.
Avoid legal arguments or conclusions in this section of the brief
and omit unsubstantiated conclusions of “fact.”
e.
Support findings of fact by circumstantial evidence, or by
inference from other undisputed facts. Remember that the absence
of proof may establish facts favorable to the Government’s case
(i.e., the failure of appellant’s president to testify when his
testimony was warranted may support the conclusion that the
president had something to hide).
11-6
f.
Insert significant specifications and clauses into the brief in their
entirety. Do not rely upon the judge to determine which clauses
support the Government’s case, and do not expect the judge to
obtain “old” copies of regulations like the FAR, DFARS, AFARS,
and AFFARS.
g.
Propose every factual averment necessary to support the
Government’s position.
h.
For disputed factual propositions, explain your position.
i.
(1)
Consider including within the proposed finding of fact a
short discussion stating how the conflict can be resolved in
your favor.
(2)
Inform the Board that the Government will address the
proposition in the Argument section of the brief (perhaps in
a footnote).
Organization.
(1)
Generally, proposed findings of fact are set forth in
chronological order.
(2)
Number proposed findings of fact separately and
sequentially.
(3)
Generally, include only one factual averment in each
proposed finding of fact.
(4)
It may be desirable to organize the facts according to
general topics, such as by the issues presented.
11-7
6.
Argument.
a.
The Argument section sets forth the legal arguments supporting the
Government’s position, the reasons the Board should adopt the
Government’s version of the disputed facts, and the inferences the
Board should draw from undisputed facts.
b.
The brief should confront weaknesses in the Government’s case
directly and attempt to persuade the Board to accept the
Government’s version of the facts. Additionally, the brief should
advise the Board of the legal authorities supporting and
contradicting the Government’s position.
c.
The Argument section begins with a summary of the argument and
an overview of the law.
d.
Discuss issues in the same order as identified in the Statement of
the Issues section.
e.
Identify each part of the Argument section with a caption that
states the topic (Issue) of that part.
f.
The argument should address the legal theories underlying the
contractor’s and the Government’s theories of the case. These
elements of proof are the “black letter law” for the particular claim
or defense. Ensure that the brief addresses these elements even
though the elements themselves are not disputed.
g.
Normally, withhold your attack on the contractor’s position until
the reply brief. If you will not have an opportunity to file a reply
brief, you need to attack the opponent’s position in your brief.
h.
Make arguments in the alternative, if appropriate, but identify them
clearly to avoid confusing the Board.
i.
When making an argument, cite to the proposed findings of fact
which support the conclusions advocated (e.g., PFF 47).
11-8
j.
7.
8.
Support legal arguments with:
(1)
Statutes.
(2)
Regulations (FAR, DFARS, AFARS/AFFARS).
(3)
Cases. DO NOT USE STRING CITES!
(4)
Legal texts and treatises.
Conclusion.
a.
Summarizes the essence and theme of the party’s case.
b.
Also contains the party’s request for relief (e.g., “Wherefore, the
Government respectfully requests that the Board deny this appeal
in its entirety”).
Appendices.
a.
May contain important but lengthy items such as statutes, contract
clauses, and FAR/DFARS/AFARS/AFFARS provisions. This is
especially true when the case turns on old regulations.
b.
May wish to provide a list to define acronyms or identify all of the
key parties or individuals to the dispute. The judge can use that
document while reading through the brief.
c.
It is inappropriate to include additional evidence in your brief,
such as new documents or summaries of other evidence.
11-9
IV.
ADVOCACY TECHNIQUES.
A.
Making the Judge’s Job Easier.
1.
Armed Services BCA judges have significant workloads. Writing an
ASBCA opinion is time consuming, and often takes years to complete.
2.
You want the judges to use your proposed findings of fact and legal
analysis in the written opinion.
3.
You will reduce the Judges’ workload and enhance your own standing
with the Board by providing legitimate support for your PFFs, and
providing them with the most recent and applicable case law.
B.
No Evidence is a Fact. If your opponent has introduced no evidence to support a
proposition, that fact may be cited as evidence of the contrary proposition.
C.
Humanize Your Argument. A case is easier to understand if Boeing and the
Army are the parties to the contract rather than Appellant and Respondent. Use
real names, when appropriate (such as when there are numerous contracting
officers involved in a contract dispute). If a contractor or subcontractor has
changed names, identify this fact early in the brief and explain how you are going
to refer to the party.
D.
Follow the Real Order of Precedence. The real order of precedence for case law
is normally:
1.
the administrative judge’s own opinions;
2.
decisions of the Court of Appeals for the Federal Circuit and its
predecessor (before 1982), the former U.S. Court of Claims;
3.
other administrative judges of the Armed Services Board of Contract
Appeals;
11-10
E.
V.
4.
Engineer Board of Contract Appeals (as of 2000, the ENG BCA merged
with the ASBCA);
5.
U.S. Court of Federal Claims; and
6.
other boards of contract appeals.
Repeat Offenders.
1.
Some contractors repeatedly file unsubstantiated claims using similar
theories of relief.
2.
Identifying these cases and citing them as authority for your legal
arguments directs the Board’s attention to these unfounded allegations.
3.
This may undermine appellant’s credibility and irritate the Board because
of the appellant’s failure to learn the law.
CONCLUSION.
11-11
PRICING OF ADJUSTMENTS
MAJ Louis A. Chiarella
Contract and Fiscal Law Department
Disputes and Remedies Elective
April 2001
I.
II.
INTRODUCTION. Following this block of instruction, students will understand:
A.
The basic philosophy and prerequisites for pricing contract adjustments.
B.
A comprehensive methodology for quantum case analysis.
C.
The measurement, methods, and burden of proving price adjustments.
D.
The special items that often comprise a contractor’s claim.
QUANTUM CASE PLANNING.
A.
B.
The Philosophy. It is necessary to approach pricing of adjustments with a guiding
philosophy. To do otherwise renders your litigation efforts half-hearted. The
elements of quantum litigation planning are two-fold:
1.
The fact that a contractor prevails on entitlement is meaningless in your
quantum case.
2.
Your game plan for the contractor’s claim is a simple one: First you are
going to cut it up, and then you are going to defeat it.
The Prerequisites. There exist two essential prerequisites to your efforts.
1.
You must have a thorough understanding of the law on pricing of
adjustments.
2.
Facts are king, and getting all the facts will take hard work.
C.
III.
The Methodology: DAMS.
1.
Divide the contractor’s claim into component parts.
2.
Apply Cost/Cost Accounting Standards (CAS) principles.
3.
Make the contractor prove the amount claimed.
4.
See what really happened.
APPLYING THE DAMS METHODOLOGY.
A.
B.
Divide the Contractor’s Claim into Component Parts.
1.
A contractor claim is really a series of smaller claims all added together.
Each piece must stand on its own, in terms of being both legally permitted
and factually supported.
2.
Quantum case litigation requires analyzing each section of the contractor’s
claim separately. This leads to a more thorough examination and prevents
overpayment regardless if the case is settled or litigated.
Apply Cost/CAS Principles.
1.
Generally. The government does not pay all the costs actually incurred
and/or claimed by a contractor. Applying Cost/CAS principles entails
analyzing each part of the total claim for allowability, allocability,
reasonableness, and CAS compliance.
2.
Allowability. The government does not pay certain costs, even if they
were actually incurred, reasonable in nature and amount, in furtherance of
the particular contract, and properly accounted for. The contact itself,
FAR Part 31.2, and case law all establish that certain costs are not
allowable.
2
a.
Profit.
(1)
A contractor is not always entitled to profit as part of its
claim. In many instances, profit is expressly not allowable.
The rationale for lack of profit is that there is no change in
the underlying work and/or risk—only the period in which
performance occurs.
(2)
Work stoppage adjustments. These adjustments preclude
profit as part of the price increase. Contract clauses
providing for such profit-less adjustments are:
(3)
(a)
FAR 52.242-14, Suspension of Work. See Thomas
J. Papathomas, ASBCA No. 51352, 99-1 BCA
¶ 30,349; Tom Shaw, Inc., ASBCA No. 28596, 95-1
BCA ¶ 27457.
(b)
FAR 52.242-17, Government Delay of Work. NB:
an unabsorbed overhead claim is essentially one for
the indirect costs of a government-caused delay,
and therefore, profit is also precluded. ECC Int’l
Corp., ASBCA Nos. 45041 et. al, 94-2 BCA ¶
26,639.
Labor standards adjustments. Adjustments under labor
standards clauses include only the increased costs of direct
labor (and preclude both profit and overhead). See FAR
52.222-43; FAR 52.222-44 (Fair Labor Standards Act and
Service Contract Act); All Star/SAB Pacific, J.V., ASBCA
No. 50856, 98-2 BCA ¶ 29,958; U.S. Contracting, Inc.,
ASBCA No. 49713, 97-2 BCA ¶ 29,232. But see BellSouth
Communications Syss., Inc., ASBCA No. 45955, 94-3
BCA ¶ 27,231 (holding that a price adjustment under the
Davis-Bacon Act (FAR 52.222-6) did not preclude profit).
3
b.
(4)
Equitable adjustment. By contrast, for equitable
adjustments a contractor is generally entitled to profit as
part of its claim for additional performance costs. United
States v. Callahan Walker Constr. Co., 317 U.S. 56 (1942).
Equitable adjustments are based on contract clauses
granting that remedy, including: FAR 52.243-1 thru –7
(Changes); FAR 52.245-2, -4, -5, and –7 (Government
Furnished Property); FAR 52.248-1 thru -3 (Value
Engineering); and FAR 52.236-2 (Differing Site
Conditions).
(5)
Convenience Termination Settlements. A contractor is not
entitled to profit as part of a termination for convenience
settlement proposal if the contractor would have incurred a
loss had the entire contract been completed. FAR 49.203.
The government has the burden of proving that the
contractor would have incurred a loss at contract
completion. R&B Bewachungs, GmbH, ASBCA No.
42214, 92-3 BCA ¶ 25,105. A contractor is not entitled to
anticipatory profits as part of a convenience termination
settlement proposal. Dairy Sales Corp. v. United States,
593 F.2d 1002 (Ct. Cl. 1979).
Attorneys Fees.
(1)
Costs related to prosecuting and defending claims and
appeals against the federal government are unallowable.
FAR 31.205-47; Singer Co. v. United States, 215 Ct. Cl.
281, 568 F.2d 695 (1977); Stewart & Stevenson Servs.,
Inc., ASBCA No. 43631, 97-2 BCA ¶ 29,252 modified by
98-1 BCA ¶ 29,653; Marine Hydraulics Int’l, Inc.,
ASBCA No. 46116, 94-3 BCA ¶ 27,057; P&M Indus., Inc.,
ASBCA No. 38759, 93-1 BCA ¶ 25,471. This is consistent
with the general rule that attorneys’ fees are not allowed in
suits against the United States absent an express statutory
provision allowing recovery. Piggly Wiggly Corp. v.
United States, 112 Ct. Cl. 391, 81 F. Supp. 819 (1949).
4
c.
(2)
The Equal Access to Justice Act, 5 U.S.C. § 504, authorizes
courts and boards to award attorneys fees to qualifying
prevailing parties unless the government can show that its
position was “substantially justified.” See, e.g., Midwest
Holding Corp., ASBCA No. 45222, 94-3 BCA ¶ 27,138.
(3)
Costs incurred incident to contract administration, or in
furtherance of the negotiation of the parties’ disputes, are
allowable. Bill Strong Enters. v. Shannon, 49 F.3d 1541
(Fed. Cir. 1995)(holding that when the genuine purpose of
incurred legal expenses is that of materially furthering a
negotiation process, such cost should normally be
allowable); FAR 31.205-33 (consultant and professional
costs may be allowable if incurred to prepare a demand for
payment that does not meet the CDA definition of a
“claim”).
(4)
Legal fees unrelated to presenting or defending claims
against the government are generally allowable. Info. Sys.
& Networks Corp., ASBCA No. 42659, 00-1 BCA ¶
30,665 (holding that legal expenses incurred in lawsuits
against third-party vendors were allowable as part of
convenience termination settlement). But see Caldera v.
Northrop Worldwide Aircraft Servs., Inc., 192 F.3d 962
(Fed. Cir. 1999) (holding that legal expenses incurred
unsuccessfully defending wrongful termination actions by
employees who would not partake in contractor fraud were
not recoverable).
Breach Damages. The contractor can recover common law breach
of contract damages in certain very narrow situations.
(1)
A contractor may not assert a claim for breach of contract
damages when there is a remedy-granting contract clause.
Info. Sys. & Network Corp., ASBCA No. 42659, 00-1
BCA ¶ 30,995 (holding that claim for breach damages
barred by convenience termination clause); Hill Constr.
Corp., ASBCA No. 49820, 99-1 BCA ¶ 30,327 (denying a
breach claim for lost profits where the underlying changes
were within the ambit of the Changes clause).
5
(2)
(3)
Situations where breach damages may be recovered
include:
(a)
Breach of a requirements contract. Bryan D.
Highfill, HUDBCA No. 96-C-118-C7, 99-1 BCA ¶
30,316.
(b)
Bad faith termination for convenience. Torncello v.
United States, 231 Ct. Cl. 20, 681 F.2d 756 (1982).
(c)
Government’s failure to disclose material
information. Shawn K. Christensen, dba Island
Wide Contracting, AGBCA No. 95-188-R, 95-2
BCA ¶ 27,724.
Breach damages are measured under common law
principles, although cost principles may apply. See AT&T
Technologies, Inc. v. United States, 18 Cl. Ct. 315 (1989);
Shawn K. Christensen, AGBCA No. 95-188R, 95-2 BCA ¶
27,724.
(a)
Consequential Damages. The general rule is that
consequential damages are not recoverable unless
they are foreseeable and caused directly by the
government’s breach. Prudential Ins. Co. of Am. v.
United States, 801 F.2d 1295 (Fed. Cir. 1986); Land
Movers Inc. and O.S. Johnson - Dirt Contractor
(JV), ENG BCA No. 5656, 91-1 BCA ¶ 23,317 (no
recovery of lost profits based on loss of bonding
capacity; also no recovery related to bankruptcy,
emotional distress, loss of business, etc.).
6
(b)
d.
Compensatory Damages. A contractor whose
contract was breached by the government is entitled
to be placed in as good a position as it would have
been if it had completed performance. PHP
Healthcare Corp., ASBCA No. 39207, 91-1 BCA ¶
23,647 (the measure of damages for failure to order
the minimum quantity is not the contract price; the
contractor must prove actual damages). Compensatory damages include a reliance component (costs
incurred as a consequence of the breach), and an
expectancy component (lost profits). Keith L.
Williams, ASBCA No. 46068, 94-3 BCA ¶ 27,196.
Interest.
(1)
Pre-Claim Interest. Contractors are not entitled to interest
on borrowings, however represented, as part of an equitable
adjustment. FAR 31.205-20; Servidone Constr. Corp. v.
United States, 931 F.2d 860 (Fed. Cir. 1991); D.E.W. &
D.E. Wurzbach, A Joint Venture, ASBCA No. 50796, 98-1
BCA ¶ 29,385; Superstaff, Inc., ASBCA Nos. 48062, et al.,
97-1 BCA ¶ 28,845; Tomahawk Constr. Co., ASBCA No.
45071, 94-1 BCA ¶ 26,312. This is consistent with the
general rule that the United States is immune from interest
liability absent an express statutory provision allowing
recovery. Library of Congress v. Shaw, 478 U.S. 310
(1986).
(2)
Lost Opportunity Costs. The damages for the “opportunity
cost of money” are unrecoverable as a matter of law.
Adventure Group, Inc., ASBCA No. 50188, 97-2 BCA ¶
29,081; Envtl. Tectonics Corp., ASBCA No. 42,540, 92-2
BCA ¶ 24,902 (not only interest on actual borrowings, but
also the economic equivalent thereof, are unallowable);
Dravo Corp. v. United States, 219 Ct. Cl. 416, 594 F.2d
842 (1979).
7
(3)
Cost of Money. Contractors may recover facilities capital
cost of money (FCCM) (the cost of capital committed to
facilities) as part of an equitable adjustment. FAR 31.20510. Among the various allowability criteria, a contractor
must specifically identify FCCM in its bid or proposal
relating to the contract under which the FCCM cost is then
claimed. FAR 31.205-10(a)(2). See also McDonnell
Douglas Helicopter Company d/b/a McDonnell Douglas
Helicopter Systems, ASBCA No. 50756, 98-1 BCA ¶
29,546.
(4)
Prompt Payment Act Interest. Under the Prompt Payment
Act (31 U.S.C. §§ 3901-3907), the contractor is entitled to
interest if the contractor submits a proper voucher and the
government fails to make payment within 30 days.
(5)
Contract Disputes Act (CDA) Interest. A contractor is
entitled to interest on its claim based upon the rate
established by the Secretary of the Treasury, as provided by
the Contract Disputes Act, 41 U.S.C. § 611. Interest begins
to run when the contracting officer receives a properly
certified claim (Dawco Constr., Inc. v. United States, 930
F.2d 872 (Fed. Cir. 1991)), or upon submission of a
defectively certified claim that is subsequently certified.
Federal Courts Administration Act of 1992, Title IX, Pub.
L. No. 102-572, 106 Stat. 4506, 4518. Interest runs
regardless of whether the claimed costs have actually been
incurred at the date of submission of a claim. Servidone
Constr. Co. v. United States, 931 F.2d 860 (Fed. Cir. 1991).
(a)
A termination for convenience settlement proposal
(FAR 49.206) is not initially considered a CDA
claim, as it is generally submitted for purposes of
negotiation. Ellett Constr. Co. v. United States, 93
F.3d 1537 (Fed. Cir. 1996). Accordingly, a
contractor is not entitled to interest on the amount
due under a settlement agreement or determination.
FAR 49.112-2(d); Ellett Constr., supra. If a
termination settlement proposal matures into a CDA
claim (once settlement negotiations reach an
impasse), then a contractor is entitled to interest.
8
(6)
e.
3.
Payment of Interest. When the contracting officer pays a
claim, the payment is applied first to accrued interest.
Then the payment is applied to the principal amount due.
Any unpaid principal continues to accrue interest. Paragon
Energy Corp., ENG BCA No. 5302, 91-3 BCA ¶ 24,349.
Nonappropriated Fund (NAF) Claims.
(1)
The CDA does not generally apply to contracts funded
solely with nonappropriated funds, with the exception of
Army and Air Force, Navy and Marine Corps exchange
contracts. 41 U.S.C. § 602(a). However, the government
may choose to include a disputes clause in a NAF contract,
thereby giving a contractor recourse to the disputes
process.
(2)
For those NAF claims not under the CDA, a contractor is
not entitled to interest on its claim to the contracting
officer, or the appeal of its claim per the contractual
disputes clause.
(3)
A contractor is not entitled to attorney’s fees on its appeal
of a denied claim, as the entitlement to EAJA applies only
to appropriated fund contracts.
Allocability.
a.
A cost is allocable if incurred specifically for the contract; or the
cost benefits both the contract and other work, and is distributed to
them in reasonable proportion to the benefits received; or is
necessary for the overall operation of the business. FAR 31.201-4.
See Caldera v. Northrop Worldwide Aircraft Servs., Inc., 192 F.3d
962 (Fed. Cir. 1999) (holding that attorneys fees incurred
unsuccessfully defending wrongful termination actions resulted in
no benefit to the contract and were not allocable); Boeing North
American, Inc., ASBCA No. 49994, 00-2 BCA ¶ 30,970; Information Systems & Network Corp., ASBCA No. 42659, 00-1 BCA
¶ 30,665; P.J. Dick, Inc., GSBCA No. 12415, 96-2 BCA ¶ 28,307
(finding that accounting fees were costs benefiting the contract).
9
b.
4.
In certain instances (i.e., impact on other work), the contract
appeals boards may ignore the principle of allocability. See Clark
Concrete Contractors, Inc. v. General Servs. Admin., GSBCA No.
14340, 99-1 BCA ¶ 30,280 (holding that costs incurred on an
unrelated project were recoverable because they were “equitable
and attributable” by-products of agency design changes).
Reasonableness.
a.
Entitlement is an equitable adjustment or price adjustment does not
provide the contractor with the authority to fleece the government.
A contractor’s additional costs must be reasonable—i.e., the
expenses in both nature and amount must not exceed that which a
prudent person would incur in the conduct of a competitive
business. FAR 31.201-3.
b.
Reasonable in nature. See Lockheed-Georgia Co., Div. of
Lockheed Corp., ASBCA No. 27660, 90-3 BCA ¶ 22,957 (finding
that air travel to the Greenbrier resort for executive physicals was
unreasonable because competent physicians were available in
Atlanta); Stewart & Stevenson Servs., Inc. , ASBCA No. 43631,
98-1 BCA ¶ 29,653, modifying 97-2 BCA ¶ 29,252 (buying
materials in anticipation of option quantities was unreasonable).
c.
Reasonable in amount. TRC Mariah Associates, Inc., ASBCA No.
51811, 99-1 BCA ¶ 30,386; Kelly Martinez d/b/a Kelly Martinez
Constr. Servs., IBCA Nos. 3140, 3144-3174, 97-2 BCA ¶ 29,243.
But see Raytheon STX Corp., GSBCA No. 14296-COM, 00-1
BCA ¶ 30,632 (holding that salaries paid key employees during a
shutdown were reasonable in amount).
d.
Profit. In determining the reasonableness of profit as part of an
equitable adjustment, profit is calculated as:
(1)
The rate earned on the unchanged work;
(2)
A lower rate based on the reduced risk of equitable
adjustments; or
10
(3)
5.
C.
The rate calculated using weighted guidelines. See Doyle
Constr. Co., ASBCA No. 44883, 94-2 BCA ¶ 26,832.
Compliance with CAS.
a.
Treat like costs in like manner: consistency. Were costs doublecounted? Did the contractor charge like expenses both directly and
indirectly?
b.
Measured in accordance with accounting standards. Contractors
can determine costs by using any generally accepted cost
accounting method that is equitably and consistently applied. FAR
31.201-1.
Make the contractor prove the amount claimed.
1.
Burden of Proof.
a.
The burden—a preponderance of the evidence standard—is on the
party claiming the benefit of the adjustment. Wilner v. United
States, 24 F.3d 1397 (Fed. Cir. 1994); Lisbon Contractors, Inc. v.
United States, 828 F.2d 759, 767 (Fed. Cir. 1987) (moving party
“bears the burden of proving the amount of loss with sufficient
certainty so that the determination of the amount of damages will
be more than mere speculation”); Deval Corp., ASBCA Nos.
47132, 17133, 99-1 BCA ¶ 30,182 (holding that a contractor’s
clear entitlement to an equitable adjustment did not diminish the
contractor’s burden of proving the amount of such an adjustment).
b.
What must the party prove for quantum damages?
(1)
Entitlement (Liability)—the government did something that
changed the contractor’s costs, for which the government is
legally liable. T.L. James & Co., ENG BCA No. 5328, 891 BCA ¶ 21,643.
11
2.
(2)
Causation—there must be a causal nexus between the basis
for liability and the claimed increase (or decrease) in cost.
Hensel Phelps Constr. Co., ASBCA No. 49270, 99-2 BCA
¶ 30,531; Stewart & Stevenson Servs., Inc., ASBCA No.
43631, 98-1 BCA ¶ 29,653, modifying 97-2 BCA ¶ 29,252;
Libby Corp., ASBCA No. 40765, 96-1 BCA ¶ 28,255; Oak
Adec, Inc. v. United States, 24 Cl. Ct. 502 (1991).
(3)
Resultant Injury—that there is an actual injury or increased
cost to the moving party. Servidone Constr. Corp. v. United
States, 931 F.2d 860 (Fed. Cir. 1991); Cascade General,
Inc., ASBCA No. 47754, 00-2 BCA ¶ 31,093 (holding that
a contractor claim was deficient when it failed to
substantiate what specific work and/or delays resulted from
the defective government specifications).
Measurement of an adjustment.
a.
Costs. “Costs” for adjustment formula purposes are the sum of
allowable direct and indirect costs, incurred or to be incurred, less
any allowable credits, plus cost of money. FAR 31.201-1. If it is
an equitable adjustment, one must also calculate the profit on the
allowable costs.
b.
Direct Costs.
(1)
A direct cost is any cost that is identified specifically with a
particular contract. Direct costs are not limited to items
that are incorporated into the end product as material or
labor. All costs identified specifically with a claim are
direct costs of that claim. FAR 31.202.
(2)
Direct costs generally include direct labor, direct material,
subcontracts, and other direct costs.
12
c.
3.
Indirect Costs.
(1)
Indirect costs are any costs not directly identified with a
single final cost objective, but identified with two or more
final cost objectives, or with at least one intermediate cost
objective. FAR 31.203. There are two types of indirect
costs:
(2)
Overhead. Allocable to a cost objective based on benefit
conferred. Typical overhead costs include the costs of
personnel administration, depreciation of plant and
equipment, utilities, and management.
(3)
General and administrative (G&A). Not allocable based on
benefit, but necessary for overall operation of the business.
FAR 31.201-4.
(4)
Calculating indirect cost rates. The total indirect costs
divided by the total direct costs equals the indirect cost
rate. For example, if a contractor has total indirect costs of
$100,000 in an accounting period, and total direct costs of
$1,000,000 in the same period, the indirect cost rate is
10%.
(5)
Some agencies limit the recoverable overhead through
contract clauses. Reliance Ins. Co. v. United States, 931
F.2d 863 (Fed. Cir. 1991) (court upheld clause which
limited recoverable overhead for change orders).
Pricing Formula.
a.
The basic adjustment formula is the difference between the
reasonable cost to perform the work as originally required, and the
reasonable cost to perform the work as changed. B.R. Servs., Inc.,
ASBCA Nos. 47673, 48249, 99-2 BCA ¶ 30,397 (holding that the
contractor must quantify the cost difference—not merely set forth
the costs associated with the changed work); Buck Indus., Inc.,
ASBCA No. 45321, 94-3 BCA ¶ 27,061. See also Wilner v.
United States, 24 F.3d 1397 (Fed. Cir. 1994).
13
b.
Pricing adjustments should not alter the basic profit or loss
position of the contractor before the change occurred. “An
equitable adjustment may not properly be used as an occasion for
reducing or increasing the contractor’s profit or loss...., for reasons
unrelated to a change.” Pacific Architects and Eng’rs, Inc. v.
United States, 203 Ct. Cl. 499, 508 491 F.2d 734, 739 (1974). See
also Stewart & Stevenson Servs., Inc., ASBCA No. 43631, 97-2
BCA ¶ 29,252 modified by 98-1 BCA ¶ 29,653 (holding that a
contractor is entitled to profit on additional work ordered by the
Army even though the original work was bid at a loss); Westphal
Gmph & Co., ASBCA No. 39401, 96-1 BCA ¶ 28194;.
c.
Pricing Additional Work. Agencies price additional work based
on the reasonable costs actually incurred in performing the new
work. Delco Elecs. Corp. v. United States, 17 Cl. Ct. 302 (1989),
aff’d, 909 F.2d 1495 (Fed. Cir. 1990). The contractor should
segregate and accumulate these costs.
d.
Pricing Deleted Work.
(1)
Agencies price deleted work based on the difference
between the estimated costs of the original work and the
actual costs of performing the work after the change.
Knights’ Piping, Inc., ASBCA No. 46985, 94-3 BCA ¶
27,026; Anderson/Donald, Inc., ASBCA No. 31213, 86-3
BCA ¶ 19,036. But see Condor Reliability Servs, Inc.,
ASBCA No. 40538, 90-3 BCA ¶ 23,254.
(2)
When the government partially terminates a contract for
convenience, a contractor is generally entitled to an
equitable adjustment on the continuing work for the
increased costs borne by that work as a result of a
termination. Deval Corp., ASBCA Nos. 47132, 47133, 991 BCA 30,182; Cal-Tron Sys., Inc., ASBCA Nos. 49279,
50371 97-2 BCA ¶ 28,986; Wheeler Bros., Inc., ASBCA
No. 20465, 79-1 BCA ¶ 13,642.
14
e.
4.
Responsibility. Where the contractor shares the fault, it shares
liability for the added costs. See Essex Electro Engineers, Inc., v.
Danzig, 224 f.3d 1283 (Fed. Cir. 2000); Dickman Builders, Inc.,
ASBCA No. 32612, 91-2 BCA ¶ 23,989.
Methods of Proof.
a.
Actual Cost Method. The actual cost method is the preferred
method for proving costs. Dawco Constr., Inc. v. United States,
930 F.2d 872 (Fed. Cir. 1991).
(1)
A contractor must prove its costs using the best evidence
available under the circumstances. The preferred method is
actual cost data. Cen-Vi-Ro of Texas, Inc. v. United States,
210 Ct. Cl. 684, 538 F.2d 348 (1976); Deval Corp.,
ASBCA Nos. 47132, 47133, 99-1 BCA 30,182.
(2)
The contracting officer may include the Change Order
Accounting clause, FAR 52.243-6, in a contract. This
clause permits the contracting officer to order the
accumulation of actual costs. A contractor must indicate in
its proposal, which proposed costs are actual and which are
estimates.
(3)
Failure to accumulate actual cost data may result in either a
substantial reduction or total disallowance of the claimed
costs. Delco Elecs. Corp. v. United States, 17 Cl. Ct. 302
(1989), aff’d, 909 F.2d 1495 (Fed. Cir. 1990) (recovery
reduced for unexcused failure to segregate); Togaroli
Corp., ASBCA No. 32995, 89-2 BCA ¶ 21,864 (costs not
segregated despite the auditor’s repeated recommendation
to do so; no recovery beyond final decision); Assurance
Co., ASBCA No. 30116, 86-1 BCA ¶ 18,737 (lack of cost
data prevented reasonable approximation of damages for
jury verdict, therefore, the appellant recovered less than the
amount allowed in the final decision).
15
b.
c.
Estimated Cost Method.
(1)
Good faith estimates are preferred when actual costs are not
available. Lorentz Brunn Co., GSBCA No. 8505, 88-2
BCA ¶ 20,719 (estimates of labor hours and rates
admissible). Estimates are generally required when
negotiating the cost of a change in advance of performing
the work. Estimates are an acceptable method of proving
costs where they are supported by detailed substantiating
data or are reasonably based on verifiable cost experience.
J.M.T. Mach. Co., ASBCA No. 23928, 85-1 BCA ¶ 17,820
(1984), aff’d on other grounds, 826 F.2d 1042 (Fed. Cir.
1987).
(2)
If the contractor uses detailed estimates based on analyses
of qualified personnel, the government will not be able to
allege successfully that the contractor used the disfavored
total cost method of adjustment pricing. Illinois
Constructors Corp., ENG BCA No. 5827, 94-1 BCA ¶
26,470.
(3)
Estimates based on Mean’s Guide must be disregarded
where actual costs are known. Anderson/Donald, Inc.,
ASBCA No. 31213, 86-3 BCA ¶ 19,036.
Total Cost Method.
(1)
The total cost method is not preferred because it assumes
the entire overrun is solely the government’s fault. The
total cost method calculates the difference between the bid
price on the original contract and the actual total cost of
performing the contract as changed. Servidone v. United
States, 931 F.2d 860 (Fed. Cir. 1991); Dawco Constr., Inc.
v. United States, 930 F.2d 872 (Fed. Cir. 1991); Stewart &
Stevenson Servs., Inc., ASBCA No. 43631, 98-1 BCA ¶
29,653, modifying 97-2 BCA ¶ 29,252; Santa Fe Eng’rs,
Inc., ASBCA No. 36682, 96-2 BCA ¶ 28,281; Concrete
Placing Inc. v. United States, 25 Cl. Ct. 369 (1992).
16
(2)
d.
The use of a total cost method is tolerated only when no
other means are possible, when the reliability of the
supporting documentation is fully substantiated, and when
the contractor establishes the subsequent four factors:
(a)
The nature of the particular cost is impossible or
highly impracticable to determine with a reasonable
degree of certainty;
(b)
The contractor’s bid was realistic;
(c)
The contractor’s actual incurred costs were
reasonable; and
(d)
The contractor was not responsible for any of the
added costs. Servidone Constr. Corp. v. United
States, 931 F.2d 860 (Fed. Cir. 1991); Northrop
Grumman Corp. v. United States, 47 Fed. Cl. 20
(2000).
Modified total cost method.
(1)
A modified total cost method involves use of a total cost
method that the contractor has adjusted to account for other
factors, usually because the original bid was not realistic,
or because there were independent causes for certain extra
costs. A modified total cost method of assessing damages
or price adjustment may also be used only as a last resort in
those extraordinary circumstances where no other way to
compute damages is feasible. ECC Int’l Corp., ASBCA
Nos. 45041, 44769, 39044, 94-2 BCA ¶ 26,639; Servidone
Constr. Corp. v. United States, 931 F.2d 860 (Fed. Cir.
1991).
17
(2)
e.
5.
With the exception of the modification, contractor must
again establish the same four factors as with total cost
claims. Olsen v. Espy, 26 F.3d 141 (Fed. Cir. 1994);
River/Road Constr. Inc., ENG BCA No. 6256, 98-1 BCA ¶
29,334; Libby Corp., ASBCA No. 40765, 96-1 BCA ¶
28,255).
Jury Verdicts. Jury verdicts are not a method of proof, but a means
of resolving disputed facts. Northrop Grumman Corp. v. United
States, 47 Fed. Cl. 20 (2000); Delco Elecs. Corp. v. United States,
17 Cl. Ct. 302 (1989), aff’d, 909 F.2d 1495 (Fed. Cir. 1990);
River/Road Constr. Inc., ENG BCA No. 6256, 98-1 BCA ¶
29,334; Cyrus Contracting Inc., IBCA Nos. 3232 et. al, 98-2 BCA
¶ 29,755; Paragon Energy Corp., ENG BCA No. 5302, 883 BCA ¶ 20,959. Before adopting a jury verdict approach, a court
must first determine three things:
(1)
There is clear proof of injury;
(2)
No more reliable method exists. See Dawco Constr. Co. v.
United States, 930 F.2d 872 (Fed. Cir. 1991) (actual costs
are preferred; where contractor offers no evidence of
justifiable inability to provide actual costs, then it is not
entitled to a jury verdict); Service Eng’g Co., ASBCA No.
40274, 93-2 BCA ¶ 25,885; and
(3)
The evidence is sufficient for a fair approximation of the
damages. Northrop Grumman Corp. v. United States, 47
Fed. Cl. 20 (2000).
Supported by the facts.
a.
Generally. In order to sustain its burden of proof regarding the
amount claimed, a contractor must submit adequate and material
supporting documentation. Libby Corp., ASBCA No. 40765, 96-1
BCA ¶ 28,255 (denying contractor’s claim where claim was
prepared by outside counsel, who did not testify, and unsupported
by contractor’s witnesses, who had no actual knowledge of how
the claim was prepared).
18
b.
6.
Certification Requirements. The Federal Acquisition Streamlining Act of
1994 (FASA), Pub. L. 103-355, § 2301, 108 Stat. 3243 (1994) amended
10 U.S.C. § 2410, Requests for Equitable Adjustment or Other Relief:
Certification.
a.
b.
D.
Pertinent Inquiries. While not exclusive, the following questions
aid in determining whether the claimed amount is adequately
supported: Was the claim prepared and/or validated by the
contractor’s witnesses?; Can the contractor explain how the claim
was derived?; Is it supported by contemporaneous records?; Are
the contractor’s submissions, especially with regard to historical
information, consistent?; Does the contractor’s treatment of costs
adhere to its CAS disclosure statement?
In DOD, a request for equitable adjustment that exceeds the
simplified acquisition threshold (currently, $100,000) may not be
paid unless a person authorized to certify the request on behalf of
the contractor certifies that:
(1)
The request is made in good faith, and
(2)
The supporting data is accurate and complete to the best of
that person’s knowledge. 10 U.S.C. § 2410(a).
Similarly, after negotiating an agreement on a modification settling
a request for equitable adjustment on a negotiated contract, the
contractor must furnish a certificate of current cost and pricing
data if the modification exceeds $500,000 under the Truth in
Negotiations Act. 10 U.S.C. § 2306(a).
See What Really Happened (take the offensive).
1.
A contractor’s cost data will tell you what really happened. Accordingly,
you must seize the initiative/go on the offensive. This allows you to
develop the “real story” of how the contractor incurred extra costs.
2.
Determine the true root causes of the contractor’s extra costs.
19
3.
a.
Was the job as a whole underbid?
b.
Did the contractor change planned facilities?
c.
Did the contractor purchase cheap and unworkable component
parts?
d.
Did the contractor select subcontractors that were unable to
perform?
e.
Was there reliance upon less competent vendors?
f.
Were there increases in material costs?
g.
Did the contractor change components for cost reasons? Did this
in turn result in engineering problems? Did prior design work
become worthless? Did this in turn cause the need for redesign
work, with more time and effort?
h.
Was there an overall lack of efficient organization?
i.
Did the contractor waste time recompeting components and
vendors?
j.
What expenses were unrelated to the claimed causation?
k.
Did the contractor order surplus material (for potential options and
possible commercial jobs)?
Important Documents. There are many important contractor documents
that will assist you in determining what really happened.
a.
As-Bid Bill of Materials (BOM), and Final BOM.
b.
Production Schedules
20
4.
IV.
c.
As-Bid Bid Rates (Overhead Rates).
d.
Actual Overhead Rates.
e.
Expected and Actual Direct Costs—for the specific contract and
plant-wide.
f.
Expected and Actual Labor Amounts—for the specific contract
and plant-wide.
g.
Material Invoices for Major Component Parts.
h.
CAS Disclosure Statement.
The Quantum Case Litigation Team. It is necessary to enlist the support
of many individuals in both your defensive and offensive quantum case
litigation efforts. These individuals will help you decipher the contractor's
accounting documentation, as well as explain relevance in relation to
contract performance.
a.
DCAA Auditor.
b.
Contracting Officer.
c.
Program Manager/End User.
d.
Contracting Officer’s Representative (COR).
e.
Project Managers, Site Inspectors, Project Engineers, Quality
Assurance Representatives.
SPECIAL ITEMS.
A.
Unabsorbed Overhead.
21
1.
Generally. A type of cost associated with certain types of claims is
“unabsorbed overhead.” Unabsorbed overhead has been allowed to
compensate a contractor for work stoppages, idle facilities, inability to use
available manpower, etc., due to government fault. In such delay
situations, fixed overhead costs, e.g., depreciation, plant maintenance, cost
of heat, light, etc., continue to be incurred at the usual rate, but there is
less than the usual direct cost base over which to allocate them. ThermAir Mfg. Co., ASBCA No. 15842, 74-2 BCA ¶ 10,818.
2.
Contracts Types. Most unabsorbed overhead cases deal with recovery of
additional overhead costs on construction and manufacturing contracts.
The qualitative formula adopted in Eichleay Corp., ASBCA 5183, 60-2
BCA ¶ 2688, aff’d on recons., 61-1 BCA ¶ 2894, is the exclusive method
of calculating unabsorbed overhead for both construction contracts
(Wickham Contracting Co. v. Fischer, 12 F.3d 1574 (Fed. Cir. 1994)) and
manufacturing contracts (West v. All State Boiler, Inc., 146, F.3d 1368
(Fed. Cir. 1998); Genisco Tech. Corp., ASBCA No. 49664, 99-1 BCA ¶
30,145, mot. for recons. den., 99-1 BCA ¶ 30,324; Libby Corp., ASBCA
No. 40765, 96-1 BCA ¶ 28,255).
a.
Under this method, calculate the daily overhead rate during the
contract period, then multiply the daily rate by the number of days
of delay.
b.
To be entitled to unabsorbed overhead recovery under the Eichleay
formula, the following three elements must be established:
(1)
a government-caused or government-imposed delay,
(2)
the contractor was required to be on “standby” during the
delay, and
(3)
while “standing by,” the contractor was unable to take on
additional work.
22
Melka Marine, Inc. v. United States, 187 F.3d 1370 (Fed. Cir.
1999); West v. All State Boiler, 146 F.3d 1368 (Fed. Cir. 1998);
Satellite Elec. Co. v. Dalton, 105 F.3d 1418 (Fed. Cir. 1997);
Altmayer v. Johnson, 79 F.3d 1129 (Fed. Cir. 1995); Mech-Con
Corp. v. West, 61 F.3d 883 (Fed Cir. 1995).
3.
c.
If work on the contract continues uninterrupted, albeit in a
different order than originally planned, the contractor is not on
standby. Further, a definitive delay precludes recovery “because
‘standby’ requires an uncertain delay period where the government
can require the contractor to resume full-scale work at any time.”
Melka Marine, Inc. v. United States, 187 F.3d 1370 (Fed. Cir.
1999).
d.
A contractor’s ability to take on additional work focuses upon the
contractor’s ability to take on replacement work during the
indefinite standby period. Replacement work must be similar in
size and length to the delayed government project and must occur
during the same period. Melka Marine, Inc. v. United States, 187
F.3d 1370 (Fed. Cir. 1999); West v. All-State Boiler, 146 F.3d
1368, 1377 n.2 (Fed. Cir. 1998).
Proof Requirements.
a.
Recovery of unabsorbed overhead is not automatic. The contractor
should offer credible proof of increased costs resulting from the
government-imposed delay. Beaty Elec. Co., EBCA No. 403-3-88,
91-2 BCA ¶ 23,687; but see Sippial Elec. & Constr. Co. v.
Widnall, 69 F.3d (Fed. Cir. 1995) (allowing Eichleay recovery
with proof of actual damages).
23
B.
b.
A contractor must prove only the first two elements of the Eichleay
formula. Once the contractor has established the Governmentcaused delay and that it had to remain on “standby,” it has made a
prima facie case that it is entitled to Eichleay damages. The
burden of proof then shifts to the government to show that the
contractor did not suffer or should not have suffered any loss
because it was able to either reduce its overhead or take on other
work during the delay. Satellite Elec. Co. v. Dalton, 105 F.3d 1418
(Fed. Cir. 1997); Mech-Con Corp. v. West, 61 F.3d 883 (Fed Cir.
1995).
c.
When added work causes a delay in project completion, the
additional overhead is absorbed by the additional costs and
Eichleay does not apply. Community Heating & Plumbing Co. v.
Kelso, 987 F.2d 1575 (Fed. Cir. 1993) (Eichleay recovery denied
because overhead was “extended” as opposed to “unabsorbed”);
accord C.B.C. Enters., Inc. v. United States, 978 F.2d 669 (Fed.
Cir. 1992).
4.
Subcontractor Unabsorbed Overhead. Timely completion by a prime
contractor does not preclude a subcontractor’s pass-through claim for
unabsorbed overhead. E.R. Mitchell Constr. Co. v. Danzig, 175 F.3d 1369
(Fed. Cir. 1999).
5.
Multiple Recovery. A contractor may not recover unabsorbed overhead
costs under the Eichleay formula where it has already been compensated
for the impact of the government’s constructive change on performance
time and an award under Eichleay would lead to double recovery of
overhead. Keno & Sons Constr. Co., ENG BCA No. 5837-Q, 98-1 BCA
¶ 29,336.
6.
Profit. A contractor is not entitled to profit on an unabsorbed overhead
claim. ECC Int’l Corp., ASBCA Nos. 45041, 44769, 39044, 94-2 BCA ¶
26,639; Tom Shaw, Inc., ASBCA No. 28596, 95-1 BCA ¶ 27,457; FAR
52.212-12, 52.212-15.
Subcontractor Claims.
24
C.
1.
The government consents generally to be sued only by parties with which
it has privity of contract. Erickson Air Crane Co. of Wash. v. United
States, 731 F.2d 810, 813 (Fed. Cir. 1984); E.R. Mitchell Constr. Co. v.
Danzig, 175 F.3d 1369 (Fed. Cir. 1999).
2.
A prime contractor may sue the government on a subcontractor’s behalf,
in the nature of a pass-through suit, for the extra costs incurred by the
subcontractor only if the prime contractor is liable to the subcontractor for
such costs. When a prime contractor is permitted to sue on behalf of a
subcontractor, the subcontractor’s claim merges into that of the prime,
because the prime contractor is liable to the subcontractor for the harm
caused by the government. Absent proof of prime contractor liability, the
government retains its sovereign immunity from pass-through suits.
Severin v. United States, 99 Ct. Cl. 435 (1943), cert. denied, 322 U.S. 733
(1944)); E.R. Mitchell Constr. Co. v. Danzig, 175 F.3d 1369 (Fed. Cir.
1999).
3.
The government may use the Severin doctrine as a defense, however, only
when it raises and proves the issue at trial. If the government fails to raise
its immunity defense at trial, then the subcontractor claim is treated as if it
were the prime’s claim and any further concern about the absence of
subcontractor privity with the government is extinguished. Severin v.
United States, 99 Ct. Cl. 435 (1943), cert. denied, 322 U.S. 733 (1944));
E.R. Mitchell Constr. Co. v. Danzig, 175 F.3d 1369 (Fed. Cir. 1999).
Loss of Efficiency. The disruption caused by government changes and/or delays
may cause a loss of efficiency to the contractor.
1.
Burden of Proof. A contractor may recover for loss of efficiency if it can
establish both that a loss of efficiency has resulted in increased costs and
that the loss was caused by factors for which the Government was
responsible. Luria Bros. & Co. v. United States, 177 Ct. Cl. 676, 369 F.2d
701 (1966). See generally Thomas E. Shea, Proving Productivity Losses in
Government Contracts, 18 Pub. Cont. L. J. 414 (March 1989).
25
2.
Applicable Situations. Loss of efficiency has been recognized as resulting
from various conditions causing lower than normal or expected
productivity. Situations include: disruption of the contractor’s work
sequence (Youngdale & Sons Constr. Co. v. United States, 27 Fed. Cl.
516 1993)); working under less favorable weather conditions (Warwick
Constr., Inc., GSBCA No. 5070, 82-2 BCA ¶ 16,091); the necessity of
hiring untrained or less qualified workers (Algernon-Blair, Inc., GSBCA
No. 4072, 76-2 BCA ¶ 12,073); and reductions in quantity produced.
26
D.
V.
Impact on Other Work.
1.
General Rule. A contractor is generally prohibited from recovering costs
under the contract in which a Government change, suspension, or breach
occurred, when the impact costs are incurred on other contracts. Courts
and boards usually consider such damages too remote or speculative, and
subject to the rule that consequential damages are not recoverable under
Government contracts. See General Dynamics Corp. v. United States, 218
Ct. Cl. 40, 585 F.2d 457 (1978); Sermor, Inc., ASBCA No. 30576, 94-1
BCA ¶ 26,302.
2.
Exceptions. In only exceptional circumstances, especially when the
impact costs are definitive in both causation and amount, contractors have
recovered for additional expenses incurred in unrelated contracts. See
Clark Concrete Contractors, Inc. v. General Servs. Admin., GSBCA No.
14340, 99-1 BCA ¶ 30,280 (allowing recovery of additional costs incurred
on an unrelated project as a result of government delays and changes).
CONCLUSION.
A.
Have the right philosophy.
1.
2.
B.
Recognize certain prerequisites.
1.
2.
C.
The fact that contractor entitlement exists is meaningless for quantum.
The contractor’s claim: Cut it up and then kill it.
Have a thorough understanding of the law on pricing of adjustments.
Facts are king, and getting all the facts will take hard work.
Apply the DAMS Methodology.
1.
2.
3.
4.
Divide the contractor’s claim into component parts.
Apply Cost/Cost Accounting Standards (CAS) principles.
Make the contractor prove the amount claimed.
See what really happened.
27
The Appeal of
Simple Simon Services, Inc. (S3I)
Summary of Facts
In 1995, the Army awarded a contract to S3I to manufacture trailer-mounted tactical
generators, for a price of $9.3 million. Although the Army has been buying military standard
generators for years, they were both loud and frequently broke down. Therefore, senior Army
leadership wanted “quiet, reliable generator sets,” and wanted them now, even if it meant
foregoing many military features. This was a firm fixed-price contract, based upon a negotiated
procurement (initial offers and BAFOs), and utilizing performance specifications. The basis for
award was low cost, technically-acceptable offer. The Army incorporated S3I’s technical
proposal by reference into the awarded contract.
The original schedule called for delivery of initial production units at 150 days after
contract award. There was no requirement for delivery of a first article unit – the contractor
received a production release at the time of contract award. S3I failed to meet the original
delivery schedule. After the Army unilaterally extended the delivery date, S3I delivered
production units to the Army for testing. The units were of poor quality, and didn’t meet many
of the performance requirements of the contract. Of particular important, many of the generators
experienced critical failures – the result of underpowered engines. The Army stopped accepting
additional units until S3I could prove through contractor testing that units met the specifications.
During this period of delay, the parties began finger-pointing and assessing blame for the state
of affairs.
During this period of delay, the Army decided to change the durability requirements of
the trailer. S3I provided a cost estimate to the Army for this proposed change, but it was
unsupported by cost data. In the end, the Army unilaterally imposed the change order, and later
unilaterally decided upon the appropriate contract price adjustment ($2.9 million). S3I
eventually (18 months later) delivered the modified units, in accordance with the performance
specifications of the contract. In the end, the Army discovered that while the units were quiet
and reliable, they lacked many military features that the troops could not live without (and
decided against ordering any of the option quantities).
S3I’s Claim
At the end of contract performance, S3I filed its claim with the contracting officer. This
was long-anticipated: the parties had been blaming each other for years now. There was no need
to file first a request for equitable adjustment—the parties were way beyond that. S3I’s claim
requested the KO to issue a final decision, although the outcome was largely a foregone matter.
S3I’s claim, for $30.6 million, alleged five separate reasons for entitlement:
28
1. Impossibility of Performance. S3I alleged that the 150 day schedule for delivery of
initial production units was not only ambitious, but impossible of being performed.
Despite its valiant efforts, there was no way this schedule could be met.
2. Allocation of Risk (design vs. performance specifications). S3I alleged that by
incorporating its technical proposal, the Army essentially changed the contract from a
performance specification to a design one, thus making the Army responsible and
liable for all changes between the original technical proposal and the finished
product.
3. Government Bad Faith. The Army knew that the schedule was not achievable but
plunged ahead anyway with a fatal acquisition plan.
4. Government’s Unilateral Design Changes. The increase in trailer durability was a
government change in requirements for which it is liable.
5. Government Delay. The government was responsible for the contractor’s delay in
contract performance.
Government’s Entitlement Defenses
The Army did not believe it was responsible for any S3I’s shortcomings. Its defenses to
the contractor’s specific allegations were as follows:
1. The schedule was not impossible to perform, if the contractor had performed certain
actions before contract award (and S3I had said that it would do certain things before
contract award).
2. This was a performance specification, and the risk was with the contractor. S3I
varied from its technical proposal and never sought permission from the Army when
doing so. S3I’s actions at the time said that all parties understood that this was a
performance specification. The Army’s incorporation of the technical proposal into
the contract did not affect allocation of risk.
3. There was no government bad faith. The Army knew the schedule was ambitious, but
did not know that schedule was not achievable. The Army had “watered down” many
areas of its standard military specification, so as to facilitate this procurement.
4. Government did make design changes that were within the scope of the contract.
S3I’s performance of the design changes meant that they were processed under the
Changes Clause. The contractor’s cost proposal was unsupported and unrealistic.
5. The contractor was responsible for contract delays.
29
Litigation
Twelve months after claim submission, the contracting officer issued her final decision
denying the claim in whole. The Contracting Officer restated the facts as the Army saw them, as
well as the aforementioned defenses to the contractor’s entitlement arguments. S3I then
appealed the final decision to the ASBCA in a timely manner. The Board has decided to try both
entitlement and quantum together.
During discovery, the trial attorneys discovered many interesting facts. S3I badly and
intentionally underbid the job (hoping that the contract would lead to commercial sales of same
or similar products). DCAA estimated that S3I underbid the job by about $4 million (S3I itself
admitted to underbidding the contract, but only by $1 million (see claim)). S3I then changed
planned manufacturing facilities soon after contract award, which added another $1 million to its
costs.
The contractor made many decisions that affected its performance and costs. It
purchased surplus materials for possible options (about $1.7 million) with no guarantee that the
Army would exercise such options (the Army did not). The attempt to make smaller,
underpowered engines work in the generator sets cost the contractor as well (estimated at $1
million). S3I experienced problems with the trailer vendor it had chosen. When that vendor
went bankrupt and S3I had to do the work itself, that resulted in about $1.2 million in additional
costs. General poor workmanship on the part of the prime contractor (sheet metal housing, fuel
tanks, etc.) resulted in about $500,000 in additional costs.
S3I’s claim, prepared by outside counsel, had its own peculiarities. First, certain types of
expenses that S3I usually treated as indirect costs (such as its costs incurred bids and proposals
on all jobs—both successful and unsuccessful) were treated as direct costs (labeled as “preproduction costs”). Further, while S3I alleged that the complete disruption of contract
performance precluded tracking costs by causal factor, the contractor did separate track the costs
for its trailer changes (about $6.2M in direct costs and overhead). Lastly, despite all the
problems associated with this contract, S3I continued to be successful on other jobs. Total plant
production volume exceeded annual estimates, and therefore, actual overhead rates were less
than the overhead estimates that S3I prepared and used to bid contracts.
Quantum Litigation
As trial attorney, you may not prevail on some (or all) of your entitlement defenses. It is,
therefore, necessary to prepare your quantum defense as well. Attached are a summary of S3I’s
modified total cost claim (executive summary) and a spreadsheet that the contractor attached to
the claim. Tell me about your defense on quantum. Specifically, regardless of the outcome on
entitlement, what amount do you believe the contractor should receive and why.
30
S3I’s Modified Total Cost Claim
(Executive Summary)
*
Original Contract Price
9.3M
What I Should Have Bid
10.4M
What I Spent
Difference
30.7M
20.3M
Unabsorbed Overhead
5.4M
Profit
3.8M
Interest/Borrowings
3.8M
Legal Expenses
Subtotal
0.3M
33.5M
Unilateral Govt payments
Claim Total
(2.9M)
30.6M*
At the time of hearing, S3I alleged entitlement to an additional $4.4M in CDA interest.
(I’ve indicated with asterisks those figures on the spreadsheet that correspond with this claim
summary).
31
SIMPLE SIMON SERVICES, INC.
Contract DAAK01-95-D-C079, Quiet Generator Sets
153,196
362,977
34,860
74,969
283,269
725,935
1,292,863
1,292,863
Actual Total
Costs
2,109,513
10,981,418
1,081,159
2,349,682
316,134
294,472
1,047,993
12,254
5,414,885
1,206,536
1,133,930
Total Direct & Overhead
G&A
7,780,996
1,089,339
9,118,886
1,276,641
25,947,976
4,706,000
16,829,090
3,429,359
Subtotal Costs
Unabsorbed Overhead
8,870,335
10,395,527
30,653,976*
5,418,020
20,258,449*
5,418,020*
Total Costs
Profit
Cost of Money
Legal Expenses
8,870,335
458,052
10,395,527
36,071,996
3,793,485
3,719,414
329,880
25,676,469
3,793,485*
3,719,414*
329,880*
Total Price
9,328,387*
10,395,527*
43,914,775
33,519,248*
Bid Estimate
Pre-Production Costs
Material
Manufacturing Labor (Contract)
Manufacturing Labor
Quality Labor
Quality Labor (Contract)
Engineering Labor
Administration Support
Manufacturing Overhead
Engineering Labor (Contract)
Subcontract, Misc./Other
6,016,808
Projected Total
Costs w/o Changes
29,880
6,632,262
Total Increased
Costs
2,079,633
4,349,156
1,081,159
1,986,705
316,134
294,472
973,024
12,254
4,688,950
1,206,536
(158,933)
2,895,173*
Unilateral Credits
30,624,075*
TOTAL CLAIM
31
CHAPTER 13
LITIGATION MANAGEMENT
I.
INTRODUCTION............................................................................................................... 1
A.
B.
GOAL................................................................................................................................. 1
TOOLS. .............................................................................................................................. 1
II. THE MANAGEMENT CHALLENGES. ......................................................................... 1
A.
B.
WORKLOAD. ..................................................................................................................... 1
THE INDIVIDUAL CASE......................................................................................................2
III. MANAGEMENT TOOLS................................................................................................. 2
A. THE TRIAL ATTORNEY NOTEBOOK................................................................................. 2
B. THE ELECTRONIC CASE FOLDER. ................................................................................... 3
C. THE BUSINESS PLAN (SEE ATTACHMENT A). .................................................................. 3
D. THE SITE VISIT(S). ........................................................................................................... 3
E. THE LITIGATION RISK ASSESSMENT. .............................................................................. 3
F. THE ASBCA STATUS REPORT (KEEPS THE PARTIES MOVING?) .................................... 4
IV. THE BIG CASE. ................................................................................................................. 4
V.
CONCLUSION. .................................................................................................................. 4
CHAPTER 13
LITIGATION MANAGEMENT
I.
II.
INTRODUCTION.
A.
Goal. The primary goal of litigation management is to preserve Government
resources by resolving contract disputes as economically as possible considering
the monetary value of the dispute, the potential cost of the litigation, and the value
of the Government’s position.
B.
Tools. There are many tools that you can use to accomplish the goal. Get smart
on information technology, and continue to look for ways to improve your
management methods.
THE MANAGEMENT CHALLENGES.
A.
Workload.
1.
Trial attorneys are generally responsible for 10 - 20 appeals (and perhaps
bid protests) at any given time.
a.
The cases will include construction, supply, and service contracts
for a broad range of clients (installation, Major Command, buying
command, NAFI).
b.
The contracts span the globe.
2.
Assignments may be made based on personal preferences, trial attorney
qualifications, and pending caseloads (number and geographic
considerations).
3.
Formal teaming arrangements (multiple attorneys assigned to a case) are
the exception, not the rule. Trial attorneys handling complicated cases
should seek a teaming arrangement whenever possible.
MAJ Jon Guden
Disputes and Remedies Elective
49th Graduate Course
April 2001
B.
III.
The individual case.
1.
Cases vary from very low dollar to multi-million dollar disputes.
BEWARE: Dollars do not equal degree of difficulty.
2.
Cases may hinge on one issue, or contain multiple issues.
3.
Placing the new case in context (i.e., how important is this case?).
a.
Upon receipt, review the case file to determine the general nature
of the appeal. Initially, you may only have a notice of appeal.
b.
Contact the Contracting Officer and the Local Counsel.
(1)
Learn their views regarding the matters in dispute; and
(2)
Discuss the contractor, the contract, the Rule 4 file, and
related matters.
(3)
Keep an open mind, but ask searching questions.
(4)
The “S” word—do you bring it up?
MANAGEMENT TOOLS.
A.
The Trial Attorney Notebook.
1.
Notice of Appeal.
2.
Telephone numbers and addresses.
3.
Pleadings.
4.
Board letters and orders.
13-2
B.
C.
D.
E.
5.
Correspondence.
6.
Discovery.
The Electronic Case Folder.
1.
Identify by the ASBCA Number.
2.
Include subfolders for case filings and correspondence.
3.
Package the case on a CD – R4 and all?
The Business Plan (see Attachment A).
1.
Timing of production dependent upon experience and knowledge of facts.
2.
Must update periodically, and shared with the client.
The Site Visit(s).
1.
Identify place(s) of performance.
2.
Supply, service, or construction?
3.
Brief the stakeholders? (see Attachment B)
The Litigation Risk Assessment.
1.
Simple or complex? Consider use of outside consultant for complex, big
dollar, multiple-issue cases.
2.
For an overview of detailed litigation risk assessment tools, such as
influence diagrams and decision trees, see Craig D. Miller, Litigation Risk
Assessment—Part I-III, CONTRACT MANAGEMENT, July, November, and
December 1999.
13-3
F.
IV.
V.
The ASBCA Status Report (keeps the parties moving?)
1.
Required every 45 days after filing of the pleadings.
2.
Status report should remind you what is/is not happening with a case.
3.
Ultimately, you’ll put out the fire that is closest to you.
THE BIG CASE.
A.
A challenge by itself!
B.
The need for organization. See Attachment C, authored by Mr. Jeff Stacey.
CONCLUSION.
13-4
[S: SUSPENSE DATE]
JALS-CA (715y)
[DATE]
MEMORANDUM FOR [Rank and Name], Chief, Team [__], Contract Appeals Division, U.S. Army Legal Services
Agency, 901 North Stuart, Arlington, Virginia 22203-1837
SUBJECT: Business Plan - ASBCA No. [__], Appeal of [____________], Under Contract No. [___________]
1.
Case synopsis:
a. [Briefly state the facts of the case. Include the date of award, the buying command, the widget or service,
the cost and type of the contract.]
b. [Identify what went wrong with the contract, when the claim was filed, the value of the claim, the date of
the final decision, etc.]
2.
c.
[Identify when the Appeal was filed and the general allegations in the Appeal.]
d.
[Identify the Government’s position as to the allegations.]
Litigation Plan: [Provide your best estimate as to the hours required to perform the following actions:]
a.
b.
c.
d.
e.
f.
g.
h.
i.
j.
k.
Initial Pleadings................................................................................................................................ [40 hours]
First Army Discovery Request ........................................................................................................... [8 hours]
Response to Appellant’s Discovery Request...................................................................................... [8 hours]
Second Army Discovery Request....................................................................................................... [8 hours]
Response to Appellant’s Second Discovery Request ......................................................................... [8 hours]
Fact Finding Trips [include number and location] ........................................................................... [40 hours]
Taking and Defending Depositions .................................................................................................. [60 hours]
Misc. [identify]................................................................................................................................. [50 hours]
Hearing............................................................................................................................................. [50 hours]
Brief and Reply Brief ....................................................................................................................... [50 hours]
Administrative Closing.........................................................................................................................[1 hour]
TOTAL:.......................................................................................................................................... [323 hours]
3. Estimated Litigation Timeline: [Provide your best estimate. The estimate included herein is only an example,
and the estimate is not applicable if the case is accelerated.]
a.
b.
c.
d.
e.
f.
g.
h.
i.
j.
Initial pleadings ..................................................................................................[notice of appeal + 3 months]
Initial written discovery requests........................................................................[notice of appeal + 4 months]
Initial written discovery responses .....................................................................[notice of appeal + 6 months]
Subsequent written discovery and document discovery...............................................[hearing – 5 ½ months]
Exchange preliminary witness lists ..................................................................................[hearing – 5 months]
Taking and defending depositions....................................................................................[hearing – 3 months]
Exchange final witness lists and supplement Rule 4 file..............................................[hearing – 1 ½ months]
Prehearing briefs. .............................................................................................................. [hearing – 2 weeks]
Hearing.............................................................................................................[notice of appeal + 14 months]
Brief and reply brief ........................................................................................................ [hearing + 3 months]
L:\PDF Project\Working\Alma\Working\49th Graduate Course Disputes & Remedies Elective (20010515)\Ch 13B.doc
JALS-CA
SUBJECT: [Subject]
k.
4.
Decision and possible appeal .............................................................................................................. Variable
Estimated Litigation Costs:
a.
Expenses funded by Contract Appeals Division:
Trial Attorney Time (323 hours @ $125.00 per hour) ................................................................. [$40,375.00]
Trial Attorney TDY........................................................................................................................ [$3,000.00]
TOTAL:........................................................................................................................................ [$43,375.00]
(Note: This amount does not include overhead expenses for the Contract Appeals
Division.)
b.
Expenses funded by [the buying command]:
Copying Services............................................................................................................................ [$5,000.00]
Court Reporter Services ............................................................................................................... [$10,000.00]
Expert Expenses/TDY.................................................................................................................... [$1,000.00]
TOTAL:........................................................................................................................................ [$16,000.00]
5. Risk Analysis: [Insert a risk analysis and identify that an updated risk analysis will be provided to the
Contracting Officer after written discovery is completed and after depositions are completed.]
[If an adequate risk analysis cannot be conducted at the time this document is prepared, the following language
may be used: A risk analysis will be provided to the Contracting Officer by [DATE]. No accurate risk analysis can
be conducted until discovery is substantially complete. Discovery is expected to be substantially complete by
[Month, Year]. This allows [days/months] for written discovery; [days/months] for document discovery; and
[days/months] to conduct depositions. If discovery is delayed, the risk analysis may also be delayed.]
6.
Point of contact is the undersigned at (703) 696-[number] or DSN 426-[number]; facsimile ext. [number].
[[#] Encl(s)]
1. [enclosure]
2. [enclosure]
[TRIAL ATTORNEY’S NAME (in caps)]
[RANK ABBV], JA
Trial Attorney
CF:
[Contracting Officer] [Address]
[Field Counsel] [Address]
2
L:\PDF Project\Working\Alma\Working\49th Graduate Course Disputes & Remedies Elective (20010515)\Ch 13B.doc
CHAPTER 14
POST-HEARING PROCEDURES AND RESPONSIBILITIES
I.
II.
INTRODUCTION. As a result of this class, students will understand:
A.
The procedures and actions necessary in a contract dispute after
the hearing concludes.
B.
Procedures for filing Motions for Reconsideration at the ASBCA.
C.
Procedures for appeals to the Court of Appeals for the Federal Circuit.
D.
Equal Access to Justice Act matters.
OVERVIEW.
A.
The hearing does not conclude the disputes process.
B.
Post-hearing responsibilities are important.
C.
Protection of documents.
D.
Stay in touch with the contracting officer, local counsel, and
key witnesses.
E.
Send letters of appreciation and status reports, as appropriate.
COL Jonathan H. Kosarin
49th Graduate Course
May 2001
15-1
III.
ACTIONS UPON RECEIPT OF THE BOARD'S DECISION.
A.
B.
IV.
The Decision. Forward a copy of the decision to the field.
1.
Generally, unless an appeal is filed, take no further action.
2.
Review an unfavorable decision for possible motion for
reconsideration.
Reconsideration. File a motion for reconsideration, if appropriate.
Forward a copy of the Board's decision on a motion for reconsideration to the field.
1.
Unless an appeal is filed, take no further action.
2.
Review an unfavorable reconsideration decision for possible
appeal.
POSTTRIAL PROCESS.
A.
Posttrial Procedures.
1.
Motions for reconsideration (ASBCA Rule 29).
Bio-Temp Scientific, Inc., ASBCA No. 41388,
95-2 BCA ¶ 86,242; Arctic Corner, Inc., ASBCA
No. 33347, 92-2 BCA ¶ 24,874.
a.
Either party may file.
b.
Set forth specifically the grounds relied upon in
the motion.
c.
File the motion within 30 days of receiving the
Board's decision. Motions filed after 30 days will
15-2
be dismissed as untimely. Bio-Temp Scientific, Inc.,
ASBCA No. 41388, 95-2 BCA ¶ 86,242; Arctic Corner,
Inc., ASBCA No. 33347, 92-2 BCA ¶ 24,874.
2.
Appeals to the Court of Appeals for the Federal Circuit
(CAFC). 41 U.S.C. § 607(g)(1).
a.
Appeal within 120 days following receipt of decision.
Federal Circuit Rule 15(a)(2); Placeway Constr. Corp. v.
United States, 713 F.2d 726 (Fed. Cir. 1983).
b.
Obtain approval from the Department of Justice,
(Civil Division) for all Government appeals. 41 U.S.C.
§ 607(g)(1)(B).
c.
Presenting matters on appeal. Follow the CAFC’s
Rules of Practice (December 1, 1998 edition). CAFC
uses both the Federal Rules of Appellate Procedure
and its own Federal Circuit Rules.
d.
Scope of review under CDA is Wunderlich
Act, 41 U.S.C. §§ 321-322. 41 U.S.C. § 609(b).
1.
Questions of law. Not final and conclusive.
The court will review questions of law.
2.
Questions of fact. Final and conclusive unless the
court or board decision is fraudulent, arbitrary,
capricious, made in bad faith, or not supported by
substantial evidence. 41 U.S.C. § 609(b);
United States v. General Elec. Corp., 727 F.2d
1567, 1572 (Fed. Cir. 1984)(court holds that it will
affirm a board’s decision if there is “such relevant
evidence as a reasonable mind might accept as
adequate to support a conclusion.”); Tecom, Inc. v.
United States, 732 F.2d 935, 938 n.4 (Fed. Cir.
1995)(credibility determinations of the trier of
fact are virtually unreviewable).
15-3
B.
Coordination With Other Offices.
1.
2.
3.
V.
Procurement fraud issues.
a.
Suspension and debarment.
b.
Prosecution.
Litigation Division.
a.
Appeals to CAFC.
b.
Related cases.
Other services Contract Appeals/Litigation Divisions.
a.
Same appellants
b.
Same issues.
c.
Mutual assistance. You are not alone out there!
INVENTORY AND RETIREMENT OF THE FILE.
A.
Documents. Maintain legible and complete copies of all key documents.
Develop a list of key documents and annotate it with the box number.
1.
Pleadings.
2.
Rule 4 and Supplemental Rule 4 files.
15-4
B.
3.
Trial Attorney’s Litigation File (TALF).
4.
Depositions.
5.
Other discovery.
a.
Discovery requests.
b.
Discovery responses.
6.
Prehearing motions.
7.
Prehearing briefs.
8.
Post-hearing briefs, including reply briefs.
9.
All decisions of the Board.
10.
Post-decision motions, replies and briefs.
11.
Any Court decisions.
Witnesses. Maintain a list of key witnesses.
1.
Full name.
2.
Social security number.
3.
Address (home and work).
4.
Telephone number (home and work).
15-5
VI.
C.
Retirement of the File. Dependent upon expected receipt of the Board's
decision and any appeals.
D.
Administrative File. Retain an administrative file with copies of key
documents and list of witnesses.
1.
Post-hearing brief.
2.
Contracting officer.
3.
Field attorney.
4.
Key technical personnel.
EQUAL ACCESS TO JUSTICE ACT MATTERS.
A.
B.
General.
1.
Authority. Boards of Contract Appeals may award attorneys
fees pursuant to the Equal Access to Justice Act (EAJA) for
disputes processed under the CDA. 5 U.S.C. §.504. Appellants
claiming EAJA fees and costs must qualify as small businesses.
Q.R. Sys. North, Inc., ASBCA No. 39618, 96-1 BCA ¶ 27,943
(Board rejected contractor attempt to transfer corporate assets
so as to fall within EAJA ceiling).
2.
Purpose.
Standard for Award.
1.
Prevailing party. 10 U.S.C. § 504(a)(1).
2.
Position of the Government. 5 U.S.C. § 504(b)(1)(E).
15-6
3.
C.
D.
VII.
Substantially justified. 5 U.S.C. § 504(a)(1).
North Chicago Disposal Co., ASBCA No. 25535,
86-3 BCA ¶ 19,052; R&B Bewachungsgesellschaft mbh,
ASBCA No. 42221, 94-1 BCA ¶ 26010.
Allowable Fees. 5 U.S.C. § 504(b)(1)(A).
1.
Attorneys. Generally $125 per hour.
The ASBCA has awarded fees in excess of
the statutory amount. Cape Tool & Die, Inc.
ASBCA No. 46433, 95-1 BCA ¶ 27,465 (although
$75 per hour [the old rate] used as guideline for
attorneys fees rates in some cases, rates in excess
of that amount found reasonable for Washington DC
area attorneys with government contracts expertise –
$225/hr for partners; $80 - 110/hr for associates).
2.
Experts/Consultants. Limited to no more than the highest rate
payable to a GS-15. C&C Plumbing & Heating, ASBCA
No. 44270, 96-1 BCA ¶ 28,100.
3.
Paralegals. Lamb Engineering & Construction Co.,
EBCA No. E-9803274, 98-2 BCA ¶ 30,075 (Paralegal
expenses recoverable at the rate normally charged to the
client for similar work.).
4.
Other costs and expenses.
5.
Subonctractor’s legal costs. Prime contractors may not
automatically recover a subcontractor’s legal costs
for a “pass through” claim. R.C. Construction v. United States,
42 Fed. Cl. 57 (1998).
Time for Filing. Great Western Utility Corp., ENGBCA Nos. 4866-F,
4899-F, 4934-F, 4935-F, 86-3 BCA ¶ 19,011.
CONCLUSION.
15-7