ARMED SERVICES BOARD OF CONTRACTAPPEALS

Appeal of

-- ) ) Public Warehousing Company, K.S.C. ) ) Under Contract Nos. SP0300-03-D-3061 ) SPM300-05-D-3119 ) SPM300-05-D-3128 )

APPEARANCES FORTHE APPELLANT:

APPEARANCES FORTHE GOVERNMENT: ASBCA No. 59020

Michael R. Charness, Esq. Jamie F. Tabb, Esq.

Vinson & Elkins LLP Washington, DC

Daniel K. Poling, Esq.

DLA ChiefTrial Attorney John F. Basiak, Jr., Esq. Nathaniel A. Work, Esq. Keith J. Feigenbaum, Esq.

Trial Attorneys DLATroop Support Philadelphia, PA

OPINION BYADMINISTRATIVE JUDGE THRASHER ON THE GOVERNMENT'S PARTIAL MOTION TO DISMISS FORLACK OF SUBJECT MATTERJURISDICTION AND MOTION FOR SUMMARYJUDGMENT

This appeal arises from the three captioned Prime Vendor contracts between appellant, Public Warehousing Company, K.S.C. (PWC), and the Defense Supply Center Philadelphia (DSCP), since renamed DLATroop Support, a component ofthe Defense Logistics Agency (DLA). PWC appeals from the denial ofits 5 December 2011 certified claim, as revised by its 26 February 2013 letter, seeking $4,605,594.53 in interest penalties allegedly due pursuantto the Prompt PaymentAct, as amended, 31 U.S.C. §§ 3901-3907, and the terms ofthe captioned contracts. Ourjurisdictionto entertain this appeal derives from the ContractDisputes Act of 1978 (CDA), 41 U.S.C. §§ 7101-7109.

The government originally moved to dismiss this appeal, in part, for lack of jurisdiction, alleging that portions ofappellant's claim were barred by the CDA's six-year statute oflimitations, 41 U.S.C. § 7103(a)(4)(A). Following full briefing on the government's partial motion to dismiss, the United States Court ofAppeals for the Federal Circuit issued its decision in

### SikorskyAircraft Corp. v. UnitedStates, 773 F.3d 1315 (Fed. Cir. 2014). By order dated 15 December2014, the Boardrequested supplemental briefing regarding the impact of

### Sikorsky on the government's motion.

### In response to the Board's 15 December 2014 order, the government filed a document titled, "DLA'sMotion for Summary Judgment and Supplemental Briefin Support ofDLA's Partial Motion to Dismiss." In this submission, the government "renews its Partial Motion to Dismiss for Lack ofSubject Matter Jurisdiction and also

moves for Summary Judgment on the grounds that

...PWC's untimely requests for [Prompt Payment Act] interest are barred" (gov'tmot. at 2). 1 

### In addition, the government seeks summaryjudgmenton the basis that the exception for payments related to military contingency operations in the Office ofManagement and Budget's (OMB's)regulations implementing the Prompt Payment Act, 5 C.F.R. § 1315.l(b)(2), precludes PWC from succeeding on its claim (gov't mot. at 2, 13-16).

In Sikorsky, as the government acknowledges, the Federal Circuit held that the six-year statute oflimitations inthe CDA is not ajurisdictional bar. 773 F.3d at 1320-22. The court's decision in Sikorsky is binding on this Board. KelloggBrown & 

### Root Services, Inc., ASBCA No. 58175, 15-1BCAii35,988 at 175,825; Combat Support Assocs., ASBCA Nos. 58945, 58946, 15-1 BCA ii 35,923 at 175,591, vacating on recon. 14-1BCAii35,782. Because the CDA's six-year statute oflimitations "provides no basis to dismiss an appeal for lack of jurisdiction," CombatSupport, 15-1BCAii35,923 at 175,591, the government'spartial motion to dismiss for lack ofsubject matter jurisdiction is denied. Accordingly, we address only the government's motion for summaryjudgmentbelow.

1

### The government acknowledges that the Federal Circuit held in Sikorsky that the CDA's six-year statute oflimitations is notjurisdictional (gov't mot. at 16-17). However, the government argues that, with respect to the statute oflimitations issue, dismissal for failure to state a claim upon which reliefcan be granted is appropriate (id. 

### at 18-20). Although the government casts its statute oflimitations argument in terms ofdismissal for failure to state a claim, the government does not cite to the allegations in PWC's complaint, but rather speaks ofan absence ofa dispute ofmaterial fact (id. 

### at 19-20). In its response, PWC treats the government's submission as seeking summaryjudgment on the statute of limitations issue (see app. resp. to gov'tmot. at 58-59). The government does not contradict this characterization in its reply. We therefore treat the government's submission as seekingpartial summaryjudgmentbased upon the CDA's six-year statute oflimitations. CfDickPacific/GHEMM, JV, 

### ASBCA No. 55829, 08-2 BCAii 33,937 at 167,941 (noting that where the parties present matters outside the pleadings that are not excluded by the Board, a motion to dismiss for failure to state a claim is typically treated as a motion for summaryjudgment).STATEMENT OF FACTS (SOF) FORPURPOSES OF THE MOTION

The Prompt Payment Act and Its Implementing Regulations

1. Congress enactedthe Prompt Payment Act, Pub. L. No. 97-177, 96 Stat. 85 (1982), to "provide incentives for the Federal Governmenttopay its bills on time" and to "relieve private vendors ofthe unfairburdens which they frequently mustbear as a result ofdoing business with the Government." H.R. Rep. No. 97-461, at 1, 11 (1982), reprinted in 1982 U.S.C.C.A.N. 111, 121. To accomplish these goals, ifa federal agency failed to make a paymentbythe required payment date, the Prompt Payment Actrequired the agency to pay an interestpenalty in accordance with regulations prescribed by the Director ofthe Office ofManagement and Budget (OMB). Pub. L. No. 97-177, § 2(a)(l), 96 Stat. 85.

2. OMB implemented the Prompt Payment Actby issuing OMB CircularA-125. Issuance ofCircularA-125, "PromptPayment,"47 Fed. Reg. 37,321(Aug.25, 1982). OMB revised CircularA-125 in 1984, 1985, and 1987. Issuance ofAttachment to OMB CircularA-125, PromptPayment, 49 Fed. Reg. 28,140 (July 10, 1984); Issuance of Attachment 2 and OtherRevisions to OMB CircularA-125, "PromptPayment," 50 Fed. Reg. 14,688 (Apr. 12, 1985); Revision to CircularNo. A-125, "PromptPayment," 52 Fed. Reg. 21,926 (June 9, 1987). InFebruary 1988, the Federal Acquisition Regulation (FAR)

was amended to implementthe Prompt PaymentAct and OMB CircularA-125 by adding FAR Subpart 32.9 and a Prompt Payment clause atFAR 52.232-25. Federal Acquisition Regulation; Ratification ofUnauthorized Commitments and Prompt Payment, 53 Fed. Reg. 3,688 (Feb. 8, 1988).

3. Concerned that full compliance with the Prompt PaymentAct had not been achieved and that problems remained, H.R. Rep. No. 100-784, at 9, 12-13 (1988), reprinted in 1988 U.S.C.C.A.N. 3036, 3037, 3040-41, Congress enacted the Prompt Payment ActAmendments of 1988, Pub. L. No. 100-496, 102 Stat. 2455. As amended by the 1988 amendments, the PromptPayment Actprovides that, in accordance with regulations prescribed by OMB, "the head ofan agency acquiringproperty or service from a business concern, who does notpay the concern for each complete delivered item ofproperty or service by the required payment date, shall pay an interestpenalty tothe

concern on the amount ofthe payment due." 31 U.S.C. § 3902(a). The interest penalty "shall bepaid for the periodbeginning on the day after the required payment date and ending on the date on whichpayment is made" and "suchpenalty shall be paid without regard to whetherthe business concern has requested payment ofsuch penalty." Id. § 3902(b), (c)(l). The Actrequires the head ofthe agency to pay the interest penalty •·out offunds made available to carry outthe program for which the penalty is incurred." Id. § 3902(f).

4. The Prompt PaymentAct, as amended by the 1988 amendments, directs the Director ofOMB to prescribe regulations to implement section 3902 and provides

3detailed instructions regarding the content ofthe regulations. 31 U.S.C. § 3903. The Act requires the OMB regulations to generally provide a required payment date of30 days after receipt ofa proper invoice ifno otherpayment date is established by contract, but also requires the regulations to prescribe earlierpayment dates for payments related to certain food and agricultural products. Id. § 3903(a)(l)-(4). The Act also requires that the OMB regulations "permit an agency to make payment up to 7 days priorto the required payment date, or earlier as determined bythe agency to be necessary on a case-by-case basis." Id. § 3903(a)(8). Lastly, the Prompt Payment Act Amendments of 1988 require the modification ofthe FARto provide appropriate solicitation provisions and contract clauses to implement the Prompt Payment Act and OMB's regulations. Pub. L. No. 100-496, § 11, 102 Stat. 2455, 2463-65 (codified at 31 U.S.C. § 3903 note).

5. In 1989, OMB revised Circular A-125 to implementthe 1988 amendments to the Prompt PaymentAct. Revision to CircularNo. A-125, "Prompt Payment," 54 Fed. Reg. 52,700 (Dec. 21, 1989). The revised CircularA-125 prescribedpolicies and procedures to be used by agencies to comply with the Prompt PaymentAct as amended. The revised CircularA-125 prescribedrules for determining whether a proper invoice has been submitted and determining thepayment due date, directing agencies to make payment no more than 7 days priorto the payment due date unless it determines that earlierpayment is necessary on a case-by-case basis, and providing guidance for calculating interest due on late payments. See id. at 52,706-13. As relevant here, the revised CircularA-125 did not include an exception for payments related to military contingency operations.

6. In 1998, OMB issued a proposed rule that would make numerous revisions to OMB's promptpaymentrules and replace OMB CircularA-125 with codified regulations. Prompt Payment, 63 Fed. Reg. 33,000 (June 17, 1998). OMB proposed to add "one additional exceptiontothe Prompt Payment Act requirements

...for payments related to certain specified emergencies and military operations." Id. at 33,001. OMB also proposed to add a section that wouldprovide for "earlypayment for

...payments related to emergencies and disasters, as well as for military deployments." Id.

7. In September 1999, OMB promulgated the final rule codifying its revised promptpaymentregulations in Part 1315 ofTitle 5 ofthe Code ofFederal Regulations. PromptPayment, 64 Fed. Reg. 52,580 (Sept. 29, 1999). As revised, OMB'sprompt payment regulations provide that "[a]ll Executive branch vendorpayments and payments to those defined as contractors orvendors

...are subjectto the Prompt Payment Actwith the following exceptions:

...(2) Payments related to

...military contingency operations (as defined in 10 U.S.C. 10l(a)(13))." 5 C.F.R. § 1315.l(b)(2).2 OMB's regulations also provide:

2 Section 1315.1(b)(2) also excepts payments related to emergencies and the release or threatened release ofhazardous substances from the Prompt PaymentAct.

4An 

### agency shall make payments no more than seven days prior to the payment due date, but as close to the due date as possible unless the agency head or his designee has determined, on a case-by-case basis for specific payments, that an earlierpayment is necessary..

. . An agency may use the "acceleratedpayment methods" in § 1315.5 when it determines that such earlierpayment is necessary.

5 C.F.R. § 

### 1315.40). Section 1315.5, titled "Acceleratedpayment methods," in tum provides at paragraph (c) that "payments made under a military contingency (as defined in 10 U.S.C. 10l(a)(l3))may be made as soon as the contract, proper invoice, receipt and acceptance documents or any other agreement are matched. Vendors shall be entitled to interest penalties ifinvoice payments are made after the payment due date." C.F.R. § 13l5.5(c).

8. In October 1999, Congress amended section 3903 ofthe Prompt Payment Act to provide:

(c) A contract for the procurement ofsubsistence items that is entered into underthe prime vendorprogram ofthe Defense Logistics Agency may specify for the purposes of section 3902 ofthis title a single required payment date that is to be applicable to an invoice for subsistence items furnished under the contract when more than one payment due date would otherwise be applicable to the invoice under the regulations prescribed under paragraphs (2), (3), and (4) of subsection (a) or under any otherprovisions oflaw. The required payment date specified in the contract shall be consistent withprevailing industry practices for the subsistence items, but may notbe more than 10 days afterthe date ofreceipt ofthe invoice orthe certified date ofreceipt of the items. The Director ofthe Office ofManagement and Budget shall provide in the regulations under subsection (a) that when a required payment date is so specified for an invoice, no otherpayment due date applies to the invoice.

National Defense Authorization Act for Fiscal Year 2000, Pub. L. No. 106-65, § 

### 1009(2), 113 Stat. 512, 738-39 (1999).

9. On 22 May 2008, the Inspector General (IG) ofthe United States Department ofDefense (DoD) issued Report No. D-2008-098 titled, "Internal Controls Over Payments Made in Iraq, Kuwait and Egypt" (app. resp. to gov't mot., ex. K). In this report, the DoD IG noted an apparent conflict between 5 C.F.R. §§ 1315.1and1315.5, and recommended that the "Under Secretary ofDefense for Acquisition, Technology, and Logistics update the [FAR] and the Defense Federal Acquisition Regulation Supplement

5[DFARS] to provide guidance that addresses [OMB's] exception to the Prompt Payment Act for payments related to military contingency operations" (id. at 22-25).

10. On 19 August 2009, the Director ofDefense Procurement and Acquisition Policy issued a class deviation from FAR Subpart 32.9, which implements the Prompt PaymentAct and OMB's regulations, for all DoD "contracting activities supporting payments covered by" 5 C.F.R. § 1315.l(b)(2) (app. resp. to gov't mot., ex. L). The class deviation applied when suchpayments "are either certified for payment in an operational
area, or are contingent upon the receipt ofnecessary supporting documentation

...emanating from an operational area" (id. at 1 ). The class deviation granted the head ofthe contracting activity the authority to incorporate a special payment clause into contracts when he determined that an unstable business environment exists, and directed the head ofthe contracting activity to "make subsequent determinations as the operational area evolves into

a more stable business environmentto enable the provisions ofthe Prompt PaymentAct to apply" (id. at 1-2).

11. In July 2010, citing the 22 May 2008 DoD IG report, the DoD issued an interim rule amending the DFARS to "bring DoD into compliance with OMB implementation ofthe PromptPaymentAct by exempting military contingencies" at 5 C.F.R. § 1315.l(b)(2). Defense Federal Acquisition Regulation Supplement; Payments in Support ofEmergencies and Contingency Operations (DFARS Case 2009-D020), 75 Fed. Reg. 40,712, 40,712 (July 13, 2010). The interim rule added DFARS 232.901, which provides that FAR Subpart 32.9, PromptPayment, does not apply when (i) there is,

as relevant here, a contingency operation, (ii) the head ofthe contracting activity has made a determination that conditions exists that limit normal business operations, and (iii) payments will be made in the operational area or made contingent upon receiving supporting documentation from the operational area. 75 Fed. Reg. 40,713; DFARS 232.901(1). The interim rule also added a new DFARS clause, DFARS 252.232-7011, PAYMENTS IN SUPPORT OF EMERGENCIES AND CONTINGENCY OPERATIONS (JUL 2010), which would apply in such situations and does not provide for the payment ofinterest penalties for late payments. 75 Fed. Reg. 40,714. Pursuant to DFARS 232.901, however, ifthe head ofthe contracting activity subsequently determines that "the operational area evolves into a more stable environment," the contracting officer is required to modify contracts beingperformed in the operational area to "deactivate[] clause 252.232-7011 and activate[] the applicable FARPrompt Payment clause in the contract." DFARS 232.901(3)(i). In March 2011, DoD adopted the interim rule as final, with one minor, clarifying change. Defense Federal Acquisition Regulation Supplement; Payments in Support ofEmergencies and Contingency Operations (DFARS Case 2009-D020). 76 Fed. Reg. 11,371 (Mar. 2, 2011). As will be seen DFARS 232.901 and the clause at DFARS 252.232-7011 were issued after award ofthe contracts at issue here.



### 6The Prime Vendor Contracts and Military Operations in Iraq

12. On 10 May 2002, DSCP issued Solicitation No. SP0300-02-R-4003 (the 4003 solicitation) to establish indefinite-delivery/indefinite-quantity (IDIQ) contracts for the distribution offood and non-foodproducts in three geographic zones under the Prime VendorProgram (R4, tab 14 at 1, 7). ForZone III

- Middle East, DSCP anticipated makingtwo awards, one for Kuwait and Qatar and one for Saudi Arabia (id. at 7). In addition to the required delivery locations (id. at 59), the 4003 solicitation advised that "thePrime Vendor must have the ability to support an unknown number oftroops deployed in its respective operational deployment areas," which for Zone III included Iraq, upon 30 days notice (id. at 62-63).

13. The 4003 solicitation included FAR 52.212-4, CONTRACT TERMS AND CONDITIONS-COMMERCIAL ITEMS (FEB 2002) (R4, tab 14 at 84-87). Paragraph (i) of that clause provided:

Payment shall be made for items accepted by the Governmentthathave been delivered tothe delivery destinations set forth in this contract. The Governmentwill make payment in accordance with the Prompt PaymentAct (31 U.S.C. 3903) and OMB promptpayment regulations at 5 CFRpart 1315. In connectionwith any discount offered for early payment, time shall be computed from the date ofthe invoice. Forthe purpose ofcomputingthe discount earned, payment shall be consideredto have been made on the date which appears onthe payment check orthe specified date if

an electronic funds transferpayment is made.

(Id. at 86) The 4003 solicitation also contained the following regarding payment:

(Id. at 67) B. Payments ofdelivery orders will be made in accordance withthe terms and conditions ofParagraph (i) of Clause 52.212-4 

### "Contract Terms andConditions

- CommercialItems", appearing in the section ofthis solicitation entitled 

### "Contract Clauses".

C. Payment is currently being made in approximately 7 days afterthe receipt ofa proper invoice; however, it is still subjectto the terms and conditions ofthe PromptPayment Act (31 U.S.C. 3903).

714. DSCP issued AmendmentNo. 0002 to the 4003 solicitation on 15 July 2002 (R4, tab 16). Section II ofthe amendment consisted ofanswers to offeror questions, which were provided "for clarificationpurposes only" and did "not change the solicitation language" (id. at 136). Among the questions and answers provided was the following:

(Id. at 156) Question # 94:

The solicitation states thatpayments are currently being made in 7 days afterthe receipt ofa proper invoice (page 67). The solicitation states thatthese payments are subject to the PromptPayment Act (31 U.S.C. 3903). However, the solicitation additionally notes that Fast Payment Procedures£31 apply versus the Prompt Payment Act (page 87). Please clarify the paymentprocedures that will apply under the contract.

Answer: The solicitation does not note that Fast Payment procedures apply. The Fast Pay block on page #87 is not checked, and does not apply. Prime Vendor contracts are paid via the Prompt Payment Act, meaning 7 day payment terms.

15. In October 2002, Congress passed the Authorization for Use ofMilitary Force Against Iraq Resolution of2002, Pub. L. No. 107-243, 116 Stat. 1498. Section 3(a) authorized the Presidentto "use the Armed Forces ofthe United States as he determines to be necessary and appropriate in orderto-- (1) defend the national security ofthe United States against the continuing threat posed by Iraq; and (2) enforce all relevant United Nations Security Council resolutions regarding Iraq." 116 Stat. 1501. On 19 March 2003, the President directed the United States Armed Forces to commence combat operations against Iraq. Letterto Congressional Leaders Reporting on the Commencement ofMilitary Operations Against Iraq, 39 WEEKLY COMP. PRES. 

### Doc. 348, 348 (Mar. 21, 2003).

3 Section 1315.6 ofOMB's prompt paymentregulations, titled "Payment without evidence that supplies have been received (fast payment)," allows payment to be made in limited situations absent evidence ofreceipt ofsupplies. 5 C.F.R. § 1315.6; see also FAR Subpart 13.4; FAR 52.213-1.
816. DSCP awarded Contract No. SP0300-03-D-3061 4 (the PVI contract), covering Kuwait and Qatar, to PWC on 28 May 2003 (R4, tab 20). The PVI contract expressly incorporated the 4003 solicitation and all five amendments thereto (id. at 2). The PV1contract also stated the following regarding payment:

(Id. at 15-16) B. Payments ofdelivery orders will be made in accordance with the terms and conditions ofParagraph (i) of Clause 52.212-4 

### "Contract Terms and Conditions

- CommercialItems", appearing in the section ofthis solicitation [sic] entitled 

### "Contract Clauses".

C. Payment is currently being made in approximately 7 days after the receipt ofa proper invoice; however, it is still subject to the terms and conditions ofthe Prompt Payment Act (31 U.S.C. 3903).

17. On or about 30 June 2003, the parties executed bilateral Modification No. POOOO 1to the PVl contract (R4, tab 21). The modification added the "Iraq Deployment Zone" to the PVI contract and "establishe[d] separate ordering and delivery requirements for Operation Iraqi Freedom (OIF) initiatives in the country ofIraq area of operations" (id. at 2).

18. On or about 9 July 2003, the parties executed bilateral Modification No. P00002 to the PVI contract, which "establishe[d] the mutually agreed upon pricing structure for 1) the Iraq Deployment Zone

..., and 2) distribution costs to deliver Government Furnished Material (GFM) ofvarious food types" (R4, tab 22). Neither Modification No. POOOO 1norModification No. P00002 exemptedpayments related to military contingency operations from the PVl contract'spaymentterms.

19. On 20 August 2004, the parties executed bilateral Modification No. P00025 to the PVl contract, which added the clause atFAR 52.213-1, FASTPAYMENT PROCEDURE (FEB 1998), to the contract (R4, tab 27). According to the modification, the Fast Payment Procedure clause was added pursuant to a 12 July 2004 FARDeviation which authorized the use of"FastPaymentprocedures for OCONUS Subsistence Awards in Support ofContingency Operations" (id. at 1). Underthe terms ofthe modification,

4 On 4 November 2004, the contracting officer issued unilateral Modification No. P00030, changing the contract number ofthe PVl contract from SP0300-03-D-3061 to SPM300-04-D-3061 (R4, tab 28). The contracting officer issued unilateral Modification No. P00033 on 1December 2004, correcting Modification No. P00030 and changing the contractnumber ofthe PVl contractto SPM300-05-D-3061 (Bd.
corr.,joint filing dtd. 22 July 2015).
9fast paymentprocedures were applicable to invoices "for a delivery into the Iraq deployment zone that does not exceed $500,000.00," and did not apply to invoices for deliveries to Kuwait and Qatar (id. at 3).

20. DSCP issued SolicitationNo. SPM300-04-R-0323 (the 0323 solicitation) on 3 September 2004 (R4, tab 36). The 0323 solicitation soughtto establish IDIQ contracts for the distribution offood and non-food products for five Middle Eastern geographic

zones under the Prime Vendor Program. Zone 1encompassed Kuwait, Iraq, and Jordan. The 0323 solicitation advised offerors that "[a]ll zones to be supported under this solicitation have been designated as contingency operations" as defined in FAR 2.101. (Id. at 10)

21. The 0323 solicitation included FAR 52.212-4, CONTRACT TERMS AND CONDITIONS-COMMERCIAL ITEMS (OCT 2003) (R4, tab 36 at 250-55). Paragraph (i)(2) ofthat clause stated that the "Governmentwill make payment in accordance with the Prompt Payment Act (31 U.S.C. 3903) and promptpaymentregulations at 5 CFR 1315" (id. at 252). The 0323 solicitation also contained the following regarding payment:

(Id. at 79) B. Payments ofdelivery orders will be made in accordance with the terms and conditions ofParagraph (i) of Clause 52.212-4 "Contract Terms and Conditions

- Commercial Items", appearing in the section ofthis solicitation entitled "Contract Clauses".

C. Payment is currently being made in approximately 7 days after the receipt ofa proper invoice; however, it is still subject to the terms and conditions ofthe PromptPayment Act (31 U.S.C. 3903).

22. On or about 17 February 2005, the parties entered into Contract No. SPM300-05-D-3l l 9 (the PV Bridge contract), with a term from 16 February 2005 until 15 December 2005, by executing Modification No. P00036 to the PVl contract (R4, tab 30). The PV Bridge contract incorporated the terms and conditions ofthe PVl
contract (id.).

23. Pursuant to the 0323 solicitation, DSCP awarded Contract No. SPM300-05-D-3128 (the PV2 contract) for Zone 1 (Iraq, Kuwait, and Jordan) to PWC on 7 July 2005 (R4, tab 41). The PV2 contract expressly incorporated the 0323 solicitation (id. at 2).

24. By letter dated 28 November 2011, PWC submitted a certified claim seeking $5,381,777.62 in late payment interestpenalties allegedly due pursuant to the Prompt Payment Act and the terms ofthe PVl, PVBridge, and PV2 contracts (R4, tab 1). PWC

10attached to its claim two spreadsheets, totaling over 400 pages, detailing the interest penalties alleged due (app. supp. R4, tab 49). Although dated 28 November 2011, the parties do not dispute that PWC submitted its claim on 5 December 2011 (gov't mot. at 9,**~** 21; app. resp. to gov'tmot. at 17,**~** 21).

25. By letter dated 26 February 2013, following multiple communications between the parties, PWC revised its claim downward to $4,605,594.53 (R4, tab 7 at 1-4).

26. The contracting officer issued a 1November 2013 final decision denying PWC's claim in its entirety (R4, tab 13). PWC appealed the denial ofits claim to this Board by letter dated 19 November 2013.

DECISION
Having already denied the government's partial motion to dismiss onjurisdictional grounds, we are left with two pending arguments. First, the government argues that it is entitled to summaryjudgmentbecause 5 C.F.R. § 1315.l(b)(2)precludes PWC from recovering Prompt PaymentAct interest. Second, the government argues that it is entitled to partial summaryjudgment as to a portion ofPWC's claim that it contends is barred pursuantto 41 U.S.C. § 7103(a)(4)(A) as untimely submitted.

Summaryjudgment is properly granted where there are no genuine issues of material fact and the moving party is entitled tojudgment as a matter oflaw. 

### Mingus Constructors, Inc. v. UnitedStates, 812 F.2d 1387, 1390 (Fed. Cir. 1987). The government, as the moving party, bears the burden ofproving the absence ofa genuine issue ofmaterial fact and all significant doubt over factual issues is resolved in appellant's favor. 

### Colorado RiverMaterials, Inc. d/b/a/NAC Constr., ASBCA No. 57751, 13 BCA**~** 35,233 at 172,991. The Board'stask is not to weigh evidence and resolve factual issues, but to determine whethertriable issues offact exist. 

### US. Coating Specialties & 

### Supplies, LLC, ASBCANo. 58245,**15-1BCA~35,957** at 175,707.

The Military Contingency Operation Exception

The parties' primary dispute concerns the proper interpretation of5 C.F.R. § 1315.l(b)(2). 5 Section 1315.l(b)(2) provides, as relevant here, that "[a]ll Executive

5 PWC states that the Prompt Payment Act "itselfhas never included an exception for payments related to military contingency operations," that "it is uncertain what authority OMB relied upon in creatingthe exception," and that "there is no indication in the regulatory history ofthe source or rationale for OMB's military contingency exception" (app. resp. to gov'tmot. at 50; app. surreply to gov'treply to app. resp. to gov'tmot. at 10). PWC does not, however, argue that 5 C.F.R. § 1315.l(b)(2) is not entitled to deference under 

### Chevron, US.A., Inc. v. Natural ResourceDefense Council, Inc., 467 U.S. 837 (1984), and its progeny.
11branch vendorpayments andpayments to those defined as contractors orvendors

...are subject to the Prompt PaymentAct withthe following exceptions:

...(2) Payments related to

...military contingency operations (as defined in 10 U.S.C. 101 (a)(l3))." The government interprets 5 C.F.R. § 1315.l(b)(2) as prohibiting the application ofthe Prompt Payment Actto payments related to military contingency operations 

### (see gov't reply to app. resp. to gov't mot. at 4). Relying onthe 22 May 2008 DoD IG report (SOF**~** 9), PWC contends thatthe government's interpretation creates a conflict between 5 C.F.R. §§ 1315.l(b)(2) and 1315.5(c) (app. resp. to gov't mot. at 51-52). Under PWC's interpretation, although the Prompt PaymentAct may not apply ofits own force to payments related to military contingency operations pursuantto 5 C.F.R. § 1315.l(b)(2), section 1315.1(b)(2) does not deprive an agency ofthe discretion to nonetheless contractually agree to make suchpayments in accordance with the terms ofthe Prompt PaymentAct (id. at 46-47, 50). PWC maintains that DSCP exercised such discretion with respect to the three Prime Vendor contracts at issue by incorporating contract clauses stating thatpaymentwould be made in accordance with the PromptPaymentAct and its implementing regulations (id. at 42-45).

We construe a regulation using the same interpretive rules used in construing a statute. 

### Lengerich v. Dep 't of Interior, 454 F.3d 1367, 1370 (Fed. Cir. 2006); 

### Tesoro Hawaii Corp. v. UnitedStates, 405 F.3d 1339, 1346 (Fed. Cir. 2005). We mustread the disputed provision "inthe context ofthe entire regulation as well as otherrelated regulatory sections." 

### Vazquez-Claudio v. Shinseki, 713 F.3d 112, 115 (Fed. Cir. 2013);



### see also Mass. Mut. Life Ins. Co. v. UnitedStates, 782 F.3d 1354, 1365 (Fed. Cir. 2015) (noting that in construing a regulation a tribunal considers "the text ofthe regulation as a whole, reconciling the section in question with sections related to it"). A regulation, like

a statute, should be construed so that "no clause, sentence, orword shall be superfluous, void, or insignificant." 

### Raytheon Co., ASBCANo. 54907, 11-2 BCA**~** 34,870 at 171,519 (quoting 

### TRWInc. v. Andrews, 534 U.S. 19, 31 (2001)) (internal quotation marks omitted); 

### see also Princess Cruises, Inc. v. UnitedStates, 201F.3d1352, 1362 (Fed. Cir. 2000) ("It is a long-held tenet ofstatutory interpretation that one section ofa law should not be interpreted so as to render another section meaningless.").

The government's interpretation of5 C.F.R. § 1315.l(b)(2) as prohibiting the application ofthe PromptPaymentAct to payments related to military contingency operations is perhaps a permissible reading ofsection 1315.1(b)(2) itself. However, we agree with PWC that the government's interpretationruns headlong into 5 C.F.R. § 1315.5(c). Section 1315.5(c), which allows acceleratedpayment methods for payments made under a military contingency, states that vendors "shall be entitledto interest penalties ifinvoice payments are made afterthe payment due date." Section 1315.5(c), promulgated simultaneously with section 1315.l(b)(2) (SOF**~~** 6-7), thus anticipates

some application ofthe terms ofthe Prompt Payment Act to payments related to military contingency operations. Inpromulgating 5 C.F.R. § 1315.5(c), OMB noted that the accelerated payment methods provided in that section, to be used when an agency determines that early payment in necessary in accordance with 5 C.F.R. § 1315.4(j),

12implement§ 3903(a)(8) ofthe Prompt PaymentAct. Prompt Payment, 64 Fed. Reg. 52,580, 52,582-83 (Sept. 29, 1999). Therefore, ifwe interpret 5 C.F.R. § 1315.l(b)(2) as prohibiting any application ofthe Prompt PaymentActto payments related to military contingency operations, then§ 1315.5(c) oftheregulations would have no effect. We are hard-pressed to conclude that OMB would promulgate a regulation that would be meaningless upon promulgation.

Moreover, the government's interpretation of5 C.F.R. § 1315.1(b)(2) calls into question the validity ofDFARS 232.901. 6 DFARS 232.901 was promulgated to implement the exception for payments related to military contingencies in 5 C.F.R. § 1315.l(b)(2) (SOF**~** 11). DFARS 232.901(1) provides that FAR Subpart 32.9, which

was promulgated to implement the Prompt Payment Act and OMB'spromptpayment rules (SOF**~** 2), does not apply to military contingencies iftwo additional criteria are met. Ifthose criteria cease to exist, DFARS 232.901(3) calls for the application ofthe standard FARprompt payment clauses. DFARS 232.901 does notpreclude application ofthe Prompt PaymentAct to payments related to military contingencies operations in all circumstances. Interpreting 5 C.F.R. § 1315.l(b)(2) as prohibiting any application ofthe PromptPayment Act to payments related to military contingency operations thus creates

a conflict between that section and DFARS 232.901. PWC's construction, which avoids this conflict and allows for a more concordantregulatory scheme, is therefore the better interpretation of5 C.F.R. § 1315.l(b)(2). See Kearfott Guidance & Navigation Corp. v. Rumsfeld, 320 F.3d 1369, 1377 (Fed. Cir. 2003) (noting the canon ofconstruction that there is a presumption in favor offinding harmony betweentwo regulations dealing with similar subjects); Rice v. Martin Marietta Corp., 13 F.3d 1563, 1568 (Fed. Cir. 1993) (same). Accordingly, we hold that 5 C.F.R. § 1315.l(b)(2) does not preclude an agency from contractually agreeing to make payments related to military contingency operations pursuant to the terms ofthe Prompt Payment Act.

All three contracts at issue in this appeal included clauses stating that payment would be made in accordance with the terms ofthe Prompt PaymentAct. The PV1 contract expressly stated thatpaymentwas "subjectto the terms and conditions ofthe PromptPaymentAct" (SOF**~** 16). The PVl contract also incorporated the 4003 solicitation, which includedFAR 52.212-4, CONTRACT TERMS AND CONDITIONS

- COMMERCIAL ITEMS (FEB 2002). That clause similarly providedthat the government would make payment in accordance with the Prompt Payment Act and OMB's prompt payment regulations. (SOF**~~** 13, 16) In modifying the PVl contract to include

6 We agree with the governmentthat DFARS 232.901 and the accompanying clause at DFARS 252.232-7011 do not apply to the contracts in dispute because the regulations were issued after contract award. See Tech.for Commc 'ns Int'l, ASBCA Nos. 36265, 36841, 93-3 BCA**~** 26,139 at 129,947 (applying the promptpayment regulations in effect atthe time ofcontract award). However, PWC does not argue that these DFARS provisions are applicable to its contracts; PWC simply cites these provisions to support its interpretation of5 C.F.R. § 1315.l(b)(2).
13deliveries to locations in Iraq, theparties did not exempt payments related to military contingency operations from these paymentprovisions (SOF if 18). The PVBridge contract incorporated the terms and conditions ofthe PVI contract (SOF if 22). The PV2
contract incorporated the 0323 solicitation. Although that solicitation advised that all

zones were designated as contingency operations, it included FAR 52.212-4, CONTRACT TERMS AND CONDITIONS

- COMMERCIAL ITEMS (OCT 2003), which stated that payments would be made in accordance with the Prompt Payment Act and OMB'sprompt payment regulations. (SOF

## iii! 20-21, 23) Because the government contractually agreed to make payments under all three contracts in accordance with the terms and conditions ofthe Prompt Payment Actwithout exception, 5 C.F.R. § 1315.l(b)(2) does not bar any portion ofPWC's claim.

Statute ofLimitations

The CDArequires that "each claim by a contractor against the Federal Governmentrelating to a contract.

..shall be submitted within 6 years after the accrual of the claim." 41 U.S.C. 

### § 7103(a)(4)(A). A claim accrues "when all events, that fix the alleged liability ofeitherthe Government orthe contractor andpermit assertion ofthe claim, were known or should have been known." FAR 33.201. A party's failure to submit a claim within six years ofaccrual is an affirmative defense to the claim. Kellogg Brown & RootServs., Inc., ASBCANo. 58175, 15-1 BCAif 35,988 at 175,825; see also Do-WellMach. Shop, Inc. v. UnitedStates, 870 F.2d 637, 639 (Fed. Cir. 1989) ("The

reason that the time bar was fatal is that it constituted a valid affirmative defense."). As theproponent ofits affirmative defense, the government bears the burden ofproving that PWC's claim was untimely. KelloggBrown & Root, 15-1BCAif35,988 at 175,825; LockheedMartin Corp., ASBCA No. 57525, 12-1 BCAif 35,017 at 172,065; see also BrunswickBank & Trust Co. v. UnitedStates, 707 F.2d 1355, 1360 (Fed. Cir. 1983) (party raising an affirmative defense normally bears the burden ofproof).

The parties do not dispute that PWC submitted its claim on 5 December2011 (SOF if 24). To be untimely, PWC's claim must have accrued priorto 5 December 2005. The government seeks partial summaryjudgment, arguing that a portion ofPWC's claim accrued more than six years priorto submittal. Specifically, the government argues that the events that fix liability for late payment interestpenalties occur, and a claim for the interestpenalties accrues, once the government fails to make timelypayment on an invoice, that is the day after the payment due date. The government thus argues that PW C's claim with respect to an unspecified number ofinvoices, those where the government's alleged failure to make timely payment occurredpriorto 5 December 2005, is barred by the CDA's six-year statute oflimitations. (Gov't mot. at 19-20) We deny the government summaryjudgmentfor two reasons.
First, the government conflates two separate obligations-the obligation to make timely payment on an invoice and the obligation to pay an interest penalty for late payments. For claim accrual purposes, in determining whenthe alleged liability is fixed,

14we begin by examining the legal basis ofthe claim. 

### GrayPersonnel, Inc., ASBCA No. 54652, 06-2 BCA 

### ii 33,378 at 165,475. The Prompt Payment Act, the provisions of which we have found to be applicable to the three contracts at issue, imposes an obligation on a government agency to pay an interestpenalty when it fails to make a paymentby the requiredpayment date. 31 U.S.C. § 3902(a). That interest penalty is calculated for the period from the day after the required payment date to the date ofactual payment, and is to be paid without regard to whether such an interest penalty was requested. 31 U.S.C. § 3902(b)-(c)(l). The Prompt PaymentAct provides that a ''claim for an interest penalty 

### notpaid" may be filed under the CDA. 31 U.S.C. § 3907(a) (emphasis added). Reading these sections together, we conclude that the government has

an obligation to pay the interest penalty for late payments automatically and that the government breaches this obligation by failing to pay the interest penalty upon paying the underlying invoice, thus creating a claim for the interest penalty not paid. Our conclusion is bolstered by 31 U.S.C. § 3902(c)(3) which provides for an additional interest penalty if the government fails to pay the interestpenalty due within 10 days ofthe underlying payment and the contractor makes a written demand for the interestpenalty due within 40 days ofsuch payment. Moreover, our conclusion is consistent with the Prompt Payment Act's legislative history. The House Report accompanying the Prompt Payment Act states that if"aFederal agency owes an interest penalty

..., and then fails to pay that interest penalty, the business concern to which the penalty is owed may file a claim for the amount ofinterest due under the Contract Disputes Act of 1978." H.R. Rep. No. 97-461, at 15 (1982), 

### reprinted in 1982 U.S.C.C.A.N. 111, 125. Accordingly, the events that fix the government's alleged liability and allow a claim for interest penalties to be asserted do not occur until the governmentpays the underlying invoice without paying the interest penalty due.

Second, the governmenthas failed to establish the absence ofa material dispute of genuine fact withregard to the statute oflimitations question. Because interest penalties are tied to specific payments, claim accrual must be determined on an invoice-by-invoice basis. In its motion, however, the government does not present specific facts regarding the invoices for which it seeks summaryjudgment. Rather the government argues in general terms. The government fails to establish the facts regarding the date ofthe specific invoices for which it seeks summaryjudgment, the amount ofsuch invoices, or the date such invoices were paid, precluding an assessment ofwhenthe government's alleged liability with regard to any particular invoice was fixed. Moreover, the government fails to introduce any facts regarding the potential applicability of31 U.S.C. § 3903(a)(2)-(4) (earlierpayment dates for certain food and agricultural products) (SOF 

### ii 4) or§ 3903(c), which applies specifically to DLA's Prime Vendor Program (SOF 

### ii 8). The failure to introduce invoice-specific facts also precludes application ofthe "shouldhave known test" for claim accrual, which includes a reasonableness component that turns upon what facts

were reasonably known to the claimant. 

### See The Ryan Co., ASBCANo. 58137, 15-1 BCA ii 35,998 at 175,862 (citing

### Laguna Constr. Co., ASBCA No. 58569, 14-1BCAii35,618 at 174,459). Accordingly, summaryjudgment onthe government's affirmative defense that the CDA's six-year statute oflimitations bars a portion ofPWC's claim is inappropriate.

15CONCLUSION

The government's partial motion to dismiss for lack ofsubject matterjurisdiction and the government's motion for summaryjudgment are denied.

Dated: 2 May 2016

I concur

Administrative Judge Acting Chairman Armed Services Board ofContract Appeals dministrative Judge Armed Services Board ofContractAppeals

I concur

RICHARD SHACKLEFORD Administrative Judge Vice Chairman Armed Services Board ofContract Appeals

I certify that the foregoing is a true copy ofthe Opinion and Decision ofthe Armed Services Board ofContract Appeals in ASBCA No. 59020, Appeal ofPublic Warehousing Company, K.S.C., rendered in conformance with the Board's Charter.

Dated:

16 JEFFREY D. GARDIN Recorder, Armed Services Board ofContract Appeals