Opinion ID: 566465
Heading Depth: 1
Heading Rank: 2

Heading: allied's appeal

Text: 7 Allied appeals the ASBCA's holding that the DCA and DAR provisions do not apply to the withheld progress payments. Allied's second appeal before the ASBCA, regarding the underlying interpretation of the EPA clause and the concomitant price adjustment, was not yet decided at the time Allied filed the present appeal before this court. The issues in that second appeal to the ASBCA are not now before us. 8
9 Jurisdiction Purposes? 10 The government argues that we should not reach the merits of this case, citing Fairchild Republic Company v. U.S., 810 F.2d 1123 (Fed.Cir.1987) (Fairchild III ). In Fairchild III, contractor Fairchild appealed to this court from a decision of the ASBCA upholding the government's right to withhold progress payments, and consequently denying Fairchild's motion for summary judgment. The ASBCA held there, as it did here, that the DCA and DAR Appendix E were inapplicable. There, however, the ASBCA had not yet considered a second issue which was before it in the same action--whether the government had properly determined that there was defective pricing by the contractor. 11 On review, because this court may only review final decisions, see United States v. W.H. Moseley Co., 730 F.2d 1472, 1474 (Fed.Cir.1984), the court dismissed Fairchild's appeal, without prejudice, on the grounds that the ASBCA decision was not a final decision on all the issues before the Board in that action. 810 F.2d at 1125. Further, in response to an argument that this situation comes under the Cohen exception to the usual rule on finality, see Cohen v. Beneficial Indus. Loan Corp., 337 U.S. 541, 546, 69 S.Ct. 1221, 1225, 93 L.Ed. 1528 (1949), the court noted that 12 Fairchild's claim that the government improperly withheld the amount of the defective pricing is not completely separate from the merits of the claim of defective pricing [--also before the Board in the same proceeding]. Both issues arose out of interrelated conduct and the same or closely connected facts.... Furthermore, Fairchild has failed to indicate any reason why the board's decision on withholding cannot be reviewed at the time a final decision on the defective pricing issue is entered. Whether or not Fairchild prevails on the defective pricing claim, it may then appeal the [then final] ASBCA decision regarding withholding and seek as a remedy interest from the date of withholding for loss of use of its money. 13 810 F.2d at 1126 (citations omitted). The court also concluded that a considerable savings in judicial resources can be achieved by waiting to consider both of Fairchild's 'claims' [involved in a single action before the ASBCA] in one appeal [of that action]. 810 F.2d at 1126. 14 Unlike the setting in Fairchild, Allied's claim here regarding withholding has been pursued in a completely separate action from Allied's claim regarding interpretation and application of the EPA clause. Under the facts of this case, Allied's separate pursuit of the two claims was not improper. Although both claims arose substantively out of the same contract, the two claims arose procedurally from two separate and distinct decisions issued by two different COs at two different times. The claims were brought and pursued in separate and distinct appeals to the ASBCA and would therefore normally be expected to result in separate and distinct final decisions by the Board, each of which may be separately appealed to this court. See 28 U.S.C. § 1295(a)(10); 41 U.S.C. § 607(g)(1) (1988). 15 At the conclusion of the ASBCA decision in Fairchild, the Board said [w]e therefore leave the parties where we find them, that is, with the issue of whether defective pricing existed on this contract. [Fairchild]'s motion for summary judgment is denied. By contrast, at the conclusion of the ASBCA decision in Allied's appeal, the Board granted the government's motion for summary judgment, and subsequently dismissed the appeal. As stated in Catlin v. United States, 324 U.S. 229, 233, 65 S.Ct. 631, 633, 89 L.Ed. 911 (1945), a final decision is one which ends the litigation on the merits and leaves nothing for the court to do but execute the judgment. See also Fairchild III, 810 F.2d at 1125; Teledyne Continental Motors v. United States, 906 F.2d 1579, 1581 (Fed.Cir.1990); Teller Environmental Systems v. United States, 802 F.2d 1385, 1388 (Fed.Cir.1986). Here, the Board's decision had the effect of disposing of the case and ending the litigation on the merits. 16 The government's assertion that jurisdiction over the issue in the present appeal would not lie in this court unless Allied waited for the ASBCA decision regarding interpretation and application of the EPA clause is incorrect. Allied's appeal now before us arises from a decision of the ASBCA which led directly to the dismissal of all remaining issues in that proceeding. There is no reason to consider the ASBCA decision as anything less than final. The Board's disposition of this first action was a final decision for purposes of our jurisdiction; Allied's appeal of that decision is properly before us. See 28 U.S.C. § 1295(a)(10); 41 U.S.C. § 607(g)(1). 17
18 Turning now to the merits of the issue decided by the ASBCA, the DCA was enacted on October 25, 1982, to facilitate substantially improved collection procedures in the federal government. S.Rep. No. 378, 97th Cong., 2d Sess., reprinted in 1982 U.S.Code Cong. & Admin.News 3377, 3377. 1 DAR Appendix E, Part 6 similarly regulates the ascertainment and collection by the Government of certain contractual debts. 2 19 As noted above, in Fairchild I (clarified by Fairchild II ) the ASBCA held that the DCA and DAR provisions did not apply to the Government's withholding of progress payments after its unilateral price reduction. The ASBCA reasoned that no debt had been established, as the amount to be withheld was to come from funds yet to be paid appellant under ... the agreement which involved the alleged defective pricing. 85-2 BCA (CCH) p 18,047 at 90,600. The ASBCA noted that 20 a debt does not arise until there is a sum of money or other obligation owed by the purported debtor to his creditor.... Since funds in an amount attributable to the alleged defective pricing data had not been paid to appellant, there was no debt or obligation owed by appellant to be administratively offset [as provided for by the DCA]. 21 Likewise, the provisions of DAR Appendix E, Part 6, have no application to this situation.... The examples of such indebtedness [covered by the DAR provisions] provided at DAR App. E-601 all cover situations where the debtor owes the Government money. Such is not the case here.... 22 .... 23 Had the Government [already paid the full amount], it would be in a position where it would have to seek recovery of overpayments by requesting return of the funds or administrative offset against money payable to appellant. Under those circumstances, the [DCA and DAR provisions] would apply. 24 85-2 BCA (CCH) p 18,047 at 90,600. 25 The Claims Court has decided the same issue in a similar context in the same way. In Avco Corp. v. United States, 10 Cl.Ct. 665, 667 (1986), the Claims Court concluded that [t]he kind of debts targeted by the [DCA] are not intra-contractual disputes like [the one at bar].... The court determined that the DCA does not apply when payment otherwise due on a contract is withheld by the government because of allegedly inadequate performance of the same contract. Adequate performance [of the contract] was at least an implied condition precedent to defendant's obligation to pay, although the extent of defendant's right to withhold ... remains to be seen. So there was no debt to trigger the [DCA] and no administrative offset as contemplated by that Act. Avco, 10 Cl.Ct. at 667. The court cited with approval the holding in Fairchild I, in which the withheld intra-contractual payment was under an express price reduction clause. 26 We find the reasoning of the Claims Court and the ASBCA persuasive. Debt as used in the DCA and DAR provisions contemplates an existing liability by the contractor, rather than a denial of further liability by the Government within an on-going contract. Analogous to the situation in Avco, one can consider Allied's continued entitlement to the progress payments an implied condition precedent to the Government's obligation to continue making those payments. There was no debt to trigger the DCA or DAR provisions and no administrative offset as contemplated by those provisions. 27 To otherwise construe the provisions would yield strange results. For example, DCA provisions 31 U.S.C. §§ 3711(a)(1) and 3716(a) require a head of an agency to try to collect a claim before administrative offset is allowed. Assume a situation similar to the instant case, but one in which the progress payments are found to have been at the appropriate level to date, even though the total contract price has been reduced. The Government now seeks to suspend or reduce future progress payments to account for the reduction in total price. There would not really be any claim or debt for the Government to try to collect. As to the later-withheld progress payments, the Government simply would not pay the contractor as much as originally calculated. This cannot reasonably be regarded as a debt covered by the DCA. To do so would force the Government to create a debt owed by the contractor simply because the contract price is reduced. This cannot be the result intended by the DCA. 28 This result--in essence the maintenance of an artificially created debt--is basically what Allied asks from this court. We do not believe that that is what the statutes require. The DCA and DAR provisions do not mandate that during ongoing transactions concerning a single contract, progress overpayments become unavailable for credit on behalf of the Government. We agree with the analyses of the ASBCA and the Claims Court in Fairchild and Avco. The DCA and DAR provisions are clearly meant to facilitate and guide collection of existing debts, not to artificially and unnecessarily create or maintain them. As the ASBCA pointed out, the Government's action here is not the collection of a debt as contemplated by the provisions. 3