Court Opinion

ID: 2756218
Source: CourtListenerOpinion
Date Created: 2014-12-01 16:00:12.551924+00
Date Added: 2024-06-11T11:26:50.961705
License: Public Domain

ARMED SERVICES BOARD OF CONTRACT APPEALS

Appeal of --                                    )
                                                )
BAE Systems Land & Armaments Inc.               )      ASBCA No. 59374
                                                )
Under Contract No. W56HZV-07-C-0660             )

APPEARANCES FOR THE APPELLANT:                      Barbara A. Duncombe, Esq.
                                                    Suzanne Sumner, Esq.
                                                     Taft Stettinius & Hollister LLP
                                                     Dayton, OH

                                                    John G. Horan, Esq.
                                                    Justin M. Ganderson, Esq.
                                                     McKenna Long & Aldridge LLP
                                                     Washington, DC

APPEARANCES FOR THE GOVERNMENT:                     Raymond M. Saunders, Esq.
                                                     Army Chief Trial Attorney
                                                    CPT Tyler L. Davidson, JA
                                                    Robert B. Neill, Esq.
                                                     Trial Attorneys

             OPINION BY ADMINISTRATIVE JUDGE NEWSOM
         ON APPELLANT'S MOTION TO COMPEL THE GOVERNMENT
                        TO FILE A COMPLAINT

       Before the Board is appellant's motion to compel the government to file the
complaint in this appeal. The government opposes. For the reasons explained below,
the Board grants appellant's motion. The government is directed to file the complaint
no later than 30 days following the date of this decision.

           STATEMENT OF FACTS FOR PURPOSES OF THE MOTION

        This dispute arises from the government's award of Contract No. W56HZV-07-C-0660
(contract) to BAE Systems Land & Armaments Inc. (BAE Systems or appellant). The contract
was a firm-fixed-price contract to produce parts for a military vehicle. (R4, tab 1) BAE
Systems subcontracted with Ibis Tek, LLC, for a portion of the work (app. supp. R4, tab 47).
The contract required submission of subcontractor cost or pricing data and contained clauses
for price reductions if the data were defective (R4, tab 1 at 1, 17).
            The Defense Contract Audit Agency (DCAA) audited appellant's cost or pricing
    data and concluded that the subcontractor's cost or pricing data were defective, i.e.,
    were not current, accurate, or complete as required by the Truth in Negotiations Act,
    10 U.S.C. § 2306a. DCAA recommended a price reduction (R4, tab 3 at 1-2). On
    14 May 2013, the contracting officer issued a "Defective Pricing Demand Letter"
    seeking debt recoupment for the alleged defective pricing identified in the DCAA audit
    reports. The letter did not state that it was a contracting officer's final decision, nor did
    it include contractor appeal rights. (R4, tab 22) On 30 July 2013, BAE Systems
    submitted a certified claim "challeng[ing] the Government's price adjustment and
    demand ... for alleged defective pricing" (R4, tab 29 at 1). On 24 March 2014, the
    contracting officer issued a final decision denying the claim (R4, tab 44 at 1, 4 ).

            BAE Systems filed this appeal from that final decision on or about 20 June 2014
    and now requests that the Board compel the government to file the complaint. Arguing
    that its claim is a defense to the government's allegations of defective pricing, appellant
    asserts that the "proceedings will benefit" from greater efficiency if the government
    files the initial pleading and presents the factual and legal underpinnings for its
    allegations of defective pricing. (App. mot. at 5-6) The government acknowledges that
    Board proceedings may be facilitated if the government filed a complaint with regard to
    its defective pricing contentions. It asserts, however, that this appeal also includes a
    contractor claim, and advises that "appellant is in a far better position to provide the
    underlying basis of its own claim" (gov't opp'n at 3).

                                            DECISION

            Under the unique procedural requirements of the Contract Disputes Act (CDA),
    all claims, whether contractor or government claims, must be the subject of a
    contracting officer's final decision. 41 U.S.C. § 7103. The contractor, however, is the
    only party who may initiate proceedings at the Board, 41 U.S.C. § 7104, and Board
    Rule 6(a) requires the appellant to file the complaint in an appeal. If the contractor
    appeals from a final decision on a government claim, the contractor typically presents in
    the complaint enough information about the government claim to form a sufficient
    predicate for its response.

            In appropriate cases, the Board may exercise its discretion to direct the
    government to file the complaint, if doing so will facilitate efficient resolution of the
    appeal. Beechcraft Def Co., ASBCA No. 59173, 14-1BCAii35,592; LGT Corp.,
    ASBCA No. 44066, 93-3 BCA ii 26, 184. Such situations can arise if relevant
    information concerning the basis for the claim resides with the government, and not the
    appellant. In Beechcraft, for example, the contractor appealed from a government
    claim alleging that the contractor was noncompliant with the Cost Accounting
    Standards (CAS). Observing that the government bears the burden to prove a CAS
    violation and the government was "fully conversant with its own claim," the Board found

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that the proceedings would benefit from the government setting forth, in an initial
pleading, the facts and rationale for its determination of CAS noncompliance. 14-1 BCA
if 35,592 at 174,395; see also, e.g., RO. VlB. SrL, ASBCA No. 56198, 09-1 BCA
if 34,068 (ordering government to file initial pleading in appeal from default termination);
Hughes Aircraft Co., ASBCA No. 46321, 94-2 BCA if 26,801 (ordering government to
file complaint in appeal involving allegations of defective pricing). We do not always
direct the government to file a complaint in appeals from government claims. Where, for
example, the contractor uniquely possessed relevant information about the claim and
proceedings would not have been aided by the government filing the initial pleading, we
declined to order the government to file the complaint. See General Dynamics Corp.,
ASBCA No. 49339, 96-1 BCA if 28,244.

       This motion presents a twist on Beechcraft, in that the contractor is appealing
from the denial of a contractor claim, not a government claim, and yet still seeks an
order compelling the government to file the complaint. Appellant argues that its claim
"relates to the Government's defective pricing claim" for which the government bears
the burden of proof, the government is in the best position to set forth the facts and legal
arguments to support its defective pricing allegations, and the "proceedings will benefit"
from greater efficiency (app. mot. at 4-5).

        We agree. Appellant's claim appears to be a defense against the government's
allegations of defective pricing, not a separate claim for contract adjustment (R4, tab 29
at 11, Conclusion). Indeed, the Board and the parties are in this unusual posture
because the government did not issue a final decision finding defective pricing except in
response to the contractor's claim. Moreover, the contracting officer's final decision
does not explain in any depth why it rejected the contractor's arguments, except with
occasional summary remarks (R4, tab 44 ). In these particular circumstances,
proceedings would be more efficient if the Board could start with a government
articulation of the basis for its determination of defective pricing, rather than appellant's
speculation about the basis for the government's assertions.

      Both the government defective pricing allegations and the contractor's claim
appear to spring from the same set of operative facts. This should alleviate the
government's concern about having to articulate the underlying basis for the
contractor's claim (app. mot. at 3). In any event, the government should only assert the
underlying basis for its defective pricing allegations and is not required to plead the
contractor's defenses. The appellant should do that in its answer.

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                                     CONCLUSION

       The Board grants appellant's motion to compel the government to file the
complaint in this appeal. The government is directed to file the complaint no later than
30 days following the date of this order. The government should assert the underlying
basis for its defective pricing allegations. Appellant's answer shall be due 30 days after
receipt of the government's complaint.

       Dated: 18 November 2014

                                                 Administrative Judge
                                                 Armed Services Board
                                                 of Contract Appeals

I concur

~~#
Administrative Judge
                                                 RICHARD SHACKLEFORD
                                                 Administrative Judge
Acting Chairman                                  Vice Chairman
Armed Services Board                             Armed Services Board
of Contract Appeals                              of Contract Appeals

      I certify that the foregoing is a true copy of the Opinion and Decision of the
Armed Services Board of Contract Appeals in ASBCA No. 59374, Appeal of BAE
Systems Land & Armaments Inc., rendered in conformance with the Board's Charter.

      Dated:

                                                 JEFFREYD. GARDIN
                                                 Recorder, Armed Services
                                                 Board of Contract Appeals

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