Lessons Learned from a recent Armed Services Board of Contract Appeals (ASBCA) case – Platinum Services, Inc. ASBCA Nos. 62199, 62200.
Bottom Line Up Front
The contractor (Platinum Services, Inc. – PSI), the Army, and even the Board all agree the services were rendered, however, since an official certified claim was not filed within six years from the date of the initial invoicing, the Government does not have to pay.
The Background on This Case
From 2009 through 2011, PSI provided moving services for military service members through an Army contract. As a result of a computer issue, on the part of the Army, the change of duty station orders for the service members moved by PSI were lost which created a problem for Defense Finance Accounting Service (DFAS) to pay the invoices from PSI. In 2012, the Army informed PSI of its computer issue. From 2012 to 2019 PSI and the Army, including the contracting officer, exchanged hundreds of emails related to the unpaid invoices from PSI. Initially the Government owed PSI over $1.2M in unpaid invoices. Through the efforts of the Army and PSI this was reduced to 26 unpaid invoices for $124K. In February 2019 PSI had its attorney send a claim to the Army. “On June 13, 2019, the CO responded that PSI’s submission did not constitute a claim because it was not certified and, if it was deemed to be a claim, it was barred by the six-year statute of limitations.”
The Board Decision
The case states: “it is undisputed that: PSI provided moving services to the Army under four contracts which the Army accepted; PSI submitted invoices for those services to the Army in accord with the four contracts; and the Army failed to pay PSI for those services as required by the contracts.” Yet the Board found in favor of the Army that the claims “were submitted more than six years after accrual and thus beyond the statute of limitations.” Resulting in the Government getting the services for free.
PSI believed that the time it spent working with the Army should have suspended the six-year statute of limitations. This involves the legal concept of “equitable tolling.” I am not a lawyer, but in my layman’s view, the concept of equitable tolling would stop the clock on the statute of limitations if one of the parties was in effect stringing the other parties along to run out the statute of limitations. The Board found that “PSI was fully cognizant of its claims of contract breach premised upon lack of payment” and “the type of governmental action necessary to invoke equitable tolling here is plainly lacking” (i.e., the Army had not tried to trick PSI into allowing the clock to run out).
The Board went on to state: “It is admirable PSI was very patient with Army efforts to resolve computer problems that arose during performance of the contracts and made repeated efforts to amicably resolve the unpaid invoices.” Which the Board “recognize[s is] a stated purpose of the [Contract Disputes Act] CDA … to ‘induce resolution of more contract disputes by negotiation prior to litigation.’” However, “mere continuance of settlement negotiations (even where a government representative has expressed a view that settlement is likely) does not constitute a reason to extend the limitations period.”
So even though the Board stated: “It is unfortunate that the parties were not able to resolve these appeals amicably” and “[t]he lack of payment to PSI for contractual services performed and accepted by the Army is troubling” it had to apply the “existing law governing contract claims.”
The Moral of the Story
When dealing with the Government, file a certified claim under FAR 52.233-1, Disputes, sooner rather than later. The Board or Court can always put the case on hold to allow the parties to work to resolve issues – but the claim is in place and any statute of limitations issue is resolved.
The Redstone Government Consulting team can assist your company by helping you understand Federal Acquisition Regulation (FAR) requirements, drafting position papers for submission to the Government, and providing expert witness support.
John is a Director with Redstone Government Consulting, Inc. providing government contract consulting services to our clients primarily related to the DFARS business systems, CAS Disclosure Statements, and DCAA/DCMA compliance preparation, advisory, and defense. Prior to joining Redstone Government Consulting, John served in a number of capacities with DCAA/DCMA for more than 30 years. Upon his retirement, he was based in Texas as an SES-level Corporate Audit Director for DCAA, managing a staff of 300 auditors at one of the largest DOD programs. Professional Experience John began his career in the late 80s working in the Clearwater, FL audit office and over the next three decades he progressed through a number of positions within both DCAA and DCMA with career highlights as DCAA Program Manager at Ft. Belvoir, Chief of Technical Programs Division, Deputy Assistant Director-Policy, Director of the DCMA Cost and Pricing Center, the SES-level Lockheed Martin Corporate Audit Director, and Director of Integrity and Quality Assurance. John’s three decades of experience in performing and leading DCAA auditors and DCMA reviewers provides a wealth of expertise to our clients. John’s role, not only in the performance of audits, but also in the development of audit policy affords him unique insights into the defense of audit findings and the linkage of audit program steps to the underlying regulatory framework. He is an expert in FAR, DFARS, and other agency acquisition regulation, as well as a subject matter expert in the Cost Accounting Standards having reviewed and provided audit feedback on many of the largest and most complex cost accounting practices during his tenure with the DCAA. John’s tenure with DCAA and DCMA came at a critical time during each agency’s history where a number of changes were occurring such as the response to the ICS backlog, development of audit approaches to the DFARS Business Systems and implementation of new audit initiatives as a result of Congressional oversight through the NDAA process. John’s leadership at the DCMA Cost & Pricing center saw oversight of all major DOD pricing actions, leadership of should cost review teams, the Commercial Pricing group and many other areas of strategic value to our clients. His involvement in these and other Agency initiatives is of great value to our clients due to his in depth understanding of DCAA and DCMA’s internal policy directives. Education John holds a Master of Business Administration and a B.A. in Accounting from the University of South Florida. Certifications Certified Information Systems Auditor State of Alabama Certified Public Accountant