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Claim Dismissed for Failure to Disclose Assignment

The Court of Federal Claims dismissed a breach claim for lack of jurisdiction because, by failing to reveal the contractor was sponsoring the claim on behalf of a second-level assignee, the claim did not provide the contracting officer with adequate notice of the basis for the claim, as required by the Contract Disputes Act. The contractor asserted the government breached a delivery order to lease software and perform support services by failing to seek funding and exercise the first one-year option. The contractor submitted a claim to the CO that was "drafted carefully" in terms of what the government was obliged to pay, rather than to whom damages were owed. The claim did not reveal the contractor had assigned its right to payments under the DO, the assignee in turn had reassigned the payments, and the contractor was sponsoring the claim on behalf of the second-level assignee.

Critical Operative Facts

The court found the contractor's failure to reveal it had assigned its claim and was pursuing the matter as a sponsor "prevented the [CO] from giving meaningful consideration to a host of issues raised by the assignments." The CO was unable to assess the applicability of the Anti-Assignment Act and the government's exposure to multiple claimants. In addition, the government's ability to raise an affirmative defense was prejudiced because, under application of the Severin doctrine, the contractor would be entitled to recover breach damages only if it remained financially obligated to the assignee. The CO also was not put on notice as to the possible relevancy of other issues associated with sponsored or pass-through claims. Consistent with the expectation the wide majority of CDA claims would be resolved by the CO, CDA claims should put the CO on notice of all critical operative facts, which means a claim should reveal it is only being sponsored by the original contractor. In not disclosing key operative facts that went to the essential nature of the claim, the contractor's claim did not meet CDA requirements. (Northrop Grumman Computing Systems, Inc. v. U.S., FedCl, 55 CCF 79,606)




(The news featured above is a selection from the news covered in the Government Contracts Report Letter, which is published weekly and distributed to subscribers of the Government Contracts Reporter. )


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