Government's Defective Pricing Claim Was Untimely

The government's defective pricing claim was time-barred and dismissed the Armed Services Board of Contract Appeals because it accrued more than six years before the contracting officers issued their final decisions. The final decisions asserted the aircraft maintenance contractor and its subcontractor failed to submit accurate, complete, and current cost and pricing data as required by the Truth in Negotiations Act (10 USC 2306a) and the implementing provisions of the Foreign Military Sales contract. The decisions reduced the contract price and called for a refund. On appeal, the prime moved, on behalf of the subcontractor, for summary judgment or a dismissal on grounds the government had actual knowledge of all the events establishing its alleged liability more than eight years before the COs issued their final decisions.

DCAA Reports

The board examined the legal basis of the government's claim and found the alleged liability was fixed more than six years prior to the issuance of the June 2008 final decisions. A 1988 Defense Contract Audit Agency report prepared for the prime alleged two of the three bases for the government's claim, and the third basis was added in a 2000 revised DCAA report. The same three bases for the claim were reiterated in a 2001 report that stated the DCAA had conferred with the CO about the matter, and in May of 2002, the DCAA communicated its assessments to the prime contractor. As a result, the claims were outside of the Contract Disputes Act's six-year statute of limitations (41 USC 605(a)), the final decisions were invalid, and the board lacked jurisdiction over the appeal.

No Strict Construction

In defending the motion, the government contended statutes of limitation potentially barring the government's rights must be strictly construed in its favor. However, the board declined to "accept the government's suggestion to the effect that [it] should interpret the CDA's six-year limitations period more liberally when a government claim is involved than when a contractor's claim is involved." Limitations principles generally apply to the government in the same way they apply to private parties, and the CDA does not distinguish between government claims and contractor claims with respect to the requirement for claims to be asserted within six years of accrual, except in contractor claims involving fraud. (McDonnell Douglas Services, Inc., ASBCA, ś92,759)

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