July 13, 2010
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Federal Contractors who elect to take their Contract Disputes Act Claims, 41 U.S.C. § 605(a), to the United States Court of Federal Claims, 41 U.S.C. § 609(a)(1), rather than to an Agency Board of Contract Appeals, 41 U.S.C. § 606, enjoy an advantage, the Court’s Compulsory Counterclaim Rule.
Under this Rule (which is set out at RCFC 13(a)), the United States, if it is required to file an Answer to the Federal Contractor’s Complaint, must assert any Claims that it has against the Federal Contractor which arise out of the same Federal Contract under which the Federal Contractor has asserted its Contract Disputes Act Claim.
This is not the case when a Federal Contractor elects to take a Contract Disputes Act Claim to an Agency Board of Contract Appeals, and there the Federal Contractor exposes itself to piecemeal and successive litigation before all matters arising under a particular Federal Contract can be resolved.
When a Federal Contractor comes before the Court with a Contract Disputes Act Claim of its own, it must first obtain the Contracting Officer’s Final Decision on that Contract Disputes Act Claim, 41 U.S.C. § 605(c)(1), (2), else proceed to the Court or to an Agency Board of Contract Appeals on a deemed denial of that Federal Contractor’s Contract Disputes Act Claim, 41 U.S.C. § 605(c)(5).
The same is true of Contracting Officer’s Contract Disputes Act Claims; these must first be asserted in a Contracting Officer’s Final Decision before such Contracting Officer Contract Disputes Act Claims can be pled as a Compulsory Counterclaim, 41 U.S.C. § 605(a). All Contracting Officer Final Decisions must be in writing and “must state the reasons for the decision reached . . .,” 41 U.S.C. § 605(a).
A Contracting Officer’s Final Decision and the necessary predicate for a $9.2 million Compulsory Counterclaim was before the Court in Fireman’s Fund Insurance Co. et al. v. United States, Fed. Cl. No. 08-782C, May 26, 2010. The Fireman’s Fund Court rejected this Contracting Officer’s Final Decision and Compulsory Counterclaim, and just why it did so provides insights into the requirements for a proper Contracting Officer’s Final Decision.
The Compulsory Counterclaim at issue arose when a Corps of Engineers Administrative Contracting Officer waived testing of the components of a lock on Arkansas’ White River in order to “expedite the project.” According to the Corps of Engineers, this unauthorized waiver shortened the period of Contract performance at an estimated savings of $9.2 million in field overhead and equipment costs. But the Corps of Engineers knew about all this as early as 2004, and it was not until August 2009 that the Corps of Engineers set out its Compulsory Counterclaim.
Per the Fireman’s Fund Court, the problem with the Contracting Officer’s Final Decision of July 2009 which was the basis for the Compulsory Counterclaim was that this Contracting Officer’s Final Decision was “not the product of [the Contracting Officer’s] personal and independent judgment.”
The Court noted that the Final Decision was entirely drafted by the Contracting Officer’s house counsel, that the Contracting Officer made no changes to the draft Final Decision before she signed it, and that prior to issuing her Final Decision, the Contracting Officer spent “less than an hour” reviewing the draft Final Decision.
Looking to Federal Acquisition Regulation 1.602-2(b), the Fireman’s Fund Court noted that when Contracting Officers exercise business judgment, they must nonetheless “[e]nsure that contractors receive impartial, fair, and equitable treatment.”
The Court carefully noted that this requirement does not abjure a Contracting Officer from first obtaining or even agreeing with the views of others. Rather, the Fireman’s Fund Court explained that the Contracting Officer must take “ownership of all determinations” included in the Final Decision; that the Contracting Officer “must put his own mind to the problems and render his own decisions;” and that the Contracting Officer must ensure that the Final Decision is not a determination by someone else.
The problems in Fireman’s Fund were that the Contracting Officer made no independent review or analysis, and that the Contracting Officer did not verify, or even ask her advisors to verify, the accuracy of any of the facts recited in the draft Final Decision:
Her testimony portrayed an orphan decision that she signed because her legal team recommended it. . . (Emphasis added). What attention she gave the final decision was not a substantive review and analysis of the claim’s merits or a review of the technical input; rather, she merely understood the nature of the claim asserted in the decision. Such a decision hardly can be elevated to the product of the exercise of the contracting officer’s independent judgment.
