Newsletter
Oct 5, 2015
Project In(Site): Legal Developments Impacting Construction & Government Contract Industries
Welcome to the inaugural issue of Project In(Site), Seyfarth’s Construction and Government Contracts practice groups’ publication focusing on decisions or other items of interest for construction and government contract solutions. Each summary included in the newsletter is followed by key practice takeaways.
Contractors Facing Government Claims Need To Be Aware of the Potential Need To Submit A Contractor Claim to Perfect Defenses Against the Government’s Claim
Contractors that face government claims need to be aware of the potential need to submit a contractor claim to perfect defenses against the government’s claim.
A government claim can come in the form of a demand for liquidated damages, a termination for default, a demand for excess re-procurement costs, and/or a demand to recoup indirect costs for a violation of the cost accounting standards. In M. Maropakis Carpentry, Inc. v. United States, 609 F.3d 1323 (Fed. Cir. 2010), the Federal Circuit ruled that a contractor’s defense to a government claim for liquidated damages that alleged government caused delay had to be dismissed for lack of subject matter jurisdiction because the contractor had never submitted the defense as an affirmative claim properly certified under the Contract Disputes Act, 41 U.S.C. Section 7103 et. seq. In Sikorsky v. United States, 102 Fed. Cl. 38 (2011) the Court of Federal Claims held that this rule did not apply to common law defenses such as satisfaction, waiver, laches or the statute of limitations. However, in 2014, in TPL, Inc. v. U.S., 2014 WL 4628311 (Fed. Cl. Sept. 16, 2014) the Court of Federal Claims held that the Maropakis rule applied to defenses of impracticability, mutual mistake, unconscionability, and defective specifications. At the same time, in Total Engineering, Inc. v. U.S., 120 Fed. Cl. 10 (2015) the Court of Federal Claims held that a defense of defective specifications did not need to be separately filed as an affirmative claim. This confusing and evolving area is full of risk for the unwary government contractor. A detailed review of all defenses to a government claim should be made as soon as possible to determine if the contractor needs to file separate affirmative claim to protect existing defenses against a government claim.