Steve McBrady

The Contract Disputes Act, 41 U.S.C. §§ 7101-7109, sets forth certain prerequisites for the exercise of jurisdiction over claims. Among these prerequisites is a six-year statute of limitations, which is applicable to Government and contractor claims alike. With few exceptions, claims submitted more than six years after “accrual” are not valid and cognizable under the CDA.

The obvious question is, when does the clock start – i.e., when does a claim “accrue”? Although the CDA does not define the term accrual, the ASBCA and Court of Federal Claims rely on the FAR 33.201 definition, which describes accrual as “the date when all events, which fix the alleged liability of either the Government or the contractor and permit the assertion of the claim, were known or should have been known.” As you may have guessed by the phrase “known or should have known,” determining when a claim accrues can raise a number of subjective and factual questions (for example, who must know? And when “should” that person have known?). Over the past several years, there have been a number of SOL decisions attempting to clarify this standard in the context of contractor and Government claims (see previous discussions here, here, here, here, here, and here).

In Appeal of Fluor Corp., the Board provided the clearest guidance yet as to how it will interpret the SOL in the context of alleged CAS violations. In Fluor, the ASBCA held that the government’s claim relating to an alleged CAS 403 noncompliance “was a continuing claim inherently susceptible to being broken down into a series of independent distinct events,” namely, each payment by the government for a CAS-non-compliant billing. Thus, the Board held that, under the CDA’s statute of limitations, the Government “knew or should have known” that it had a claim against the contractor as of the date the compliance audit was completed – for amounts billed and paid before that date. But – significantly – claims for the same alleged CAS noncompliance in subsequent years did not accrue until the amounts at issue for those years had been billed and paid. In other words, the Board found that the clock re-started each year when the Government allegedly over-pays. What does that mean for contractors? As additional SOL cases continue to clarify the standard, it seems clear that for the time being, Fluor may save some Government claims by tying the CDA’s 6-year SOL to the date that increased costs are billed and paid as a result of a CAS noncompliance, rather than tying the SOL to, e.g., the date that the Government issued an audit report identifying the alleged noncompliance.