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A Waiting Game: No reaction from the Court of Federal Claims to Raytheon Company, Space & Airborne Systems

Posted in Claims and Disputes, Contracting Rules and Regulations

A recent decision of the Armed Services Board of Contract Appeals (“ASBCA”) seems to nail down the issue of exactly when a claim accrues to the government under the Contracts Disputes Act (“CDA”) arising from increased costs due to changes in a contractor’s accounting practices.  In Raytheon Co. Space & Airborne Systems, ASBCA 57801 (“Raytheon”), the ASBCA announced its test for determining whether the government knew or should have known that it had a valid cause of action.  Such claims accrue (and the six-year statute of limitations clock starts ticking) when (a) the contractor reports an accounting change; (b) informs the government of any resulting adverse dollar cost impact; and (c) the change takes effect.  According to the ASBCA, when all three elements occur, the statute of limitations will begin to run.

While ASBCA’s identification of these specific elements might be the biggest news out of Raytheon, the question of what the Court of Federal Claims (“CFC”) will do with the ASBCA’s findings remains unclear.  Though suit in the CFC is a more expensive option, contractors nevertheless can seek de novo review of final agency determinations there under the CDA.  Importantly, CFC is not bound by ASBCA decisions, and so it is at least possible that the CFC could come up with a different standard for when a government claim accrues that is based on cost increases resulting from changed contractor accounting practices.  In other words, the CFC could reach a different conclusion than the ASBCA did.  In that case, the Court of Appeals for the Federal Circuit (“CAFC”) likely will be called upon to resolve such discrepancies.

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