Gone But Not Forgotten: ASBCA Affirms that Laches Is No Longer an Affirmative Defense to Claims; Appeals of BAE Systems Land & Armaments L.P., ASBCA Nos. 62703, 62704

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Government’s motion to strike contractor’s affirmative defense of laches is granted. The government asserted a defective pricing claim against the contractor. The contractor appealed, alleging, in part, that the government’s claims were barred by the doctrine of laches. Citing U.S. Supreme Court precedent, the board reasoned that when there is a statute of limitations, a party is precluded from asserting laches as an affirmative defense. Here, the CDA provides a six-year statute of limitations for claims. Laches thus is not a defense to a CDA claim.

BAE Systems Land & Armaments L.P. had a basic ordering agreement under which it remanufactured Bradley Fighting Vehicles for the Army. In 2020, the Army issued two final decision asserting claims against BAE for defective pricing for deliveries under the basic ordering agreement.

BAE appealed the claims to the ASBCA, asserting, in part, the claims were barred by the doctrine of laches. The government moved to strike the laches defense, arguing that the existence of a statute of limitations precludes the assertion of laches as a defense. Here, the CDA has a six-year statute of limitations, so laches is not a defense to a claim.

The board sided with the government. The U.S. Supreme Court has recently held that laches is not an available defense when there is a legislatively enacted statute of limitations. See SCA Hygiene Prods. Aktiebolag v. First Quality Baby Prods., 137 S.Ct. 954 (2017). The Supreme Court reasoned that it is inappropriate for a judge to apply an equitable doctrine like laches when a party has complied with a Congressionally-enacted statute of limitations.

The board recently applied this precedent holding that the government cannot assert laches as a defense to a contractor claim. The reasoning in that case applied to a contractor’s assertion of laches as an affirmative defense to a government claim.

BAE contended that the laches defense was viable in this case because the government had failed to maintain records, which prejudiced the company’s appeal. The board, however, was not persuaded, reasoning that the Supreme Court precedent on this issue was unequivocal. This existence of prejudice or extraordinary circumstances does not support the assertion of laches when there is a legislatively-enacted statute of limitations.

BAE argued that its laches defense should not be stricken because it was intertwined with the company’s claim that the government had failed to preserve records. But the board opined that BAE was not foreclosed from seeking relief based on the alleged harm it suffered from the failure to preserve records; rather, it simply could not rely on the doctrine of laches as the basis of that relief.

BAE is represented by David Z. Bodenheimer of Nichols Liu LLP. The government is represented by Scott N. Flesch, Robert B. Neill, Harry M. Parent, and Major Nichole M. Venious of the Army.

ASBCA - BAE Systems Land & Armaments