Contractor Submitted Two Claims Arising out of Same Contract. Both Claims Alleged Inaccurate Price Estimates. Why Did the Court Find that the Claims Were Distinct?

The contractor submitted a claim alleging inaccurate price estimates. The government denied the claim. The contractor didn’t appeal. But when it completed the contact, the contractor filed a second claim, again alleging inaccurate price estimates. The government denied the second claim, and the contractor filed suit in the COFC, disputing the decision. The government alleged the suit was untimely, arguing the second claim was identical to the first, so any suit disputing the agency’s decision should’ve been brought within one year of the denial of the first claim. The court, however, found that the two claims were distinct. They each alleged different inaccuracies, asserted different legal theories, and sought different remedies. The suit challenging denial of the second claim was timely.

Monterey Consultants, Inc. v. United States, COFC No. 20-1663

Background

Monterey Consultants had a contract with the Department of Veterans Affairs to process applications for certification of veteran-owned and service-disabled, veteran-owned businesses. Monterey’s compensation was determined by a “case equivalent” (CE) ratio, which was supposed to reflect the amount of time Monterey spent performing required activities. 

But as Monterey performed the contract, it realized it was not receiving the amount of work specified by the contract’s CE ratio. Believing that the price had been understated relative to the level of effort Monterey proposed. Monterey submitted a claim to the VA alleging that the VA had not exercised due diligence in establishing CE estimates. The VA denied the claim.

Monterey did not appeal the denial of its claim. Instead, it completed the contract and then filed a second claim. In this second claim, Monterey alleged that the VA breached the contract by failing to disclose its superior knowledge of the historical CE ratio. Monterey further alleged the contract contained defective specifications concerning the CE ratio, and that the VA had constructively changed the contract resulting in damages.

For the most part, the VA denied the second claim. Monterey filed suit on the claim with the Court of Federal Claims. 

The VA moved to dismiss the claims as untimely. The VA contended that under 41 U.S.C. § 7104(b), a suit disputing a contracting officer’s final decision must be brought within one year. The VA argued that Monterey’s second claim was essentially identical to its first claim. And because the suit on the second claim was brought more than a year after the denial of the first claim, the suit was untimely.

Legal Analysis

Monterey’s Two Claims Were Distinct 

Claims are the same if they arise out of the same operative facts. The court reasoned that while the focus of Monterey’s two claims concerned whether the CE ratio had been properly calculated, their similarities ended there. As an initial matter, the alleged inaccuracy in each claim was different. The first claim alleged that the quantity of case equivalents that Monterey received was inconsistent with the ratio stated in the solicitation. The second claim alleged the VA had innacruately calculated the CE ratio. The first claim focused on Monterey’s experience performing, while the second focused on the VA’s knowledge of historical data.

Additionally, the two claims were based on different legal theories. The first claim essentially alleged negligence in the determination of the estimates. The second claim contended that the VA withheld material information during the solicitation process.

What’s more, each claim sought different remedies. In the first claim, Monterey simply sought to recover costs incurred in performing the contract. In the second, Monetery sought a price adjustment from recalculating the CE ratio.

The court concluded that the second claim was distinct from the first claim. The suit challenging the denial of the second claim was timely.

Constructive Change Claim Was New

The government also asserted that Monterey’s constructive change claim had been previously asserted in the first claim and therefore was also untimely. The court noted, however, that while Monterey had alluded to changes in the first claim, it had specifically not monetized its change claim. Consequently, the changes alleged in the first claim did not contain a sum certain. In the second claim, Monterey alleged specific changes and monetized those allegations with a specific sum. To the extent the first claim alleged a change, it was distinct from the second claim.