Federal Circuit Holds that Final Decision on a Government Claim Need Not State a Sum Certain; Creative Management Services, LLC, DBA MC-2 v. United States, Fed. Cir. 2020-1449


Appeal of a COFC decision dismissing a contractor’s appeal of a government claim is affirmed. The government sent correspondence demanding that the contractor relinquish funds in a disputed account and then issued a separate final decision stating that the contractor had no right to the funds in the account. The contractor filed suit objecting to the final decision. The COFC dismissed, finding that the contractor had not filed suit within 12 months of the final decision as required by the CDA. The contractor appealed arguing that its suit was timely because the government’s final decision was defective; it failed to state a sum certain. The Federal Circuit noted that that a final decision need not state sum certain. Rather, it need only refer to a claim that seeks a sum certain. The government’s previous correspondence to the contractor had stated a sum certain. While that previous correspondence had used qualifying words, like “approximately,” it still stated a sum certain because the amount in the account was readily ascertainable.

Creative Management Services, LLC d/b/a MC-2 had a contract with the General Services Administration to provide marketing and logistical support for the agency’s annual GovEnergy Conference. The contract provided that MC-2 would be paid a percentage of the registration fees, sponsorships, and sales for each conference. The contract required MC-2 to keep all the funds collected for each conference in a trust account. MC-2 could pay itself from the account upon receiving written authorization from the contracting officer’s representative.

MC-2 performed the contract for the conference from 2009-2011. But in 2012, GSA cancelled the conference. MC-2 had over $1.2 million in the trust account when the conference was cancelled. GSA asked MC-2 to return the funds. MC-2 refused claiming that GSA was not entitled to the excess revenue. MC-2 submitted a termination-for-convenience proposal to GSA.

Over the next couple of years, GSA sent letters to MC-2 demanding an accounting of the trust account. MC-2 refused and asked GSA to consider its cancellation proposal. In November 2015, GSA sent a letter to MC-2 providing the final decision on the settlement proposal. GSA approved settlement in the amount of $628,000 to cover termination costs. But GSA denied that MC-2 had any right to the funds in the trust account.

In 2018, GSA sent MC-2 a letter demanding payment of $660,000 representing difference between the $1.2 million in the account and MC-2’s termination costs. MC-2 filed suit with the Court of Federal Claims arguing that GSA’s claim for was invalid because GSA had not provided s sum certain, and the November 2015 letter was not a final decision. The government moved to dismiss, arguing the suit was untimely because it had not been filed within twelve months of the contracting officer’s November 2015 final decision as required by the Contract Disputes Act. The COFC granted the government’s motion to dismiss.

MC-2 appealed to the Federal Circuit. On appeal, MC-2 argued that GSA’s November 2015 was not a final decision because it did not state a sum certain. As a result, MC-2 argued, the clock on its COFC suit had not started to run.

The court noted that there is no requirement under the CDA that a final decision state a sum certain. Instead, the CDA merely requires that the final decision address a claim. The claim itself must state a sum certain. The court found that GSA’s 2012 and 2014 communications demanding the funds in the account each sated a claim for a sum certain. Those communications provided notice of the amount of the amount of the government’s claim—namely, all the money in the account. Those letters were, in turn the subject of the contracting officer’s final decision.

The court reasoned that while the 2012 and 2014 letters did not demand an exact monetary, it was irrelevant. A CDA claim need not identify a precise monetary amount. It is sufficient if there if the amount is readily ascertainable. Here, the MC-2 controlled the account and could readily ascertain how much money was in it.

Moreover, the court continued, GSA’s use of qualifying terms like “approximately” to refer to the account balance did not mean that GSA had not stated a sum certain in its 2012 and 2014 communications. Qualifying terms will only undermine the sum certain requirement when the amount is not readily ascertainable.

MC-2 argued the 2012 and 2014 communications could not state a sum certain because they referred to different amounts. But the court found that in those communications, GSA had relied on information provided by MC-2, which was in the best position to know the precise amount of money in the account. GSA’s belief about the amount in the account did not change the actual amount of money in the account.

MC-2 is represented by Chelsea A. Weiss, Stephen R. Snodgrass, and Adam L. Shaw of Bryan Cave Leighton Paisner LLP. The government is represented by Sonia W. Murphy, Deborah Ann Bynum, Jeffrey B. Clark, and Robert Edward Kirschman, Jr. of the Department of Justice.

Fed Circuit - Creative Management