The contractor asserted claims for breach of contract and illegal exaction against the government. The COFC dismissed for lack of jurisdiction. The COFC reasoned the contract claims were intertwined with a challenge to a regulation, which negated the COFC’s jurisdiction. The COFC also found it lacked jurisdiction under the CDA to consider the illegal exaction claim. The Federal Circuit, however, held the COFC was wrong on both counts.
The Boeing Company v. United States, COFC No. 2023-1018
- The Claim – Boeing had several cost reimbursement contracts governed by the Cost Accounting Standards. Boeing changed its accounting practices, which increased the government’s costs on some contracts but decreased them on others. Overall, Boeing estimated that the changes would decrease the government’s costs by $1.5 million. But the government determined that Boeing’s changes would increase its costs by over $1 million. The government issued a final decision demanding Boeing pay a $1 million price adjustment.
- COFC Proceedings – Boeing filed suit with the COFC, alleging that the government payment demand was a breach of contract and an illegal exaction. The COFC, however, dismissed Boeing’s suit for lack of jurisdiction. The COFC reasoned that Boeing’s contract claim was in essence a challenge to the validity of FAR 30.606, which sets forth the procedures for price adjustment following a change in accounting practices. The COFC reasoned that challenges to the validity of a regulation must be brought in district court. Additionally, the COFC opined it lacked jurisdiction over the illegal exaction claim because any challenge to the application of the cost accounting standards must be made under the Contract Disputes Act, not as a separate illegal exaction claim. Boeing appealed to the Federal Circuit.
- Contract Claims – The Federal Circuit held that the COFC erred in dismissing the contract claims. The COFC had reasoned that Boeing’s challenge was effectively a challenge to a regulation, not a contract claim. But the Federal Circuit opined Boeing was asserting a contract claim, namely, that the government was not entitled to over $1 million in contract-related costs. This was the type of claim that falls under the COFC’s CDA and Tucker Act jurisdiction. To be sure, Boeing’s contract claim was intertwined with a challenge to the validity of a cost accounting regulation. But the Federal Circuit held that the challenge to the validity of the regulation did not obviate the COFC’s CDA jurisdiction.
- Illegal Exaction – The Federal Circuit also ruled that the COFC erred in dismissing the illegal exaction claim. The COFC reasoned that the CDA provides a contractor’s exclusive mechanism for a contract-related dispute. Boeing had asserted the illegal exaction claim as a non-contractual alternative to its CDA claim. Because the claim was not based on the CDA, the COFC concluded it lacked jurisdiction. But the Federal Circuit held that while the illegal exaction may not have been asserted as a CDA claim, it was properly asserted as an alternative claim under the Tucker Act, which gives the COFC jurisdiction over non-CDA monetary claims. Thus, the COFC could have addressed the illegal exaction under its Tucker Act jurisdiction.
The contractor is represented by Scott M. McCaleb, Jon W. Burd, George Emil Petal, Gary Scott of Wiley Rein, and Jade Totman of The Boeing Corporation. The government is represented by Daniel B. Volk, Brian M. Boynton, Elizabeth Marie Hosford, Borislav Kushner, and Patricia M. McCarthy of the Department of Justice.
–Case summary by Craig LaChance, Editor in Chief
