Government’s Claim Barred by Statute of Limitations; Appeal of URS Federal Services, Inc., ASBCA No. 61227

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Contractor’s motion for summary judgment on the government’s claim is granted in part. The government asserted that the contractor had failed to seek government permission for subcontractor costs. But the government knew of this claim in 2006, yet did not assert it until 2017. The claim was barred by the CDA’s six-year statute of limitations. The government also asserted a claim for failure to document subcontractor costs. The record was devoid of evidence on that issue, so the board denied summary judgment with respect to that claim. The board also denied the contractor’s motion for summary judgment on a laches theory, finding a factual dispute as to whether the government’s delay impacted the contractor’s ability to document subcontractor costs.

URS Federal Services, Inc. had a contract to provide a medical event reporting system to the Army. The contract required URS to obtain Army approval for use of subcontractors. During performance of the contract in FY 2006, URS submitted invoices that included subcontractor costs for Northrop Grumman and SAIC.

In 2015, the Defense Contract Audit Agency audited URS’s 2006 invoices. Two years later, the administrative contracting officer asserted a claim against URS for $700,000 in unallowable cost for 2006. The AOC alleged that (1) URS failed to produce adequate documentation that it had received approval to subcontract as required by the contract, and (2) failed to produce adequate documentation that it had incurred these subcontracting costs. URA appealed the claims to ASBCA and then moved for summary judgment, alleging the claims were barred by the Contract Dispute Act’s statute of limitation and by laches.

The board found that the first claim—failure to obtain subcontractor approval—was barred by the statute of limitations. This claim accrued in 2006 when URS submitted invoices that clearly listed substantial subcontracting costs for Northrop Grumman and SAIC. The government paid those invoices and must have known, before making these payments, whether it had approved URS’s subcontractors. Because the government should have known of the subcontractors in 2006, its claim—asserted 11 years later—was untimely.

It was not clear, however, that the government’s second claim—concerning documentation of incurred subcontractor costs—was similarly barred. The issue, the board reasoned, was which documents URS was supposed to keep and for how long. The parties’ filings did not discuss this issue. Given the absence of evidence on this issue, the board was not prepared to grant judgment on this portion of the government’s claim.

URS also moved for summary judgment under the doctrine of laches, arguing that the government’s delay in bringing its claim had adversely impacted URS’s ability to produce documents relevant to its defense. More specifically, URS argued, the company had gone through several corporate transactions since 2006 and had lost some records. But the board found issues of material fact concerning the government’s delay precluded summary judgment on laches.

URS is represented by Terry L. Elling and Gregory R. Hallmark of Holland & Knight LLP. The government is represented by Arthur M. Taylor and Robert L. Duecaster of the Defense Contract Management Agency.

ASBCA – URS Federal Services, Inc.