Appeal of a termination for default and government claims for liquidated damages is denied for lack of jurisdiction, where the contractor failed to filed its appeal within the 90-day statutory deadline, counting from either the termination notice or the later notice of liquidated damages. The board noted that the government’s communications regarding the appellant’s appeal rights were defective, but did not deprive the appellant of the information it needed to file a timely appeal.
Hof Construction Inc. appealed the General Services Administration’s termination of its construction services contract for default and its assessment of liquidated damages.
On December 14, 2017, the GSA contracting officer issued a notice of termination stating that the notice provided the final decision of the government and advising Hof of its right to appeal. Hof sought to have the termination be converted to one for convenience, but the agency maintained the termination for default. The CO later issued a unilateral contract modification assessing liquidated damages of $5307.51 through December 14, 2017, and deobligating funds remaining on the contract.
In May 2018, Hof retained a law firm to advise it on the termination, and in August 2018, submitted a claim to the contracting officer asking GSA to convert the termination to one for convenience, withdraw the modification assessing liquidated damages and deobligating funds from the contract; and correct Hof’s CPARS for the project to remove references to the default termination and the liquidated damages. GSA did not respond and on November 5, 2018, Hof appealed from the deemed denial. On appeal, Hof sought the same recovery as its claim to GSA.
As an initial matter, the board found that both the December 2017 default termination letter and the May 2018 unilateral modification were flawed. For example, the termination letter said that Hof “may” have the right to appeal under the Disputes clause, rather than stating, accurately, that Hof had that right. More significantly, neither the letter nor the modification quantifying the liquidated damages included the statement of appeal rights that must accompany a contracting officer’s decision on a claim.
Nonetheless, the board found the communications were clear. The CO unambiguously asserted the government’s claim of termination for default, cited the Disputes clause, and announced her intent to assess liquidated damages. The May 2018 modification referred Hof back to the termination notice, which in turn referred Hof to the Disputes clause for information on how to appeal.
Despite the lack of ambiguity, Hof did not file its appeal until eleven months after the termination notice and six months after the unilateral modification. By either date, the appellant greatly exceeded the 90-day deadline for appeal to CBCA.
The board noted that meeting—or failing to meet—the deadline determines whether the board has jurisdiction to hear an appeal. However, the board noted that the deadline can be set aside when a CO’s final decision fails to advise the contractor of its appeal rights or when the notice of appeal rights is provided but defective.
The board found the latter case applied, but noted that previous decisions on the matter were in conflict.
The Court of Appeals for the Federal Circuit held that a defect alone is insufficient to render the notice ineffectual, and that the contractor must demonstrate that the defect actually prejudiced its ability to prosecute its timely appeal. The court contrasted this with a case where the contractor appealed from a deemed denial. Since no final decision had been issued, the contractor was not informed of its appeal rights even to a limited extent. Other boards have agreed that a defective notice does not automatically cause harm to a contractor such that the 90-day appeal deadline must be set aside.
In contrast, the Department of Veterans Affairs Board of Contract Appeals held that, where a contracting officer’s termination decision cited the CDA and gave details on how to appeal to the agency board of contract appeals, without identifying the board, the defect was “critical” and rendered the decision substantially deficient and unable to meet the minimum requirements necessary to toll the appeal period.
Hof relied on the VA Board of Contract Appeals to argue that CBCA should conclude it has jurisdiction to hear the appeal.
However, the board reconciled the conflicts among the previous boards’ decisions in favor of the government. The board adopted the categorial rule for defective notices of appeal rights stated in Carter Industries, Inc., DOT BCA 2995, 98-1 BCA ¶ 29,625, which cited the Federal Circuit’s holding in Decker & Co. v. West, 76 F.3d 1573. Those panels agreed that the contractor must show that a defective notice hindered its ability to file a timely appeal. The board overturned other cases, including the case cited by Hof, that held that a notice’s lack of critical or essential information in itself precludes a showing of detrimental reliance.
The board noted that Hof received defective notice of its right to appeal the termination for default in December 2017, but found that Hof could not show that it reasonably relied on that notice to its detriment. Even counting from the May 2018 unilateral modification and its concurrent retaining of counsel, Hof missed the 90-day deadline for filing an appeal. Hof knew by August 2018 that both government claims were pending and did not assert that its lawyers did not know where or how to appeal. Hof chose to submit a claim to challenge GSA’s claims, which is not how to proceed under the CDA. When Hof filed this appeal in November 2018, Hof had known enough to appeal both government claims for more than ninety days, and the appeal periods for both claims had expired.
Hof Construction Inc. is represented by Brian P. Waagner of Husch Blackwell LLP. The government is represented by Robert W. Foltman and Michael Converse, Office of General Counsel, General Services Administration.
