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Contractor’s motion to dismiss government’s claims for lack of subject matter jurisdiction and failure to state a claim is denied. The government’s claims arose out the contractor’s failure to provide supporting documents during a DCAA audit. The contractor claimed the CBCA lacked jurisdiction over the claims because the government had not provided “adequate notice” of the amount or basis of the claims. The board reasoned that the notice standard, which is quite low, is the same for government and contractor claims. The government’s claims had satisfied the minimal notice standard. The contractor also alleged the government had failed to state a claim because the government had not given the contractor enough time to respond to document requests during the audit. The board found that the government had given the contractor enough time, and even if it hadn’t, this would not mean that the government’s claim should be dismissed.

The Department of State (DOS) awarded SRA International two task orders, one for enhancement of the of the Worldwide Refugee Admissions Processing System and one for cybersecurity support. The Defense Contract Audit Agency (DCAA) audited SRA’s incurred cost proposals under each contract. DCMA issued an audit report stating that SRA had failed to provide evidence supporting its claimed costs and thus DCAA disclaimed the audit opinion, questioning over $29 million in costs.

DOS issued two final decisions, one for each task order, asserting government claims against SRA for the $29 million in disallowed costs. SRA filed a notice of appeal from both decisions. DOS designated the final decisions at its complaints in the appeal. SRA moved to dismiss the complaint for lack of jurisdiction and for failure to state a claim.

SRA claimed the board lacked subject matter jurisdiction DOS’s final decisions did not provide adequate notice of the basis or amount of DOS’s claims. To be valid, a government claim must contain adequate notice of basis and amount of the claim. SRA alleged that the DOS’s decision only made a generic reference to the amount demanded with no breakdown of the disallowed costs.

The board agreed that a government claim must provide adequate notice. Nevertheless, the board saw no reason to impose a more demanding notice standard on government claims than on contractor claims. The notice requirement for contractor claims is quite low. Contractors do not need to include detailed breakdowns of each cost component. Here, DOS met this low notice standard. Both decisions clearly indicated that DCAA conducted an incurred cost audit, and that SRA did not provide evidence to justify its costs.

Moreover, the board continued, even if the DOS decision were not so clear, it would not defeat the government’s claims. To assess notice, the board looks to the correspondence leading up to the claims as well as the claims themselves to determine whether the contractor understood or should have understood the basis of the claims. In this case, the DCAA audit report was attached to both decisions. That report broke down the total amount of requested costs into categories and subcategories. With the audit report, SRA certainly understood the basis of the claims.

Aside from the jurisdictional issue SRA argued the government had also failed to state a claim. According to SRA, DOS’s primary complaint was that SRA violated the FAR by failing to make documents available during the audit. But, SRA continued, although the FAR provisions at issue require contractors to make their records, they do not specify the length of time in which the contractor must respond to an agency request for documents. SRA further claimed that the four months it was given to respond to the documents request was, as a matter of law, too short.

The board rejected SRA’s argument for several reasons. First, the argument depended in part of emails that SRA attached to its motion. The board cannot consider materials outside the pleadings in ruling on a motion to dismiss.

Second, the board did not agree with SRA’s interpretation of the timing requirements in the applicable FAR provisions. Those provisions plainly gave DOS a contractual right to access SRA’s documents “at all reasonable times.” Thus, four months was not, as a matter of law, too short. Rather, SRA should have had the documents available when the agency requested them.

Third, even if the SRA were right about the amount of time that DOS gave the company to provide the documents, this would not mean that SRA was suddenly entitled to judgment as a matter of law. The crux of DOS’s claims were that it had not seen support for SRA’s incurred costs. If SRA has the evidence supporting those costs, then it could simply present that evidence in the litigation to defeat the government’s claim. The alleged failure of the DOS to give SRA enough time to respond to document request did not mean that SRA got to keep the entire $29 million in disputed costs.

SRA is represented by D. Joe Smith, Umer M. Chaudhry, and Eric K. Herendeen of Jenner Block, LLP. The government is represented by  Dennis J. Gallagher of the State Department.