The agency unilaterally definitized prices for two Undefinitized Contracts Actions. The contractor appealed the definitization to the ASBCA. The board dismissed, finding the definitization decision was not a government claim. Because the contractor had not submitted its own claim, the board lacked jurisdiction. The Federal Circuit affirmed the ASBCA. A government claim makes a demand for relief against a contractor. A definitization is not a demand. Rather, in definitizing price, the government merely performs a duty set forth in the contract. A contractor cannot directly appeal a definitization.
Lockheed Martin Aeronautics Company v. Secretary of the Air Force, Fed. Cir. 2022-1035
Background
Lockheed Martin had two contracts with the Air Force to upgrade F-16 aircraft. The contracts were Undefinitized Contracts Actions (UCAs), meaning Lockheed had begun performance before the parties negotiated a final price. The contracts had “definitization” clauses, which provided that if the parties were unable to agree on a price after a reasonable time, the contracting officer could set a reasonable price.
Lockheed performed under the UCAs for years. But Lockheed and the Air Force could not agree on a contract price. Accordingly, using its authority under the definitization clauses, the Air Force definitized each contract at $1 billion.
Lockheed appealed the definitization decisions to the ASBCA. The board dismissed for lack of jurisdiction. The board reasoned a definitization decision is not a government claim. Because Lockheed had not submitted claims to the Air Force objecting to the definitization decision, the ASBCA lacked jurisdiction over the appeal.
Lockheed appealed to the Federal Circuit.
Analysis
The Federal Circuit affirmed the ASBCA. Definitization of a contract is not a government claim. A government claim must make a demand or an assertion seeking relief against the contractor. A definitization decision is not a demand. Rather, in definitizing price, the government merely performs a duty prescribed by the contract when the parties can’t agree on price.
Lockheed argued definitization is akin to an adjustment of contract terms, which qualifies as a government claim. The court didn’t agree. Definitization establishes prices were none existed; it is not an adjustment of extant contract terms.
Lockheed is represented by Skye Mathieson and Stephen John McBrady of Crowell & Moring. The government is represented by Amanda Tantum, Brian M. Boynton, Patricia M. McCarthy of the Department of Justice as well as by Christopher Judge Hilbor, Jeffrey Paul Hildebrant, and Caryl Potter, III of the Air Force. Amicus curie, National Defense Association, is represented by Jason Nicholas Workmaster and Alejandro Luis Sarria of Miller & Chevalier Chartered.
–Case summary by Craig LaChance, Senior Editor
