The contractor submitted a claim, alleging the government had underfunded its pension plan. The government argued that the claim had accrued in 2013 and was now barred by the CDA’s statute of limitations. The contractor argued the claim had not accrued in 2013 because (1) there were pre-claim procedures that hadn’t been completed 2013, and (2) had the company demanded payment in 2013, it would not have been a claim but rather a routine payment request that didn’t trigger the statute of limitations. The court, however, sided with the government finding these alleged exceptions to the statute of limitations—pre-claim procedure, routine request—did not apply to the cost accounting standard underlying the claim. The claim was time barred.
Textron Aviation Defense LLC v. United States, COFC No. 201-903C
Background
Hawker Beechcraft Defense Company (Beechcraft) had several contracts with the government. The government covered portions of Beechcraft’s pension plans as reimbursable contract costs. Following a 2012 bankruptcy and reorganization, Beechcraft and its federal contracts were acquired by Textron, Inc. A Textron, Inc. affiliate, Textron Aviation Defense (Textron AD) then acquired the rights and obligations to Beechcraft’s pension plans.
In 2018, Textron AD submitted a payment demand under Cost Accounting Standard (CAS) 413 foo the Defense Contract Management Agency. CAS 413 sets forth the rules for accounting pension costs of a closed business segment. Under CAS 413, a contractor must determine whether its pension plan was overfunded or underfunded at the time the business segment closed. If it was overfunded, the contractor owes the government money; if underfunded, the government owes the contractor money.
In its 2018 demand, Textron AD alleged that Beechcraft’s plan had been underfunded and that the government owed the company about $19 million. The government declined to pay. Textron AD then submitted a claim to the cognizant contracting officer in 2020. The claim was denied, and Textron AD filed suit in the Court of Federal Claims.
The government moved to dismiss the suit, arguing the claim was barred by the Contract Disputes Act’s six-year statute of limitations. The government claimed the claim had accrued in 2013 when Beechcraft’s bankruptcy had ended and the disposition of the pension plans had been set. Textron AD, however, had not submitted a claim for pension adjustment until more than seven years later in 2020.
Court’s Analysis
Mandatory Pre-Claim Procedures
The CDA’s sx-year statute of limitation does not begin to run until mandatory pre-claim procedures have been completed. Textron AD contended the CAS 413 had several pre-claim procedures, including the 413 Submission and negotiations over the amount owed. Because Textron AD didn’t file its 413 Submission until 2018, the company argued, it didn’t accrue until some time after 2018 and thus was timely.
The court, however, found that CAS 413 contained no such pre-claim procedures. While Textron AD referred to the 413 Submission as if it were a defined term of art, nothing in the regulation identified a specific document that must be submitted before a contractor can file a claim. Likewise, while negotiations over the amount owed may make sense for both parties, nothing in CAS 413 required the parties to negotiate before filing a claim.
Routine Request
A routine request for contract payment is not a claim. A routine request does not become a claim until it is disputed by the government. Seizing on this, Textron AD argued that its claim didn’t accrue in 2013, because any payment demand submitted in 2013 would have been a routine request for payment. Rather, Textron AD reasoned, its claim didn’t accrue until 2020 when the government failed to act on CAS 413 submission.
But the court rejected this argument, finding that the CAS 413 demand is not a routine request for payment. To the contrary, a 413 submission is non-routine—it has no connection to expected contract payments and has nothing to do with contract performance. A 413 submission is not at all similar to an invoice. Thus, the 413 request was a claim that accrued in 2013.
Textron is represented by Thomas A. Lemmer, Phillip R. Seckman, and K. Tyler Thomas of Dentons US LLP. The government is represented by Daniel B. Volk, Brian M. Boynton, Patricia McCarthy, and Elizabeth M. Hosford of the Department of Justice as well as Peter M. Casey and Debra A. Berg of the Defense Contract Management Agency.
