Document Type

Symposia Article


The Contract Disputes Act of 1978 (“CDA”) governs disputes “relating to a contract” between federal executive agencies and contractors. It establishes the process for parties to seek administrative remedies for claims under covered contracts. It also limits the right to judicial review of agency decisions to specific “boards of contract appeals” (“BCA”) and the United States Court of Federal Claims (“COFC”). According to the CDA’s sponsors, Congress enacted the law to bring reliability and order to a hodgepodge of conflicting and inconsistent rules for adjudicating contract disputes used by the various executive agencies. The law aimed to simplify the process for resolving agency-contractor disputes in light of the growing complexities and importance of Government procurement programs. In introducing the bill, its primary sponsor underscored the need for an efficient adjudicatory process in which both Government agencies and the contracting industries had confidence:

One cannot dispute the almost universal expressions of industry and the practicing bar that the system needs change. A good remedies system is a major element in good procurement, and a good system depends not only on fairness and justice, but also on whether the people who are subject to the system believe it is fair and just.

In some respects, the CDA fell short of providing a comprehensive framework for Government contract dispute resolution and its stated aim to “provide to the fullest extent practicable, informal, expeditious, and inexpensive resolution of disputes.” In particular, the Act did not prescribe any period of time for a party to submit an administrative claim for monetary or other relief after occurrence of the breach or other injury. After sixteen years and many complaints from both Government agencies and contractors about dealing with stale claims, Congress finally adopted a CDA limitations period as part of the Federal Acquisition Streamlining Act of 1994 (“FASA”). That statute of limitations, now codified at 41 U.S.C. §7103(a) (4), provides:

Each claim by a contractor against the Federal Government relating to a contract and each claim by the Federal Government against a contractor relating to a contract shall be submitted within 6 years after the accrual of the claim.

Decisions by BCAs and Federal Circuit courts under the CDA statute of limitations were relatively rare in the several years following the amendment. Since the early 2010s, however, the number of cases has skyrocketed. This spike in limitations disputes undoubtedly is attributable to the massive increase in military procurement following September 11, including unprecedented spending for goods and services in Afghanistan, Iraq, and other conflict zones. The sheer volume of defense contracts and contractual activity often made it difficult for the parties to recognize and submit claims within six years of the occurrence of the underlying facts. In a relatively short period of time, the tribunals with jurisdiction over defense contract litigation had to decide a large number of limitations disputes with little guidance from direct precedent or legislative or regulatory history. These circumstances have led to case law that is not always consistent in analysis or reconcilable in outcome.

Part I of this Article provides an overview of the architecture and key features of the CDA. Part II examines the salient legislative and regulatory history surrounding the adoption of the CDA statute of limitations. Part III discusses when a CDA claim “accrues” and triggers the six-year time period for submitting a claim. In Part IV, we review some of the major issues that arise under the statute in significant and recurrent types of contractor-agency disputes. Part V concludes with a brief evaluation of whether the CDA statute measures up to the “long tradition of judicial authority to formulate rules ensuring fair and predictable enforcement of statutes of limitations.”

Increasing litigation about limitations periods are challenging CDA tribunals to develop coherent and consistent criteria for parties to determine when the six-year period begins to run on their potential claims. Arguably, the trial judges have made that challenge more difficult by attempting to impose precedent under the Tucker Act’s non- discovery-accrual standard on FAR 31.201’s “discovery” rule language. That challenge has been compounded by a general tendency of the BCAs and COFCs to find that claims do not accrue until the claimant possesses the information on which the claim is based. It is reasonable to conclude that the decisional law has not matured to the ideal, and perhaps, idealistic, state of consisting of “rules ensuring fair and predictable enforcement of statutes of limitations.”

It may also be observed that, despite the FAR Council’s express intent and “knew or should have known” definition of “accrual” in FAR 33.201, the decisional law to date has not developed or applied typical discovery rule analysis in examining the facts of the cases or in judgments whether claims are timely or untimely. With rare exception, the decisions have not dismissed as untimely claims based on when a claimant “should have known” or been aware of the relevant facts where the claimant did not have actual knowledge or possess the information showing that it had a claim. As a result, the precedent offers virtually no guidance on issues traditionally fundamental to a “reasonably should have learned” analysis, which include the following:

  1. (1) What information is sufficient to put a claimant on “notice”?

  2. (2) Does “notice” itself trigger the period (as Gray suggests), or

does the statute initiate when a diligent claimant discovers the facts, or reasonably would have discovered the facts?

(3) When and under what circumstances does a claimant have an affirmative duty to make a reasonable inquiry aimed towards “discovery” of potential claims?

(4) When and under what circumstances may a claimant rely on the other party’s contractual duties to provide information in deter- mining the nature and extent of any “diligence” expected of the claimant?

On a more fundamental level, however, the cases have never ad- dressed whether the FAR’s discovery rule definition of “accrual” appropriately serves as controlling over the definition of the otherwise undefined term “accrual” in section 7103(4)(a) of the CDA. The FAR Council undertook to define the word “accrue” in Section 4(a) pursuant to its general authority to promulgate regulations “as may be necessary to implement this Act,” and not in response to any specific delegation. The failure to examine whether the FAR Council’s adoption of its definition of “accrue” is sufficient under the recent Supreme Court decision relating to proper construction of statutory limitations provisions and, separately, deference to federal agencies in implementing regulations, raises questions of whether any “discovery rule” should apply in CDA statute of limitations cases.

In several recent cases, the Supreme Court has sent a strong signal that the courts should not “graft” a “discovery rule” on the term “accrues” or the like in a federal statute of limitations absent “textual, historical, or equitable reasons” to do so. In Gabelli v. SEC, the SEC in 2008 filed a civil enforcement action against defendants for securities law violations between 1999 and 2002 and sought civil penalties, which are subject to a statute of limitations that require an action to be brought “within five years from the date when the claim first accrued.” The SEC argued that the statute is subject to a “discovery rule,” delaying accrual until it discovered or “could have been discovered with reasonable diligence.” The Court rejected that argument:

“In common parlance a right accrues when it comes into existence . . . .” . . . Thus the “standard rule” is that a claim accrues “when the plaintiff has a complete and present cause of action.” . . . That rule has governed since the 1830’s when the predecessor to §2462 was enacted. . . . And that definition appears in dictionaries from the 19th century up until today. See, e.g., 1 A. Burrill, A Law Dictionary and Glossary 17 (1850) (“an action accrues when the plaintiff has a right to commence it”); Black’s Law Dictionary 23 (9th ed. 2009) (defining “accrue” as “[t]o come into existence as an enforce- able claim or right”).

The Court added: “[T]he cases in which ‘a statute of limitation may be suspended by causes not mentioned in the statute itself . . . are very limited in character, and are to be admitted with great caution; other- wise the court would make the law instead of administering it.’”

At a minimum, the CDA forums will need to address, if and when any litigant raises the question, whether “accrues” in section 7103(a) (4) (A) means (1) when the claimant “knew or should have known” of the cause, or (2) in light of Gabelli and other recent precedent, when the claimant “has a complete and present cause of action” regardless of the claimant’s state of mind. In this regard, while the FAR Council and the CDA forums have relied significantly on Tucker Act precedent, neither appears to have considered that, as in the CDA, the Tucker Act does not define “accrue,” and since its enactment, the federal courts consistently have construed “accrue” in the Tucker Act to mean the date when “when all the events have occurred which fix the alleged liability of the United States and entitle the claimant to institute an action.”

The Supreme Court, moreover, recently clarified that under the Chevron deference analysis, “deference is not due [a regulatory definition of a statutory term] unless a ‘court, employing traditional tools of statutory construction,’ is left with an unresolved ambiguity. . . . Where . . . the canons supply an answer, ‘Chevron leaves the stage.’” Notably, there is no indication in the record that the FAR Council determined that the CDA statute’s use of “accrue” was “ambiguous,” or adopted its “discovery” definition standard to clarify an ambiguity. On the contrary, it noted the “discovery requirement must remain,” notwithstanding little support and much objection among commentators, because “many pricing defect cases have their original events at the beginning of the contract or on contract award, but often cannot be discovered by the Government until years later.” The CDA forum’s “discovery” rule, and the CDA forum’s default use of that definition, may be vulnerable in light of Gabelli, a growing hostility to Chevron deference, and the regulatory record.

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