Federal Contracts Training Center

A grant of summary judgment on a government counterclaim for liquidated damages was affirmed by the Court of Appeals for the Federal Circuit because the contractor's defense was a contract modification claim that did not meet the Contract Disputes Act's jurisdictional requirements. After the contractor failed to timely perform roof and window replacement work, the government assessed LDs and offset the majority of the LDs against the contract price. The contractor filed suit in the Court of Federal Claims, seeking remission of the LDs and time extensions, and the government counterclaimed for the LDs it had not recovered. The CFC granted the government's motion for summary judgment, finding the contractor "failed to establish a material issue as to whether the [LDs] provision was an unenforceable penalty," and dismissed the claim for time extensions based on the contractor's failure to submit a valid CDA claim to the contracting officer (52 CCF ¶79,012).

Summary Judgment Affirmed

The Federal Circuit rejected the contractor's argument it was not required to file a valid CDA claim prior to raising excusable delay as a defense to the government's LDs claim. The contractor's authority, Placeway Construction Corp. v. U.S. (36 CCF ¶75,914) was distinguishable, and CFC cases directly addressing the issue have all concluded a contractor's claim for contract modification must adhere to the jurisdictional requirements of the CDA, even when used as a defense to a government claim. Thus, a contractor seeking an adjustment of contract terms must meet the CDA's jurisdictional and procedural requirements, regardless of whether the contractor is asserting the claim as an affirmative claim against the government or as a defense to a government action. The fact the contractor styled its claim as a defense to a government counterclaim for liquidated damages did not excuse it from complying with the CDA. "Because the [CFC] correctly held that it did not have jurisdiction over [the contractor's] claim for time extensions, and because [the] extension claim was the only defense asserted against the government's counterclaim for liquidated damages," the grant of summary judgment on the counterclaim was affirmed.

Dissent

Judge Newman, dissenting, disputed that there was no jurisdiction to consider the defense to the counterclaim, "whereby the claim was summarily granted without permitting inquiry as to its merits and defenses." According to the dissent, when a claim is within a tribunal's jurisdiction, it routinely has jurisdiction to consider defenses to the claim, and this rule is not negated by any provision of the CDA. "No rule or precedent holds that a contractor forfeits its right of defense if it does not file its own claim," and the majority was "misguided" in ruling the contractor could not defend against the claim unless it first undertook the formal procedures of contract modification. The dissent concluded that the right to defend against an adverse claim is a matter of right, and the denial of this right "is contrary to the purposes of the CDA, contrary to precedent, and an affront to the principles upon which these courts were founded." (M. Maropakis Carpentry, Inc., CA-FC, 54 CCF ¶79,360)