AGILITY DEFENSE & GOVERNMENT SERVICES, INC. v. USA
Filing
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PUBLISHED OPINION granting 19 Motion to Dismiss. The Clerk is directed to enter judgment. Signed by Judge Thomas C. Wheeler. (em) Copy to parties.
In the United States Court of Federal Claims
No. 11-101C
(Filed: January 20, 2012)
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AGILITY DEFENSE & GOVERNMENT
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SERVICES, INC., f/k/a/ TAOS INDUSTRIES, *
INC.
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Plaintiff,
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v.
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THE UNITED STATES,
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Defendant.
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Subject
Matter
Jurisdiction;
Requirement for Certification of a
CDA Claim; Differences Between
Claim and Request for Equitable
Adjustment; Conversion of REA
to Claim; Dismissal Without
Prejudice.
Gary L. Rigney, Huntsville, Alabama, for Plaintiff.
Jacob A. Schunk, with whom were Tony West, Assistant Attorney General, Jeanne E.
Davidson, Director, and Harold D. Lester, Jr., Assistant Director, Commercial Litigation
Branch, Civil Division, United States Department of Justice, Washington, DC, for
Defendant.
OPINION AND ORDER ON DEFENDANT’S SECOND MOTION
TO DISMISS FOR LACK OF SUBJECT MATTER JURISDICTION
WHEELER, Judge.
On November 10, 2011, Defendant filed its second motion to dismiss in this case
(“Def.’s Mot. II”) for lack of subject matter jurisdiction. The Government’s primary
contention is that Plaintiff, Agility Defense & Government Services, Inc. (hereinafter
“Agility”) submitted to the procuring contracting officer three “requests for equitable
adjustment” but did not file a proper “claim” under the Contract Disputes Act (“CDA”).
See (Def.’s Mot. II at 7); see also 41 U.S.C. § 605 (2006) (current version at 41 U.S.C. §
7103). In light of Agility’s failure to submit a claim to the contracting officer, the
Government contends that the Court lacks jurisdiction over this CDA case. See (Def.’s
Mot. II at 5, 8).
In response, Agility maintains that its October 26, 2010 request for a final decision
was a “claim,” containing all but one of the necessary certification requirements. See
(Pl.’s Resp. II at 2-3, Dec. 12, 2011). Agility contends that at worst, it filed a defective
claim, which can be corrected and does not deprive this Court of jurisdiction. Id. at 2.
Agility also contends that because the contracting officer did not notify it of any defect in
its certification, and did not issue a final decision within 60 days, the Court should deem
Agility’s claim denied, thereby authorizing the current action to go forward. See id.
Background
Agility filed its complaint in this Court on February 17, 2011, seeking
compensation for work performed on behalf of the Defense Logistics Agency (“DLA”)
within the U.S. Department of Defense. See (Compl. ¶¶ 1-3). Agility maintains that it
had a contract to provide storage, reutilization, and disposal services for the U.S. military
in Afghanistan, Kuwait, and Iraq, but that the actual workload “significantly exceeded”
the scope of work originally specified by the Government. Id. ¶¶ 5, 9. Accordingly,
Agility claims that it is entitled to an equitable adjustment of $4,359,071.17 for additional
labor and increased work not anticipated under the contract. Id. ¶ 19.
Before filing suit in this Court, Agility attempted to obtain payment by submitting
a “Request for Equitable Adjustment” to Karen Hammontree, the procuring contracting
officer at DLA, on September 1, 2009. See (Def.’s Mot. II, Ex. A). Ms. Hammontree
responded with a letter dated February 16, 2010. See id. Ex. D. She characterized the
letter as “the final decision of the Contracting Officer”; however, within the letter, she
presented four requests or questions to Agility, seeking further information regarding
Agility’s request for equitable adjustment. Id.
For unexplained reasons, Agility maintains that it did not receive Ms.
Hammontree’s February 16, 2010 letter until August 12, 2010. (Pl.’s Resp. I at 1.) In the
meantime, Agility submitted to DLA a second “Request for Equitable Adjustment” in the
amount of $4,359,071.79 on August 3, 2010. (Def.’s Mot. II, Ex. C.) After Agility
received Ms. Hammontree’s February 16, 2010 letter, it sent a follow-up letter on
October 26, 2010, requesting the contracting officer’s final decision on the letter it had
submitted on August 3, 2010. Id. Ex. E. In both the August 3 and October 26, 2010
letters, the Vice President of Agility certified that “[p]ursuant to DFAR 252.243-7002
Requests for Equitable Adjustment . . . this request is made in good faith and that the
support data are accurate and complete to the best of my knowledge and belief.” Id. Exs.
C, E. DLA apparently did not respond further to Agility’s letters, and this action
followed.
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On June 17, 2011, Defendant filed a motion to dismiss (“Def.’s Mot. I”),
contending that Plaintiff had failed to submit a certified claim in accordance with 41
U.S.C. § 7103. In an order dated June 24, 2011, the Court denied the Government’s
motion to dismiss without prejudice, noting that the Government could re-file if, upon a
fuller record, the Government believed that a further basis existed to challenge the
Court’s jurisdiction. Order at 3. On November 10, 2011, the Government filed its
second motion to dismiss, re-stating its position that the Court lacks subject matter
jurisdiction because Agility has failed to submit a “claim” meeting the requirements of 41
U.S.C. § 7103(a)-(b). Agility filed a response to the Government’s motion on December
12, 2011, and the Government filed a reply on December 21, 2011. The Court deems
oral argument unnecessary, and the motion is ready for decision.
Discussion
This Court has “jurisdiction to render judgment upon any claim by or against, or
dispute with, a contractor arising under” the CDA. 28 U.S.C. § 1491(a)(2); see also 41
U.S.C. §§ 601-13 (2006) (current version at 41 U.S.C. §§ 7101-09). Before resorting to
the Court, however, the CDA requires a contractor to exhaust its administrative remedies
by submitting a “claim” to, and receiving a final decision from, the contracting officer.
41 U.S.C. § 7103(a). In addition, where a contractor seeks a remedy of more than
$100,000, it must certify that: “(A) the claim is made in good faith; (B) the supporting
data are accurate and complete to the best of the contractor’s knowledge and belief; (C)
the amount requested accurately reflects the contract adjustment for which the contractor
believes the Federal Government is liable; and (D) the certifier is authorized to certify the
claim on behalf of the contractor.” Id. § 7103(b).
As with a “claim” under the CDA, a contractor submitting a request for equitable
adjustment (“REA”) to a Department of Defense entity also must meet a certification
requirement, albeit a less demanding one. Pursuant to 10 U.S.C. § 2410, a contractor
requesting an equitable adjustment that exceeds the simplified acquisition threshold1 must
certify that: “(1) the request is made in good faith; and (2) the supporting data are
accurate and complete to the best of [the certifier’s] knowledge and belief.” §
2410(a)(1)-(2). In other words, a contractor submitting an REA must make only two of
the four certifications required for the submission of a claim under the CDA. “If a
contractor has certified a[n] [REA] in accordance with 10 U.S.C. § 2410(a), and desires
to convert the request to a claim under the [CDA],” the contractor must certify the claim
in accordance with FAR 33.207, which requires the contractor to meet the four
certification requirements for submitting a claim over $100,000 under the CDA. 48 CFR
243.204-71(c).
1
For purposes of ease and efficiency, purchases below a certain threshold are permitted to use simplified
acquisition procedures. The current simplified acquisition threshold is $100,000. 41 U.S.C. § 134
(2006).
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Here, Agility concedes that it “inadvertently failed to include the certification
required by 41 U.S.C. § 7103(b)(1)” in its September 1, 2009 REA. (Pl.’s Resp. II at 1.)
In light of that failure, Agility takes the position that its initial claim was invalid and
therefore, so was the “final decision” allegedly rendered by Ms. Hammontree on
February 16, 2010. See id. at 2. Nevertheless, Agility maintains that this Court has
jurisdiction because its October 26, 2010 request contained a certification meeting nearly
all the requirements of 41 U.S.C. § 7103(b)(3). See id. (emphasis added). Agility
maintains that its claim at most was defective and therefore, pursuant to 41 U.S.C. §
7103(b)(3), may be corrected prior to the entry of a final judgment. Id.
This Court has long held that a proper certification under the CDA is a
jurisdictional prerequisite. J & E Salvage Co. v. United States, 37 Fed. Cl. 256, 263
(1997) (citing United States v. Grumman Aerospace Corp., 927 F.2d 575, 579 (Fed. Cir.
1991)). In 1992, however, Congress amended the CDA to provide that “a defect in the
certification does not deprive a court . . . of jurisdiction over the claim.” 41 U.S.C. §
605(c)(6) (2006) (current version at 41 U.S.C. § 7103(b)(3)). Instead, § 7103(b)(3) gives
a contractor an opportunity to cure its defective certification while the Court retains
jurisdiction. Id. By allowing contractors to cure defective certifications, Congress
sought “‘to avoid repetition of the entire administrative process’” where the defect
resulted from an “innocent mistake.” Hamza v. United States, 31 Fed. Cl. 315, 323
(1994) (quoting H.R. Rep. No. 102-1006, reprinted in 1992 U.S.C.C.A.N., 3921, 3937).
Agility attempts to characterize its October 26, 2010 request as a defective CDA
claim that it can correct pursuant to § 7103(b)(3). The Court, however, views Agility’s
submission not as a defective CDA claim, but as a properly-certified REA. In both its
August 3 and October 26, 2010 letters, Agility refers to its submission as a “Request for
Equitable Adjustment,” (Def.’s Mot. II, Exs. C, E), and Agility’s October 26, 2010 letter
contains the proper certification for an REA, id. Ex. E. In its October 26 letter, Agility
even states that it is certifying its REA “[p]ursuant to DFAR 252.243-7002”—the
DFARS provision that sets forth the certification requirements for an REA. Lastly, it is
significant that Agility did not merely omit two of the four certification requirements for
a CDA claim; it specifically omitted the two requirements that differentiate the
certification of an REA from the certification of a CDA claim.
The DFARS provision notes that the certification required for an REA “is different
from” the certification required for a CDA claim. DFARS 243.204-71(c). Moreover, the
DFARS prescribes a specific process that a contractor must follow if it wishes to convert
a properly certified REA into a claim under the CDA: “the contractor shall certify the
claim in accordance with FAR Subpart 33.2.” Id. In other words, the contractor’s
submission must include the four statements required for a properly-certified CDA claim.
In light of the DFARS’ differentiation between an REA and a CDA claim, as well as the
DFARS’ prescription for converting an REA into a CDA claim, the Court cannot say that
Agility’s October 26, 2010 request is merely a defective claim that Agility can correct.
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Instead, it is an REA that must be converted into a CDA claim by making the proper
certifications.
For the above reasons, the Court finds that it does not have jurisdiction to
adjudicate Agility’s complaint. The Court makes this ruling with some reluctance, given
the contracting officer’s contribution to a confused set of circumstances. It is not clear to
the Court why Agility did not receive Ms. Hammontree’s February 16, 2010 letter for
nearly six months. Moreover, Ms. Hammontree confused the matter further by
characterizing her February 16 letter as “the final decision of the Contracting Officer,”
while also seeking additional information from Agility in the same letter. (Def.’s Mot. II
Ex. D.) Because of the delay already occasioned by these missteps, the Court expects the
DLA to act promptly to adjudicate any further submissions from Agility.
Conclusion
Based upon the foregoing, Defendant’s motion to dismiss is GRANTED.
Agility’s complaint is DISMISSED without prejudice and with the suggestion that
Agility submit a properly-certified claim to the contracting officer for final decision. In
the event Agility re-files its action in this Court, Agility shall indicate that the case is
related to this case, No. 11-101C, and that the new case should be assigned to the
undersigned Judge. Pursuant to Rule 40.2 of the Court, Agility shall file a separate
Notice of Directly Related Case at the time of filing the complaint in the new case.
IT IS SO ORDERED.
s/Thomas C. Wheeler
THOMAS C. WHEELER
Judge
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