URS Federal Services, Inc.

ARMED SERVICES BOARD OF CONTRACT APPEALS

Appeal of -- )

)

URS Federal Services, Inc. ) ASBCA No. 61227

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Under Contract No. W74V8H-04-D-0023 )

APPEARANCES FOR THE APPELLANT: Terry L. Elling, Esq.

Gregory R. Hallmark, Esq.

Holland & Knight LLP

Tysons, VA

APPEARANCES FOR THE GOVERNMENT: Arthur M. Taylor, Esq.

DCMA Chief Trial Attorney

Robert L. Duecaster, Esq.

Trial Attorney

Defense Contract Management Agency

Chantilly, VA

OPINION BY ADMINISTRATIVE JUDGE O'SULLIVAN ON APPELLANT'S

MOTIONS FOR PARTIAL SUMMARY JUDGMENT AND SUMMARY JUDGMENT

URS Federal Services, Inc. (URS or appellant) appeals a contracting officer's

(CO's) final decision asserting a government claim to recover allegedly unallowable direct

and indirect costs paid to appellant. Appellant moves for partial summary judgment on

the portion of its appeal related to the direct costs, arguing that that part of the claim is

time barred by the Contract Disputes Act's (CDA) six-year statute of limitations.

Appellant also moves for summary judgment on its entire appeal based on the doctrine of

laches. We partially grant and deny the motions as discussed below.

STATEMENT OF FACTS (SOF) FOR PURPOSES OF THE MOTIONS

Unless otherwise noted, the following facts are undisputed or uncontroverted.

1. On September 27, 2004, the U.S. Army Medical Research Acquisition Activity

issued Task Order B303 under Contract No. W74V8H-04-D-0023 (the Contract) to

PlanetGov Inc. Apptis, Inc., subsequently acquired PlanetGov Inc., and a modification

was issued updating the contractor's name. URS is the successor in interest to Apptis,

Inc. (App. SUMF 1 ,i 1, ex. A-1, ex. A-2 at URS-001222) The contract included Federal

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The government accepted and incorporated appellant's statement of undisputed

material facts, dated August 13, 2018 (see gov't opp'n at 2).

Acquisition Regulation (FAR) 52.244-2, SUBCONTRACTS (AUG 1998), which requires

contractors to obtain contracting officer approval to subcontract if the contractor does not

have an approved purchasing system (R4, tab 8 at G-000128, R4, tab 9 at G-000148).

2. The task order called for a proof of concept for a commercial off-the-shelf

medical event reporting system (app. SUMF ,i 2, ex. A-1 at URS-001229). URS's

proposal for the task order noted its intention to utilize Northrop Grumman as a

subcontractor (app. SUMF ,i 4, ex. A-4 at DCMA.00339, .00342, .00358-59).

3. During performance of the task order in FY 2006, URS submitted periodic

invoices for reimbursement of its direct and indirect costs. Subcontractor costs relating

to Northrop Grumman and SAIC were included on these invoices. The government paid

each invoice. (App. SUMF ,i 9, ex. A-9 at URS-000833-34, ex. A-10 at URS-001032 33,

ex. A-11 at URS-001063-64)

4. On July 25, 2008, URS submitted its final indirect cost rate proposal for

FY 2006 (app. SUMF ii 10; R4, tab 8 at G-000088). By letter dated April 19, 2012, URS

withdrew its proposal (gov't SUMF ,i 23, R4, tab 8 at G-000088, see ex. G-1). On

June 22, 2012, URS resubmitted its final indirect cost rate proposal for FY 2006 (app.

SUMF ,i 12; R4, tab 8 at G-000088).

5. On April 13, 2015, the Defense Contract Audit Agency (DCAA) issued an

audit report on URS's June 22, 2012; final indirect cost rate proposal for FY 2006

(app. SUMF ii 12; R4, tab 8 at G-000088).

6. By letter dated April 6, 2017, the administrative contracting officer (ACO)

issued a contracting officer's final decision (COFD) asserting a government claim to

recover certain allegedly unallowable direct and indirect costs in a total amount of

$784,369. The bulk of the government's claim was for $698,685 in allegedly

unallowable direct subcontractor costs. The COFD alleged that URS was in

noncompliance with FAR 31.201-2, Determining Allowability, because it failed to

produce adequate documentation that it had received approval to subcontract under

FAR 52.244-2, thus violating FAR 3 l.201-2(a), and also failed to produce adequate

documentation to confirm it had incurred the costs and that they were allocable to the

contract, thus violating FAR 31.201-2(d). (App. SUMF ,i,i 13-14; R4, tab 9 at G-000141,

G-000148)

7. On June 19, 2017, appellant filed a timely notice of appeal with the Board,

which the Board docketed as ASBCA No. 61227.

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DECISION

Appellant initially filed a motion for partial summary judgment regarding the

ACO's disallowance of $698,685 in direct subcontractor costs. Appellant subsequently

submitted a brief supplementing its motion for partial summary judgment, and also

moving for summary judgment on the entirety of the appeal based on the doctrine of

laches.

I. Standard ofReview

Summary judgment will be granted if a moving party has shown that there are no

genuine issues of material fact and it is entitled to judgment as a matter of law. Celotex

Corp. v. Catrett, 477 U.S. 317, 322 (1986). A non-movant seeking to defeat summary

judgment by suggesting conflicting facts must set forth specific facts showing that there

is a genuine issue for trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986);

Mingus Constructors, Inc. v. United States, 812 F.2d 1387, 1390 (Fed. Cir. 1987). A

genuine issue of material fact is one that is outcome determinative. Liberty Lobby, 4 77

U.S. at 248. If the non-moving party carries the burden of proof at trial for elements of

its case and fails to provide such proof, the moving party is entitled to summary judgment.

Dairyland Power Coop. v. United States, 16 F.3d 1197, 1202 (Fed. Cir. 1994). In

deciding summary judgment motions we draw all reasonable inferences in favor of the

non-movant; we do not resolve controversies, weigh evidence, or make credibility

determinations. Liberty Lobby, 477 U.S. at 255.

11 Appellant's Motion for Partial Summary Judgment

The CDA provides that "[e]ach claim by ... the Federal Government against a

contractor relating to a contract shall be submitted within 6 years after the accrual of the

claim." 41 U.S.C. § 7103(a)(4)(A). A claim accrues "when all events, that fix the alleged

liability of... the contractor and permit assertion of the claim, were known or should have

been known." FAR 33.201. The events fixing liability "should have been known" when

they occurred unless they were either concealed or inherently unknowable at the time.

Alion Sci. & Tech. Corp., ASBCA No. 58992, 15-1 BCA ,i 36,168 at 176,489 (citing

Raytheon Missile Sys., ASBCA No. 58011, 13 BCA ,i 35,241 at 173,017). Only facts that

could not reasonably be known by the claimant postpone claim accrual. Id. (citing United

States v. Commodities Export Co., 972 F.2d 1266, 1272 (Fed. Cir. 1992)).

Failure to meet a statute of limitations is an affirmative defense, for which appellant

bears the burden of proof. Kellogg Brown & Root Servs., Inc., ASBCA No. 58175, 15-1

BCA ,i 35,988 at 175,823 (citing FED. R. Crv. P. 8(c); Bridgestone/Firestone Research, Inc.

v. Automobile Club de L 'Ouest de la France, 245 F.3d 1359, 1361 (Fed. Cir. 2001)).

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Appellant maintains that the government's claim for $698,685 in direct

subcontractor costs is time-barred by the CDA's six-year statute of limitations because

the claim accrued in 2006 yet the government failed to assert the claim until 201 7

(app. mot. at 9-10). Appellant's primary contention is that the government had actual

knowledge of its use of subcontractors Northrop Grumman and SAIC in 2006 when

the government paid appellant's invoices that included subcontractor costs (id. at 13;

SOF ,r 3).

The government contends that the earliest possible date that its claim could have

accrued was June 22, 2012, which is the date appellant resubmitted its final indirect cost

rate proposal for FY 2006 (gov't opp'n at 4; SOF ,r 4). The government advances two

bases for its claim, the first being URS' s inability to prove it received contractual

approval to subcontract, and the second being lack of adequate documentation showing

that the costs for which it was reimbursed were in fact incurred and were allocable to the

contract. Both of these bases, the government argues, became known to it only during

the course of the audit, when URS's inability to provide the requested documentation

became apparent. The government states, "[t]hat inability, or refusal, of Appellant to

provide substantiating documents to the Government that showed payments to certain

purported subcontractors were made for performance of the contract is the legal basis for

the Government's claim." (Emphasis in original) The government maintains that

appellant's failure to maintain this supporting documentation could only be apparent after

it had the opportunity to examine appellant's certified final indirect cost rate proposal,

which was submitted on June 22, 2012. (Gov't opp'n at 4-5; SOF ,r 4)

We have previously considered arguments that a government claim accrued with

the payment of an invoice. As we recently observed in DRS Global Enterprise

Solutions, Inc., ASBCA No. 61368, 18-1 BCA ,r 37,131 at 180,697, our precedent does

not allow for a blanket rule to be applied. Rather, we must consider the unique facts

giving rise to when the government reasonably should have known of its claim. Id.

at 180,697.

Here, it is clear to us that the government should have known the basis of its

claim regarding noncompliance with the contract's requirement to obtain approval to

subcontract in 2006. At that time, appellant submitted periodic invoices to the

government that clearly and unmistakably listed substantial subcontractor costs attributed

to both Northrop Grumman and SAIC. The government paid these invoices without

objection. (SOF ,r 3) Before making these payments, the government most assuredly

knew whether or not it had previously approved appellant's use of a subcontractor under

FAR 52.244-2.

We disagree with the government's assertion that the facts in this appeal parallel

those in DRS Global Enterprise Solutions, Inc., 18-1 BCA ,r 37,131 (gov't opp'n at 7).

While both appeals involve government claims made years after the payment of a

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contractor's voucher or invoice, the relevant information able to be gleaned from the

voucher or invoice is substantially different. In rejecting DRS' s argument, we observed

that the vouchers were not even in the record. DRS Global Enterprise Solutions, Inc.,

18-1BCA137,131 at 180,695. Consequently, we concluded that "DRS's sweeping

statements with respect to the level of knowledge possessed by the government in 2006

are not supported by the current record." Id. at 180,698.

The facts of this appeal are different. Appellant's contention is relatively

straightforward: its invoices from 2006 provided the government actual knowledge

that appellant was using subcontractors Northrop Grumman and SAIC. Also, unlike

DRS Global Enterprise Solutions, Inc., the record in this appeal includes copies of

appellant's invoices from 2006. Review of these documents reveals multiple entries

for Northrop Grumman and SAIC, which are clearly labeled as subcontractor costs.

(SOF 13) The government did not need any additional information, outside of the

invoices themselves, to recognize that appellant utilized a subcontractor. Moreover,

all facts regarding whether the government had previously approved appellant's use of

a subcontractor under FAR 52.244-2 were knowable at that time.

Therefore, we grant summary judgment to appellant as to that portion of the

government's claim that is premised on alleged noncompliance with the contractual

requirement to obtain approval to subcontract, finding that this portion of the

government's claim accrued in 2006.

However, matters are not so clear as to the second basis for the government's

claim that URS's direct subcontract costs are unallowable. The government argues

that appellant's failure to maintain documentation that it incurred the costs in question

and that they were allocable to the contract could only be apparent after it had the

opportunity to examine appellant's certified final indirect cost rate proposal, which

was submitted on June 22, 2012. (Gov't opp'n at 4; SOF 14)

Appellant argues that this portion of the government's claim also accrued in 2006

because at that time the government had an obligation to inspect and timely inform

appellant of any issues relating to contractual requirements to maintain records (app.

reply br. at 6). We are not convinced that this argument resolves this matter, because it

is immaterial whether the government was under an obligation to notify appellant of any

issues in 2006. The real issue here is: which documents was URS required to maintain,

and for how long? The parties' briefs do not answer this question. Nor does the answer

appear in the record.

As an example, the government may defeat the proposition that its claim based

on lack of adequate documentation accrued in 2006 if record evidence were to show

that there then existed a contractual requirement that such documentation be retained

not just for the purpose of claiming payment under the contract, but also for the purpose

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I of audit of indirect cost rates many years after payment had been made on those costs.

Likewise, appellant could introduce evidence that a shorter retention period was the

only reasonable expectation in 2006, which would tend to support the conclusion that

the government's claim accrued then. Based on the record before us, we cannot find

that appellant has met its burden of proof to show that it is entitled to summary

judgment as a matter of law on this portion of the government's claim. Thus, we deny

appellant's motion for partial summary judgment on the government's claim for direct

subcontractor costs to the extent it is based on inadequate documentation under

FAR 31.201-2(d).

III. Appellant's Motion for Summary Judgment

Appellant also moves for summary judgment on the entirety of its appeal based on

the doctrine of laches. "Laches is an equitable doctrine under which relief is denied to

one who unreasonably and inexcusably delays in the assertion of a claim, thereby causing

injury or prejudice to the adverse party." Delco Systems Operations, Delco Electronics

Corp., ASBCA No. 37097, 90-3 BCA ,i 23,245 at 116,632 (citing S.E.R., Jobs For

Progress, Inc. v. United States, 759 F.2d 1, 5 (Fed. Cir. 1985)). "There is no presumption

of prejudice, and the passage of time alone does not constitute laches." Anis Avasta

Construction Co., ASBCA No. 61107, 18-1 BCA ,i 37,036 at 180,317 (citing Mediax

Interactive Technologies, Inc., ASBCA No. 43961, 93-3 BCA ,i 26,071 at 129,582).

"[T]he burden of proving prejudice from the late assertion of claims is on the party

defending against such claims." Rudolf Bieraeugel, Stahl-und Metallbau, Gesellschaft

mit beschraenkter Haftung, ASBCA No. 47145, 95-1 BCA ,i 27,536 at 137,220.

Appellant alleges that due to the government's delay in pursuing its claim, the

government has directly and adversely affected appellant's ability to produce complete

documentation relevant to its defense (app. supp. mot. at 4). Appellant notes that during

contract performance and the DCAA audit, URS underwent several corporate transactions

in the nature of an acquisition or merger (app. supp. mot. at 5; SOF ,i 1). Appellant argues

that this has resulted in a loss of records and knowledge within appellant's organization

(app. supp. mot. at 5). In support of its motion, appellant submits a declaration from its

Vice President of Government Accounting. The declaration asserts that during the DCAA

audit, URS provided all relevant documents within its possession. It also states that many

of the former Apptis employees with knowledge relevant to the contract left the company

after its acquisition by URS in 2011. (App. supp. mot., ex. A-1)

The government maintains that despite appellant's allegations, appellant failed

to make any representation that additional documentation ever existed or that the

government's delay in asserting its claim caused appellant to be adversely affected

(gov't opp'n at 9).

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We do not believe this matter is ripe for decision on summary judgment.

Material facts are in dispute regarding the extent to which, if any, the government's

delay in asserting its claim prejudiced appellant's ability to produce documentation.

Accordingly, appellant's motion for summary judgment based on lac hes is denied.

CONCLUSION

Appellant's motion for partial summary judgment is granted as to the portion of

the government's claim based on lack of subcontract approval and denied as to the

portion of the government's claim based on inadequate documentation. Appellant's

motion for summary judgment based on the doctrine of laches is denied.

Date: September 3, 2019

L~.O'SULLA

Administrative Judge

Armed Services Board

of Contract Appeals

I concur

RICHARD SHACKLEFORD OWEN C. WILSON

Administrative Judge Administrative Judge

Acting Chairman Vice Chairman

Armed Services Board Armed Services Board

of Contract Appeals of Contract Appeals

I certify that the foregoing is a true copy of the Opinion and Decision of the

Armed Services Board of Contract Appeals in ASBCA No. 61227, Appeal of URS

Federal Services, Inc., rendered in conformance with the Board's Charter.

Dated:

PAULLA K. GATES-LEWIS

Recorder, Armed Services

Board of Contract Appeals

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