Fidelity Construction Company v. The United States

*1388 BALDWIN, Circuit Judge,

dissenting.

I dissent from the holding that interest accrues from the date a claim is certified. This ruling amends clearly drafted statutory language that marks the accrual of interest from the date a claim is submitted in writing and is, moreover, contrary to the purpose of the statute’s interest provision. The majority justifies its exercise of legislative prerogative by stating that when a statute consents to the collection of interest on claims against the government, “[n]ot only may the consent not be implied, but even a seemingly explicit consent will not be effective if the language used appears too sweeping and contrary to the overall statutory scheme as judicially deduced.” In fact, the language of the Contract Disputes Act (CDA) regarding the date from which a contractor is entitled to interest, is neither ambiguous nor contrary to the statutory scheme intended and enacted by Congress.

The interest provision of the CDA could not have been written more clearly to begin the accrual of interest from the date a claim is submitted. In mandatory terms, it says:

Interest on amounts found due contractors on claims shall be paid to the contractor from the date the contracting officer receives the claim pursuant to section 605(a) of this title from the contractor until payment thereof * * *.

41 U.S.C. § 611 (Supp. V 1981) (emphasis added). Section 605(a) requires all claims to be submitted to the contracting officer in writing. Neither the interest provision nor section 605(a) refer to certification. Certification is made a requirement only for claims exceeding $50,000 by section 605(c) of the CDA.

The explicit language making interest run from the date a written claim is submitted to the contracting officer, rather than the date a claim is certified, implements the full measure of Congressional intent. The Senate report accompanying the CDA explains that Congress wanted to fully compensate contractors for the cost of money needed to finance continued performance after disputes arise and the contractors pursue their remedies through administrative and judicial channels. The drafters of the CDA expressed their purpose in the following way:

The rights of Government contractors who prevail on claims against the Government are unique since they have been required by language of the contract, for example, the changes article and the disputes article, to perform the work as directed by the Government without stopping to litigate. Thus, Government contractors must perform and then argue about the amount of the equitable adjustment at some later time. Since the contractor has been compelled to perform the work with its own money — in the total absence of contract payments or progress payments — there can be no equitable adjustment to the contractor until the contractor recovers the entire cost of the additional work. The cost of money to finance this additional work while pursuing the administrative remedy, normally called interest, is a legitimate cost of performing the additional work.

S.Rep. No. 95-1118, 95th Cong., 2d Sess., 1978 U.S.Code Cong. & Ad.News 5235, 5266 (emphasis added). When presented to Congress,- the bill began interest from the date a claim accrued, an even earlier date than the date a claim is submitted. To address concern that determinations of when a claim accrues would be too difficult, the interest provision was amended to mark the beginning of interest from the date a claim is submitted in writing. 124 Cong.Rec. 36261, 36267 (1978). The change provided a more easily discerned date on which interest begins but did not change the purpose of the interest provision.

The majority finds a conflict between compensating contractors with interest from the date a claim is submitted and the certification requirement of the CDA. These two requirements of the statute, *1389 however, do not conflict with each other, but achieve distinct, unrelated purposes.

Certification assures a contracting officer that the claim is made in good faith and that the supporting data is accurate and complete. With this assurance of a good faith claim based on accurate supporting data, the contracting officer is better equipped to settle cases rather than forcing contractors to prove their claims in litigation. Before a claim can be certified the contractor must review carefully his books and records. This may take days, weeks, or months, depending on the complexity of the claim and the integrity of the contractor’s records. Amending the statute to tie the accrual of interest to the date a claim is certified, rather than to the date it is submitted in writing, needlessly pressures contractors to hurry certification of their claims. This pressure undermines the very accuracy certification was designed to provide and cannot be justified by a desire to eliminate unfounded claims. Contractors face an array of statutory sanctions which carry significant civil and criminal penalties for false claims. * In fact, the CDA contains a separate provision, supplementing these statutes, tailored to discourage unfounded claims. Under this provision of the CDA, contractors who are unable to support portions of their claim because of misrepresentation of fact or fraud, are made liable to the government for the unsupported part of the claim in addition to all costs to the government attributable to the cost of reviewing the unfounded part of the claim. 41 U.S.C. § 604 (Supp. V 1981). Contractors facing the serious consequences that may attend false claims against the government should not be prodded into hurrying the certification process by amending the CDA to deny them interest expressly granted by the statute.

The majority reasons that allowing interest to accrue before a claim is certified would compensate a contractor for delaying settlement of a claim. This assumes that contractors would consider leaving money in the government’s hands, where it collects interest, as preferable to having the money in their own hands as soon as possible. Actually, a contractor has every economic incentive to certify a claim promptly to speed his receipt of money claimed. When the money is in the contractor’s hands he can get as good an interest rate as the government gives, or he can put the money to some more urgent or productive use. From the contractor’s perspective, delaying certification would have no economic benefit and may be economically irresponsible.

The Court of Claims decision in Paul E. Lehman, Inc. v. United States, 673 F.2d 352 (Ct.Cl.1982), relied on by the majority, does not provide authority for amending the interest provision. Lehman holds only that a contracting officer’s decision must be made on a certified claim before the Court of Claims has jurisdiction to review the contracting officer’s decision. The present case concerns only the date from which a contractor is entitled to interest, not jurisdiction or the reviewability of a contracting officer’s decision. Lehman has no bearing on when interest begins on a claim over which this court has jurisdiction. The date from which a contractor gets interest is independent of certification or jurisdictional prerequisites or procedural requirements of the CDA.

I would give contractors interest from the date claims are submitted in writing to compensate them in accordance with the statute’s express requirements and the intent of Congress.

31 U.S.C. § 231 (1976) (civil penalties provided for knowingly false, fictitious, or fraudulent claims); 18 U.S.C. §§ 286 , 287, 1001 (1976) (civil and criminal penalties provided for activities involving knowingly false, fictitious or fraudulent claims and concealment of material information).