MOTION FOR PARTIAL DISMISSAL DENIED:

MOTION FOR PARTIAL DISMISSAL DENIED:

May 12, 2015

CBCA 4068

SYSTEMS MANAGEMENT AND RESEARCH

TECHNOLOGIES CORPORATION,

Appellant,

v.

DEPARTMENT OF ENERGY,

Respondent.

Lorenzo F. Exposito, Washington, DC, counsel for Appellant.

James J. Jurich and Charmaine A. Howson, Office of General Counsel, Department

of Energy, Washington, DC, counsel for Respondent.

Before Board Judges DANIELS (Chairman), KULLBERG, and LESTER.

LESTER, Board Judge.

Respondent, the Department of Energy (DOE), has filed a motion to dismiss, as

time-barred, a portion of the claim that appellant, Systems Management and Research

Technologies Corporation (SMARTECH), submitted to the contracting officer in March

2014. In its claim, SMARTECH seeks payment of $788,303.29, most of which relates to

unpaid fixed fees to which it asserts it is entitled under its contract. DOE asserts that,

because services under the contract were performed on an annual or bi-annual basis between

2004 and 2008 and because the fixed fees were tied to each year’s or half-year’s contract

work, SMARTECH’s 2014 claim for fixed fees earned from 2004 through 2007 was

CBCA 4068

2

untimely because it was not submitted within six years of the date upon which the fees claim

accrued, as required by the Contract Disputes Act (CDA), 41 U.S.C. § 7103(a)(4)(A) (2012).

For the reasons set forth below, we deny the motion.

Background

The following factual allegations are taken from SMARTECH’s complaint,

supplemented with information from the contract to which SMARTECH repeatedly cites in

its complaint.

On September 30, 2003, DOE awarded SMARTECH an undefinitized time-andmaterials (T&M) letter contract, no. DE-AC01-03S020138, for technical support in the

review of classified and unclassified-but-sensitive documents for the Office of Classified and

Controlled Information Review. Complaint ¶¶ 1, 7, 17. The contract was definitized by the

parties on March 17, 2005 (after SMARTECH had already begun performance of the first

base year of the contract), pursuant to modification no. A006. Id. ¶ 7. Consistent with the

nature of a T&M contract, DOE was to issue specific work/task orders, or “task

assignments,” to SMARTECH during the contract period identifying the specific tasks that

SMARTECH was to accomplish and for which it would be paid at an hourly labor rate.

Exhibit 8 at 13, 32 (contract clauses C.4.0 and H.8);1 see 48 CFR 16.601(b) (2014)

(discussing T&M contracts).

As definitized, the contract had a base period of twenty-four months, plus four option

periods totaling an additional thirty-six months. As set forth in modification no. A006,

option periods one and two were for six months each, and option periods three and four were

each for twelve months. Complaint ¶ 8.

SMARTECH alleges that, “[u]nlike a typical T&M contract, which would call for the

capture of ‘fee’ as part of the burdened hourly rates, the Contract set out fixed and partially

burdened hourly rates for direct labor and separate and stand-alone ‘fixed fee’ terms by

contract/option period.” Complaint ¶ 9. Specifically, the contract, as definitized and

subsequently modified, set out a “Fixed Fee” in the first base year of $368,153 (a period

running from September 30, 2003, to September 29, 2004);2 in the second base year of

1

All exhibits referenced in this decision are found in the appeal file, unless otherwise

noted, and are cited in SMARTECH’s complaint.

2

SMARTECH has represented that, because the contract was definitized after

SMARTECH had completed the first base year of work, there is no unpaid fee issue in this

CBCA 4068

3

$718,779 (running from September 30, 2004, to September 29, 2005); in option period one

of $231,596 (running from September 30, 2005, to March 29, 2006); in option period two

of $231,596 (March 30, 2006, to September 30, 2006); in option period three of $366,019

(October 1, 2006, to September 30, 2007); and in option period four of $367,422 (October 1,

2007, to September 29, 2008). Id. ¶¶ 12, 29. SMARTECH alleges that the “Fixed Fee”

provisions “were not in any way qualified and were clearly independent from the otherwise

burdened hourly labor rates and other elements of contractor compensation.” Id. ¶ 13. It

asserts that its entitlement to a stand-alone “fixed fee,” in addition to payment for direct costs

charged at hourly rates, is “consistent with DOE’s intent as expressed in its [Request for

Proposals],” in which DOE is alleged to have stated that “[a] single, fixed rate, fixed fee,

level of effort, task assignment, term type contract, with performance incentives is

contemplated,” but with DOE “reserv[ing] the right to award any type of contract deemed

appropriate.” Id. ¶ 10 (citing Exhibit 1 at 1). SMARTECH cites to the “Fixed Fee” clause

incorporated by reference into its contract from Federal Acquisition Regulation (FAR)

52.216-8 (Mar 1997), which provides that “[t]he Government shall pay the contractor the

fixed fee specified in the Schedule.” Id. ¶ 14 (quoting 48 CFR 52.216-8 (2003)).

The contract also incorporated by reference the contract clause at FAR 52.232-7,

“Payment under Time-and-Materials and Labor Hour Contracts (Feb 2002),” see Exhibit 8

at 47, which provided that “[t]he Government will pay the Contractor as follows upon the

submission of invoices or vouchers approved by the Contracting Officer:” (a) the hourly rate

for direct labor, including “wages, indirect costs, general and administrative expenses and

profit,” and (b) “the total cost to the Government for the performance of this contract.” 48

CFR 52.232-7. Clause H.14, titled “Payment (Jul 1991),” provided that the Government

would make payments pursuant to the clause at FAR 52.232-7.

The contract’s billing instructions, set forth in clause G.2, outlined the procedure by

which SMARTECH was to submit invoices under the payment provisions of the contract.

Complaint ¶ 22; Exhibit 8 at 26-27. Those billing instructions did not explicitly identify a

deadline by which SMARTECH was to submit invoices. Complaint ¶¶ 22, 26. SMARTECH

invoiced DOE using a DOE-provided sample form, which SMARTECH alleges DOE

instructed it to follow. Id. ¶ 22. The sample invoice form called for the invoicing of fee

amounts at a percentage of the costs charged through each invoice, rather than at the full

amount of the fee. Id. SMARTECH alleges that, in reliance on the DOE-supplied form, it

did not contemporaneously invoice all of the fixed fee amounts due under the contract. Id.

appeal relating to the first base year. Complaint ¶ 23.

CBCA 4068

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SMARTECH further alleges that “neither the Contract nor the invoicing instructions

provided by DOE required that any remaining fee would or should be invoiced by contract

year.” Complaint ¶ 26. Instead, the DOE billing instructions suggested that any portions of

the fixed fees not previously billed “could appropriately be invoiced as part of a final voucher

‘upon completion, termination, or expiration’ of the Contract.” Id. (quoting Exhibit 72 at

10). SMARTECH alleges that, pursuant to clause H.9(a) of the contract, the “term” of the

contract was “defined as the total contract period, including all exercised options.” Id. ¶ 20

(quoting Exhibit 8 at 33) (emphasis in appellant’s complaint). It asserts that it performed

work under the contract “from the onset of performance [in 2003] until March 31, 2008.”

Id. ¶ 21.

On March 6, 2008, DOE advised SMARTECH by letter that it had awarded a new

contract for document review services to another entity, that DOE did not expect to issue

further work to SMARTECH, and that SMARTECH should take all necessary steps to

complete phase-out of the contract by March 31, 2008. Complaint ¶ 32. Nevertheless,

although DOE did not subsequently assign SMARTECH any additional tasks under the

contract, DOE never terminated it, and the contract expired by its own terms on

September 29, 2008. Id. ¶¶ 39, 40.

Two years later, on September 29, 2010, SMARTECH submitted a request for

equitable adjustment (REA) in the amount of $1,268,270.74, which accompanied

SMARTECH’s final release. Complaint ¶ 41. In that REA, SMARTECH, for the first time,

sought payment of the unpaid portions of its fixed fees under the contract. Id. ¶ 42. On

May 18, 2011, the contracting officer for the first time indicated that DOE would not pay the

remaining unpaid fixed fees. Id. ¶ 43.

On March 28, 2014, SMARTECH submitted a certified claim for $788,303.29

alleging entitlement to additional payment under the contract as follows: (1) unpaid fixed

fees totaling $722,236.79; (2) reimbursement for private office space in the amount of

$8436.61; (3) interest on unpaid fixed fees of $54,602.94; and (4) interest on withheld

retainage of $3026.95.

On May 22, 2014, the contracting officer issued a decision denying SMARTECH’s

claim in its entirety, a decision that SMARTECH appealed to this Board. In its answer to

SMARTECH’s complaint, DOE asserted the CDA six-year statute of limitations as an

affirmative defense. DOE’s motion to dismiss SMARTECH’s claim for fixed fees for all

years other than option year four is now pending.

CBCA 4068

5

Discussion

I.

The Post-Sikorsky Standard of Review

The CDA provides that “[e]ach claim by a contractor against the Federal Government

relating to a contract . . . shall be submitted within 6 years after the accrual of the claim.” 41

U.S.C. § 7103(a)(4)(A); see 48 CFR 33.206(a) (implementing CDA limitations period).

Although Congress enacted the CDA in 1978, it did not add this six-year limitations period

for submitting a claim until 1994, when it enacted the Federal Acquisition Streamlining Act

(FASA). “Prior to 1994, no statute of limitations applied to the presentment of claims to the

contracting officer.” Arctic Slope Native Association, Ltd. v. Sebelius, 699 F.3d 1289, 1295

(Fed. Cir. 2012).

Applying its long-standing view of the CDA as “a statute waiving sovereign

immunity, which must be strictly construed,” Cosmic Construction Co. v. United States, 697

F.2d 1389, 1390 (Fed. Cir. 1982), the Court of Appeals for the Federal Circuit originally

interpreted this six-year limitations period to be jurisdictional. See, e.g., Systems

Development Corp. v. McHugh, 658 F.3d 1341, 1345 (Fed. Cir. 2011); Arctic Slope Native

Association, Ltd. v. Sebelius, 583 F.3d 785, 792-93 (Fed. Cir. 2009). Accordingly, as it

would with any jurisdictional question, a tribunal faced with a challenge to the timeliness of

a contractor’s CDA claim submission would have to accept as true any undisputed

allegations of fact made by the non-moving party, but could consider relevant evidence to

resolve any disputes over jurisdictional facts. Reynolds v. Army & Air Force Exchange

Service, 846 F.2d 746, 747 (Fed. Cir. 1988). Ultimately, the party seeking to invoke the

tribunal’s jurisdiction would have to establish by a preponderance of the evidence the factual

predicate for jurisdiction. Id. at 748; CB&I Federal Services LLC v. Department of

Homeland Security, CBCA 3112, et al., 14-1 BCA ¶ 35,550, at 174,209.

The Federal Circuit recently changed this framework in Sikorsky Aircraft Corp. v.

United States, 773 F.3d 1315 (Fed. Cir. 2014), after holding that the Supreme Court, in

Sebelius v. Auburn Regional Medical Center, 133 S. Ct. 817 (2013), had effectively

overruled the Federal Circuit’s prior decisions as to the jurisdictional nature of the CDA’s

six-year limitations period. Sikorsky, 773 F.3d at 1320-21. Reconsidering the jurisdictional

issue in light of Auburn Regional, the Federal Circuit determined that “§ 7103 ‘does not

speak in jurisdictional terms’ or refer in any way to . . . jurisdiction,” id. at 1321 (quoting

Zipes v. Trans World Airlines, Inc., 455 U.S. 385, 394 (1982)), and does “not suggest, much

less provide clear evidence, that the provision was meant to carry jurisdictional

consequences.” Id. (quoting Henderson v. Shinseki, 562 U.S. 428 (2011)). It therefore

“conclude[d] that § 7103 is not jurisdictional.” Id. at 1322.

CBCA 4068

6

Although “prior decisions of a panel of the [Federal Circuit] are binding precedent on

subsequent panels unless and until overturned in banc,” Newell Cos. v. Kenney

Manufacturing Co., 864 F.2d 757, 765 (Fed. Cir. 1988), “[i]t is established that a later panel

can recognize that the court’s earlier decision has been implicitly overruled as inconsistent

with intervening Supreme Court authority.” Troy v. Samson Manufacturing Corp., 758 F.3d

1322, 1326 (Fed. Cir. 2014). Given the Sikorsky panel’s finding that the Supreme Court had

“effectively overruled” the Federal Circuit’s prior decisions finding the CDA limitations

period to be jurisdictional, Sikorsky, 773 F.3d at 1320-21, the Sikorsky panel’s decision is

plainly binding upon us. See Combat Support Associates, ASBCA 58945, slip op. at 1-2

(Mar. 16, 2015) (vacating prior jurisdictional dismissal order in light of Sikorsky).3

The transformation of the CDA’s six-year statute of limitations from jurisdictional to

non-jurisdictional changes how we must approach a motion to dismiss a case for failure to

meet that deadline. No longer can the Government, through a motion to dismiss, challenge

the factual allegations that the contractor has made in its complaint and require the contractor

to prove jurisdictional facts by a preponderance of the evidence. Instead, the CDA’s six-year

statute of limitations is now an affirmative defense that the Government must plead in its

answer to the appellant’s complaint. See Fed. R. Civ. P. 8(c)(1) (identifying “statute of

limitations” as affirmative defense); CBCA Rule 6(c), 48 CFR 6101.6(c) (requiring

respondent to plead affirmative defenses in answer). “[F]ailure to plead an affirmative

defense . . . in a timely fashion generally results in the waiver of that defense.” Rock Creek

Associates K Limited Partnership v. General Services Administration, GSBCA 11333, 93-1

3

After Sikorsky, the Supreme Court issued another decision, United States v. Wong,

Nos. 13-1074, et al., 2015 WL 1808750 (U.S. Apr. 22, 2015), in which it expanded upon the

ruling that the panel in Sikorsky cited. The Supreme Court, in deciding that the statute of

limitations in the Federal Tort Claims Act, 28 U.S.C. § 2401(b), is non-jurisdictional, held

that “the Government must clear a high bar to establish that a statute of limitations is

jurisdictional.” Wong, 2015 WL 1808750, at *5. Consistent with the Federal Circuit’s

discussion in Sikorsky, the Supreme Court stated that, “[i]n recent years, we have repeatedly

held that procedural rules, including time bars, cabin a court’s power only if Congress has

‘clearly state[d]’ as much.” Id. (quoting Auburn Regional, 133 S. Ct. at 824 (quoting

Arbaugh v. Y & H Corp., 546 U.S. 500, 515 (2006))). “[A]bsent such a clear statement,” the

Supreme Court held, “‘courts should treat the restriction as nonjurisdictional.’” Id. (quoting

Auburn Regional, 133 S. Ct. at 824 (quoting Arbaugh, 546 U.S. at 516)). “[W]e have made

plain,” the Court indicated, “that most time bars are nonjurisdictional.” Id. To the extent that

the Sikorsky panel’s reliance upon Auburn Regional as the basis for overturning the prior

panel decisions in Systems Development and Arctic Slope raised any concerns, the Wong

decision provides no basis for questioning the result in Sikorsky.

CBCA 4068

7

BCA ¶ 25,351, at 126,271 (1992). In addition, the burden is on the Government, not the

appellant, to prove its affirmative defense that the contractor’s claim is time-barred. See

Shell Oil Co. v. United States, 751 F.3d 1282, 1297 (Fed. Cir. 2014) (“defendant has the

burden of pleading and proving any affirmative defense that legally excuses performance”);

Lynchval Systems Worldwide, Inc. v. Pension Benefit Guaranty Corp., CBCA 3466, 14-1

BCA ¶ 35,792, at 175,068 (party asserting affirmative defense bears burden of proving it).

Further, because the statute of limitations issue is no longer jurisdictional, the party seeking

to enforce the limitations period must do so using the same procedural rules that the Board

applies to other non-jurisdictional issues: motions for failure to state a claim, summary relief

procedures, and, if there are genuine issues of material fact relating to the statute of

limitations issue, a hearing or record submission to resolve competing versions of the facts.

Here, the agency seeks to dismiss SMARTECH’s appeal for failure to state a claim.

In considering any such motion, “we must assume all well-pled factual allegations are true

and indulge in all reasonable inferences in favor of the nonmovant.” Kiewit-Turner, a Joint

Venture v. Department of Veterans Affairs, CBCA 3450, 14-1 BCA ¶ 35,705, at 174,847

(quoting Anaheim Gardens v. United States, 444 F.3d 1309, 1314-15 (Fed. Cir. 2006)

(quoting Gould, Inc. v. United States, 935 F.2d 1271, 1274 (Fed. Cir. 1991))). “If the

allegations” in the complaint “show that relief is barred by the applicable statute of

limitations, the complaint is subject to dismissal for failure to state a claim.” Jones v. Bock,

549 U.S. 199, 215 (2007). Nevertheless, “[d]ismissal for failure to state a claim should not

be granted unless it appears beyond doubt that the appellant cannot prove any set of facts in

support of its claim that would entitle it to relief.” Kiewit-Turner, 14-1 BCA at 174,847

(citing Conley v. Gibson, 355 U.S. 41, 45-46 (1957)).

The Federal Circuit has recognized (in considering another non-jurisdictional statute

of limitations) that “plaintiff[s] [are] not required to negate an affirmative defense in [their]

complaint.” ABB Turbo Systems AG v. Turbousa, Inc., 774 F.3d 979, 985 (Fed. Cir. 2014)

(quoting La Grasta v. First Union Securities, Inc., 358 F.3d 840, 845-46 (11th Cir. 2004)

(brackets in original)); see 5B Charles Alan Wright & Arthur R. Miller, Federal Practice &

Procedure § 1357, at 708-10 (3d ed. 2004) (“the complaint is also subject to dismissal under

Rule 12(b)(6) when its allegations indicate the existence of an affirmative defense that will

bar the award of any remedy, but for this to occur, the applicability of the defense has to be

clearly indicated and must appear on the face of the pleading to be used as the basis for the

motion”). “Dismissal at the pleading stage on statute-of-limitations grounds,” the Federal

Circuit has said, “ordinarily is improper unless it is ‘apparent from the face of the complaint

that the case is time-barred.’” ABB Turbo, 774 F.3d at 985 (quoting La Grasta, 358 F.3d at

845-46). But see 5B Charles Alan Wright & Arthur R. Miller, supra, § 1357, at 714 (“A

complaint showing that the governing statute of limitations has run on the plaintiff’s claim

CBCA 4068

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for relief is the most common situation in which the affirmative defense appears on the face

of the pleading and provides a basis for a motion to dismiss under Rule 12(b)(6).”).

In its motion, the agency does not cite to SMARTECH’s complaint, but instead

focuses exclusively upon, and cites to, provisions of the contract between DOE and

SMARTECH. That omission does not necessarily defeat the agency’s motion. In

considering a motion to dismiss for failure to state a claim, “materials attached to a complaint

may be considered as exhibits that are part of the complaint for determining the sufficiency

of the pleadings.” Pennington Seed, Inc. v. Produce Exchange No. 299, 457 F.3d 1334, 1342

n.4 (Fed. Cir. 2006); see Fed. R. Civ. P. 10(c) (“A copy of any written instrument which is

an exhibit to a pleading is a part thereof for all purposes.”). In addition, a tribunal “must

consider . . . documents incorporated into the complaint by reference, and matters of which

a [tribunal] may take judicial notice.” Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S.

308, 322 (2007). “Even where a document is not incorporated by reference, the [tribunal]

may nevertheless consider it where the complaint ‘relies heavily upon its terms and effect,’

which renders the document ‘integral’ to the complaint.” Chambers v. Time Warner, Inc.,

282 F.3d 147, 153 (2d Cir. 2002) (quoting International Audiotext Network, Inc. v. American

Telephone & Telegraph Co., 62 F.3d 69, 72 (2d Cir. 1995)); see Perry v. New England

Business Service, Inc., 347 F.3d 343, 345 n.2 (1st Cir. 2003); Pension Benefit Guaranty

Corp. v. White Consolidated Industries, Inc., 998 F.2d 1192, 1196 (3d Cir. 1993). Here,

although SMARTECH did not attach the contract to its complaint, it repeatedly cites to,

quotes from, and relies upon the contract in its complaint, rendering it integral to the

complaint. Accordingly, we can look to the terms of the contract in considering the agency’s

motion to dismiss without converting it into one for summary relief.

II.

Whether Any of SMARTECH’s Claims are Time-Barred

A claim against the United States first accrues on “the date when all events, that fix

the alleged liability of either the Government or the contractor and permit assertion of the

claim, were known or should have been known.” 48 CFR 33.201. “Therefore, where a claim

is based upon a contractual obligation of the Government to pay money, the claim first

accrues on the date when the payment becomes due and is wrongfully withheld in breach of

the contract.” Oceanic Steamship Co. v. United States, 165 Ct. Cl. 217, 225 (1964).

DOE contends that SMARTECH’s claims accrued under the terms of the contract at

the end of each annual or bi-annual performance period and that, because five of the six

performance periods at issue in this appeal ended more than six years before SMARTECH’s

claim submission, SMARTECH’s appeal for those five periods – those for the second base

year and the first three option periods – is untimely. There is some historical support for

DOE’s position. In Nager Electric Co. v. United States, 368 F.2d 847, 851 (Ct. Cl. 1966),

CBCA 4068

9

in which the Court of Claims considered accrual under the statute of limitations applicable

to the Tucker Act, now located at 28 U.S.C. § 2501 (2012), the Court recognized that, as a

general rule, a claim accrues as soon as services are performed or goods are delivered, which

is the point at which the contractor can demand payment from the Government:

For contract cases, in the era before use of “disputes” clauses (or like devices

for administrative determination), the general principle was . . . that normally

the cause of action first accrues, and the statute begins to run, when the work

is completed or the items delivered (and accepted), or the services rendered,

or (if the contract was never completed) when the breach became total. That

was considered to be the time when the contractor could ordinarily demand his

money and bring his suit if payment was not made. Voluntary efforts

thereafter to obtain compensation through executive channels or by negotiation

would not defer or toll limitations.

Id. at 851-52; see Battelle v. United States, 7 Ct. Cl. 297, 300-301 (1871) (“We think the

claim ‘first accrued,’ in the language and meaning of the statute, when the right to demand

the price for the property sold first vested in the petitioner,” since “[t]he purpose of a statute

of limitation requires that it should not leave the time at which it is to attach at the control

of the creditor”). Under that general rule, a claim can accrue before the contractor ever

submits an invoice to the Government. Nevertheless, the Court of Claims in Nager Electric

further “recognized that this is not a rigid rule – that, in the contract field as in others, a

particular agreement, or a special statute, can establish some other pre-condition for liability

or an unusual time for demanding payment.” Nager Electric, 368 F.2d at 852. Accordingly,

although identifying what it viewed a general rule for accrual, the Court of Claims

determined that, because of the variety of circumstances applicable to and contract terms

used in government contracts, “there is no single inexorable principle of limitations for

contract litigation.” Id. Instead, to determine an accrual date, “the individual terms,

conditions, and practices must always be studied.” Id. at 852-53.

If, as the Government seems to suggest here, Congress had “intended definitely to fix

the time when the claim should accrue in every case, [the statute creating the limitations

period] would simply have provided that every suit should be commenced [or, as relevant

here, every claim should be submitted] within six years after the service was rendered or the

articles called for were furnished.” Manufacturers Aircraft Association, Inc. v. United States,

77 Ct. Cl. 481, 523 (1933) (considering statute of limitations language in Tucker Act). The

general rule in Nager Electric only applies “[w]here . . . a call for performance” – for

example, an invoice requesting payment – “is not an essential element of the cause of

action.” Nyhus v. Travel Management Corp., 466 F.2d 440, 453 (D.C. Cir. 1972), cited in

Hurst v. United States, 220 Ct. Cl. 616, 617 (1979). Conversely, “[w]here a demand is

CBCA 4068

10

necessary to perfect a cause of action, the statute of limitations does not commence to run

until the demand is made.” Id. at 452; see Wright v. United States, 221 Ct. Cl. 913, 914

(1979) (plaintiffs’ cause of action for payment of claims under alleged contract involving

mining rights “did not accrue until demand for payment was made and refused”);

Manufacturers Aircraft, 77 Ct. Cl. at 523 (“In this case there was no breach and the royalties

claimed did not accrue and become payable under the agreement until reports had been made

and invoices or bills rendered.”).

The prerequisite acts necessary for a claim to accrue, then, are entirely dependent on

the language of the government contract at issue. Nager Electric, 368 F.2d at 852-53; see

Oceanic Steamship, 165 Ct. Cl. at 225 (“Of course, in determining when money becomes due

and payable under a contract, it is necessary to ascertain the nature of the agreement that the

parties have made on this point.”); Manufacturers Aircraft, 77 Ct. Cl. at 522 (“[o]rdinarily

a cause of action accrues when the service [provided pursuant to the contract] is rendered or

the articles are furnished and the obligation to pay therefor arises, but this is not a hard and

fast rule and whether the cause of action in a particular case accrues at such time depends

upon the agreement or arrangement between the parties.”); see also United States v. Cocoa

Berkau, Inc., 990 F.2d 610, 613 (Fed. Cir. 1993) (“to determine when the entry bond was

breached,” at which point the claim would accrue, “we look to the language of the bond

stipulating the relevant obligations of the bond principal and its surety” (emphasis added)).

In arguing that its March 28, 2014, claim was timely, SMARTECH cites to the

“Payments under Time-and-Materials and Labor-Hour Contracts” clause in its contract,

which provides for the Government’s payment after the contractor’s submission of vouchers:

The Government will pay the Contractor as follows upon the submission of

vouchers approved by the Contracting Officer or the authorized representative.

48 CFR 52.232-7. SMARTECH argues that, because it had to submit its voucher for

payment as a prerequisite to DOE’s obligation to pay under the contract, the limitations

period did not begin to run until it submitted a payment request for the unpaid fixed fees. It

also alleges that its contract did not require it to submit invoices by a specific deadline each

year, and it identifies a contract provision, clause H.9(a), that defines the contract as a single

multiple-year unit, including the option periods, that concludes only at the end of the multiyear contract performance period. Exhibit 8 at 33 (defining the “term” of the contract “as

the total contract period, including all exercised options” (quoted in Complaint ¶ 20)). Based

upon this language, SMARTECH alleges that it was entitled to include previously unbilled

costs from the entirety of its contract performance from 2003 through 2008 in its final

contract wrap-up invoice and that such an invoice would be timely.

CBCA 4068

11

The situation that SMARTECH alleges exists here is similar to that in Parsons-UXB

Joint Venture, ASBCA 56481, 09-2 BCA ¶ 34,305, in which the Government asserted that

the contractor’s claim for reimbursement of general excise taxes was untimely. The taxes

at issue had been assessed and paid in 1998, but the contractor did not submit an invoice for

reimbursement under the Allowance Cost and Payment clause until August 2007. After

denying the reimbursement request, the Government argued that a reasonably prudent

contractor would have submitted an invoice for reimbursement in 1998, but the board found

that, since the contract did not affirmatively require the contractor to have done so and since

payment was not due until “requested,” there was no breach that would cause the statute of

limitations to begin to run until the Government denied a contractor-submitted invoice:

Appellant claims a breach of the Allowable Cost and Payment clause. That

clause provides that “[t]he Government shall make payments to the Contractor

when requested as work progresses.” There was no breach until appellant

requested payment and the government rejected the request. Hence, the claim

is timely.

Id. at 169,459 (emphasis added); see Todd Pacific Shipyards Corp., ASBCA 55126, et al.,

11-1 BCA ¶ 34,759, at 171,087 (“there can be no breach of that [payment] clause, and

therefore no claim accrual from which the limitation period is measured, until the contractor

requests payment and the government fails to pay”); see also Continental Insurance Co. v.

Coyne International Enterprise Corp., 700 F. Supp. 2d 207, 213 (N.D.N.Y. 2010) (“[w]hat

counts, for statute of limitations purposes, are the date[ ] that invoices were sent . . . for

premiums due and [the date that the recipient of the invoices] declined to pay” (quoting

Potomac Insurance Co. of Illinois v. Richmond Home Needs Services, Inc., No. 04-CV-4335,

2006 WL 2521283, at *2 (S.D.N.Y. Aug. 30, 2006)).

Had the contract required SMARTECH to submit invoices for all costs by a particular

date each year, the statute of limitations likely would have started to run, depending on the

contract language, on or soon after each year’s contractual deadline for invoicing. See

Johnson v. Columbia Properties Anchorage, LP, 437 F.3d 894, 900-01 (9th Cir. 2006)

(where contract required that invoice be sent “at the conclusion of the project,” statute of

limitations began to run well before contractor submitted invoice for payment two-and-a-half

years after project conclusion). Further, if the contract language did not require any invoice

or other action by the contractor to perfect the Government’s obligation to pay, the

limitations period might commence, again depending on the contract language, upon the

Government’s failure to pay by the due date – that is, by the date of the Government’s

breach. See Cannon v. United States, 146 F. Supp. 827, 830 (Ct. Cl. 1956) (Government’s

failure to make payment “when due” starts the running of the statute of limitations). Here,

though, neither the complaint nor DOE identifies any specific deadline for submitting the

CBCA 4068

12

necessary invoice for the fixed fees. On a motion to dismiss for failure to state a claim,

where we make all reasonable inferences in the nonmovant’s favor, DOE has failed to meet

its burden of establishing that SMARTECH’s claim for fixed fees accrued at some point

more than six years before March 28, 2014, when SMARTECH submitted the claim.4

We recognize that, if taken to its extreme, SMARTECH’s theory – that the limitations

period does not start to run under its contract until the contractor submits an invoice and the

Government denies it – would be untenable. Under its theory, SMARTECH presumably

could have waited ten or twenty years to submit its invoice and, by so doing, deferred accrual

of its fixed fee claim. Yet “it cannot be true that one who has a claim against another which

he can perfect and make actionable by acts within his own power can keep the claim alive

indefinitely by merely refraining from doing those acts.” Duhame v. United States, 135 F.

Supp. 742, 744 (Ct. Cl. 1955). “[W]here a preliminary step is required before suit is begun,

a reasonable time will be granted therefor but only a reasonable time.” Dawnic Steamship

Corp. v. United States, 90 Ct. Cl. 537, 579 (1940). Here, though, we need not decide how

long SMARTECH could have waited to submit either an invoice or its claim. SMARTECH

submitted the claim within six years of the contract completion date, which, at least based

upon the current record and making all reasonable inferences in SMARTECH’s favor,

satisfies the CDA six-year statute of limitations.5

4

Even if the contract did not suggest that the Government’s denial of or failure to

pay an invoice commences the running of the statute of limitations under this particular

contract, SMARTECH has alleged in its complaint that clause H.9(a) of the contract defines

the contract, including any exercised options, as a single multiple-year unit. See Exhibit 8

at 33 (quoted in Complaint ¶ 20). Without contractual deadlines expressly requiring payment

of the fixed fee annually or bi-annually, there is no reason to believe that the statute of

limitations started to run on any fixed fee until performance of the single unit contract was

complete. See Johnson, 437 F.3d at 900-01. SMARTECH submitted its claim to the

contracting officer within six years of the 2008 contract completion date, precluding any

argument that the claim submission was untimely.

5

DOE also argues that the “fixed fee” aspect of SMARTECH’s contract was not

truly a fixed fee, but instead was intended to represent a profit markup of eight percent upon

hourly direct costs incurred as part of contract performance. It appears that, based upon that

argument, DOE believes that SMARTECH was required to invoice that “fixed fee” profit

markup at the same time that it submitted invoices for its direct costs, most of which were

submitted more than six years before SMARTECH’s certified claim. In support of its

argument, DOE cites to a document that, although a part of the appeal file that DOE

submitted to the Board, is not identified in SMARTECH’s complaint. Because DOE’s

CBCA 4068

13

Decision

For the foregoing reasons, respondent’s motion to dismiss for failure to state a claim

is DENIED.

_____________________________

HAROLD D. LESTER, JR.

Board Judge

We concur:

____________________________

STEPHEN M. DANIELS

Board Judge

_____________________________

H. CHUCK KULLBERG

Board Judge

argument is dependent upon material from outside of the appellant’s complaint, we cannot

consider it on a motion to dismiss for failure to state a claim. Payne Enterprises v.

Department of Agriculture, CBCA 2899, 13 BCA ¶ 35,261, at 173,082.