United States: Strike When The Iron Is Hot: Court Of Federal Claims Found A Contractor's Defense To A Termination Was Precluded By Its Failure To Previously Assert Those Claims In Litigation Before The ASBCA

On August 25, 2023, in ECC CENTCOM Constructors, LLC v. United States, COFC No. 21-1169, the U.S. Court of Federal Claims ("the Court" or "COFC") barred ECC CENTCOM Constructors, LLC ("ECC") from asserting claims that should have been asserted before the Armed Services Board of Contract Appeals ("ASBCA") citing the doctrine of claim preclusion.

At the ASBCA, ECC had appealed a termination for default and sought time extensions and damages due to excusable delay. The Board dismissed ECC's appeal, finding that the Contracting Officer ("CO") acted reasonably in terminating the contract and finding that ECC failed to present its excusable delay claims to the CO as required under M. Maropakis Carpentry, Inc. v. United States, 609 F.3d 1323 (Fed. Cir. 2010). ECC requested a stay to allow it time to present its delay claims to the CO, but the Board denied the request stating that it was untimely and futile because ECC's own expert testified that less than half of the delays were excusable, which meant that the CO's termination decision would still be justified. ECC appealed the ASBCA's decision to the U.S. Court of Appeals for the Federal Circuit, where the Board's decision was affirmed.

Two years after the ASBCA decision, ECC submitted certified claims to the CO seeking time extensions of 273 days, delay damages of $2,534,827.23, a conversion of the wrongful termination for default to one for convenience, and a withdrawal and reevaluation of its Contractor Performance Assessment Reporting System rating. The delays were the same delays that ECC failed to properly assert before the ASBCA. When the CO informed ECC that a final decision would not be issued, ECC filed a complaint at the COFC asserting three different delay claims—all of which ECC had attempted to raise at the ASBCA.

The government moved for summary judgment, arguing that ECC's delay claims were barred by the doctrine of claim preclusion because ECC previously challenged its termination before the ASBCA on several grounds, including the same excusable delays alleged before the Court. ECC argued that claim preclusion was inapplicable because the Board dismissed these claims for lack of jurisdiction rather than issuing a decision on the merits. The Court disagreed, holding that claim preclusion was still supported, even though the initial action was dismissed for lack of subject matter jurisdiction, because some issues in the appeal were decided on the merits and the jurisdictional defects were solely due to the contractor's failure to submit all its claims to the CO at one time. Since the termination for default was the subject of the ASBCA appeal, ECC should have and could have litigated any plausible defense before the ASBCA as "the master of its appeal." Accordingly, the Court found that ECC may not "proceed to piecemeal litigation of its claims through selectively creating or limiting [the] ASBCA's or this Court's jurisdiction over its claims."

This decision is an important reminder to contractors to submit defenses to a termination to the CO before appeal to preserve those defenses before the Board of Contract Appeals or Court of Federal Claims and avoid the risk that the company is precluded from raising the issue in a later action.

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