               ARMED SERVICES BOARD OF CONTRACT APPEALS

Appeal of --                                   )
                                               )
DRS Global Enterprise Solutions, Inc.     )        ASBCA No. 61368
                                          )
Under Contract No. DAAB07-03-D-B013 et al.)

APPEARANCES FOR THE APPELLANT:                     David Z. Bodenheimer, Esq.
                                                   Skye Mathieson, Esq.
                                                    Crowell & Moring LLP
                                                    Washington, DC

APPEARANCES FOR THE GOVERNMENT:                    Arthur M. Taylor, Esq.
                                                    DCMA Deputy Chief Trial Attorney
                                                   Michael T. Patterson, Esq.
                                                    Trial Attorney
                                                    Defense Contract Management Agency
                                                    Chantilly, VA

            OPINION BY ADMINISTRATIVE JUDGE O'CONNELL
           ON APPELLANT'S MOTION FOR SUMMARY JUDGMENT

       This appeal involves a government demand for repayment of more than
$8.6 million. Appellant, DRS Global Enterprise Solutions, Inc. (DRS), contends that
the government's claim is untimely and has moved for summary judgment. We deny
the motion.

          STATEMENT OFF ACTS FOR PURPOSES OF THE MOTION

      The following facts are undisputed or uncontroverted.

       On various dates, the government awarded contracts to DRS's predecessor (for
simplicity, also referred to as DRS). The Defense Contract Management Agency
(DCMA) administered these contracts for the government. Two of the contracts are in
the record, both of which provide that DRS would be paid on a time-and-materials basis.
(R4, tab 1 at G-2, tab 11 at G-255)

      Appellant submitted the vouchers at issue between December 2005 and May 2006.
The government paid all of these vouchers by December 15, 2006. (Appellant's
Statement of Undisputed Material Facts (ASUMF) and Government's Response to
ASUMF (gov't resp.) ,r,r 4-5; compl. and answer ,r 9) The vouchers are not in the record.
      On February 28, 2008, DRS submitted its fiscal year (FY) 2006 incurred cost
proposal (ICP) for the period from November 1, 2005 to January 31, 2006, to the
government. On March 31, 2008, DRS submitted its FY 2006A ICP for the period from
February 1, 2006, to March 31, 2006. (ASUMF and gov't resp. ,r,r 7-8; R4, tabs 16-17)

       On July 17, 2009, the Defense Contract Audit Agency (DCAA) conducted an
entrance conference with DRS concerning the FY 2006 and 2006A ICPs (ASUMF and
gov't resp. ,r 13; compl. and answer ,r 17).

       Almost three years later, on April 3, 2012, DCAA informed DRS that its FY 2006
and FY 2006A ICPs were inadequate, contending that the schedules included with the
submission lacked various information (ASUMF and gov't resp. ,r,r 18-19; app. supp. R4,
tabs 24-25).

       DRS thereafter submitted additional information and on June 22, 2012, DCAA
informed DRS that it had provided sufficient information for DCAA to perform the
audits (ASUMF and gov't resp. ,r,r 20, 23; app. supp. R4, tabs 27-28).

        In September 2013, DCAA requested additional documentation from DRS,
which it did not provide. On November 7, 2013, DCAA wTote to DRS to inform it
that it had been denied access to data/documentation for labor transactions, direct
material transactions and the other direct cost transactions. (Government proposed
findings of fact ,r,r 9-11 1; ex. G-3 at G-14)

       On December 30, 2013, DCAA issued an audit report in which it questioned more
than $54 million in costs for the fiscal years at issue (ASUMF and gov't resp. ,r 24; R4,
tab 8 at G-168).

       More than three years later, on September 11, 2017, a DCMA contracting officer
issued a final decision demanding repayment of $8,607,879.23. Of this amount, the
vast majority, $8,416,435.16, was for "other direct costs" that the contracting officer
contended were unallowable. The final decision listed the purportedly unallowable
costs and identified various reasons for the disallowance, including the lack of an
invoice for the costs, proof of payment, or a signed purchase order. The remainder of
the amount sought arose from the difference between DRS's billing rates and the
indirect cost rates established in the final decision. (ASUMF and gov't resp. ,r,r 27-29;
R4, tab 10 at 239-45)

         DRS filed a timely appeal with the Board on October 16, 2017.



1
    DRS has not disputed these facts. Thus, we find them to be undisputed. Board Rule 7(c)(2).
                                            2
                                         DECISION

       Summary judgment is appropriate when there is no genuine issue of material fact
and the moving party is entitled to judgment as a matter of law. Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 247-48 (1986). When considering a motion for summary
judgment, the Board's function is not to weigh the evidence and determine the tmth of
the matter but to determine whether there is a genuine issue for trial. Id at 249. We are
required to view the record in the light most favorable to the nonmoving party, in this
case the government. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574,
587 (1986).

        The Contract Disputes Act (CDA) provides that "each 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 accmes,
"when all events, that fix the alleged liability of. .. the contractor and permit assertion of
the claim, were known or should have been known.'' Federal Acquisition Regulation
(FAR) 33.201. 2 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 ,T 36,168 at 176,489 (citing
Raytheon Missile Sys., ASBCA No. 58011, 13 BCA ,T 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 DRS
bears the burden of proof. Kellogg Brown & Root Servs., Inc., ASBCA No. 58175,
15-1 BCA ,T 35,988 at 175,823 (citing FED. R. CIV. P. 8(c); Bridgestone Firestone
Research, Inc. v. Automobile Club de L 'Quest de la France, 245 F.3d 1359, 1361
(Fed. Cir. 2001)).

         DRS contends it is entitled to summary judgment because the government's
claim accrued more than six years before the September 11, 2017 final decision, or, in


                                                                                                 I
other words, before September 11, 2011. DRS identifies three alternative accrual dates.
First, it contends, that for direct costs, the government's claim accmed no later than
December 15, 2006, when it paid the last of the invoices at issue. (App. mot. at 1)
Second, for the indirect costs, DRS identifies February 28, 2008, the submission date
for the FY 2006 ICP and March 31, 2008, the submission date for the 2006A ICP (id.
at 2), as the accrual dates. It also contends that the claim for direct costs began to
accme on these dates if it did not accrue in 2006 (id. at 23 ). Third, DRS contends that
the claim accrued no later than the July 17, 2009 DCAA entrance conference by which

2
    We quote from the current version of the regulation but the version in the 2002 FAR
        (the year of the earlier of the two contracts in the record (R4, tab 1)) is the same
        or very similar in material respects.
                                              3
point DRS contends that the auditor should have been aware "that the costs in the
vouchers and ICPs were not sufficiently substantiated" (id. at 26).

       The government contends that interim vouchers by their very nature do not
contain supporting documentation (gov't opp'n at 28), nor do ICPs (id. at 38). The
government further contends that there is no way it could have known that DRS could
not substantiate the amounts billed until it failed to provide DCAA with requested
documents in October 2013 (id. at 42).

        With respect to DRS's contention that the claim for direct costs accrued when
the government paid the invoices, we have denied summary judgment in comparable
appeals. Kellogg Brown & Root Servs., Inc., ASBCA Nos. 58518, 59005, 16-1 BCA
,r 36,408 at 177,527-29 (denying summary judgment where contractor contended that
claim accrued when government paid the first invoice containing controverted charges);
Kellogg Brmvn & Root SenJs., Inc., ASBCA No. 58465, 16-1 BCA ,r 36,253 at 176,869
(denying summary judgment where contractor contended the claim accrued on the last
date the government made a payment on the invoices at issue). Accordingly, our
precedent simply does not provide for a blanket rule that the statute begins to run when
the government pays the invoice.

        This does not mean that a claim never accrues on the date the government pays
disputed costs. As DRS observes in its brief, we granted the appellant summary judgment
in such a case in Spartan Deleon Springs, LLC, ASBCA No. 60416, 17-1 BCA ,r 36,601
at 178,3 10-11. We concluded in that appeal that there were undisputed facts demonstrating
that the claim accrued either when the government paid the relevant invoices or when the
contractor submitted its indirect cost rate proposals, both of which occurred more than six
years before the contracting officer's final decision. But our conclusions in that appeal
stemmed from admissions by the government in its brief as to the types of information it
received when the contractor submitted its invoices and its ICP. 3 Id.

       These decisions demonstrate that determining when the government reasonably
should have known of its claim requires consideration of the unique facts in the
appeal. This is particularly relevant in this appeal because the final decision identifies
39 discrete direct cost items that the contracting officer found to be unallowable. For
purposes of illustration we will briefly review the largest single item at issue, a
demand for repayment of $1,117,645 on voucher No. 99924 (see R4, tab 10 at 243).

3
    In its reply brief, DRS also cites a decision in which we held that the claim accrued
           on the date of ICP submission, but our ruling was based upon our finding that
           the ICP had included "expressly unallowable" costs. Raytheon Co., ASBCA
           Nos. 57576, 57679, 13 BCA ,r 35,209 at 172,751. There is no contention in this
           appeal that the costs were on their face unallowable, only that DRS failed to
           produce necessary supporting documentation.
                                             4
        The contracting officer found this amount to be unallowable because DRS was
unable to provide proof of payment (R4, tab 10 at 243 ). DRS contends that the
government should have recognized this back in 2006; it states that "[w]hether certain
costs were substantiated or not involves objective facts that are reasonably knmrable upon
cursory review of the vouchers and/or ICPs" (app. mot. at 19) (emphasis in original).
DRS also states that"[ w]hen it paid th[ e] vouchers in 2006, the Government possessed all
material facts regarding the degree and adequacy of substantiation for those vouchered
direct costs" (id. at 20). But, having made these provocative statements, DRS produces no
smoking gun. Voucher No. 99924 is not in the record and, absent an admission by the
government, we cannot accept DRS' s assertion that a cursory review would reveal the
lack of substantiation.

       Furthermore, the parts of the ICPs that are in the record do not mention voucher
No. 99924, or an amount of $1,117,645, nor do any of the other documents in the
government's Rule 4 file. There is also no admission by the government that it knew
that DRS could not provide appropriate documentation prior to September 11, 2011.
Nor is there anything else in the record that provides uncontroverted proof that the
DCAA auditor was aware of the lack of proof at the time of the entrance conference.
Accordingly, the record as currently developed lacks undisputed facts demonstrating that
the government knew or should have known of its claim before September 11, 2011.

        We also observe that DRS's contention that the government should have known
of its claim in 2006 is undermined by letters DRS wrote to DCAA and DCMA in 2013
and 2014. In those letters, DRS complained that the audit did not take place until seven
years after the fiscal year closed, and alleged that a series of corporate acquisitions and
consolidations, combined with its bank's policy of purging records after seven years,
resulted in the loss or destruction of the requested documentation. (R4, tab 8 at G-231,
tab 9 at G-233) This raises a rather obvious question: if the records disappeared over
the course of seven years, how could the government have known about the lack of
substantiation in 2006, as DRS contends in its motion?

       In addition to Spartan Deleon Springs, DRS primarily relies upon Raytheon
Missile Systems, 13 BCA ~ 35,241, but that decision is inapposite. Raytheon involved a
contracting officer's final decision issued in 2011 demanding repayment of more than
$10 million. The claim arose from a contract that the parties entered into back in 1999.
Earlier that year, Raytheon had informed the government in a Cost Accounting
Standards Disclosure Statement that certain major subcontracts would receive a special,
reduced, application of its burden for overhead rates. Nevertheless, for one major
subcontractor, Raytheon billed the government full burden, which the government
began paying later in 1999. Id. at 173,015-16. In other words, the government was told
it would be charged one rate but was charged (and paid) another rate. We held that the
government's claim was "perfectly knowable" in 1999 because it had the key facts,
even if it failed to connect them. Id. at 173,017.

                                            5
       There are no comparable undisputed facts in the present appeal. As we
discussed above, DRS' s sweeping statements with respect to the level of knowledge
possessed by the government in 2006 are not supported by the current record.

        For all of these reasons, the best course is to allow further development of the
record to determine when the government should reasonably have known of its claim.
See A/ion Sci., 15-1 BCA 136,168 at 176,490; Boeing Co., ASBCA No. 58660, 15-l
BCA 135,828 at 175, 190-94; Lord Corp., ASBCA No. 54940, 06-2 BCA ,r 33,314
at 165, 169-70.

       We note that DRS's motion raises only the statute oflimitations. Therefore, we
need not address whether the more than 10 years that elapsed between payment of the
invoices at issue and the issuance of the contracting officer's final decision calls for
application of the doctrine of laches.

                                      CONCLUSION

         Appellant's summary judgment motion is denied. 4

         Dated: August 30, 2018


                                                 l)\~~2)Q'~
                                                    MICHAEL N. O'CONNELL
                                                    Administrative Judge
                                                    Armed Services Board
                                                    of Contract Appeals


    I concur                                        I concur


       M
    RICHARD SHACKLEFORD                             J. REID PROUTY
    Administrative Judge                            Administrative Judge
    Acting Chairman                                 Vice Chairman
    Armed Services Board                            Armed Services Board
    of Contract Appeals                             of Contract Appeals




4
    The government's motion to file a sur-reply is denied as moot.
                                             6
      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. 61368, Appeal of DRS
Global Enterprise Solutions, Inc., rendered in conformance with the Board's Charter.

      Dated:



                                                 JEFFREY D. GARDIN
                                                 Recorder. Armed Services
                                                 Board of Contract Appeals




                                           7
