The Litigation Initiation Decision Process

The materials set forth in the foregoing section discuss the actions that a contractor needs to undertake in order to exhaust all possibilities of settlement at the Contracting Officer level, as well as related matters at the Agency. This section discusses the issues that are presented in deciding whether to enter into litigation, and how to use litigation as an actual settlement tool.

As so relatively few cases actually go to trial, contractors should remember that most cases are going to settle once litigation starts. The issue is how to maximize recovery, while minimizing the time and expense of doing so.

In an overall setting, the litigation portion of the resolution of claims is ignored by many contractors, not dealt with as being considered too antagonistic or hard an approach to utilize, or simply avoided because of the perception that counsel needed to deal with litigation issues is too expensive. All of those reasons for avoiding litigation are in part erroneous.

Litigation is simply a management tool to gain a settlement in any situation. In the Government contract arena, litigation is one-half of the equation. How can that be? Because Congress has passed the Contract Disputes Act, which effectively requires that any issue that the parties can not resolve voluntarily can only be resolved in two ways -- either as a formal claim followed by a formal final decision of the contracting officer, or during the course of litigation on an appeal to either the Board of Contract Appeals or the Court of Federal Claims.

As mentioned above, as over 90% of the cases taken into litigation are settled before trial, using litigation as a tool to gain an appropriate settlement is necessary. There is no reason to be afraid of the litigation option. Indeed in many ways litigation with the federal Government is much more predictable. rational, and reasonable than in commercial litigation. Congress has seen to this with the CDA. Contractors also routinely recover interest in litigation -- which is not true in commercial litigation. In addition, certain small contractors can recover their attorney's fees -- this does not generally occur in commercial litigation.

Litigation of Government contract disputes is something that needs to be approached knowledgeably and as a part of an overall management approach to appropriately maximize a contractor's recovery on extra work or other items that have been required of the contractor during contract performance. The claims process is one-half of this - the appropriate use of the litigation process is the other half.

Initial Strategy Drivers and Decisions - There Are Many and They Are Subjective.

Even before litigation is instituted, which is usually done by filing a Notice of Appeal under appropriate circumstances, it is necessary to consider two principal matters: (1) unique federal procedural issues, and strategy related to them, and (2) the costs associated with the litigation, and related issues. We discuss these in order below.

We then discuss actual litigation mechanics, and ideas for accomplishing those in a way that addresses the overall purpose of litigation in the federal Government contract area - getting paid for claims, etc. within the shortest possible time, and with the least possible cost.

Choice of Forum for Litigation (Procedural); Choice of Law (Substantive); and Choice of Opponent Issues (Judgmental).

The federal government contract area is unique in terms of where litigation is pursued. That issue drives other related issues, such as whether the two forums available to contractors have differing favorable law to one party or the other, or whether various differing judgmental issues exist concerning the two forums' personnel and procedures that may have an impact upon the outcome of a case.

We stress again that the materials that are contained in this section are highly judgmental - different practitioners will have different views. Our point is to raise these issues so that you can make your own informed judgments.

Choice of Forum.

The issues presented for decision as to choosing a forum in an effort to better one’s chances in litigation, virtually all come out of the Contract Disputes Act of 1978.

That act provided that a federal Government contractor could go to either of two forums to resolve their Government contract disputes. Contractors could go to the agency Board of Contract Appeals 90 days after a final decision was issued by the Contracting Officer, or it could go to the U.S. Court of Federal Claims one year from the date the final decision was issued.

Safety Valve Action in the Court of Federal Claims.

Obviously, if the contractor misses the 90 day period, he has the safety valve of going to the Court of Federal Claims for one year. It is not surprising that there are a large number of cases like this -- no conscious decision is made to go to the Court of Federal Claims - the contractor has simply missed the 90-day window and has no choice.

The Background of the Two Separate Forums.

Why did Congress give contractors two separate forums? There is no particularly good reason for this. Historically, before the Contract Disputes Act, contractors could initially go to the Court of Federal Claims if they believed their case involved a breach of contract as opposed to an administrative matter under the terms of the contract. That issue of course provoked all sorts of jurisdictional litigation and Motions to Dismiss -- the Justice Department, which is in charge of litigation at the Court of Federal Claims, was always trying to send contractors back to the Boards.

In reaction, Congress gave contractors the unfettered right to pick which forum they wanted to go to -- an administrative body, or a Federal Court. The idea was to be fair to contractors -- let them choose the forum they are most comfortable with.

Related Lobbying Issues -- Pure Washington Activity.

There were of course other lobbying efforts going on at the time, which were geared towards resolving this matter in a way that would be perceived as favorable to contractors. One interesting story that circulates is that a prominent member of the Government contract bar, whose office was in downtown Washington very near the Court of Federal Claims, did not want to have to go to the Armed Services Board of Contract Appeals, which was in suburban Virginia and a subway ride away. Therefore, pressure was applied upon the appropriate committee in Congress to get contractors the unfettered choice to pick or choose which forum they wished to utilize.

Does One File Their Case at the Board of Contract Appeals or the Court of Federal Claims?

There are a number of related issues, which are set out immediately below, that require initial consideration, as well as other separate issues that may be case related, which are discussed later in this section. The initial types of considerations, leading to a decision to go to the Board or to the Court of Federal Claims, are set out below:

Size of Cases.

As will be discussed in the costs of litigation section below, the size of a case obviously has an effect upon how much money is going to be spent in trying the case. Some practitioners will say that it is less expensive to try a case at an agency Board of Contract Appeals because of the informality involved than at the Court of Federal Claims. We are not sure that is a correct analysis.

Accelerated Procedures.

What we are sure of is that the Board of Contract Appeals has an accelerated procedure for dealing with cases of $50,000 or less or $100,000 or less. This procedure is worth using, and indeed, except in the rarest cases, is the only way to process Government contract claims in this price range. It is possible with discipline to economically process a $25,000 claim at the Board of Contract Appeals.

But, what is perhaps more important is that the larger a case grows the more contentious it becomes. Board of Contract Appeals Judges, and the entire Board of Contract Appeals, is a creation of the agency involved in the dispute. The A-12 litigation, the most contentious litigation perhaps in the last 30 years, was filed in the U.S. Court of Federal Claims. The claims in dispute were over $2 billion. It would have been perhaps unrealistic to expect the Navy to process this dispute at its own agency Board of Contract Appeals.

Internal Agency Calls.

Ex parte calls can also be a problem. This occurred in publicized cases at the GSBCA a number of years in the past in connection with the Capital Electric line of cases. It is always a temptation for agency people at senior levels to be insensitive and call the agency Board or Chairman.

In the Court of Federal Claims such a call will likely result in the FBI visiting the person who placed the call to investigate a potential obstruction of justice.

Temperature Level of Agency Personnel.

How upset are the agency personnel about the particular dispute? If an objective person can tell that the agency people are really highly outraged with what the contractor has been doing, even though the contractor thinks he is legally correct, going to the agency Board of Contract Appeals, where the agency still has full control over the settlement process, could be a mistake.

Is the Case Ready for Immediate Settlement?

If the case is one in which the agency is clearly wrong for a host of reasons at the Contracting Officer level, it may be ready for immediate settlement at the agency Trial Attorney's Office. This is because once the Trial Attorney looks at the case and sees that it is a loser, he or she will most likely take immediate action to get the case resolved.

This happens more frequently than one thinks. The contractor did not communicate well with the Contracting Officer, new attorneys for the contractor and CO come into the case, an appeal is filed, and an understandable rationale for recovery is presented to the contracting agency. One needs to make the decision whether this type of situation exists - it points towards going to the Board of Contract Appeals to keep the agency in control.

If the case goes to the Court of Federal Claims, the Justice Department initially has 60 days to answer and will perhaps ask for more. Justice Department counsel are unfamiliar with the case and do not work for the agency. Yet, the Justice Department makes all decisions concerning the settlement and resolution of the case. They will consult with agency counsel and personnel, but they make the final decision based upon their view of the overall impact on the federal Government procurement system.

The Justice Department's decision making process is very different at times than an agency's. Justice also has its own agenda on various procurement policy/litigation related issues.

Do You Want the Agency to Retain Control Over the Case?

As indicated above, settlement is one reason to keep the agency in charge of the case - by keeping the case at the Board of Contract Appeals with a fair Trial Attorney in charge. There are other reasons not to have the agency in charge. For example, if the case is particularly contentious, and you need adequate discovery to prove your case, many practitioners would say that the Court of Federal Claims will enforce discovery proceedings more quickly and perhaps more broadly against the agency.

Have Fraud, Waste, and Abuse Issues Been Raised?

The Court of Federal Claims has a forfeiture statute, which holds that an entire claim may be forfeited if the Government proves one element of fraud in the claim. 28 USC 2514; UMC Electronics v. United States 249 F.3d 1337 (Fed Cir 2001)

Therefore, it might be wise to take such cases to the Board of Contract Appeals if any type of fraud issue has been raised. That does not mean that the Board fails to deal with fraud, waste and abuse issues. It just does so differently.

Substantive Law Issues.

There are certain substantive areas of law that automatically telegraph to the contractor that he should be taking his case to one forum or the other.

Defective Pricing -- Cost or Pricing Data Cases.

A defective pricing case is a good example. With perhaps one or two exceptions, the Court of Federal Claims and the Federal Circuit have not decided a defective pricing case in a contractor's favor in over the last 20 years.

In the same time period, the Board of Contract Appeals, according to various estimates, has been deciding defective pricing cases in the contractor's favor in the rate of something like 60%.

Indeed, the Air Force felt so oppressed by the rate of decisions in the contractor's favor on Air Force defective pricing cases that it opened a public dialogue with the Board of Contract Appeals, in which it objected to the Board's decision rate in favor of contractors. That accomplished little.

Other Substantive Areas of the Law.

Are there other substantive areas where the law is more favorable to contractors in one forum than the other?

Because of the DeVito line of cases, it has been assumed for many years that the Court of Federal Claims is more favorable to contractors' appeals from default terminations. We are not sure that is correct, but it is an issue to be considered.

In interpretation of contract cases there is a general feeling that the Court of Federal Claims may stay closer to the established rules for construing contracts, and therefore be more favorable to contractors. We are not sure this is correct either.

Looking for Your Specific Case, or Something Close, at Both the Board and Court.

Whatever the general rule, you should examine and review Board and Court of Federal Claims case law that involves the dispute at issue in your case to look for trends and similarities before a decision is made to file at either forum. One may be surprised to find a case directly on point and favorable at the Board, but lacking at the Court or vice versa. This specific type of forum selection/shopping is specifically permitted by the Contract Disputes Act, and contractors are remiss if they fail to take advantage of it.

The Trial Attorney's Office.

Each of the military departments has its own Trial Attorney's Office. If you have a case going to the Armed Services Board of Contract Appeals, you will deal with these Trial Attorney's offices.

In addition, other agencies have either trial attorneys or people who fill those functions, who try cases at the Board, and are experienced in Board rules and procedures and how cases proceed. This is both good and bad as discussed below.

Military Trial Attorneys' Offices.

The military Trial Attorneys' Offices are generally populated by both civil servant employees, as well as military officers, who are on a military career path.

It is at times refreshing to see the can-do now approach of military personnel in the litigation area; it is at times frustrating when you are on the wrong end of that approach.

All Trial Attorney personnel tend to be approachable, and willing to talk about cases without particular restrictions. It is wise to meet with the Trial Attorney assigned to your case in the opening rounds to see if there are common points of agreement or to learn what the major points of disagreement are.

It is good to continue with these periodic meetings, as well as the exchange of informal emails, separate from the formal pleadings which must be filed at the Board.

In addition, many of the trial attorneys will engage in informal discovery practices. You can trust them to do a fair job of producing documents and witnesses without formal Board orders or proceedings. This can certainly save time and expenses in smaller cases.

General Services Administration.

GSA has trial attorneys available to assign to their cases and in some instances to other agencies' cases. Under the Board consolidation taking place in October of 2006, the GSA Board will also have jurisdiction to handle the resolution of contract disputes for a number of smaller agencies. Exactly how agency counsel from the other agencies will interface with GSA counsel is to be determined.

The procedures to be followed as to the interface with GSA counsel are similar to those described above for military cases.

Other Agencies.

Agencies off the beaten path may have their own ways of resolving cases. They may have a very strong general counsel's office that insists upon dealing with cases themselves proactively. They may be happy to delegate all disputes resolution processes to the ASBCA. Experienced personnel should inquire as to all of these issues before deciding where to pursue litigation.

The Justice Department.

The Justice Department is in charge of cases, including making all decisions concerning settlement, at the Court of Federal Claims. While the Justice Department may consult with agency counsel and try to accommodate agency views, it is not uncommon for Justice to overrule the agency or make a decision based upon its concerns as to Government-wide litigation policy.

The good part about this is that Justice is as far from being concerned about the agency's sensitivities as could be possible in a Governmental system. Justice is going to make its own decisions after hearing the agency out. Justice Department lawyers do not like to lose cases -- they will settle bad cases at a rational figure.

But the Justice Department can also become bound up in policy wide issues relating to litigation that seem extraordinarily insensitive to contractors' interests or that take an extraordinary amount of time. The Justice Department's approach to taking every issue possible with respect to the certification of claims under the Contract Disputes Act, which effectively ended in 1992 when Congress passed the technical correction provisions to the Contract Disputes Act, is an example. Without any regard to contractors' interests or congressional purpose, Justice challenged every conceivable issue regarding certification inadequacies.

While the Court has discovery procedures which parallel in many respects the Federal rules, and should therefore allow full and open discovery, it is not uncommon to see Justice raising issues that it believes are peculiar to the Government as to why discovery does not need to be granted. These can be time consuming and frustrating battles for contractors and their attorneys. Dealing with state secrets issues, executive privilege, pre-decision privilege processes, etc. are all issues rarely seen in civil Federal litigation.

Declaratory Judgments.

“Contractors should think proactively — do they see contract interpretation, options, or other disputes brewing with the Government that are going to cause them to lose significant amounts of money on their contracts? If so, they need to try to time their litigation efforts, and get to Court before significant funds are expended so that their disputes are truly being resolved prospectively.”

The general understanding is that declaratory judgments are not available in the federal Government contract area. This comes out of cases such as King v. United States. This general understanding was largely correct as part of the Contract Disputes Act.

Contract Disputes Act Practice

However, a practice has developed under the Contract Disputes Act, which allows the Boards of Contract Appeals to make declarations of parties’ rights under a contract when no immediate monetary dispute exists. The following decisions are representative:

• Sarong-National Joint Venture, ASBCA No. 54992, 06-1 BCA P 33,232 (Board held that it has "certain discretion to issue a declaratory judgment decision in situations involving a fundamental question of contract interpretation or a special need for early resolution of a legal issue.")

• Appeal of Martin Marietta Corporation, ASBCA No. 38920, 90- 1 BCA P 22418 (Board held that it could resolve all contract claims "including demands for ‘interpretation of contract terms, or other relief' as it has jurisdiction to grant ‘declaratory relief’".)

• Dr. Michael Grinberg, DOTCAB No. 1543, 87-3 BCA P 20102 (Board held that it has “jurisdiction over all disputes arising under the contract including non-monetary actions".)

Speed of Boards of Contract Appeals.

The problem is that the Boards do not move fast enough in most instances to give meaningful relief to contractors.

United States Court of Federal Claims Rule.

The answer to this difficulty is somewhat surprisingly the United States Court of Federal Claims. Being a Federal Court, it has a declaratory judgment rule - Rule 57. And most importantly, the Court will utilize it in short order in appropriate cases.

Acting Proactively -- Alliant Tech Systems Situation

In Alliant Techsystems, Inc. v. U.S., 178 F. 3d 1260 [Fed.Cir. 1999), the Court heard a complex declaratory judgment request with respect to invalid option exercise allegations, and issued its initial opinion in 43 days from the date the case was filed. Such a result would be virtually impossible at the Boards of Contract Appeals.

A declaratory judgment action is extraordinarily expensive in comparison to a standard contract action -- you are seeking injunctive relief, which involves filing numerous papers and briefs with the Court in short order. This significantly increases litigation expenses. Therefore there is a serious price to be paid for seeking declaratory relief.

However, as demonstrated upon a review of the Alliant Techsystems case, there are appropriate instances for seeking declaratory judgment, such as in that case. In Alliant, the contractor was being asked to expend significant money in the future, thereby increasing its losses on a Government contract. Alliant sought an expedited ruling that it was not obligated to perform the option portion of a contract because the Government had not validly invoked the option clause. The Court agreed with a part of that invalidity argument.

Stopping Work as an Alternative.

A portion of the injunctive relief/declaratory judgment approach is driven by the fact that it is always extraordinarily risky to stop work under a federal Government contract. In Alliant Techsystems, the contractor did stop work and it was criticized by the Court for doing so.

If declaratory judgment relief is available in the Court in 40 days or so, contractors in most cases will probably not want to assert that the Government has committed so significant a breach that it was entitled to stop work, without having its dispute resolved by the Court of Federal Claims. Contractors will run the risk of being found in breach of the contract themselves if they do stop work, which would thereby extinguish any other relief they may have otherwise been entitled to receive.

Looking for Ways to Use this Technique Constructively

Contractors should think proactively -- do they see contract interpretation, options, or other disputes brewing with the Government that are going to cause them to lose significant amounts of money on their contracts? If so, they need to try to time their litigation efforts, and get to Court before significant funds are expended so that their disputes are truly being resolved prospectively. While it is impossible to control this situation completely, it is possible to analyze events and be proactive before you lose the possibility to cut future losses.

And remember the need for a CDA certified claim and the 60 day final decision period.

Maritime Cases (Effectively Brought Only in US District Court).

The Contract Disputes Act holds that Maritime cases are to continue with their pre Contract Disputes Act jurisdiction as admiralty type actions to be brought in US District Court or at the ASBCA.

The difficulty is that the Contract Disputes Act governs the sale of all goods and services. Therefore, when the Government purchases for example propellers or other parts from say the Federal Supply Schedule or through a directed contract, the assumption would be that this is Contract Disputes Act covered. The Government is simply purchasing goods or services that happen to eventually be going to a ship or other Maritime use.

Do not be misled by this assumption. The United States Court of Federal Claims has issued decisions, which in effect cut off its ability to review such cases. These cases are probably in error, but they are present and need to be respected. It is a waste of time to go to the Court, only to be simply dismissed on jurisdictional grounds, even if the Court's approach is incorrect.

The Contract Disputes Act, 41 U.S.C. § 603, § 607, and§ 609, requires that if a maritime contract is involved, contractors must seek review of a Contracting Officer's final decision in the appropriate United States District Court - not in the Court of Federal Claims. See the discussion of such issues in the following: Bethlehem Steel Corporation v. Avondale Shipyards, Inc., 951 F.2d 92 (5th Cir. 1992); Southwest Marine, Inc.. et.al. v. United States, 43 F.3d 420 (9th Cir. 1994); and Bonanni Ship Supply. Inc. v. United States, 959 F.2d 1558 (l lfh Cir. 1992). The ASBCA also will hear some of these cases.

It should also be noted that Federal Rule of Civil Procedure Rule 82 provides that the general venue sections for civil actions-28 U.S.C. § 1391-1392 do not apply to admiralty or maritime claims. Federal admiralty law allows the Federal Government to be sued where they may be found and served.

Summary Judgment Strategy.

Every case that goes to either the Board of Contract Appeals or the Court of Federal Claims should be reviewed for summary judgment potential.

For example, we have seen a recent case in which the Government has not paid a contractor -- not because it disputes the underlying work, but because it cannot adequately understand the contractor's invoices or accounting reasons . We have gone back to the basic work tickets and created new summaries/invoices, which may be certified as claims, and will likely be moving for summary judgment.

This is exactly the kind of case in which summary judgment can easily be pursued. As long as there is no dispute as to the underlying work and only paperwork issues are involved, the paperwork can be corrected before moving for summary judgment.

Summary judgment also works in a partial fashion. If you know that you are legally correct on a particular issue, but you cannot possibly sort out quantum issues without a trial, you may move for partial summary judgment as to legal entitlement issues only. If you win on summary judgment, you have resolved one half of your case and you will be in a much better position to negotiate a settlement on just the quantum portion.

The list of items on which you can move for summary judgment goes on and on. There is no hard and fast rule as to how many separate summary judgment motions or issues can be raised on a partial basis, but it should be considered in each case. You can be sure that your opponents at the trial attorney's office or at the Justice Department are considering summary judgment motions as well, and will file them to try to eliminate portions of your client's arguments.

Particularly at the Boards and Courts, where there are no jury trials, summary judgment motions are a way of life , and an integral part of litigation practice. Both sides are trying to get an immediate legal or quantum leg up on the other side, and that is appropriate. It also shortens the litigation, lessens the costs, and leads to more resolutions of cases.

Consider yet one more example:

The Government has been reimbursing a particular item under a contract for 10 years. In the 11th contract for the 11th year, the Government changes its policy and decides that it will not reimburse this particular cost. The cost is only one modest element of the overall work that the contractor is doing, part of which is being done for a fixed price, and part of which is being done on a time and material basis. But, the total cost amounts to $250,000.

The contract provision under which the Government has been reimbursing the particular item for the last 10 years is ambiguous, and it is difficult to tell whether the item is really reimbursable under that particular provision by just looking at the language.

What do you do with this situation?

There is a two-part analysis here -- a substantive law of Government contracts issue and procedural issues. This is generally the circumstance that you are confronted with.

On the substantive case law side you would want to know about the Foster Sportswear doctrine (L.W. Foster Sportswear v. United States, 405 F.2d 1285 (Ct.Cl. 1969)). That case in effect holds, as do cases following it, that the Government cannot interpret a specification in one way repetitively (by repeatedly reimbursing the contractor for the disputed item over the last 10 years) and then change its position without informing the contractor of its new interpretation before the contractor has placed its bid, which was prepared based upon the parties' practices over the prior 10 years. This is likely also the rule in commercial contract disputes. See UCC section 2-208.

On the procedural side, the contractor could file its Notice of Appeal, and Complaint, and move immediately for partial summary judgment on the Foster Sportswear entitlement issue, without conducting discovery. If the contractor receives a favorable ruling on that issue, or the Government reads the case law and decides that the contractor is right, a settlement of the quantum issue will follow.

Looking for and Predicting Settlement Windows.

There are settlement windows throughout every case. Some cases may have unique settlement windows. But, virtually all cases have predictable similar settlement windows as well. We set out below a list for discussion and analysis:

• The parties have obviously exhausted settlement negotiations with the Contracting Officer per the recommendations in the opening section of this text. A negative final decision has been received.

• The Contracting Officer expects to receive a Notice of Appeal -- if the contractor has his case in hand there is no reason he cannot file a Notice of Appeal, a Complaint, and an initial round of document production, interrogatories, and requests for admission.

This sort of approach lets the Government immediately see your case if well plead, and allows you to make the first low-key statement of "isn't this a case that we could resolve" to the Contracting Officer or the Trial or Justice Department attorney. Discussions have been opened, and there has not been any show of weakness.

If the Government attorney is on their toes. they will push back in their answer, and perhaps counterclaim, as well as file an initial motion for summary judgment and discovery package. This is an opportunity for them to ask "isn't this a case that could be resolved". Settlement opportunities and windows appear in these predictable times.

The list goes on:

• A settlement window exists when discovery is exchanged by both parties. When the other side needs to do work, that is a good time to ask whether "this case could be resolved".

• The Judge assigned to the case will have conference calls or status conferences -- he will make points during those conferences that seem favorable to one side or the other side's position. A settlement window would exist thereafter.

• You will see materials being produced in discovery both by your side and the other side. A 1-page document focusing on the significance of something taking place in discovery opens a settlement window.

• There is a settlement window after key depositions have been conducted.

• There is a settlement window when a trial schedule has been set.

• There is a settlement window when all discovery has been completed. Each side knows the extent of the other side's case in full, short of trial.

We will review settlement offer issues in class scenarios and approaches.

Simply recall that once you reduce your offer it is virtually impossible to go back. That reduced figure will become your permanent floor that you will be expected to negotiate down from.

Time for Decisions -- Board versus Court.

We reviewed in the previous section the 90-day and the one-year clock that exist with respect to making the decision as to whether to go to the Board or the Court. We have also reviewed the procedural and substantive reasons for making that election. The point of this section is to talk about additional strategy issues.

All of these decisions about Board versus Court ideally need to be made during the final decision, settlement negotiation process with the Contracting Officer. There is no reason to wait until the last minute. Indeed, it may actually deter the resolution and/or settlement of the case if you have not thought through and made your primary decisions on this particular issue.

Please also bear in mind that you cannot change your decision once it has been made. If you go to the Board of Contract Appeals, you may not withdraw your appeal and then go to the Court. If you go to the Court, you may not withdraw your Complaint and go to the Board . There are some statutory provisions that allow the Court to send cases back to the Board for trial in appropriate circumstances - other similar cases are pending at the Board, you have taken only one to the Court. Be aware of that situation as this is similar to splitting your cause of action in civil litigation, and you will be criticized for it.

At the same time, if you are disappointed with the Board and a new issue on the same contract comes along, that is different and in such circumstances you may wish to consider pulling toward the Court. Whether the Government moves to dismiss that case and remand it to the Board is a matter of subjective judgment.

Substantive Choices for Litigation Bases.

Government contract claims fall into specific patterns. While it is possible to state the most recurring types of claims in which most litigation is pursued. Set out below is an outline of these pattern claims. 

Interpretation disputes

Defective specifications

Impossibility of performance

Superior knowledge

Claims arising during the inspection & testing phase of work

Acceleration

Late or Withheld Payments

Breach of Contract

Government Claims

Default Termination

Convenience Terminations

Deductive Changes

Proprietary Data Related Claims

Defective Pricing

Fraud/Waste/ Abuse

Real Litigation Cost Considerations.

One of the most confusing areas in Government contract litigation is the cost of that litigation. Many law firms compound this problem by not having control over their costs, and/or by being unwilling to give firm estimates or fixed prices to their clients for doing certain work. Clients are also at fault for being unrealistic about the costs of litigation, and for not managing, and making decisions concerning their cases in a timely fashion, preferably before the litigation is even filed.

“It is possible to design cost of work that is going to be done in a particular case. It is no different than designing a piece of equipment to the cost that is available to expend on the equipment.”

In this section we discuss the issues that clients and their counsel should resolve early in the litigation or before it is even filed. In addition, we believe all of these issues warrant exploration even if the litigation is being conducted in-house by company counsel and his or her assistants. Larger defense contractors may have specific litigation departments, through which the company does its own Government contract litigation. That litigation still costs substantial amounts of money even though the company is not getting a bill from an outside lawyer/vendor each month. The same overall analysis and rules would apply.

One of the good things about Government contract litigation is that the litigation is fairly predictable. The stages of the litigation, its evolution, and therefore the amount that each stage will cost can be predicted with some certainty. Finally, the contractor has the ultimate control over the litigation -- in most cases it can be withdrawn at any time the contractor chooses, contractors can limit or reduce the claims they are asserting, and within each individual claim or element of the case, they can decide to stick to their estimates about what they are willing to spend. Unfortunately, it requires hard decision-making, and at times unpleasant discussions to do this.

Design Case to Cost?

It is possible to design cost of work that is going to be done in a particular case. It is no different than designing a piece of equipment to the cost that is available to expend on the equipment.

For example, a contractor has $100,000 constructive change claim which the Contracting Officer has refused to pay by issuing a negative final decision. Many law firms would tell you that is too small an amount in dispute to effectively recover. That is incorrect.

One must simply decide that they are going to spend no more than say $15,000 to collect that $100,000. That can either be done through the negotiation of a contingent fee arrangement, or by determining that the fees to be expended will be no more than $15,000. The lawyers are then required to design the litigation to the cost that is available for the collection activity.

There are many ways to save costs in litigation and to design cases to specific costs that are available for expenditure, as will be discussed at various points in the following sections that deal with specific pretrial motions.

Only Do Document Production.

One can decide to do only document production, and not depositions. Depositions cost staggering amounts of money if allowed to run on interminably. Production of documents cost little- the preparation of the request, and the time to look at the documents, and then copy and categorize them. Once both sides have their documents, perhaps limited requests for admissions and interrogatories can be posed.

Do No Discovery At All.

All pretrial activity can be limited. The company takes the risk that it understands its case and is prepared to present it without the need of documents or records from the other side. It designs to cost the expense for actually spending a day at the trial.

Do Individual Budgets for Sections of the Case and do not Allow Them to be Exceeded.

It is possible to do a combined approach where one pays $5,000 for a particular task, and $10,000 for a different task in the pretrial calendar, etc. When the budget is exceeded in that area, work stops, and no follow-up activity is conducted . This is a particularly useful approach in the deposition area. One can predict how much depositions cost per day, and based upon that cost decide that they will take 10 days worth of depositions, and no more.

Summary

All of the foregoing requires a strong stomach and the willingness to manage cases as you would manage any other particular project in the company. It can be done and litigation costs can be predicted as a result.

Costs to Other Side? Does the Government Respond to This Issue?

The short answer is that the Government often pays little attention to the costs of its litigation. Agencies hire staff attorneys in various areas, who are paid on salary. Those attorneys are paid whether litigation is ongoing or not. It is part of the agency's budget. Therefore, the agency is not generally motivated by the need to defend litigation.

There are of course exceptions. If the agency has to pay large amounts in expert witness fees for example, that is often a factor that may affect their desire to settle. If there are other internal tangible costs involved - the need to pull large numbers of program people who have other jobs into the litigation defense -- that will also be noticed.

What motivates an agency to settle is often the desire to do the right thing, and not contest payments that are otherwise due to contractors. Many agency personnel operate on this basis of fair payment to contractors, and you should therefore not lose sight of that in pursuing litigation.

Offers of Judgment. Formal vs. Informal.

The Federal Rules of Civil Procedure provide for offers of judgment in Rule 68 - Offer of Judgment:

At any time more than 10 days before the trial begins, a party defending against a claim may serve upon the adverse party an offer to allow judgment to be taken against the defending party for the money or property or to the effect specified in the offer, with costs then accrued. If within 10 days after the service of the offer the adverse party serves written notice that the offer is accepted, either party may then file the offer and notice of acceptance together with proof of service thereof and thereupon the clerk shall enter judgment. An offer not accepted shall be deemed withdrawn and evidence thereof is not admissible except in a proceeding to determine costs. If the judgment finally obtained by the offeree is not more favorable than the offer, the offeree must pay the costs incurred after the making of the offer. The fact that an offer is made but not accepted does not preclude a subsequent offer. When the liability of one party to another has been determined by verdict or order or judgment, but the amount or extent of the liability remains to be determined by further proceedings, the party adjudged liable may make an offer of judgment, which shall have the same effect as an offer made before trial if it is served within a reasonable time not less than 10 days prior to the commencement of hearings to determine the amount or extent of liability.

Under this rule one party can propose to have a judgment taken against it in a certain amount. This is in effect a settlement offer. If the other side refuses to accept the offer, and it does not recover more than the offer at trial, it must pay the other party's costs.

There is no such rule at the Court of Federal Claims, or at the Board of Contract Appeals. However, informal offers of judgment can have an effect during pre-litigation. And, a contractor or the Government can agree to follow the Federal Rule even though it is not directly applicable. Following the rule can be done in a simple way, such as asking the Board or Court to impose sanctions if one of the parties later refuses to abide by their previous agreement to follow the rule.

Abridged Approaches to Case and Planning Exit Strategies.

We have discussed above designing cost to particular segments of a case, in which decisions are made not to expend greater costs than those budgeted for particular areas of a case. We have also discussed summary judgment motion practice as a technique in several areas of the course.

What we want to discuss and raise briefly in this section is the need to make an overall abridgment of one's case up front so that things do not become completely out of control presentation-wise at trial.

For example, a contractor can have (as we have had in the past) a case in which there are $400,000 in numerous constructive change costs that need to be litigated, fourteen of which are $1,000 or less. In such circumstances, it may be better at times to eliminate the $14,000 of $1,000 claims in order to concentrate fully on the remainder of the larger dollar items.

That is not always the rule. The substance of the smaller claims may, for example, help to demonstrate why the larger claims should be paid, and the extent of the extra work items. In all cases, it is important to consider the effort of litigating all of your claims, which should be undertaken in a cost-effective fashion.

There will also be times when it becomes clear during litigation that a contractor's claims, interpretation disputes, or other positions are actually much weaker than originally thought. The Government's attorney asserts defenses that the contractor had not anticipated, and the contractor can see that the Government's positions are well taken, or that they at least impose substantial risk that the case will be lost at trial. Unless counterclaims are pending, the contractor can call for the dismissal of the suit by simply withdrawing its claims in most cases.

Every case must be well planned, and every case needs an exit strategy. The exit strategy and its implementation should be flexible.

Government's Approach as Plaintiff or Defendant.

In almost all Government contract litigation the Government is the defendant. It is being asked to pay additional money for some item or some monetary connection associated thereto.

The Government is rarely the plaintiff that is aggressively asserting claims and having to prove its entitlement to those claims. Therefore, the Government is uncomfortable when it is put in the position of being a plaintiff, and it does not necessarily have the same skill sets to put forward · as does the contractor. The contractor should be aware of this, and aggressively put the Government to its proof, as such an approach will often provoke settlements.

Company Resource Impact.

One important part of litigation pre-planning is to determine how many company witnesses will be required to support the litigation, and the senior attorney. Cases that can be proved through documents, with the assistance of one person at trial to testify as to the documents, are very inexpensive from a company resource expenditure viewpoint.

However, a case in which numerous senior people are involved, who must be present at trial, must be prepared for trial, and who are expected to perhaps attend pretrial depositions, can be extraordinarily expensive to the company. This is not just a monetary issue, but also a dilution of the company's ongoing business function when senior executives are tied up with the litigation of past events.

Future Business Receipts

One of the issues that is raised frequently in preparing for litigation is the fear that the company will upset its Government customer, and it will not receive future business as a result.

This is a valid concern. We have seen situations in which the company's pursuit of litigation has hurt it at least indirectly in terms of future business. The company has been mentioned in evaluation documents as asserting claims, pursuing litigation against the Government, etc. This is the company's right under the Contract Disputes Act, and it is completely inappropriate for the Government to be doing this at the contracting level. Nevertheless, the Government does this informally in evaluations using means that contractors may not defect, and challenge. 

Having said this, we believe it is rare for the presence of claims or litigation over past contract actions to have future business impact. The Government is used to having claims presented. The Government is in some respects like an insurance agency. It understands that claims will be submitted. They are part of the contracts process and a way of life, and as long as a contractor pursues them in a professional fashion, including through litigation, there is no future business impact.

Equal Access to Justice Act

Ordinarily, absent a special statute, a litigant in civil litigation cannot recover its attorney fees. Such a statute exists in the Government Contract area-- the Equal Access to Justice Act ("EAJA"). Its purpose is to prevent small businesses or individuals from being deterred in contesting unjustified Government actions. There are two EAJA statutes: 28 U.S.C. § 2412 covers suits in the Court of Federal Claims. A similar statute, 5 U.S.C. 1 §504 covers adjudicatory proceedings before the Boards of Contract Appeals. Many agencies have issued regulations implementing the Act.

In a contract case, the statutes enable a contractor to recover legal fees and costs incurred in litigation against the Government after the final Contracting Officer decision is issued or is deemed denied. Levernier Construction v. United States, 947 F.2d 497 (Fed. Cir. 1991). In the bid protest context, it has been held to include actions at the agency bid protest level. PRI/RCI v. United States, 37 Fed. Cl. 785 (1997). The EAJA does not cover private litigation that was caused by the Government's improper actions. Prowest Diversified, Inc. v. United States, 40 Fed. Cl. 879 (1998).

In order to recover statutory legal fees (limited to $125 per hour for normal contract and bid protest litigation) and costs, you must {a) meet the financial qualifications, (b) 11prevail" in the litigation, and {c) be ready to disprove that the position of the Government in the litigation was "substantially justified," and {d) file a timely application. Each of these requirements has been the subject of litigation. However, from a litigator's perspective, the key is winning at the trial court level and preparing the documents beforehand that will be submitted in the application.

Qualifications

To apply for EAJA fees in a contract action, at the time of the civil action, an individual's net worth must be less than $2 million and a business's net worth must be less than $7 million and have less than 500 employees. You have to prove that you meet this standard. What is required is an integrated balance sheet reflecting a systematic analysis of the assets and liabilities. The greater detail and specificity, the better. In the Court of Federal Claims, this application and each document on which it is relying must be attested to under oath. Rule 81 {e).

Financial Proof Issues

A self-serving "affidavit" is insufficient. Al Ghanim Combined Group Co. Gen. Trad. & Cont. W.L.L. v. United States, 67 Fed. Cl. 494 (2005}; Lion Raisins. Inc. v. United States, 57 Fed. Cl. SOS, 511 (2003) (tax return and three balance sheets, and summary declaration insufficient to establish company's net worth); Doe v. United States. 54 Fed. Cl. 337, 342 {20021 (affidavit and cash flow worksheet were inadequate).

To avoid additional litigation and delays, this information should be in your initial application. However, it can be supplemented if the initial submission is timely filed. Chapman Law Firm v. United States, 65 Fed. Cl. 422 (2005).

With respect to net worth, an entity's affiliates probably will not be counted in determining the $7 million figure if the underlying litigation does not benefit the related firms. Lion Raisins, supra. Whether such benefit is found is discretionary based on the facts. This is an unsettled area legally so a showing should be made to show that the benefits accrue directly to the plaintiff and that the benefit to the affiliates is attenuated.

Numbers of Employees Proof Issues

The 500-employee standard also is not necessarily straightforward. While it is unlikely that subcontractor employees would be counted, the trial court will look to the substance of the relationship with subcontractors and affiliated companies to make this determination. Al Ghanim, supra.

Prevailing Party

Orders Granting Relief Requested: Not a Catalyst Leading to Such Relief.

The fact that your lawsuit was the "catalyst" that caused the Government to take corrective action is insufficient to recover EAJA fees. To be a prevailing party, you must obtain an enforceable judgment on the merits or a court-ordered consent decree that causes a "material alteration in the legal relationship of the parties" or its "equivalent." Buckhannon Board & Care Home, Inc. v. West Virginia Department of Health & Human Resources, 532 U.S. 598 (2001).

In Universal Fidelity LP v. United States, 70 Fed. Cl. 310 (2006), although no order on the merits was issued, the court held that an "equivalent" order existed by the court's issuance of an injunction, followed by statements in the injunction order which, in turn, were followed by the corrective action requested-- cancellation of the solicitation. Likewise, a court's remand ordering corrective action sought was found to be equivalent to a consent decree. Former Employees of Motorola Ceramic Products v. United States, 336 F.3d 1360 {Fed.Cir.2003).

In contrast, in Rice Services Ltd. v. United States, 405 F.3d 1017 (Fed. Cir. 2005), when facing a bid protest and after an injunction had been issued, the Navy took corrective action and re-evaluated proposals. The Navy then moved to dismiss, calling the action moot. The trial court granted the motion but in its order dismissing the case, ordered the Navy to implement its voluntary corrective action.

The Federal Circuit denied an EAJA recovery, stating that the protester was not the prevailing party. The fact that the court had ordered the Navy to fulfill its voluntary corrective action in granting the Navy's motion to dismiss did not convert a voluntary decision to take corrective action into one changing the parties' legal relationships.

From these cases, it is apparent that the Government can avoid EAJA fees if it takes corrective action voluntarily and unilaterally in the face of the lawsuit. That means that if EAJA is a major factor, you must consider whether the agency's voluntary corrective action is truly sufficient based on the relief requested. If not, one must pursue the litigation in the hope of obtaining a court order requiring corrective action in the form sought or enter a consent-type agreement with the agency.

Partially Prevailing Party

If you prevailed on the claims overall, you should be given a full EAJA recovery as the prevailing party. Hensley v. Eckerhart, 461 U.S. 424 (1983). However, if you only prevail on a part of your claim, all is not lost: your fee claim may be reduced pro-rata . Community Heating & Plumbing Co., Inc. v. Garrett, 2 F.3d 1143 (1993). Whether a reduction is made is a matter of judicial discretion. Here is where records also play a role, discussed in more detail below. As discussed below, if you do not adequately segregate your time records to show different issues in the claim, the trial court can estimate the percentage of the case on which you prevailed. CEMS, Inc. v. United States, 65 Fe d . C l. 473 (2005).

Substantial Justification

Not Every Prevailing Party is Entitled to an EAJA Recovery

After you have prevailed, you must ascertain whether this is the type of case in which a court could award EAJA fees and costs . As an overall rule, EAJA should only be considered when the Government was so wrong as some stage of the proceedings that it had no reason to litigate the case. In other words, if it was a close decision on the law or facts, it is a waste of time to file an EAJA action.

But be aware that your perceptions will greatly differ from those of the Government. Unless the Government has absolutely no excuse for continuing its defense, it will contend that its position was substantially justified . While the Government bears the burden of proving that its position was substantially justified, the fact that the Government action may have ultimately been found to be arbitrary and capricious, unreasonable or irrational, or not in accordance with law, does not necessarily mean that EAJA fees will be awarded.

The Government's "Substantial Justification Defenses

The typical arguments made by the Government in its defense are: 

(1) the case raised an issue of first impression;

(2) the regulations were ambiguous and/or law at that time was unsettled;

(3) there were factual issues that, if decided differently, would have changed the outcome;

(4) while the Government was in error, as a whole , its position was substantially justified.

These Government arguments do not always succeed.

In L.G. Lefler v. United States, 801 F.2d 387 (Fed. Cir. 1985), the court upheld an EAJA recovery even though the precise legal issue involving the Buy America Act and the Changes clause had not been previously litigated where statute was clear.

In Keeton Corrections, Inc. v. U.S., 62 Fed. Cl. 134 (2004), the Government argued that the regulation was unclear. However, in other litigation, the Government had taken the opposite positions and the court awarded EAJA fees.

In contrast, in CEMS, Inc. V. United States, 65. Fed. Cl. 473 (2005), although the Government successfully defended 11 of 19 claims, because the Contracting Officer had not reviewed the decisions of her subordinates and had no factual or legal defenses at all to 6 of the successful claims, the court held that the Government's overall position was not substantially justified. But see Manno v. United States, 48 Fed. Cl. 587 {2001) {even where Government's actions in settlement negotiations was rigid and misleading, overall position was substantially justified.)

Nevertheless, a Government contract litigator should seriously consider whether to file an EAJA claim if such an argument can be made. This is particularly necessary since the costs of litigating an EAJA claim are sometimes significant, as discussed in part E below.

Strategic Considerations

Although each case is fact-specific, and the standards are identical, many practitioners perceive that the Boards of Contract Appeals are more likely to find the Government's position was not substantially justified under 28 U.S.C. §504 than the Court of Federal Claims under 28 U.S.C. § 2412.

Winning at the trial level is extremely important. It is rare for a trial court's determination on substantial justification to be reversed. Massie v. United States, 226 F.3d 1318 (Fed. Cir. 2001) is one of those rare instances. In that case, the court erred in allowing the Government to avoid a settlement agreement it entered that was outside the court's jurisdiction and the Government was not substantially justified in seeking this relief in spite of the court's support.

In contrast, in RAMCOR Services Group v. United States, 185 F.3d 1286 (Fed. Cir. trial court's ruling that the Government had raised "substantial questions' of whether its actions were permissible was sufficient factual basis to avoid EAJA liability).

Fee and Cost Recovery Details

Legal Fee Caps

Legal fees are recoverable at $125 per hour in most contract matters. The fees include the preparation of the EAJA application. Baldi Brothers, Inc. v. United States, 52 Fed. Cl. 78 (2002). There can be cost of living increases. Chapman Law Firm, supra.

In order to recover attorney fees, the applicant must have "incurred" these fees. However, an agreement which makes your client responsible for fees based on the contingency of winning the case or recovery above a certain amount results in "incurred fees." Ed A. Wilson v. GSA, 126 F.3d l 406 (Fed. Cir. l 997); Phillips v. GSA, 924 F.2d 1577 (Fed.Cir.1991). The fact that insurance may cover the fees is irrelevant. ld.

Billing Issues

The next consideration is how you bill your time and expenses. This is the area where advance planning will pay huge dividends. Some cases state that sufficient documentation requires "contemporaneous records of exact time spent on the case, by whom, their status and usual billing rates, as well as a breakdown of expenses such as the amounts spent copying documents, telephone bills, mail costs and other expenditures related to the case." Community Heating & Plumbing Co., Inc. v. Garrett, 2 F.3d 1143 (1993). You can expect the Department of Justice or agency lawyer who is smarting from having lost the case to argue that your bills are not exact enough.

Questions have arisen in litigation as to the increments of time used in your billing, i.e. 1/10 of an hour, every quarter hour, etc. However, if the attorney fee billing which contains this information is considered "typical," the court should find it sufficient. Beta Systems Inc. v. United States, 866 F.2d 1404 (Fed. Cir. 1989). Fee statements have been found typical if they include "the dates on which work was performed, the attorney who performed the work, and the nature of the work performed." Ramcor Services Group, Inc. v. United States, 41 Fed. Cl. 264 (1998). In contrast, average hourly rates over a period of time will be rejected regardless of how they are rationalized. Naporano Iron & Metal Co., Inc. v. United States, 825 F.2d 403 (Fed. Cir. 1987) (court rejects argument that an average of 3 hours per week over an extended period entitled contractor to recovery in spite of a lack of specificity of the work performed).

Many disputes involve the description of the “nature" of the work being performed and the justification for the hours billed. The Government usually will allege that the nature of the work should be more detailed and that the time actually spent was far more than the Government attorney would have taken to perform the work. While you can rely on the "typical billing" case law to justify a boilerplate time description (i.e. "performed research", "reviewed documents". "analyzed pleadings", "phone calls" a few extra words or sentences in your contemporaneous time description identifying the specifics of the “follow­ up" research, the call to Mr. ______ re: _____ or  the exact subject of the "review" will facilitate recovery and lower the cost of the EAJA claim litigation.

Recognize though, that the extra specificity in your time description has to present a reasonable description of the work and the justification for spending that time. The Government will be quick to highlight any efforts into an argument which was not accepted or to claim research or analysis could have been performed faster and sometimes, the Government prevails. Courts will make deductions for mistakes! Lion Raisins, supra; Baldi Bros.; supra. It is very important to carefully review your contemporaneous fee descriptions.

Fees versus Cost

There is a distinction between recovery of fees and costs. If you are a prevailing party but the Government's position was substantially justified, you can still recover costs. These costs include reasonable expenses of expert witnesses, the reasonable cost of any study, analysis, engineering report, test, or project which is found by the court to be necessary for the preparation of the party's case. The costs at issue include costs for attorneys, paralegals and experts.

Once again, though, these costs must be adequately supported and their recovery is a matter of the trial court's discretion. Neal & Co. v. United States, 121 F.3d 683, 684 (Fed.Cir.1997).

Paralegal time has been the subject of litigation. These costs are only allowed to the extent that the paralegal is performing attorney work at customary paralegal rates.

Expert fees are recoverable to the extent they are reasonable and necessary. Their fees are only limited by what is customary. If the expert can perform work that an attorney could also perform, for EAJA recovery purposes, it may make financial sense in a proper case for your client to assign factual background work primarily to the expert.

Contractor Assistance

Contractor employee costs in working on the litigation are not recoverable, even if they are reducing recoverable legal expenses by directly assisting an attorney. Baldi, supra. Assuming that you will prevail and that the Government's position is not substantially justified , it may make sense to assign factual work that could be performed either by client personnel or a paralegal, lawyer or expert to one whose costs will be compensated at market rates.

Reductions Based on Contractor "Fault" 

One statutory limitation can factor into your recovery-did much of the legal expense resulted from overly protracted proceedings caused by the contractor? If the court or board finds that you were responsible for the high cost, it can reduce the award even if otherwise justified. 28 U.S.C. §24 12(d )(l )(C ); Marshall Associated Contractors and Columbia Excavating (JV}, IBC A No. 2088F, 2005 WL 1231813.

Time for Filing

The EAJA requires that applications to be submitted to the court " within thirty days of final judgment in the action." 28 U.S.C. § 2412(dl (l )(B) . The Act defines " final judgment" as "a judgment that is final and not appealable." Id. § 2412(d)(2).

In making this calculation, attention must be paid to the court's or Board's rules. For example, in the Court of Federal Claims, Rule 6(0), the 30-day period is measured from the "day of the act ··· from which the designated period of time begins to run." This has been reported to be the last day that the Government can appeal. SAI Industries, Corp . v. United States, 421 F.3d 1344 (Fed. Cir. 2005). In that case, the contractor argued that the Supreme Court's statement in Melkonyan v. Sullivan, 501 U.S. 89, 96 (1991), that "[t]he 30-day EAJA clock begins to run after the time to appeal [a court's] 'final judgment' has expired" extended the time to the next day.

But why would you allow yourself to be in this position? If there is a question, file your EAJA application one day earlier.

The Strategy of Initial Filings

Perhaps the best way to open a litigation settlement window early in the case is by being knowledgeable and complete in the pleadings that are initially submitted to the Board or to the Court.

If the contractor understands its case and has done adequate pretrial preparation, it is possible to show the Government most of the contractor's case so the Government can make a decision on settlement early on.

Filing Complaint and Discovery Together.

There is no reason that the contractor cannot file its notice of appeal, complaint, interrogatories, request for admissions, and document production request all at the same time at both the Board or at the Court of Federal Claims.

The Government may be able to avoid having to answer the discovery until 30 to 45 days after its Answer is due, but the contractor has put all of the initial litigation materials relating to the case in front of the Government, and turned itself into the decision-maker from a subtle point of view.

In addition, submitting the initial round of discovery with the complaint and the answer has the advantage of focusing the parties on their case . Proceeding in this manner forces the parties to do everything at one time from the claims perspective, which has the benefit in getting both of the parties moving, as well as the added benefit of the parties' being certain that they understand their cases fully and that they have all issues under control.

Several Complaint examples are set forth below:

Complaint Example One - Improper Government Demand for Payment and Threatened Set-Off Action Against Other Contracts

BEFORE THE ARMED SERVICES BOARD OF CONTRACT APPEALS

Appeal of ______________

Under Contract __________

ASBCA No._________

COMPLAINT

For its Complaint in this Appeal, Appellant alleges as follows:

Appellant is a _______ corporation with its principal place of business at ____________.

Statement of Facts

This is an appeal from the Defense Finance and Accounting Service's (and its credit recovery company _________) demand that Appellant pay the Government $________ (See the attached billing list from DFAS at Exhibit l)

There has been no Contracting Officer's final decision claiming entitlement to the repayment of any of these funds as required by the Contract Disputes Act. The Government has not specified any basis for this claim. Nor has the Government described the basis for its calculation.

The Government is now threatening to set off this full $_________ amount against currently due payments on other ________ contracts. This would cause a critical cash flow situation at Appellant's plant and prevent its performance on other contracts.

Appellant believes that the majority of this amount $_________ relates to the termination for convenience of Contract #__________

Under the terminated contract, Appellant had agreed to purchase material from the Government for use in performing the contract.

Upon the termination for convenience of the contract, Appellant requested that the Government take possession of the property as part of its termination inventory, which was unused and intact, in return for a credit to the contractor.

The Government improperly refused to take possession of these materials that it had previously sold to the contractor. As discussed below, this is a violation of the termination for convenience clause.

As to the remainder of the claimed amount, one of the bills shown in Exhibit l (#_________) in the amount of $__________ does not appear in Appellant's records, nor does it appear in any of the Government's invoices that Appellant possesses . It appears that this is a mistaken assessment that does not relate to the appellant.

As to the remaining $___________, the Government has not provided any specifics as to this amount in dispute or the reason giving rise to this attempted assessment.

Legal Issues

As stated above, this entire claimed amount of $_________ has not been the subject of a Contracting Officer's final decision. The Government has an obligation to issue such a decision before it demands entitlement to claim amounts. 41 U.S.C.A. § 605 - Decision by Contracting Officer.

If the Government does not issue a final decision, but does demand payment of a sum certain with no option to negotiate such amounts due, the contractor may pursue its appeal. Midwest Properties, LLC v. GSA, GSBCA No. 15,822, 03-2 BCA 32,34.

As to the majority of the claim by the Government ($_______), the termination for convenience regulations at FAR 52.249-2(d } hold as follows with respect to inventory:

After expiration of the plant clearance period as defined in Subpart 45.6 of the Federal Acquisition Regulation, the Contractor may submit to the Contracting Officer a list, certified as to quantity and quality, of termination inventory not previously disposed of, excluding items authorized for disposition by the Contracting Officer. The Contractor may request the Government to remove those items or enter into an agreement for their storage. Within 15 days, the Government will accept title to those items and remove them or enter into a storage agreement. The Contracting Officer may verify the list upon removal of the items, or if stored, within 45 days from submission of the list, and shall correct the list, as necessary, before final settlement.

Wherefore, Appellant respectfully requests that the Board hear this Appeal. And determine that the Government is entitled to none of the money it seeks, or in the alternative that the Government issue a final decision and state its bases for entitlement so that Appellant may respond to them in detail.

Respectfully submitted,

___________________________

Complaint Example 2 - Claim for Recovery of Rejected Invoices

BEFORE THE ARMED SERVICES BOARD OF CONTRACT APPEALS

Appeal of ______________

Under Contract __________

ASBCA No._________

COMPLAINT

For its Complaint in this Appeal, Appellant alleges as follows:

Jurisdiction

The Appellant,__________, is a corporation incorporated in the State of _________. Its principal place of business is _______________.

This is an appeal under the Contract Disputes Act of the Contracting Officer's final decision of ____________, denying Appellant's certified claim dated _______, requesting payments due in the amount of $______.

Introduction

This contract by the Government is for _______. The Government pays a fixed price for _____, and provides cost reimbursement (without profit) for many of the expenses incurred in _____.

The contract, which is the subject of this appeal. was awarded to on ________. This contract was preceded by numerous other similar contracts between and __________ and its affiliated corporations.

It was the Government's standard and long term practice to always reimburse Appellant for various costs, including costs. These prior reimbursed costs include __________.

The same basic contract form used by the Government in the contract was used in prior the Government contracts, in which _______ costs were reimbursed. There were minor variations.

Appellant submitted invoices numbered ______ and _______ for ______ costs. The Payment Office, with the Contracting Officer's concurrence, rejected the payment of these invoices. There was no reason given for the failure to pay.

The Contracting Officer's final decision provides no analysis or detailed basis for this wrongful refusal to make payments due under the contract. This refusal is contrary to the parties' past, repetitive, reimbursement practices in prior contracts.

Factual Background

Under the contracts between the Government and Appellant's affiliated companies, the Government either reimbursed the affiliated company for the cost of _________, or the Government, through its own contractors and facilities, actually took the _________.

The Appellant's contract, at paragraph ________, specifies that ________ will be at the Government's expense. For the contract, _______ costs have been reimbursed by the Government, as with other _______ charges.

The Contracting Officer implies in her final decision that Appellant should not confuse practices in Respondent's ______ with Respondent's __________. Under the applicable case law discussed below , this is irrelevant. In any event, ________ has been reimbursed for __________. The Contracting Officer's final decision is factually in error.

Legal Issues

The Government may not repeatedly treat an item as reimbursable under prior contracts, and then later, while using the same contract type, abruptly change its course and deny such reimbursement. Appellant knew of the reimbursement practice previously used by the Government, and based its bid in _______ on such reimbursement.

If the Government wished to change its past practices, and deny the payment of _______ costs, it could do so only if it informed all bidders of such changes before the next contract was awarded. Such a notification would allow contractors to account for all necessary increased expenses in their bids.

There is a line of cases commencing with L.W. Foster Sportswear v. United States, 405 F.2d 1285 (Ct.Cl. 1969), in which the Courts and Boards recognize that the parties' past performance sets a floor or baseline for their future performance obligations even when such contract provisions are ambiguous, or actually defective as in the case of Foster Sportswear. 

The Foster Sportswear doctrine also requires disclosure that past  performance practices are being changed before a new bid is accepted or submitted:

Plaintiff admittedly knew that it could not produce an acceptable flying jacket under the contract specifications, as written, at the time that it submitted its bid . But it had had five or six previous contracts with the Navy for the same type of jacket, with the same or very similar specifications, and in every case deviations were made and allowed as a matter of course--and had to be made for production to go on. Both the plaintiff and the Navy were aware of this past history, and necessarily relied upon it in entering into new contracts of the same type. We have no doubt that plaintiff would have a sound claim if the Navy had abruptly changed its practices under the same contract specifications. We likewise have no doubt that plaintiff would not have to indicate at the time it bid on the successor Navy contracts that it expected to obtain the same deviations.

In federal contracts the parties' interpretations and performance expectations, based upon similar contracts in the past, form the basis for what is required under future contracts between the parties, even if there is no recitation of those specifics in the contract document itself.

The Contracting Officer has also stated orally that because the Government does not pay for ________, the Government will not pay for _______. That position is irrelevant to the issue of the long established practice of the Government paying for ________. The Government cannot change its reimbursement practices in the middle of contract performance.

Relief

Appellant is entitled to reimbursement for its _______ costs as presented in its submitted invoices. ______ invoices submitted to the Government in the future should also be paid under the terms of the contract, and in keeping with the parties' long-standing past practice of reimbursing such expenses.

The Government's failure to pay has been asserted as a claim under the Contract Disputes Act of 1 978, 41 U.S.C. 601, et.seq. Appellant's claim is in the amount of $_________.

Appellant is entitled to interest on the amounts withheld commencing from this date until the date of payment, pursuant to the Contract Disputes Act (41 U.S.C. 601, et.seq.).

WHEREFORE, Appellant asserts that it is entitled to payment of the amounts withheld from its invoices of $____, plus interest at the Contract Disputes Act rate from the date of the certification of its claim, and all other relief to which it is justly and properly entitled.

Respectfully submitted,

__________________

Complaint Example 3 - Improper Payment Withholdings Based upon Lack of Military Readiness Allegations

BEFORE THE ARMED SERVICES BOARD OF CONTRACT APPEALS

Appeal of ______________

Under Contract __________

ASBCA No._________

COMPLAINT

For its Complaint in this Appeal, Appellant alleges as follows:

COUNT I

NO DAMAGE EXPERIENCED BY GOVERNMENT

1. This is a timely appeal from the failure of the Contracting Officer to issue a final decision following the filing of a certified claim for payment to the contractor of monies withheld from invoices submitted to the Government. This claim, filed pursuant to the Contract Disputes Act, was dated ______, and delivered to the Contracting Officer on ________.The claim was in the amount of $_____ when certified, and has increased thereafter to $________ as a result of additional withholdings.

2. The Appellant, _____, is a corporation incorporated in the State of _______. It has its principal place of business at _____.

3. The contract, under which Appellant alleges the Government has failed to make payments, was placed by the United States acting by and through _______.

4. After this contract was awarded, there followed a protest proceeding instituted by a third party at the General Accounting Office. The award to Appellant was sustained by the withdrawal, after a hearing, of the protest.

5. This contract is for commercial services. The Appellant provides a _____ to the Government for _____ months with two options for_____ months each; the Government pays a fixed price based on a fixed daily rate, and reimburses certain variable operating expenses.

6. Appellant believes the Government has deducted approximately _______% from the amount of daily payments from the date of _______ through _____.

7. The Contracting Officer has never provided any written rationale for the deductions taken. Based upon oral discussions, Appellant believes that it is the Government's assertion that ______ was not "capable" of performing 100% of the _______ requirements called for by the original contract documents.

8. The Government's assertion, with no written justification, calculation, or stated basis, is that it may deduct this asserted ______% "lack of capability" from each invoice under a special, non-FAR clause in the contract.

9. The Government's deductions are impermissible. The Government has experienced absolutely no damages by any temporary, short-term limitation that may have existed on the contractor' s ability to _____ during the period as specified in Paragraph Number 6.

10. ________ has fully performed by_____. The Government has not provided any evidence of actual damages in response to Appellant's requests to do so. None exist.

11. On information and belief, the Government will admit that it never requested appellant to perform services that could not be carried out.

12. Respondent's counsel has stated to Appellant's counsel that there "might have been" one or two instances in which the Government would have asked for alternative performance, but that it did not make such a demand upon Appellant. The Contracting Officer has made no specification to Appellant of what this was or might have been.

13. Therefore, Respondent has made no demands that appellant failed to accomplish. There are no damages. Appellant is entitled to be paid for the balance of the invoices due because it has provided the services the Government required and is entitled to be paid the daily price without deductions.

COUNT II

WAIVER

1. Appellant repeats and realleges each of the foregoing allegations in Paragraph Number l through Paragraph Number 13, as if fully set forth herein.

2. During the protest proceeding at the General Accounting Office, referenced in Paragraph No. 4 above, Appellant's counsel promptly advised Respondent's counsel that the _____ would require the ______ to meet certain technical requirements with the result that the _____ would not be authorized to _____. 

3. This limitation was reflected in _______ certificate, which restricted ___________.

4. The ______ also required that certain structural revisions be effected even to permit ______ to operate at the reduced ________. This requirement was reflected in a Notice commonly referred to as, which is common in the ______ industry.

5. It is also common for a number of minor "Notices" to be recorded, which require correction, but do not prevent _____ from doing its work.

6. Appellant promptly advised the Contracting Officer 's legal representatives of the temporary "Notice" issue and the reduced _________ during the course of the protest proceeding so that the Government could deal with this issue immediately and not have its needs disrupted by this issue being raised at a later date.

7. The Government could have stopped the protest by withdrawing the award and commencing a re-competition. The protester requested that the Government do just that.

8. The Government chose instead to proceed with the award and Appellant's performance of this contract without reservation because it knew _________ would fully perform the missions required of it.

9. Further, at the time the Contracting Officer's representative was advised of the restriction (hereafter "the technical restrictions") the ________ had not yet been accepted under the contract, and the Contracting Officer gave no indication that _______ would not be accepted when tendered in accordance with the contract.

10. When the ________ was so tendered, the Contracting Officer accepted the ______ under the contract without condition or qualification. The issue of the pending technical restrictions was not raised or reserved in any fashion at acceptance.

11. Assuming any rights existed, the Government, by its actions or inactions described above, has waived any such right that it has to now object to _______ ability on speculative bases when ________ performed everything that the Government requested before the temporary technical restrictions were resolved.

COUNT Ill

THE GOVERNMENT'S BREACH OF CONSTRUCTIVE CONDITIONS OF COOPERATION

1. Appellant repeats and re-alleges each and every allegation in Paragraph Number 1 through Paragraph Number 24 as if fully set forth herein.

2. The Appellant worked diligently to cause the technical restrictions to be removed and was successful.

3. The technical restrictions restricted only __________. They did not prevent _______ from performing its work under the contract.

4. The technical restriction on _______ was based upon theoretical consideration and theoretical analysis, which did not restrict the ______ from doing its work and fulfilling all the demands that the Government imposed upon it during this time.

5. At the Government's direction, ________ did perform throughout the entire period the restrictions were in effect.

6. There was no safety issue in ________ performing its work.

7. The ________ Agency recognized this, worked with the Appellant here cooperatively to remove the technical restrictions, and did so in a brief period of time.

8. The Government refused to aid and assist Appellant in its dealings with ______, despite being fully informed as to all actions/analysis then taking place.

9. The Government was fully informed of all the events surrounding the issuance of the technical restrictions on, and Appellant's efforts to clear the technical restrictions.

10. The Government made no objection in writing or orally.

11. The Government could have requested a National Defense Waiver. __________ informed Appellant that such a request for waiver would be immediately granted by it. The waiver would not have imposed any cost or delay on the Government.

12. Appellant advised the Government of this option, but the Government refused to exercise it.

13. Any damage the Government now alleges it experienced on possible missions it may have assigned, but did not due to the technical restriction, could have been easily avoided by its own action.

14. The Government's failure to take action, and then blaming the contractor for "damages" it allegedly incurred, is a breach of the Government's obligation of constructive condition of cooperation in performance of this contract. Appellant is entitled to be paid without deduction.

COUNT IV INSPECTION CLAUSE APPLICATION

1. The Appellant repeats and re-alleges each allegation set forth in Paragraph Number l through Paragraph Number 38 above, as if fully set forth herein.

2. Post-dispute discussions with the Government indicate that the Government has not considered the mandatory FAR contract clause that covers the exact situation in this case - the standard "Inspection Clause" (52.212-4(a)(3)(i)(B). This standard FAR clause provides that the Government may only reduce the contract price to reflect the reduced value of the services performed. Thus, there must be proof of damages under the standard FAR clause before a payment deduction may be made.

3. The FAR "Inspection Clause" states as follows:
   
   * * *

If any of the services do not conform with contract requirements, the Government may require the Contractor to perform the services again in conformity with contract requirements, at no increase in contract amount. When the defects in services cannot be corrected by re-performance, the Government may -

Require the contractor to take necessary action to ensure that future performance conforms to contract requirements; a reduce the contract price to reflect the reduced value of the services performed.

1. Significant ASBCA precedent requires proof of actual damages under the Inspection Clause.

2. The inclusion of any other clause in a contract that conflicts with the longstanding FAR Inspection Clause and its requirements is contrary to the FAR, and is not enforceable.

3. Including a clause that was interpreted to permit the Government to recover damages when it experienced no damages would be directly contrary to the FAR Inspection Clause, and would force contractors to include contingencies in their bids, increasing Government costs, which would violate longstanding federal procurement policies.

4. FAR § 15-402 states that Contracting Officers must: 11 (c ) Not include in a contract price any amount for a specified contingency to the extent that the contract provides for a price adjustment based on the occurrence of that contingency." The Inspection Clause provides for the adjustment.

5. Based upon oral discussions with the Government. it appears that the basis for the Government's failure to pay is allegedly due to a specially prepared and instituted only at the Government clause.

6. A special Government clause that it can use to recover money from a contractor for "damages" when it experienced no damages is directly contrary to the FAR Inspection Clause and Federal Procurement Policy and is prohibited. It likely violates federal statutes as well.

7. On information and belief, the Government has not requested or received required permission to use any such clause, which deviates from and conflicts with the FAR Inspection Clauses. Appellant is entitled to be paid the daily hire price without deduction.

COUNT V

THE _______ CLAUSE

1. The Appellant repeats and re-alleges each allegation set forth in Paragraph Number 1 through Paragraph Number 48 above, as if fully set forth herein.

2. The special Government Clause called the _______ Clause provides as follows in Appellant's contract: ________.

3. This clause can and should be interpreted to be consistent with the mandatory FAR Inspection Clause, and to be in harmony with the Inspection Clause's concept of recovery only when there are actual damages. The Clause as written allows a “proportionate" recovery to “indemnify" the Government for a “degradation” of warranties or an inability to operate at a "fully efficient state."

4. “Degradation," “proportionate," and "fully efficient" are terms in the Clause that are consistent with the requirement for actual damages in the Inspection Clause. Also, “indemnity" is a term of equity consistent with the Inspection Clause's requirement for actual damages.

5. The term "Proportionate" in the Clause cannot be interpreted or applied as a mathematical formula when the _______ was fully efficient for all of the missions called for by the Government.

6. Clauses in a contract must be construed in harmony with each other.

7. The terms of the Clause may not be interpreted to be essentially a liquidated damages provision when the Government chose not to use or negotiate a liquidated damages provision. Liquidated damages are the typical way to obtain a recovery without proving actual harm in instances where such proof would be difficult. Liquidated damages clauses state specific amounts of damages.

8. The Clause must be interpreted in a way consistent with the FAR mandatory Inspection Clause. When this occurs, Appellant is entitled to be paid without deduction. Any other interpretation of the Clause would be contrary to federal procurement policy, contrary to Government contract law precedent, contrary to the Inspection Clause, and therefore unenforceable.

COUNT VI

NO BREACH OF WARRANTY

1. Appellant repeats and re-alleges each and every allegation in Paragraph Number l through Paragraph Number 56 as if fully set forth herein.

2. The Government is apparently asserting Appellant has breached a warranty in the contract. Even if there was a breach of warranty by Appellant, the Government has made no attempt to harmonize the special Clause that it drafted with the FAR, its own actions, accepted contract law, or ASBCA precedent.

3. This special, non-FAR clause applies, by its own terms, to the "degradation" of a "warranty", the "proportionate decrease" thereof, and then "indemnity" for such events.

4. The Government accepted the _________ when it knew of the technical restriction, and used it fully until the restriction was removed, and thereafter.

5. For there to be "degradation" of a "warranty", such action must come after acceptance. The Government knew the technical restriction was placed on the _________ before it accepted the ______. There was no "degradation" after acceptance. And, for there to be an "indemnity", there must be damages for that indemnification to operate upon. There are no damages here.

6. For there to be a "warranty" and a breach thereof, there must also be a real loss as a result of the warranty's breach. e.g., Dale Construction v. United States. 168 Ct. Cl. 692 (1964). There is no Government loss here.

7. The Clause, by its own terms does not apply to the circumstances presented by this appeal.

COUNT VII

CONFLICT WITH ASBCA PRECEDENT

1. The Appellant repeats and re-alleges each allegation as set forth in Paragraph Number l through Paragraph Number 63 above as if fully set forth herein.

2. The Government's assertion that it may recover "damages" in a situation where it has in fact received the performance that it asked for is directly contrary to existing ASBCA precedent.

3. The Armed Services Board of Contract Appeals has dealt with exactly this subject in interpreting the similar _______ clause used by the Government in its contracts. The ASBCA has held unequivocally that ________.

4. The _______ Clause is much more specific than the ________ Clause, and the Board has interpreted it as not applying when the Government asks for specific work, which it receives. The "speculation" that the Government could have asked for _________, is exactly that - speculation, which the Board disregarded in the __________ case.

5. Appellant submits that the Board, under its precedents, would not permit withholdings under the Clause when the Government has not specifically asked the contractor to perform in any fashion that it was unable to perform. As stated above, the Government made no request formally or informally in writing or orally that _________ was unable to perform. Any other Government arguments about what _______could not do are exactly the type of "speculation" that the ________ decision above state must be disregarded.

6. Had the Government wished to accomplish a result contrary to the mandatory FAR Inspection Clause, and contrary to ASBCA precedent, it was required to undertake the FAR deviation procedures. It did not. Appellant is entitled to be paid the daily hire price without deduction.

COUNT VIII

BREACH BY FAILURE TO PAY

1. Appellant repeats and realleges each and every allegation in Paragraph Number l through Paragraph Number 69 as if fully set forth herein.

2. The Government has provided no written justification for withholding amounts; it has simply taken ______ % of the total amounts due, and failed to make these payments.

3. There has been no written articulation of legal or contractual bases for making these withholdings, which are now outstanding for over ______. This unilateral decision to reduce contract payments is itself a breach of contract. (See, e.g., Brooklyn & Queens Screen Manufacturing Company v. United States, 97 Ct. Cl. 532, (1942)). Appellant is entitled to its damages for this failure to make payments when due.

COUNT IX

COMMERCIAL CONTRACT

1. Appellant repeats and re-alleges each and every allegation in Paragraph No. 1 through Paragraph No. 72 as if fully set forth herein.

2. This is a commercial services contract. The Government is making interpretations and assertions that are contrary to established law, contrary to commercial practices, and contrary to the well understood meaning of the FAR Inspection Clause and Government policy. Such interpretations are impermissible and violate the FAR and established federal procurement policy.

COUNT X

PAYMENTS NOW DUE

1. Appellant repeats and re-alleges each and every allegation set forth in Paragraph Number 1 through Paragraph Number 74 above, as if fully set forth herein.

2. The FAR requires that Contracting Officers find and pay the amounts they believe are due to a contractor in their final decision, notwithstanding the pending of an appeal. 48 CFR 33.211.

3. On information and belief, Appellant submits that the Contracting Officer has found that the contractor is entitled to a release of withholdings in a specific amount.

4. Appellant asks the Board for an Order that this amount be immediately paid to Appellant during the pendency of this appeal.

COUNT XI

GOVERNMENT CALCULATION METHOD IS IRRATIONAL

1. Appellant repeats and re-alleges each and every allegation set forth in Paragraph Number 1 through Paragraph Number 78 above, as if fully set forth herein.

2. The Contracting Officer apparently asserts the ______ percent price deduction on the basis that the ________ was restricted by __________ percent due to the short-term issuance of the technical restrictions.

3. Such a ______ percent deduction basis is irrational for the following reasons: _________.

4. Appellant is entitled to be paid without deductions.

* * *

WHEREFORE, Appellant asserts that on the basis of Counts I through XI above, on each individual Count, and then as a whole, it is entitled to payment of the amounts withheld from its invoices of $______, (as updated to currently $_______), plus interest at the Contract Disputes Act rate from the date of the certification of its claim, and all other relief to which it is justly and properly entitled.

Respectfully submitted,

___________________________

Drafting Checklist - Complaints.

Long versus Short Form.

None of the above example complaints is particularly long, but you can see different levels of pleadings. Our recommendation is that you plead Complaints in this manner, depending upon how well you know your case and how confident you feel about it. If you are uncertain, or only know certain key facts, keep things short until you become more comfortable. In other words, do not embarrass yourself.

Obviously you have an obligation to be sure that you are correct in the overall allegations that you are making against the Government.

Case Law.

Note that in the examples above only key case law was pleaded in particular areas. This is so somewhat unique to Government contract practice, but not necessarily so. If you know the key case law that supports your case, plead it in the complaint.

Short Allegations.

You are dealing with Government professionals on the other side, not commercial lawyers. They feel an obligation to respond fairly and fully to allegations that you are making. Take the opportunity to use this system. Keep your allegations short and brief. You will get better responses to them, and will also know the other side's positions better.

Procedural Materials.

Plead the certification of the claim. Plead your corporate existence. Make reference to the contract at issue or series of contracts. State whether there has or has not been a final decision.

Need Answer for Summary Judgment Motion Filing?

Initial filings may also include a partial or complete summary judgment motion if you have satisfactory documentation already in hand, or if the contracting officer's final decision provides statements that can be used.

Recall that you must eliminate all reasonable factual disputes on the issue for which are moving for summary judgment. The Government may not agree with your legal position - that is fine -- but the facts that you are basing the motion upon must be without serious dispute. This occurs at times before the Government files its answer to your complaint.

If there are factual disputes pending that must be resolved before you can move for summary judgment, receipt of the Government's answer may well do that.

If the answer does not provide the information needed to show that there are no material factual disputes, then the next step would be to see if the answers to interrogatories, document production, or answers to request for admissions will solve the problem.

If none of that works, then perhaps taking one critical deposition will solve the particular problem. We have seen this occur a number of times.

One key decision-maker states answers on the record to questions you pose that are sufficient for the contractor to move for summary judgment.

Virtually all of the foregoing strategy issues work equally as well for the Government if it chooses to be aggressive in the litigation.

Handling Government Time Extension Requests.

Once the litigation commences, you need to make a reasonable effort to get along with your Government (or contractor) counterpart.

At the Court of Federal Claims the Justice Department gets 60 days to answer - it routinely asks for one 30 to 60 day extension and perhaps more.

If you really must move the litigation forward (It is a declaratory judgment action), you can refuse to grant the time extension and fight that issue before the Court when the Government files for the time extension without your consent.

The authors were involved in a declaratory judgment action similar to that in Alliant Tech Systems, supra. The action was fast-moving. Numerous briefs were filed throughout the Christmas holidays. Neither party asked the other party for a time extension because they knew it was inappropriate to do so.

The same general rule of thumb exists at the Boards of Contract Appeals - the Government gets 30 days to answer and may ask for a 30-day extension.

Another approach is to tell the Government the seriousness of your case and the financial impairment that it is causing to the contractor. Tell the Government candidly that you cannot give them any time extensions beyond the Board's or Court's rules, and that you will have to resist each time extension. That has the advantage of candor. You are telling your counterpart upfront what you are going to do even though they may object to it and will fight you in court. We believe there are less hard feelings with this approach.

Audits as Part of Litigation.

It is a serious mistake to ignore the issue of audits in litigation. The Government will not conclude an important settlement or generally routine cases without some sort of an audit. Perhaps the audit has already been done by an agency such as DCAA as part of the contracting officer's final decision process.

If an audit has not been done, then it must be scheduled and take place before the Government can realistically resolve the case. The contractor should recognize this, and take some level of control over pushing the process forward.

Contractor Control of the Process.

The contractor should make its analysis of what audits have not been done or what audits will likely be required. If the contract dispute involves a constructive change, an audit is going to be required of the cost that the contractor alleges it incurred as a result of the constructive change. Get this issue resolved promptly. Get the audit scheduled as soon as possible. Try to do this voluntarily with your Government counterparts. If they will not agree or state that they need additional time to determine what sort of audit to perform, move to the next step below.

Motion to Board/Court.

There is no reason that a contractor cannot take the initiative, and file a motion to schedule the audit. In many cases it is very clear and obvious that an audit needs to be conducted. State those reasons to the Board. In other cases it is more obscure. You are going to need to persuade the Board in those situations. Do a good job in your motion filing. See the motion sample earlier in the materials.

The Auditor Should Assist Both Parties.

There is no earthly reason why only the Government should get the benefit of a DCAA audit. The Government should not be allowed to dictate to the auditor the "bad" or "harmful" issues that it wishes to have the auditor look for and produce its report upon.

An audit report should be fair, evenhanded, and cover all issues likely to arise in the litigation. However, if the contractor does not assert its rights to the Government, and if necessary to the Board, to have such an audit prepared, it will be stuck with a one-sided, Government issues only audit report. That must be avoided.

To do this, the contractor must think through the audit issues that it needs to dispose of in the report. It must commit those to writing, and provide that to Government counsel. It must also prepare the motions as set forth above if necessary.

Entrance and Exit Interviews.

The DCAA auditors are used to having entrance and exit interviews with contractors on normal cost allowability disputes that do not involve a contracting officer's final decision and litigation. Why should that procedure be any different once litigation is involved?

The contractor should request to have an entrance and exit interview. During the entrance interview and preferably before, it should provide the Government auditor with the pertinent pleadings that have been filed in the case and some statement of the audit issues that it believes require resolution. The auditor will deal with these issues if told about them. It will feel compelled in most cases to do so. If not, it can be compelled to do so by the Board. See the motions above.

Exit interviews are also important, although perhaps not as important as entrance interviews. Now the Government has completed its audit work and is preparing to write up its findings. It is still worth trying to engage the auditor to find out what its findings are and to provide ideas that perhaps the auditor has not considered. In addition it is an opportunity to suggest additional audit topics that would clarify the matter in the contractor's favor or simply verify it so that the Court or Board can reach a fair decision.

Witnesses

Part of trial preparation, even before filing the complaint and opening pleadings as discussed above, is choosing who the contractor's witnesses are going to be. It is possible that the contractor's witness may have left the company and be employed elsewhere. These present challenging people to deal with.

Our initial recommendation is that contractors determine who its witnesses are going to be as soon as it appears that a final decision is going to be issued. It then needs to submit a simple consulting agreement to each of the witnesses if they determine to leave the company. This consulting agreement compensates the witness for their lost time, which is appropriate legally and ethically for fact witnesses. See the draft agreement below.

Witness and Consulting Agreement

_________ has determined to seek employment with another company. ________ recognizes that it has important information concerning _______ that was required during the course of their employment.

_________ agrees that it will return to the company for no more than ______hours per month to provide analysis and work with respect to this issue, and that if necessary it will prepare with the employer's lawyers for trial. and appear at the trial of the case as a fact witness as to these issues.

The contractor agrees to pay the potential witness tor their consulting services and witness preparation time based upon the time that was lost from their new position . The payment rate has been calculated by dividing the average hours per month less vacation time (1800 hrs) into the yearly salary with bonuses and benefits of the individual (______) establishing therefore an hourly rate for lost time of ________.

Payments will be made for consulting and witness preparation amounts monthly upon submission of a time statement by the employee.

____________ ___________

Company Employee

The foregoing simple statement, or something along these lines, will be signed by most people before they leave employment. They feel responsible and are concerned about the issue that they participated in, which is going through the disputes process. They will most often agree to consult and appear as a witness before they leave. Once they leave, however, attitudes can change. Employees approached a year or two after they have left are often unwilling to help.

Choosing and Using Former Employees.

“Do not choose people who are difficult to deal with - if you have that option.”

Both current and former employees used to present a case at trial should obviously not be interested or prejudiced with respect to the litigation. If so, this will come out during the course of the hearing.

Think through carefully the appearance that the witness will present given whatever job it currently has with the company or with a new employer. Are there compensation impact issues?

Think through how closely the witness has followed the dispute, and whether it suffered or will suffer as a result of a negative decision. That obviously colors the individual's testimony.

Also interview and talk with the witness candidly about what has happened in the past and what will go on in the future. If you have options, try to choose other people if you. are dissatisfied with a witness for any reason. You can then make that witness a secondary source, and go to another primary source.

Who Not to Choose.

Do not choose people who are difficult to deal with - if you have that option. Their coworkers will tell you or it will generally be known in their section or area of work. Do not deal with people as witnesses, who are disgruntled or dissatisfied and who are about to leave the company. That will only make your task more difficult.

Do not use someone that you must "turn" as a witness before you can use them. In other words, if the witness does not support your position now, why are you so certain that you can turn them to support your position before trial? If other options are available, use them.

Ideally choose someone who is firmly committed to the position that the company is taking and believes in it. That may not always be possible -- in that case find someone who will be able to provide a low-key factual basis that supports the position that the company needs to establish in order to prevail.

Evaluating the Government's Options

Do not neglect the other side of the case. Think through who the Government's witnesses must be, as well as who the Government's secondary witnesses may be. Their choices will affect the witnesses that you choose. This will also affect how many depositions you must take. You need to factor this into the possible budget available as you will need to get the stories of these key Government witnesses. You may be able to pass on depositions for secondary witnesses.

Talk to knowledgeable people and evaluate how strong or weak the Government's key witnesses are. You may choose to take the weaker key witness depositions first to show the Government the problems that they present.

Requests for Admissions.

Requests for admissions are a very useful tool in pretrial discovery proceedings. Many people believe that they should not be filed until near the end of discovery. We disagree. While it may be wise to file a second or third set of requests for admissions, it is very useful to file an opening set of requests for admissions.

A Useful Tool.

It is often not well understood what the response to a request for admission must contain. Look at Federal Rule of Civil Procedure Rule 36, and related treatise materials for further explanation. In summary, the request for admission if properly framed must be answered, or if only parts of the request can be answered then the applicable parts must be responded to, or the Government must state the reasons for its denial.

Do not assume that you can simply blow off a request for admission and deny simply because one word or phrase is out of order in the request for admission. That is not correct and done frequently enough will likely draw a motion for sanctions. You must work at answering requests for admissions, and not just deny them. This is often not appreciated.

Requests for admissions also serve another very useful function even if they are going to result in a denial. They show the other side what it is you believe you can establish short of or at trial. They command attention if done properly, and they educate the other side as to the weakness of their case.

Proper Drafting.

We have set out below typical requests for admissions filed early in proceedings at the ASBCA. The case immediately below involved the refusal of the Government to reimburse costs in accordance with previous practices. Read through and look a t the points the contractor is pressing and why he is pressing them. We will discuss these matters during the course.

Example One.

BEFORE THE ARMED SERVICES BOARD OF CONTRACT APPEALS

Appeal of ______________

Under Contract ___________

ABSCA No. __________

FIRST REQUEST FOR ADMISSIONS UNDER RULE 15

Pursuant to the instructions in Federal Rules of Civil Procedure 36 and pursuant to Board Rule 15, you are requested to admit or deny the truth of the following Requests for Admissions within forty-five (45} days: (Appellant means ________ performing contracts for THE AGENCY.)

1. Admit that THE AGENCY has reimbursed Appellant under prior Government contracts with THE AGENCY (preceding the award of the instant contract) for ________.

2. Admit that THE AGENCY has permitted Appellant to ________at THE AGENCY's own facilities, or at THE AGENCY contracted facilities, at no cost.

3. Admit that under the ________ contracts between THE AGENCY and Appellant, Appellant was reimbursed for the cost of ________.

4. Admit that under the _________ contracts between THE AGENCY and Appellant, the Appellant was allowed to use THE AGENCY, or THE AGENCY contracted facilities, to take ________ at no cost.

5. Admit that prior to the award of Appellant's current contract, THE AGENCY, either reimbursed for ______, or allowed contractors to take ________ to THE AGENCY's facilities or its contracted facilities at no cost to contractors.

6. Admit that prior to award of Appellant's contract for the _______, Respondents department either reimbursed for ______, or allowed contractors to take ________ to its facilities or its contracted facilities for __________ at no cost to contractors.

7. Admit that THE AGENCY has in the past included in THE AGENCY contracts specific statements that _______ will be at the Government expense.

8. Admit that in Appellant's ___________ contract at paragraph ________ Respondent stated that the _________ would be at the Government's expense.

9. Admit that THE AGENCY has records that would verify whether _______ have been reimbursed for ______ before the award of Appellant's contract at issue.

10. Admit that THE AGENCY has records that would verify whether the Respondent and/or its contractors have taken _________ at no cost.

11. Admit that the Contracting Officer has taken the position that because THE AGENCY does not pay for __________ on the contract, THE AGENCY will not pay for _________.

12. Admit that the Contracting Officer has taken the position that ________ may have been reimbursed for ___________.

13. Admit that__________ is not reimbursed by THE AGENCY in any contract.

14. Admit that the same __________ provision is used by all groups at THE AGENCY with any differences in the mission and requirements addressed at the beginning of the contract.

15. Admit that prior to the award of the subject contract, the Government failed to provide the Appellant with any notice that ___________ would not be reimbursed as charges under this contract, and/or that ______ would not be taken and disposed of at no cost by the Government or its contractors.

    ________________________

Attorney for Appellant

Example Two

BEFORE THE ARMED SERVICES BOARD OF CONTRACT APPEALS

Appeal of __________________

Under Contract ______________

ABSCA No. ______________

FIRST REQUEST FOR ADMISSIONS UNDER RULE 15

Pursuant to the instructions in Federal Rules of Civil Procedure 36 and pursuant to Board Rule 15, you are requested to admit or deny the truth of the following Requests for Admissions within forty-five (45) days:

1. Admit that from the date of contract award to this date the Government has never requested in writing that _______ perform ________which _________ failed to perform.

2. Admit that from the date of contract award to this date the Government never orally asked that ________ perform ________, which _________ failed to perform.

3. Admit that the Government had no actual out-of-pocket damages as a result of __________.

4. Admit that prior to acceptance of _________, the Government issued no written exception or reservation to that acceptance because of _________.

5. Admit that the Government performed no evaluation of the limitations that ___________ could impose upon the ________'s ability.

6. Admit that the Government knew ________ would have accepted a waiver request from ________, and would have exempted ________ from compliance with the rules that required the _________.

7. Admit that the Government did not use a liquidated damages clause or provision in the subject contract insofar as _________ is concerned.

______________________

Attorney for Appellant

Drafting Checklist - Request for Admissions

Winning Issues.

Outline the issues that let you win your case, or that will perhaps put you in a position to move for summary judgment.

Capture these thoughts in crisp requests for admissions. Recognize that if you over plead, and/or fail to be brief and to the point. and non-controversial, you are setting the other side up for the right to deny your request.

Keep it Simple, Short, and to the Point.

As Sergeant Joe Friday said on Dragnet: "Just the facts ma'am, just the facts". That should be your watchword in drafting requests for admissions. Just get the facts out that you believe the other side must admit, and that help you take the next step in your overall litigation plan.

Send the Other Side a Message.

An ancillary benefit to requests for admissions and other discovery is that you get the opportunity to further brief the other side as to the details of your case. Litigation is not a situation in which blind man's bluff is a good game to play. Tell the other side candidly the strengths of your case in detail, and get the information that you need to prevail or receive a good settlement.

Tightly drafted requests for admissions show the other side what you think you can prove at trial. That is an appropriate message to send.

Follow-up Sets Are Required

Depending upon the Government's answers to the request for admissions (or the contractor's), follow-up sets may be appropriate.

Once you have competent answers from the other side, you can tighten your requests for information, and hopefully tie the other side down to particular specific points. Do not miss this opportunity.

Interrogatories and Document Production

These are the tried and true methods of discovery at the Board of Contract Appeals, the Court of Federal Claims, and in federal and state courts for that matter as well. Attorneys generally draft these documents too broadly so that it gives the other side interpretation and wiggle room to not respond. Precise drafting is important. Short questions and statements are important.

There is no immediate limitation on the number of interrogatories or document production requests that may be posed at the standard Government contract forums. Therefore, be to the point and brief in each version.

“State Your Legal Position" Interrogatories.

Interrogatories generally ask about the other side's position or information that may be available on a particular point. They may be followed up on by submitting a companion document production request.

If the case involves legal issues that require resolution, it is appropriate to have tightly drafted interrogatories that require the other side to "state their legal position on -- - -"

Document Production Requests.

Document production requests generally specify areas or groupings of documents that the other side should produce. Many of these documents at the Boards of Contract Appeals should have been produced in the Rule Four file. A similar practice should occur at the Court of Federal Claims---generally it does not.

Be all encompassing and specific at the same time in drafting document production requests. Take the time to think through the issues in the case. Get help from knowledgeable individuals as to the types of documents the agency would keep or produce in a particular situation.

Do not stop with the first document production request. Gather your documents and look through them.

Take whatever document production the other side gives you and then file a second set of document production requests that focus in further.

Document production requests are a relatively economical form of discovery. One can sit in their office and do the document production request in several hours. With the assistance of paraprofessionals, the documents produced can be sorted and classified. If necessary, surrogate document forms can be created so that fairly large volumes of documents can be controlled.

Microsoft Access works fine for such situations. Complex document control systems are generally unnecessary in Government contract cases.

Examples From Cases.

We set out below examples of typical interrogatories and document production requests for Government contract cases. We will analyze these and the approaches represented in class:

Interrogatory - Example One.

An example of interrogatories from a typical contract case is set forth below:

BEFORE THE ARMED SERVICES BOARD OF CONTRACT APPEALS

Appeal of _____________  

Under Contract _________

ABSCA No. __________

* * * * * * * * * *

FIRST SET OF INTERROGATORIES TO RESPONDENT UNDER RULE 15

In accordance with Board Rule 15, Appellant hereby serves upon Respondent the following first set of Interrogatories. Appellant requests that the answers be mode within 45 days and sent to the offices of ________.

Instructions of Interrogatories

You are requested to answer each Interrogatory on the basis of your entire knowledge and the entire knowledge of your agents, attorney, and/or their agents. If you cannot answer any Interrogatory in full, after exercising due diligence to secure the information to do so, so state and answer to the extent possible, specifying your inability to answer the remainder and stating whatever knowledge, information or belief you have concerning the unanswered portion.

If any Interrogatory is based in whole or in part on any opinion, so state in your answer and state whether it is in whole or in part, the name of the person or persons forming such opinion and each fact, matter, happening and writing used, consulted or referred to in forming such opinion.

The words and phrases used herein should be construed in their normal and regular manner as such words or phrases are typically used or defined.

The words "and" or "or" are intended to be construed conjunctively or disjunctively as necessary to make the Interrogatory inclusive rather than exclusive, and singular words are intended to include the plural and plural words are intended to include the singular, as necessary to make the request inclusive rather than exclusive.

The term “person" shall be deemed to mean any natural person, firm, association, partnership, corporation or other form of legal entity or Government body, unless the context indicates otherwise.

“Communications" shall mean oral, written, or electronic transmission of information to and/or from persons, inclusive communications where the recipient of the communication is not specifically identified in the communication, or where the recipient is the author, such as without limitation a written, electronic or memorandum to file. A communication includes the identity of the participants, the date, and the substance.

"Relating to" shall mean, either directly or indirectly, referring to, reflecting, describing, embodying, discussing, evidencing or in any way pertaining to. The object of the phrase "relating to" is to be included within the coverage of this definition.

The term “document(s)" or "documentation" includes every type of material that is producible under FRCP 34 and Board Rule 15 and includes any writing or recording of any nature or description, including handwriting, e-mail, photographing, Photostat, tape, wire, video, belt or disc recording, and every other means of recording upon any tangible thing in any form, including without limitation, drafts, originals and copies of books, calendars, planners, diaries, correspondence, memoranda, reports, minutes, notes, records, contracts, proposals, tickets, checks, bills, receipts, telegrams, papers of any character, tapes and their associated printer listings, wire, belt or video recordings, and copies of documents which are not identical, duplicates of the originals (e.g., microfilm, as opposed to hard copy}, and material which has been otherwise photographically or electronically recorded, or any other physical material in the possession, custody, and/or control of the Respondent, its divisions, subsidiaries, agents, intermediaries, employees, or contractors.

Each Interrogatory and response thereto shall be construed and responded to independently and not be referenced to any other Interrogatory or Interrogatory response.

Singular words are intended to include plural and plural words are intended to include the singular, as necessary to make the Interrogatory inclusive rather than exclusive.

When an Interrogatory does not specifically request a particular fact or facts, but such fact or facts are necessary in order to make the response to the Interrogatory either comprehensive, complete or not misleading, the Interrogatory shall be deemed specifically to request such fact and Respondent is to include such fact as part of its response.

Interrogatories

In accordance with FRCP 33 and Board Rule 15, and the "Instructions" above, Appellant requests that Respondent state its answers to the following Interrogatories:

1. Between the date of contract award and __________, identify with particularity each and every item that the Government considered for ___________, but determined not to place the order with because of __________; identify all documents related thereto.

2. State with particularity the Government's exact legal and contractual contentions concerning ___________; identify all documents related thereto.

3. Identify each and every individual participating in making the determinations set out in Paragraphs 1 and 2 above.

4. State with particularity the procedures followed in considering, drafting, and approving the ________ Clause, used in Appellant's contract; identify all documents relating in any fashion to your answer and the drafting and approval process.

5. State what, if any, consideration THE AGENCY gave to terminating the existing award during the course of the protest proceeding, and state the Government's rationale for whatever decision was made; identify all documents relating to this issue.

6. (a.) State with particularity the Government's definition/current interpretation of the following terms contained in the _________ Clause: (i.) degradation, (ii.) proportionate, (iii.) fully efficient, (iv.) indemnify, and (v.) warranty; identify all documents related thereto.
   (b.) State the Government's contentions as to each one of these five terms as it relates to the position taken in this litigation in supporting the deductions taken from Appellant's payments due; identify all documents related thereto.

7. State with particularity the consideration/analysis made to the board's decision in the case (_______BCA _________) before drafting the __________ Clause; identify all documents related thereto.

8. Identify all documentation of any kind prepared stating the Government's intention to make withholdings of any kind because of ___________.

9. Identify all documentation of any kind relating to the formulation, preparation, drafting, and/or use of the special Agency _______ Clause.

10. State with particularity each individual who provided input to these interrogatory answers, by individual answer.

* * *

Note: Interrogatory answers are to be signed under oath by the person making them: FCRP 33(b)( l) and (2).

_________________________

Attorney for Appellant

Interrogatories - Example Two.

BEFORE THE ARMED SERVICES BOARD OF CONTRACT APPEALS

Appeal of _____________  

Under Contract _________ 

ABSCA No. __________

* * * * * * * * * *

FIRST SET OF INTERROGATORIES TO RESPONDENT UNDER RULE 15

In accordance with Board Rule 15, Appellant hereby serves upon Respondent the following first set of Interrogatories. Appellant requests that the answers be made within 45 days and sent to the offices of __________.

Instructions of Interrogatories

1. You are requested to answer each Interrogatory on the basis of your entire knowledge and the entire knowledge of your agents, attorney, and/or their agents. If you cannot answer any Interrogatory in full, after exercising due diligence to secure the information to do so, so state and answer to the extent possible, specifying your inability to answer the remainder and stating whatever knowledge, information or belief you have concerning the unanswered portion.

2. If any Interrogatory is based in whole or in part on any opinion, so state in your answer and state whether it is in whole or in part, the name of the person or persons forming such opinion and each fact, matter, happening, and writing used, consulted, or referred to in forming such opinion.

3. The words and phrases used herein should be construed in their normal and regular manner as such words or phrases are typically used or defined.

4. The words "and" or “or" are intended to be construed conjunctively or disjunctively as necessary to make the Interrogatory inclusive rather than exclusive, and singular words are intended to include the plural and plural words are intended to include the singular, as necessary to make the request inclusive rather than exclusive.

5. The term “person" shall be deemed to mean any natural person, firm, association, partnership, corporation or other form of legal entity or Government body, unless the context indicates otherwise.

6. Communications shall mean oral, written, or electronic transmission of information to and/or from persons, inclusive communications where the recipient of the communication is not specifically identified in the communication, or where the recipient is the author, such as without limitation a written, electronic or memorandum to file. A communication includes the identity of the participants, the date, and the substance.

7. “Relating to" shall mean, either directly or indirectly, referring to, reflecting, describing, embodying, discussing, evidencing, or in any way pertaining to. The object of the phrase "relating to" is to be included within the coverage of this definition.

8. The term "document(s)" or "documentation" includes every type of material that is producible under FRCP 34 and Board Rule 15, and includes any writing or recording of any nature or description, including handwriting, e-mail, photographing, Photostat, tape, wire, video, belt or disc recording, and every other means of recording upon any tangible thing in any form, including without limitation, drafts, originals and copies of books, calendars, planners, diaries, correspondence, memoranda, reports, minutes, notes, records, contracts, proposals, tickets, checks, bills, receipts, telegrams, papers of any character, tapes and their associated printer listings, wire, belt or video recordings, and copies of documents which are not identical, duplicates of the originals (e.g., microfilm, as opposed to hard copy), and material which has been otherwise photographically or electronically recorded, or any other physical material in the possession, custody, and/or control of the Respondent, its divisions, subsidiaries, agents, intermediaries, employees, or contractors.

9. Each Interrogatory and response thereto shall be construed and responded to independently and not be referenced to any other Interrogatory or Interrogatory response.

10. Singular words are intended to include plural and plural words are intended to include the singular, as necessary to make the Interrogatory inclusive rather than exclusive.

11. When an Interrogatory does not specifically request a particular fact or facts, but such fact or facts are necessary in order to make the response to the Interrogatory either comprehensive, complete, or not misleading, the Interrogatory shall be deemed specifically to request such fact and Respondent is to include such fact as part of its response.

    Interrogatories

    In accordance with FRCP 33 and Board Rule 15, and the "Instructions" above, Appellant requests that Respondent state its answers to the following Interrogatories:

12. With respect to the current contract action, identity all documentation prepared prior to the award of Appellant's instant contract in which there is discussion regarding the reimbursement of contractor expenses, including those for ___________.

13. In connection with the solicitation, negotiation, preparation, and award of the subject contract, identify all documentation which comments upon or relates to reimbursement for contractor expenses, including those for __________.

14. With respect to paragraph _______ of Appellant's complaint, and the rejection of the invoice referenced therein, identify all documentation of the _________ Program Office, the Contracting Officer, the Agency Paying Office, or contractors in charge of payments, that comments upon, states, or records any and all positions concerning the reimbursement for contractor expenses, or _____________.

15. With respect to the __________ contract, number ________, identity all documentation commenting upon or relating to the Agency's reimbursement to Appellant, or its _________ companies, for __________.

16. With respect to the __________ contracts, identify all documentation commenting upon or relating to the Agency's actions causing its contractor or its own facilities to __________ at no cost to the contractor.

17. State in detail the Government's legal position as to why the past practice of reimbursing Appellant or its companies for ___________, did not become a portion of and requirement under the current contract in dispute.

18. State in detail the Government's legal position as to why the L.W. Foster Sportswear v. United States, 405 F.2d 1285 (Ct.Cl. 1969), case does not require the reimbursement of under this contract, given the Government's practice of reimbursing and/or taking at no cost under other contracts with Appellant or its companies.

19. State in detail the Government's legal position concerning the relationship, if any, between the nonpayment for _______ under this contract and the non-reimbursement for ____________.

20. With respect to the _________ contracts, identify each and every document generated by the Agency or its contractors showing or commenting upon the reimbursement for _________ or the ________ at no cost to the contractor.

21. With respect to the ___________ contract, identify each and every document generated by the Agency or its contractors showing or commenting upon the reimbursement for __________ or the ____________ at no cost to the contractor.

22. State in detail the Government's legal position concerning the distinction to be drawn between the Agency's reimbursement for ____________, or the Agency's _________ at no cost, depending upon whether _________ are involved. (This is a distinction the Contracting Officer apparently makes.)

23. State whether the Agency has gathered factual information after the award of this contract concerning whether __________ were __________at no cost by the Agency to Appellant or its companies on prior contracts with the Agency, and identify all factual information so gathered and the documents in which such information is contained.

24. State whether the Agency has gathered factual information after the award of this contract concerning whether __________were reimbursed, or __________ at no cost by the Agency, on prior contracts with other entities not related to the Appellant in this litigation, and identify all factual information so gathered and the documents in which such information is contained.

25. Referring to the Government's Answer, paragraph _____, state the Government's legal position under the L.W. Sportswear case with respect to the following:

    1. Do contracts with individual companies that are 100% owned by ______________ qualify in the Government's view as past performance actions under L.W. Sportswear?

    2. Does the Government have access to any records of any kind regarding the contracts that Appellant, and its companies, have performed for the Agency in the last ten years?

    3. If Appellant provides the list of all contracts it has held during the last ten years, does the Government have the ability to identify the contract files, including expense reimbursement records, relating to these individual contracts performed in the last ten years?

    4. Referring to the Government's Answer, paragraph ______, with respect to the Government's statement that it has "insufficient knowledge", will the Appellant's provision of the list of its companies, and its list of contracts performed for the Agency in the last ten years, provide sufficient information for the Government to determine whether the L.W. Sportswear case applies to the current contract situation in dispute?

26. With respect to the Government's Answer, paragraph __________:

    1. State whether the Government has the ability to determine when it has reimbursed for _________ on contracts it has placed over the last ten years.

    2. If the Government states that it does not have the ability to so determine, state whether the Government has reimbursement records including invoices and/or other payment data from the last ten years for __________?

    3. State specifically whether data, including but not limited to invoices and payment records, exists within the Agency that would determine, manually or electronically, the Agency's reimbursement for ________ despite the Agency's lack of contemporaneous records of just _________ reimbursement amounts.

27. With respect to the Government's Answer, paragraph _________:

    1. Identify all documents, which show facilities, contractors' equipment, or policies of the Agency with respect to ______ outside the continental United States.

    2. State the geographic areas in which the Government provides for ___________.

    3. Identify all documents stating the policies of the Government and procedures for at each geographic area identified above.

28. With respect to the Government's Answer, paragraph _________:

    1. State what knowledge the Government has, if any, concerning __________ compensation paid to Appellant, or its affiliated companies (beyond the ________) on contracts placed with Appellant by the Agency over the last ten years.

    2. Identify all records that the Government possesses, or has control over, which could be utilized to determine past reimbursement to Appellant, or its affiliated companies, for ____________, or the _______ at a Government facility, occurring in the last ten years.

29. With respect to the Government's Answer, paragraph ______:

    1. State all knowledge and information the Government has concerning the same or similar __________ reimbursement provisions as those included in paragraph ______ of the ___________ contract, in any other contract Appellant, or its affiliated companies, have performed for the Agency in the last ten years.

    2. State whether the Government has used the same or similar paragraphs to ______ in other Agency contracts, and if so identify those contracts.

30. With respect to the Government's Answer, paragraph ______, state the Government's precise legal position concerning why the reimbursement of _________ on a Government owned ______ is different than reimbursement of _________ under L.W. Sportswear v. United States.

31. With respect to the Government's Answer, paragraph _____:

    1. State all of the Government's information concerning the number of contracts Appellant has performed for the Agency, and state whether the Government's contract and payment files, including invoice data, is available for each contract so identified.

    2. State what information the Government needs to pull from its files, records, or storage depots, to determine its reimbursement for _________ on all _______ contracts for the Agency.

32. With respect to the Government's Answer, paragraph ______, to the extent not answered above:

    1. State the Government's legal position as to why non­-reimbursement for _______ in a contract means that _____ is also not reimbursable.

    2. State the Government's legal position under Foster Sportswear v. United States as to whether a long standing practice of reimbursement for ________, or the taking of ________ to Government facilities at no cost, is negated by the inclusion in the instant contract of the statement that the Government will not reimburse for purchases of ___________.

33. With respect to the Government's Second Affirmative Defense in its Answer:

    1. State the Government's exact legal position as to what proof of the incurrence of costs for _________ is required beyond an invoice from a vendor, a canceled check or other payment document, and/or an invoice to the Government for reimbursement.

    2. To the extent that the Government identifies additional items to those listed immediately above that are required to prove such cost incurrence state with particularity what those items are.

    3. State with particularity exactly what has not been provided by Appellant already with its invoices for ___________ that is required for the Government to make payment if payment is found due. Your interrogatory answer should state completely what the Government's requirements are in terms of proof of cost incurrence by Appellant so that there is not a second dispute proceeding relating to this issue following a decision on entitlement by the Board regarding the issue of the reimburseability of ______ costs.

34. State the Government's knowledge, position, and projections, if any, of the amount of reimbursement. which is due to this date, or may become due, under the ________ contract and/or through to the conclusion of the entire _________.

35. State with particularity each individual who provided input to these interrogatory answers, by individual answer.

* * *

Note: Interrogatory answers are to be signed under oath by the person making them: FCRP 33(b}(l) and (2).

____________________

Attorney for Appellant

Document Production Request - Example One.

BEFORE THE ARMED SERVICES BOARD OF CONTRACT APPEALS

Appeal of _______________

Under Contract ___________ 

ABSCA _________

FIRST REQUEST FOR DOCUMENT PRODUCTION UNDER RULE 15

In accordance with Board Rule 15, Appellant hereby serves upon Respondent, the following Document Production Requests. Appellant requests that the responses and documents be made available for inspection within 45 days as provided by the Board's rules.

Instructions for Document Production Requests

1. In each of your responses to these requests, you are requested to provide not only such information and/or documents in your possession, but also all information and/or documents in your custody or control or otherwise reasonably available.

2. In the event that you are able to provide only part of the information and/or documents called for by a particular request, please provide all the information and/or documents you can provide and state the reason for your inability to provide the remainder.

3. If you object to any portion of a request, provide all information called for by that portion of the request, which you do not object to or to which you intend to respond. For portions of any request to which you object, state the reason for such objection.

4. If you claim privilege for any document, identify the document by (a) author, (b) address, (c) date, and (d) subject matter, and state the facts that demonstrate why the document is entitled to the privilege asserted. Notwithstanding a claim that a document is privileged, the document must be produced with the portion subject to the claim of privilege excised.

5. All documents described below shall be produced separately for each numbered item or category listed below and the documents produced shall be organized such that said response will accurately reflect the production of documents or absence thereof for each numbered item or category.

6. If any document requested herein is unavailable or has been destroyed:

   1. Please identify all persons who have or have had personal knowledge of the information contained in such document;

   2. Please identify all persons who have or have had a copy of such document; and 

   3. If the document was destroyed, please describe the time and circumstances under which such document was destroyed.

   4. If any document is the subject of more than one request, the document need be produced only in response to the first such request (unless the document is in a different form or with writing added or deleted), but any omitted documents shall be identified in response to all requests.

   5. Unless otherwise indicated in a particular request, the words and phrases used in these requests should be construed in their normal and regular manner as such words or phrases are typically used or defined.

   6. The words "and" or "or" are intended to be construed conjunctively or disjunctively as necessary to make the Document Production Request inclusive rather than exclusive; and singular words are intended to include the plural and plural words are intended to include the singular, as necessary to make the request inclusive rather than exclusive.

   7. "Relating to" shall mean either directly or indirectly, constituting, referring to, reflecting, describing, embodying, showing, discussing, evidencing , or in any way pertaining to. The object of the phrase "relating to" is to be included within the coverage of this definition.

   8. "Communication" shall mean any statement or message transmitted, either orally, in writing, or through electronic media, including but not limited to, documents as defined herein and direct interpersonal statements.

   9. The term "document(s)" or "documentation" includes every type of material that is producible under the Federal Rules of Civil Procedure 34, and includes any writing or recording of any nature or description, including handwriting, typewriting, printing, e-mail, photographing, photostat, tape, wire, video, belt or disc recording, and every other means of recording upon any tangible thing in any form, including without limitation, drafts, originals and copies of books, calendars, pocket calendars, pocket planners, diaries, correspondence, memoranda, reports, minute s, notes, records, contracts, proposals, airline tickets, checks, bills, receipts, telegrams, papers of any character , tapes and their associated printer listings, wire, belt or video recordings, and copies of documents which are not identical, duplicates of the originals (e.g., micro film as opposed to hard copy), and material which has been otherwise photographically or electronically recorded, or any other physical material in the possession, custody, and/or control of Respondent, its agents, intermediaries, employees, or subcontractors.

   10. "Person" shall mean any individual, firm, partnership, association, corporation or other legal, business, or Government entity.

Document Production Request

1. Produce for inspection and copying all of those documents identified or referred to in response to Appellant's First Set for Interrogatories dated the same date as this Document Production Request.

2. Produce for inspection and copying all documentation retained by, or held by, or available to Respondent that relates in any fashion to _________, including but not limited to the reimbursement of _______, policies with respect to ________, contractors who will undertake _________, and Government facilities available for __________.

3. Produce for inspection and copying all documentation commenting upon or stating conclusions concerning the claim Appellant submitted under the Contract Disputes Act dated __________ in dispute here.

4. Produce for inspection and copying all documentation, which relates to or evaluates the amounts set out in Appellant’s Claim of ________ and Respondent's denial of Appellant's request for the reimbursement of ____________ costs.

5. Produce for inspection and copying all Agency documentation of any kind, without regard to the Program Office involved, that deals with policies, positions, or procedures, for __________ reimbursement or _______________.

Document Production Request - Example Two.

BEFORE THE ARMED SERVICES BOARD OF CONTRACT APPEALS

Appeal of ________________                              

ASBCA ____________

Under Contract ___________

FIRST REQUEST FOR DOCUMENT PRODUCTION UNDER RULE 15

In accordance with Board Rule 15, Appellant hereby serves upon Respondent, the following Document Production Requests. Appellant requests that the responses and documents be made available for inspection within 45 days as provided by the Board's rules.

Instructions for Document Production Requests

1. In each of your responses to these requests, you are requested to provide not only such information and/or documents in your possession, but also all information and/or documents in your custody or control or otherwise reasonably available.

2. In the event that you are able to provide only part of the information and/or documents called for by a particular request, please provide all the information and/or documents you can provide and state the reason for your inability to provide the remainder.

3. If you object to any portion of a request, provide· all information called for by that portion of the request, which you do not object to or to which you intend to respond. For portions of any request to which you object, state the reason for such objection.

4. If you claim privilege for any document, identify the document by (a) author, (b) address, (c) date, and (d) subject matter, and state the facts that demonstrate why the document is entitled to the privilege asserted. Notwithstanding a claim that a document is privileged, the document must be produced with the portion subject to the claim of privilege excised.

5. All documents described below shall be produced separately for each numbered item or category listed below and the documents produced shall be organized such that said response will accurately reflect the production of documents or absence thereof for each numbered item or category.

6. If any document requested herein is unavailable or has been destroyed:

   1. Please identify all persons who have or have had personal knowledge of the information contained in such document;

   2. Please identify all persons who have or have had a copy of such document; and

   3. If the document was destroyed, please describe the time and circumstances under which such document was destroyed.

   4. If any document is the subject of more than one request. the document need be produced only in response to the first such request (unless the document is in a different form or with writing added or deleted), but any omitted documents shall be identified in response to all requests.

   5. Unless otherwise indicated in a particular request, the words and phrases used in these requests should be construed in their normal and regular manner as such words or phrases are typically used or defined.

   6. The words “and” or "or" are intended to be construed conjunctively or disjunctively as necessary to make the Document Production Request inclusive rather than exclusive; and singular words are intended to include the plural and plural words are intended to include the singular, as necessary to make the request inclusive rather than exclusive.

   7. Relating to" shall mean either directly or indirectly, constituting, referring to, reflecting, describing, embodying, showing, discussing, evidencing, or in any way pertaining to. The object of the phrase "relating to" is to be included within the coverage of this definition.

   8. "Communication" shall mean any statement or message transmitted, either orally, in writing, or through electronic media, including but not limited to, documents as defined herein and direct interpersonal statements.

   9. The term ''document(s)" or "documentation" includes every type of material that is producible under the Federal Rules of Civil Procedure 34, and includes any writing or recording of any nature or description, including handwriting, typewriting, printing, e-mail, photographing, photostat, tape, wire, video, belt or disc recording, and every other means of recording upon any tangible thing in any form, including without limitation, drafts, originals and copies of books, calendars, pocket calendars, pocket planners, diaries. correspondence, memoranda, reports, minutes, notes, records, contracts, proposals, airline tickets, checks, bills, receipts, telegrams, papers of any character, tapes and their associated printer listings, wire, belt or video recordings, and copies of documents which are not identical, duplicates of the originals (e.g., microfilm as opposed to hard copy), and material which has been otherwise photographically or electronically recorded, or any other physical material in the possession, custody, and/or control of Respondent, its agents, intermediaries, employees, or subcontractors.

   10. "Person" shall mean any individual, firm, partnership, association, corporation or other legal, business, or Government entity.

Document Production Request

1. Produce for inspection and copying all documentation commenting upon or stating conclusions concerning the claim Appellant submitted under the Contract Disputes Act dated ___________.

2. Produce for inspection and copying all documentation, which relates to or evaluates the amounts set out in Appellant's Claim of ___________, and the Government's deductions from Appellant's payments for __________.

3. Produce for inspection and copying all documentation, which records in any fashion how the Government calculated the amount of the deductions actually taken from Appellant's invoices under this contract.

4. Produce for inspection and copying all documents stating or recording in any fashion performance tasks considered for __________ from the date of contract award, until the date of this request.

5. Produce for inspection and copying all documentation generated by the Government prior to contract award, setting forth its selection and designation of the subject contract as one for "commercial services".

6. Produce for inspection and copying all the documents, of any kind, generated before or after the _________ was accepted relating to or commenting, in any fashion, upon the pending __________.

7. Produce for inspection and copying any documentation commenting upon the consideration of whether a national defense waiver should be asked for by the Government from the ________ for the pending _________.

8. Produce for inspection and copying all documentation in which the Government analyzes the technical, financial, or other issues raised by the _________.

9. Produce for inspection and copying all documentation by the Government, which records the Government's analysis of the technical solutions __________ was proposing to ___________ for __________.

10. Produce for inspection and copying all documentation relating to comments to and from the sponsor agents (___________) generated by or to the Government, relating to the presence of the ____________ when the ___________ was scheduled or taking place.

11. Produce for inspection and copying all documentation commenting upon or relating in any fashion to the ________, which was generated by or sent to the Government.

12. Produce for inspection and copying any and all documentation relating to or recording any alleged damages or increased costs experienced by the Government as a result of the ___________.

13. Produce for inspection and copying any and all documentation sent to the or received by the Government from the _________ commenting upon, in any fashion, the pending ____________.

14. Produce for inspection and copying any and all documentation commenting upon or stating the desirability of or the considerations in requesting a national defense waiver of the ____________.

15. Produce for inspection and copying all documentation generated since the receipt of appellant's claim on ___________, which in any fashion states technical, financial, or operational evaluations, and which states ciny amounts of money that could or should be paid to the Appellant relating to the withholding.

16. Produce all documents identified in your Response to Appellant's lnterrogatories, First Set, dated ____________.

_____________________

Drafting Checklist- Interrogatories.

State your Legal Position on Various Points.

As set forth in the opening discussion in this section, these types of interrogatories are appropriate. Draft them tightly. Get the information that you need.

Review your Complaint and Support It.

You should have pleaded things in your complaint that you need to win at trial (or to receive an appropriate settlement short of trial). Go through each one of the allegations and determine how you are going to prove them.

If you can get help from the other side, through either their identification of documents or from their answers to specific questions, do so through your interrogatories by asking for that information.

Broad, Open-Ended Interrogatories versus Short Narrow Ones.

Our recommendation is that you use both approaches. Be as specific as you can with all of your interrogatories. Then go back and ask broader interrogatories that request the identification of documents, which you are not sure exist, etc. You will get denials on some of the broad ones, but that is to be expected.

Covering issues in the case in a comprehensive and thorough manner in your interrogatory requests also prevents the other side from later maneuvering around positions which you tied down earlier on.

Continuing Interrogatories.

All interrogatories are continuing. But deal with the continuing interrogatory issue in writing frequently.

State the other side's requirement for doing so, but follow-up yourself and if needed ask the interrogatories again by reference. Do not rely upon the other side to remember their obligations to provide continuing information.

Inquire Specifically and Frankly.

Ask the Government: "Did the Government take ________ action"; "Has the Government paid for _________ in the past with federal funds"; “Has the Government denied ___________ in the past"; along with whatever other types of specific questions are appropriate to the situation involved.

Your questions must be relevant and lead to the production of discoverable information. If you ask what the Government has done on the contract at issue, and on related contracts, that will probably work.

If you ask the Government what it has done Government-wide, that is probably too broad and will most likely at least lead you into discovery squabbles. Avoid them if possible, but do not be afraid to push as far as you can. You can always accept an objection and take no action upon it from the other side.

Drafting Checklist -- Document Production Request.

Get Help From Knowledgeable Individuals.

If you were not intimately involved in the performance of the subject contract, you probably need help as to what type of documentation the Government was keeping.

If you are not familiar with the record-keeping habits of the particular agency in detail, seek help from company employees who understand them, and can pinpoint the type of documents the agency would keep as to the performance of a contract like the one at issue.

This is one area of discovery in which it is difficult to ask for the production of documents relating to the particular contract in dispute, or relating to the way the agency normally does business, if you are not familiar with these matters. There are company employees who can help you.

What Documents Are Important For Trial?

As discussed in the foregoing section, you need to follow up on what documents should be available, and specifically as to what documents you need for trial. Ask for them.

But, also ask for broad categories of production that relate to your specific contract. You are not clairvoyant. You cannot know exactly what the Government created. Ask for categories as well as specifics.

Be Prepared to Take Whatever Incremental Document Production Is Offered.

As discussed in the above materials, do not be particular and prissy about the way document production is performed by your opponent. If the documents seem relevant, make yourself available to review the documents and clip them for copying.

Take the copies that you are given, and use them in the system of organization that you have created. There will be plenty of time for follow-up requests in writing, and for separate jawboning sessions with your opponent.

Of course it would be nice to have documents produced at one time, in one place, and in neat file folders. That is unrealistic. Do not hold up the case and your progress awaiting such perfection.

Depositions

The Highest Cost Item.

As discussed earlier, this is the highest cost item in litigation, and can easily get out of hand.

Limitations.

Our recommendation is that a list initially be developed and then a strict budget made with respect to depositions. While the budget might be deviated from in certain instances if a particular witness was helpful and therefore requires a second or third day of examination, generally the budget should not be moved. This is because every witness will have new things to say that could be pursued. There is no limitation unless a limitation is imposed.

It is also possible to negotiate limitations with the other side. The Government may agree to no more than five or ten depositions per case for each side. You should consider embracing that approach as well.

Videotaped depositions are the rage today -- on smaller cases, they are prohibitive from an expense point of view. Indeed, in particular cases it might be possible to get the Government to agree to the parties taping of depositions and then the transcription of only portions of it. Cost savings approaches must be considered at all times.

In Sequence.

Depositions should be taken in a particular sequence that has been developed beforehand. The willingness to change the sequence and be flexible is fine. However, move it only for good reason because you will be chasing things and creating additional costs otherwise.

Doing Without.

As previously stated, one hard-nosed approach is to work on your own case and to let the other side go its own way in developing its case. Be prepared to present your case at trial and if necessary to skip discovery if it is too expensive to pursue.

Opening Settlement Discussions Without Trial Delay.

We have previously discussed above the windows that exist for settlement discussions, as well as ADR proceedings. ln this section we wish to raise several additional issues, in particular timing considerations.

ADR type meetings, whether they involve the Court, or higher level management positions, should be conducted in a fashion that does not delay the trial process. As many old fashioned trial lawyers will tell you, cases do not get settled until a trial date is set.

One of the things that we try to do is set an early trial date and then back up and leave adequate time for individual actions to take place. The pressure of a trial date causes people to be serious in considering the other parties' rational offers to resolve cases.

Trial of the Case

People tend to be overly concerned about the trial of Government contract cases. At the Boards of Contract Appeals, trials are relatively informal. The Federal Rules of Evidence are utilized as a guide and not strictly enforced. The Court of Federal Claims approach is similar.

Bench Trials.

There are no jury trials; hence there is no need to appeal to the emotions of individuals, but rather to present the facts and the law on a subject.

Short Presentations.

Short presentations are generally best for all activities at the trial. Judges are ready to step in and attempt to push things forward and cut off time wasting activities. You should be sensitive to that particular point. Be prepared and be brief.

Cross examination of Witnesses.

The cross examination of witnesses at trial should also be brief. You should plan your cross examination well before the trial starts. You will need to make modifications to it as a trial moves forward and as you actually hear the witness, but the cross examination of the witness should largely be prepared before an adverse witness takes the stand.

The important documents of the witness, and the witness's deposition testimony if taken, should all be annotated, and prepared, along with an outline of the questions to be posed as a minimum.

Opening and Closing Statements.

This is one area in which we believe greater length is perhaps appropriate. It is also common to prepare a short pretrial brief to be delivered to the Judge a week or two before the trial.

Opening statements and pre-trial briefs are an opportunity to educate the court as to where your case is going, and they allow the court to pay additional attention to the witnesses you are presenting as they testify. Hopefully their testimony is also brief.

Post-trial Briefing.

In most Government contract cases at the Boards of Contract Appeals, an extensive post trial brief is filed. This is also generally the practice at the Court of Federal Claims.

This is an opportunity for the contractor and the Government to take the information that came from the trial and to write a comprehensive brief as to why they should prevail on the facts and the law. Do not be surprised if your post-trial brief is five to ten times the length of your pretrial brief as you have witness testimony to deal with in the post trial brief.