ASBCA 61911

ARMED SERVICES BOARD OF CONTRACT APPEALS Appeal of -- ) ) Strategic Technology Institute, Inc. ) ASBCA No. 61911 ) Under Contract No. N00178-05-D-4580 ) APPEARANCES FOR THE APPELLANT: James Y. Boland, Esq. Caleb E. McCallum, Esq. Venable, LLP Tysons Corner, VA APPEARANCES FOR THE GOVERNMENT: Arthur M. Taylor, Esq. Chief Trial Attorney Kara M. Klaas, Esq. Trial Attorney Defense Contract Management Agency Chantilly, VA OPINION BY ADMINISTRATIVE JUDGE D’ALESSANDRIS In April 2008, the Department of the Navy (Navy) awarded a contract to appellant, Strategic Technology Institute, Inc. (STi), for engineering support and other services. The contract was STi’s first cost-type contract, and the contract was administered by the Defense Contract Management Agency (DCMA or government). Pursuant to the contract, STi was required to submit an Incurred Cost Proposal (ICP) within six months of the end of its fiscal year, which was the calendar year. STi retained accountants to timely prepare its ICPs for the 2008 and 2009 fiscal years, in 2009 and 2010, respectively. This appeals turns on the following factual dispute. STi contends that it timely submitted the ICPs to the contracting officer. However, STi has not presented documentary evidence or testimony from a witness with personal knowledge to demonstrate that it submitted the documents. Conversely, the government maintains logs of incoming mail (both email and hard-copy mail) and finds no record of submission to the Navy or DCMA. Following submission of an ICP, the normal procedure is for the Defense Contract Audit Agency (DCAA) to audit the ICP, and for the contracting officer to set final incurred cost rates. At the time of these events, DCAA monitored ICP submissions based on the date of the last submission, and would send reminders to contactors if the government had not received a new ICP within a year of the most recent submission. However, because this was STi’s first cost-type contract, there was no prior submission to trigger this reminder. The situation remained unchanged until July 2014, with STi apparently of the belief that its 2008 and 2009 ICPs were awaiting audit, and the government apparently unaware that it had not received the 2008 and 2009 ICPs. During that month, DCAA was auditing STi’s 2010 ICP, which would have been submitted in June 2011 -- three years earlier. The auditor found reference to 2008 and 2009 costs, and requested from STi copies of its 2009 and earlier ICPs. STi promptly provided the 2008 and 2009 submissions to DCAA. At this point in July 2014, the 2008 ICP had been prepared five years earlier. In August 2014, DCAA internally considered the statute of limitations and concluded that, since it had no record of the ICP having been submitted previously, there was no statute of limitations problem, meaning that they concluded that they had six years from the prior month’s submission to bring any claim, rather than a period of less than 11 months, that would apply if DCAA had received the document back in July 2009. DCAA issued its audit report regarding the 2008 and 2009 ICPs in June 2015, just shy of six years from the original due date of the 2008 ICP, and just over a year prior to the expiration of the six year claim deadline for the 2009 ICP. The DCMA contracting officer eventually issued a final decision asserting a government claim in excess of $1.1 million in November 2018, over three years after the audit report was released and over nine years after the 2008 ICP was prepared, but less than four-and-a-half years after DCAA requested the ICPs from STI in July 2014. On appeal to the Board, STi argues that the government’s claim is barred by the six-year statute of limitations. STi contends that it timely submitted the ICPs in July 2009 and July 2010, more than six years before DCMA issued its final decision. Alternatively, STi contends that, even if the Board finds that the ICPs were not submitted until 2014, the government’s claim accrued in July 2009 and July 2010, because the government should have known that STi’s ICPs were due on those dates. STi has not presented any evidence on the merits of the government’s claim and states that it is unable to defend against the government’s cost claims due to the passage of time.