ASBCA Denies Government’s Motion to Dismiss, Finds Government’s Argument “Borders on Frivolous”

The government moved to dismiss the contractor’s liquidated damages claims, arguing that payment estimates withholding those damages were final decisions that should have been appealed within 90 days. The ASBCA rejected this argument as “bordering on frivolous.” Payment estimates signed by a Contracting Officer’s Representative (COR) cannot constitute final decisions under the Contract Disputes Act because CORs lack authority to issue such decisions. Even two estimates signed by an Administrative Contracting Officer (ACO) were not final decisions where they appeared in a series of ten routine payment documents, none of which indicated an intent to trigger appeal rights or provided the required appeals language.

Appeal of ACC Construction Co., Inc., ASBCA Nos. 63528, 64067

• Background – The Army Corps of Engineers awarded ACC a design-build construction contract for facilities at Fort A.P. Hill, Virginia. After COVID-19 caused project delays, the contractor sought time extensions and costs. The government withheld $497,660 in liquidated damages through a series of payment estimates. ACC submitted a certified claim seeking return of the liquidated damages and compensation for COVID delays. The government moved to dismiss portions of the appeal for lack of jurisdiction and moved for summary judgment on all claims, arguing they were time-barred, released, or subject to accord and satisfaction.
• COR Cannot Issue Final Decisions – The government argued that Payment Estimate (PE) 22 and PE 32, which withheld liquidated damages, were contracting officer final decisions that ACC failed to appeal within 90 days. The Board found this argument meritless. Both estimates were signed by the COR, Mr. Pugh, not a contracting officer. The government’s motion initially failed to disclose this fact. Only after the Board questioned Mr. Pugh’s status based on testimony from prior litigation did the government admit he was merely the COR. His delegation letter explicitly barred him from obligating payment of government money or taking actions affecting contract funds. Under the Contract Disputes Act, only contracting officers can issue final decisions. Because Mr. Pugh lacked such authority, the payment estimates he signed could not trigger the 90-day appeal deadline.
• ACO Payment Estimates Also Not Final Decisions – The government’s supplemental brief relied on two payment estimates (PE 26 and PE 27) signed by ACO Michael Roach. While the Board found Mr. Roach had authority to issue final decisions, it concluded these documents did not express such intent and ACC would not reasonably recognize them as final decisions. The estimates appeared in the middle of a series of ten payment documents, all using the same standard form, with eight signed only by the COR. None contained language indicating they were final decisions or describing appeal rights required by statute. Reviewing the totality of circumstances, the Board found these routine payment administration documents did not constitute final decisions triggering the 90-day appeal clock. The Board rejected what would have been an absurd result: requiring the contractor to file ten separate appeals over 18 months to preserve its right to challenge less than $500,000 in liquidated damages.
• Good Faith and Fair Dealing Claim Preserved – The government moved to dismiss Count V of the complaint, which alleged breach of the implied duty of good faith and fair dealing, arguing ACC never presented this theory to the contracting officer. The Board disagreed. ACC’s certified claim expressly stated, “the government breached the implied duty of good faith and fair dealing by failing to work with ACC on COVID issues, impacts, and delays.” The claim detailed how the government refused to timely address COVID impacts, withheld time extensions, enforced liquidated damages, and failed to partner with ACC. Count V tracked these allegations by asserting the government “refused and failed to cooperate with ACC to resolve the COVID-related impacts.”
• No Final Payment Bar – The government argued ACC’s claims were barred because they were submitted after final payment under the Changes clause. The Board found a triable question of fact. ACC never requested the final $100 payment because of unresolved disputes over the DEQ claim, COVID delays, and liquidated damages. The ACO incorrectly told ACC the government had to issue final payment 30 days after declaring the work complete, regardless of whether ACC requested payment—a misstatement of the FAR payment clauses. The ACO then accelerated the payment, issuing it only one week after acceptance rather than waiting the full 30 days he had indicated. ACC notified the government of its intent to pursue claims within 30 days of payment. The Board inferred the government “inappropriately foisted final payment upon ACC” through potentially deceptive conduct. The final payment rule “is not a trap to be set or tool for abusive gamesmanship.” Without a payment request from ACC and given the government’s misrepresentations, the Board found genuine issues about whether the $100 constituted a mutual final payment barring future claims.
• Release and Accord Arguments Fail – The government sought summary judgment on two additional grounds. First, it argued a bilateral modification released claims for COVID delays between March 13 and June 26, 2020. ACC conceded it was not seeking recovery for that period, making summary judgment unnecessary. Second, the government contended that a unilateral modification extending performance by two days constituted an accord and satisfaction barring all delay claims after June 26, 2020. The Board rejected this argument as meritless. Accord and satisfaction requires a meeting of the minds and consideration. ACC never agreed to the unilateral modification. The government cited no case law finding accord and satisfaction based on a unilateral modification to which the contractor did not consent.

The contractor is represented by Lochlin B. Samples, Jacob W. Scott, and Nufar Sharon of Smith, Currie & Hancock LLP. The government is represented by Michael P. Goodman, Sean P. Johnson, and James M. Inman of the U.S. Army Engineer District, Louisville.

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