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Walsky Construction Co. v. United States

U.S. Court of Appeals, Federal Circuit


January 11, 1999

WALSKY CONSTRUCTION COMPANY, PLAINTIFF-APPELLANT,
v.
UNITED STATES, DEFENDANT-APPELLEE.

Before Michel, Bryson and Gajarsa, Circuit Judges.

The opinion of the court was delivered by: Michel, Circuit Judge.

This is an appeal from the March 11, 1998 judgment of the United States Court of Federal Claims dismissing Walsky Construction Company's (Walsky's) complaint for lack of jurisdiction. The government terminated for default a contract for which Walsky was the contractor. Walsky appealed the default termination to the Armed Services Board of Contract Appeals (ASBCA). The ASBCA sustained the termination, which converted the default to a termination for the convenience of the government. Walsky then submitted a termination for convenience settlement proposal to the contracting officer. Eleven-and-a-half months later, Walsky filed a complaint in the Court of Federal Claims alleging a deemed denial of its settlement proposal. Because no valid claim was submitted by Walsky to the contracting officer for a final decision, we affirm.

BACKGROUND

On May 25, 1990, Walsky was awarded contract no. F65503-90-C-0021 (the contract), which was a firm fixed-price construction contract. On July 24, 1990, sixty days after contract award, and before Walsky performed any significant work at the job site, the contract was terminated for default. Walsky appealed the termination for default to the ASBCA. On September 7, 1990, the performance bond surety, General Insurance Company of America (GICA), entered into a completion agreement with Walsky and Walsky completed construction of the project on GICA's behalf.

On July 30, 1993, the ASBCA issued its decision upon Walsky's appeal and converted the termination for default to a termination for the convenience of the government. The government moved for reconsideration, which was denied on February 9, 1994. As a result, the contracting officer, by letter dated October 19, 1994, notified Walsky that, effective that date, the termination for default of Walsky's contract was now a termination for the convenience of the government.

By letter dated December 29, 1994, Walsky submitted a termination for convenience settlement proposal to the contracting officer, which also contained what purported to be a certification submitted pursuant to the Contract Disputes Act (CDA). The proposal requested payment of the allowable and allocable costs to which Walsky was entitled as a result of a termination for convenience of the government. It further requested payment of the alleged costs Walsky incurred completing the defaulted contract, as its surety's subcontractor, pursuant to the surety's takeover agreement with the government, and attorney fees allegedly incurred by Walsky in prosecuting the termination for default against the government before the ASBCA. In total, Walsky requested $1,152,443. Walsky received $519,292 as the surety's subcontractor, and so was requesting a net payment of $633,151.

On January 26, 1995, the contracting officer forwarded Walsky's proposal to the Defense Contract Audit Agency (DCAA) for an audit. Before the audit was completed, Walsky, by letter dated April 18, 1995, submitted an amended termination settlement proposal, reducing the net amount requested to $600,473. The DCAA completed its audit in June 1995. On December 21, 1995, Walsky filed a complaint with the Court of Federal Claims alleging jurisdiction based on a deemed denial by the contracting officer of the alleged claim.

DISCUSSION

The CDA grants the Court of Federal Claims jurisdiction over actions brought on claims within twelve months of a contracting officer's final decision. See 41 U.S.C. § 609(a) (1994). Therefore, for the court to have jurisdiction under the CDA, there must be both a valid claim, and a contracting officer's final decision on that claim. See James M. Ellett Constr. Co. v. United States, 93 F.3d 1537, 1541-42 (Fed. Cir. 1996). The issue in this case is whether Walsky submitted a valid claim upon which the contracting officer has issued a final decision.

Walsky contends that its December 29, 1994, termination for convenience settlement proposal (the proposal) was a CDA claim. It is undisputed that the proposal was not a routine submission under 48 C.F.R. § 33.201 (1998). A non-routine submission is a "claim" under 48 C.F.R. § 33.201 if it is: (1) a written demand, (2) seeking, as a matter of right, (3) the payment of money in a sum certain. See 48 C.F.R. § 33.201;See also Reflectone, Inc. v. Dalton, 50 F.3d 1572, 1575 (Fed. Cir. 1995) (in banc). The proposal was a written demand, seeking as a matter of right, under the termination for convenience clause, the net payment of $633,151, and therefore met the Federal Acquisition Regulation's (FAR's) requirements for a non-routine submission to be considered a valid claim.

The second part of the test for jurisdiction requires a final decision by the contracting officer on the claim. As Walsky is claiming a deemed denial of its claim, the issue becomes the narrower one of whether the claim was submitted to the contracting officer for a final decision. If Walsky wanted "by its submissions . . . a final decision, that prong of the CDA claim test is met." Transamerica Ins. Corp. v. United States, 973 F.2d 1572, 1576 (Fed. Cir. 1992).

"When a contractor submits a termination settlement proposal, it is for the purposes of negotiation, not for a contracting officer's decision. A settlement proposal is just that: a proposal. . . . Consequently, while [the contractor's] termination settlement proposal met the FAR's definition of a claim, at the time of submission it was not a claim because it was not submitted to the contracting officer for a decision." James M. Ellett Constr., 93 F.3d at 1543-44.

The proposal remains a proposal during negotiations, and until such time as the negotiations come to an impasse, the proposal is not considered to be submitted for a contracting officer's final decision. Implicit in the proposal is a request that the contracting officer issue a decision in the event the parties are unable to agree on a settlement. See id.

Walsky contends that its settlement proposal specifically requested "prompt action and decision" and, therefore, the proposal was submitted for a contracting officer's final decision. However, the proposal was just that: a proposal. The proposal, in accordance with FAR requirements, invited settlement negotiations, and did not represent a claim submitted to the contracting officer for a final decision.

Walsky alternatively argues that negotiations had reached an impasse, and therefore the proposal had matured into a claim and was deemed denied. However, when Walsky filed in the Court of Federal Claims, negotiations had not yet begun and certainly had not proven to be fruitless. In August 1995, Walsky wrote to the government and asked the government to "appraise [Walsky] . . . of when [the government] . . . intend[ed] to actually set a negotiations date." The government responded to this letter the next day and stated that "reaching a mutually agreeable settlement, as expeditiously as possible, is a definite priority of this office." The government sent another letter to Walsky in October, again stating that the "proposal was still in legal review." In December, Walsky filed its complaint in the Court of Federal Claims. Given this record, we cannot say that negotiations were at an impasse in December, or that the trial court should have so found. Therefore, we hold that, at the time of filing, the proposal had not yet matured into a claim.

The proposal, on its face, meets the FAR requirements for a claim. However, the Court of Federal Claims lacks jurisdiction over any claim, such as this one, which is not submitted to the contracting officer for a final decision before being appealed. The termination for convenience settlement proposal submitted by Walsky has not yet been the subject of negotiations with the government and until such time cannot be a claim upon which the contracting officer can be deemed to have denied by a lack of action on his part. Accordingly, we affirm the dismissal without prejudice entered by the Court of Federal Claims.

19990111


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