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Armatively Inecient Jurisprudence?:
Confusing Contractors’ Rights to Raise
Armative Defenses with Sovereign
Immunity
Steven L. Schooner* & Pamela J. Kovacs**
It is as much the duty of government to render prompt justice against itself, in favor of
citizens, as it is to administer the same, between private individuals.
1
Since a party cannot know what her defense is until she hears the claim leveled against
her, it seems that it would be nearly impossible for a party to submit future hypothetical
defenses to the administrative claims procedure—defenses to lawsuits which may not yet
have [been] brought against her or which may never be brought at all.
2
Introduction
With its 2010 decision in M. Maropakis Carpentry v. United States,
3
the
U.S. Court of Appeals for the Federal Circuit upset the commonly understood
rules of practice and procedure for government contracts dispute litigation.
e Maropakis court, in what the Supreme Court might view as a drive-by
jurisdictional ruling,
4
held that a contractor must le its own claim for time
extensions before it can defend against a government claim for liquidated
damages.
5
Initially, many feared that the decision would create a signicant,
* Nash & Cibinic Professor of Government Procurement Law and Co-Director of the
Government Procurement Law Program, e George Washington University Law School.
Professor Schooner previously served in the Oce of Management and Budget, the De-
partment of Justice, and the Army Judge Advocate General’s Corps. Professor Schooner is a
director of the Procurement Round Table and a Fellow of the National Contract Management
Association. e authors gratefully acknowledge Seymour Herman for his continued support
of government procurement law research at e George Washington University Law School
and Jack Friedenthal, Daniel Gordon, Alan Morrison, Ralph Nash, Ray Pushkar, and Heidi
Schooner for their helpful comments and insights.
** Juris Doctor, e George Washington University Law School.
1
Abraham Lincoln, First Annual Message (Dec. 3, 1861), in 5 T C W
A L, 35, 44 (Roy P. Basler ed., 1953).
2
Nat’l Union Fire Ins. Co. v. City Sav., F.S.B., 28 F.3d 376, 395 (3rd Cir. 1994).
3
M. Maropakis Carpentry v. United States (MaropakisII), 609 F.3d 1323 (Fed. Cir. 2010).
4
See infra text accompanying notes 176–185.
5
MaropakisII, 609 F.3d at 1331–32.
T F C B J V. , N.
disruptive, and—from the contractors’ perspective—disadvantageous
change in procedural posture for a large number of contractors defending
against government claims.
6
ese fears rapidly evolved into reality with
two U.S. Court of Federal Claims (“COFC”) cases interpreting Maropakis.
7
Accordingly, practitioners now can conrm that the change breeds ineciency
and uncertainty in the contract disputes process, thereby increasing costs for
both contractors and the government (without providing any corresponding
benet).
8
If unchecked, Maropakis may reect one of the most signicant
changes in government-contracts litigation posture since the urry of
jurisdictional litigation following the late-1970s enactment of the Contract
Disputes Act (“CDA” or “the Act”).
9
is is particularly frustrating to the extent that Maropakis does not appear
well-grounded in relevant precedent and seems to ignore the realities of the
congressionally mandated contract disputes process.
10
e Federal Circuit—as
it too often does—appears to have relied on a rigid, formalistic interpretation
of the CDA.
11
e resulting rule creates expensive ineciencies in the contract
disputes context,
12
which, unavoidably, result in costly, unproductive litigation.
13
Moreover, the scope of the rule’s application remains unclear.
14
To avoid
wasteful litigation, remedy the court’s departure from precedent, and restore
6
See, e.g., Ralph C. Nash, Defense to a Government Claim Is a Contractor Claim: A Weird
ought, 24 NCR. ¶42 (Sept. 2010) [hereinafter Nash, A Weird ought];
Raymond S.E. Pushkar & Justin M. Ganderson, Federal Circuit Contravenes Purposes of
CDA in Holding on Government Liquidated Damages Assessments, BNAF.C.R.,
July 20, 2010, at 6; Steven L. Schooner, A Random Walk: e Federal Circuit’s 2010 Govern-
ment Contracts Decisions, 60 A.U.L.R. 1067, 1097–99 (2011) [hereinafter Schooner,
A Random Walk].
7
See Structural, Inc. v. United States, 103 Fed. Cl. 84 (2012); Sikorsky Aircraft Corp.
v. United States, 102 Fed. Cl. 38 (2011).
8
See, e.g., Pushkar & Ganderson, supra note 6, at 6–8.
9
Contract Disputes Act (CDA), 41 U.S.C. §§7101–7109 (Supp. V 2011); see also W.
Staneld Johnson, A Retrospective on the Contract Disputes Act, 28 P.C.L.J. 567,
569–70 (1999) [hereinafter Johnson, A Retrospective on the CDA].
10
See Schooner, A Random Walk, supra note 6, at 1098; see also Nash, A Weird ought,
supra note 6, at 135.
11
See Schooner, A Random Walk, supra note 6, at 1095.
12
Steven L. Schooner, Postscript: Defense to a Government Claim Is a Contractor Claim,
26 NCR. ¶6 (Feb. 2012) [hereinafter Schooner, Postscript].
13
See id.
14
See id. at 19.
C C’ R R A D
contractors’ rights to an equal playing eld in litigating with their government
customer, a statutory solution appears to be required.
15
Part I of this Article will discuss Maropakis, prior case law on the issue, and
the relevant waiver of sovereign immunity, the CDA. Part II will describe, and,
in so doing, applaud, Judge Newman’s dissent in Maropakis, which respected
the status quo in CDA litigation utilizing a fair and reasonable analysis. Part
II also explains how the majority’s formalistic decision contradicts general
principles of civil procedure. Part III proposes a simple statutory amendment
to the CDA.
is Article does not suggest that any theory proered within it is particularly
unique, innovative, or even profound, but that does not diminish the
importance of its message. Courts make mistakes, but, fortunately, the nature
of our common-law regime is such that errors need not become permanent
or indenitely lead to inecient, ineective, or unfair results. Accordingly,
the Federal Circuit should revisit the substance of Maropakis, en banc, at
the rst opportunity. Until then, contractor (plainti’s) counsel should seek
en banc review in any related cases or, where appropriate, consider amicus
brieng.
16
e Justice Department’s attorneys should exercise their discretion
and refrain from exploiting Maropakis (remaining mindful that, ultimately,
their responsibility must be to “do Justice”). Contractor (plainti’s) counsel
should craft arguments that persuade individual COFC judges to avoid the
harsh and inecient application of Maropakis. e administrative judges on
the agency boards of contract appeals should stay the course and, if necessary,
15
As discussed below, the decision arises in the context of the CDA, over which the
Federal Circuit exercises exclusive appellate jurisdiction. Accordingly, there is no potential
demonstration of a split amongst the circuit, nor does there appear another convenient route
to achieve certiorari review in the Supreme Court.
16
See generally Robert K. Human, Federal Circuit Decisions on Government Contracts:
Insights from the Roundtable, 24 NCR. ¶7, at 27–28 (Feb. 2010):
Judge Michel said that the Federal Circuit would welcome briefs from amici curiae in
considering such requests for en banc resolution. Amici participation would help the
Federal Circuit understand the “downstream,” or real-world, eects of its prior and/
or potential decisions in the Government contracts arena.
...Judge Michel stated his belief that the Federal Circuit could be persuaded to grant
en banc review in the appropriate case. He stated that dissents [such as Judge Newman’s
in Maropakis] were important in persuading the Court to grant en banc review, and he
reiterated that amicus briefs were very important in helping the Court to determine
whether to take a particular case en banc. Judge Michel also stated that it was perfectly
appropriate for an appellant or amici to argue that en banc initial consideration of a second
appeal is appropriate years after a prior precedent relevant to the appeal on the basis that
the prior precedent was wrongly decided and had adverse practical consequences.
Id. (emphasis added) (italics omitted).
T F C B J V. , N.
distinguish Maropakis.
17
And, of course, if the Federal Circuit fails to remedy
the situation, Congress should craft and enact a legislative solution.
I. M. Maropakis Carpentry v. United States: Depriving
Contractors of eir Right to Defend
In M. Maropakis Carpentry v. United States, the Federal Circuit deprived a
contractor of its right to defend itself in litigation against a government claim
for money, specically, liquidated damages.
18
e court’s rigid, formalistic
reading of precedent and the CDA
19
unnecessarily opens a complicated can
of worms.
Granted, M. Maropakis Carpentry, Inc. (“Maropakis”) is not the most
sympathetic character. e company spent more than two years completing
a construction and repair work contract for the U.S. Navy that was originally
scheduled to take only nine months.
20
Still, the contractor faced many obstacles.
21
It took months for the contractor to locate a manufacturer to custom-make
the windows to meet the Navy’s admittedly overly strict specications.
22
e
government suspended all work on the contract for three-and-a-half months
after the contractor located lead-based paint in the building.
23
roughout,
the Navy refused to allow the contractor to mitigate the lost time by altering
the sequential order of the project’s phases.
24
In total, contract completion
was delayed by 467 days.
25
As a result, the contracting ocer (“CO”) assessed
$303,550 in liquidated damages pursuant to the contract’s liquidated damages
clause,
26
which stipulated that Maropakis was liable to the government for
17
See, e.g., Nat’l Fruit Prod. Co. v Dep’t of Agric., CBCA No. 2445, 2012 WL 1059477
(March 26, 2012).
18
MaropakisII, 609 F.3d 1323, 1334–35 (Newman, J., dissenting).
19
Schooner, A Random Walk, supra note 6, at 1095, 1098.
20
See M. Maropakis Carpentry, Inc. v. United States (MaropakisI), 84 Fed.Cl. 182,
191 (2008).
21
See id.
22
Id. at 188, 191 (stating that the Navy had admitted that the specication’s unusually
high standard for the windows was an error, but refused to lower the standard because it
would be unfair to the other bidders on the contract).
23
See id. at 189–90.
24
Id. at 187.
25
Id. at 191.
26
See generally 48 C.F.R. §52.211–12(a) (2000) (stating that “[i]f the Contractor fails to
complete the work within the time specied in the contact, the Contractor shall pay liquidated
damages to the Government in the amount of ___ [Contracting Ocer insert amount] for
each calendar day of delay until the work is completed or accepted” (alteration in original)).
C C’ R R A D
$650 per day for each day the contract was delayed beyond the contract
completion date (or any extensions).
27
roughout the contract’s duration, Maropakis requested time extensions,
arguing that the government caused the delays.
28
Maropakis, however, never
(properly) submitted a formal “claim” to the CO for a time extension.
29
Maropakis ultimately led suit in the COFC,
30
seeking time extensions
and remission of the government’s assessment of liquidated damages.
31
e
government in turn led a counterclaim for the payment of the $59,514
balance for liquidated damages.
32
e COFC concluded that, because Maropakis had never submitted a
formal “claim” to the CO for time extensions, the court lacked jurisdiction to
hear the contractor’s claim.
33
e court also held, however, that, while it had
jurisdiction over the government’s claim for liquidated damages, the contractor
could not defend against the government’s claim because the court lacked
subject matter jurisdiction over the contractor’s defense that the government
had caused the delays.
34
e Federal Circuit (in a two-to-one decision) in
Maropakis,
35
upheld the lower court’s ruling, nding that, pursuant to the
CDA, the contractor must have led its own claim with the CO in order to
challenge the government’s claim for liquidated damages before the COFC.
36
27
MaropakisII, 609 F.3d at 1325–26 (noting that the Navy withheld a nal payment
otherwise due to Maropakis under the contract, in the amount of $244,036, thus resulting
in a total amount due from Maropakis of $59,514).
28
e court related that the contractor requested an extension of 447 calendar days:
based on ve alleged delays: (1) 187 days due to the inability to locate a window
manufacturer; (2) 32 days in time lost from the start date of fabrication of windows due
to the need to re-submit plans; (3) 107 days due to the discovery of lead-based paint;
(4) 20 days due to the Navy’s prohibition of the use of asphalt as a roong adhesive;
and (5) 101 days for time lost while searching for a metal fabricator.
Id.
29
Id. at 1326. In retrospect, Maropakis’s counsel had numerous opportunities to avoid
much of the jurisdictional chicanery that would follow.
30
is Article also references decisions from the Claims Court (trial court) and the Court
of Claims, which were predecessors to the COFC. All three courts will be referenced for
precedential value. General references to decisions from the COFC include decisions from
the Claims Court and the Court of Claims.
31
MaropakisI, 84 Fed.Cl. 182, 193–94 (2008).
32
Id. at 194.
33
Id. at 205, 208.
34
Id. at 208; Schooner, A Random Walk, supra note 6, at 1097.
35
MaropakisII, 609 F.3d 1323, 1331–32 (Fed Cir. 2010). As discussed below, Judge
Newman led a vigorous dissent. See infra Part II.A.
36
MaropakisII, 609 F.3d at 1331–32.
T F C B J V. , N.
e Federal Circuit appears to have agreed that the assessment of liquidated
damages constituted a government claim under the CDA.
37
Nonetheless, the
court found that the only defense raised by Maropakis was that it was entitled
to a time extension, reasoning that any time extension would necessarily
modify the contract terms.
38
e court reasoned that, to obtain a modication
to the contract terms, the contractor must follow the requirements of the
CDA and submit its own claim to the CO.
39
e court thus armed the
nding of the COFC, which dismissed the contractor’s claims for lack of
jurisdiction, and granted the government’s motion for summary judgment
as to the counterclaim for liquidated damages.
40
Precedent and conventional wisdom prior to Maropakis was that the CDA’s
jurisdictional predicates did not apply to armative defenses.
41
Granted,
the Federal Circuit had stopped short of directly addressing the issue,
42
and
the COFC and the BCAs had inconsistently addressed the extent to which
a contractor could assert a factual defense to a government claim without
meeting the jurisdictional requirements associated with ling an armative
CDA claim.
43
Still, the Federal Circuit had not previously held that a contractor
could not challenge a CO’s adverse government claim without submitting a
separate armative claim.
44
For example, in Placeway Construction Corp. v. United States, the court
held that the government’s refusal to disburse the remaining amount under
a contract constituted a government claim.
45
Because the CO’s decision to
37
Id.
38
Id.
39
Id. “us, we hold that a contractor seeking an adjustment of contract terms must meet
the jurisdictional requirements and procedural prerequisites of the CDA, whether asserting
the claim against the government as an armative claim or as a defense to a government
action.” Id. at 1331.
40
Id. at 1332.
41
See id. at 1329–30; see also Schooner, Postscript, supra note 12, at 18.
42
MaropakisII, 609 F.3d at 1330 n.1.
43
Compare Kemron Envtl. Servs. Corp., ASBCA No. 51536, 00-1 BCA ¶30,664 (1999)
(allowing a contractor to defend against the government’s liquidated damages claim by prov-
ing that the government had contributed to the delay), with Elgin Builders, Inc. v. United
States, 10 Cl.Ct. 40, 44 (1986) (stating that without submitting a claim of its own, the
only defense a contractor could assert to the government’s liquidated damages claim was
that there was no delay in contract completion).
44
Placeway Constr. Corp. v. United States, 920 F.2d 903, 907 (Fed. Cir. 1990).
45
Id. at 906 (stating that a government claim does not require certication under the
CDA). e Court dened a government claim as “a claim seeking incidental and consequen-
tial damages for Placeway’s alleged breach of the contract, in particular, failure to complete
performance on the date set in the contract.” Id. at 906 n.1.
C C’ R R A D
withhold payment was adverse to the contractor, the court found that the
contractor could properly appeal to the (then) Claims Court, despite the fact
that the contractor had failed to certify its claim for the remaining amount.
46
Notably, the contractor in Placeway was initiating suit in court to recover the
amount the government owed under the contract; even still, the court found
that the contractor did not have to le its own claim in order to attempt to
defeat the government’s claim withholding the amount.
47
Similarly, in Garrett
v. General Electric Co.,
48
the court held that, under the CDA, a contractor may
appeal a CO’s decision on a government claim without submitting a claim of
its own to the CO.
49
Because the court found that the government’s directive
to perform remedial work constituted a government claim, the court held
that the Armed Services Board of Contract Appeals had jurisdiction over the
contractor’s appeal despite the fact that the contractor had submitted no claims
to the CO.
50
Most signicantly, the court held that the board’s jurisdiction
rested solely on the Navy’s claims under the contract.
51
erefore, Federal
Circuit precedent prior to Maropakis established that (1) a contractor can
appeal a CO’s decision on a government claim without submitting a claim
of its own and (2) the court’s or board’s jurisdiction in such cases is based
solely on the government claim.
52
While COFC and Boards of Contract Appeals (“BCA” or “board”) judges
had diered—in degree—on this question directly before Maropakis, little
suggested the path the Federal Circuit would take.
53
Some cases had allowed
contractors to present factual defenses to government claims without requiring
the contractor to bring its own claim,
54
while others allowed the contractor
to bring only limited defenses without submission of an armative claim.
55
46
Id. at 907.
47
Id. at 906–07.
48
Garrett v. Gen. Elec. Co., 987 F.2d 747 (Fed. Cir. 1993).
49
Id. at 749, 752; see also MaropakisII, 609 F.3d 1323, 1333 (Fed. Cir. 2010) (Newman,
J., dissenting) (citing Garrett, 987 F.2d at 749).
50
Garrett, 987 F.2d at 749.
51
Id.
52
Id.; see also MaropakisII, 609 F.3d at 1333 (Newman, J., dissenting) (citing Garrett,
987 F.2d at 749).
53
See supra note 34.
54
See, e.g., Kemron Envtl. Servs. Corp., ASBCA No. 51536, 00-1 BCA ¶30,664 (1999)
(not only exercising jurisdiction over a contractor’s appeal from a liquidated damages assess-
ment, but also ruling in the contractor’s favor on the issue, despite the fact that the contractor
had not submitted a claim to the CO).
55
See, e.g., Elgin Builders, Inc. v. United States, 10 Cl.Ct. 40, 44 (1986) (holding that
a contractor could contest the government’s claim to liquidated damages by challenging the
actual assessment, that is, by claiming that there was no delay or less delay in completion
T F C B J V. , N.
In Sun Eagle Corp. v. United States,
56
the Claims Court undertook a thorough
examination of the dierence between a contractor’s claim and defense.
57
e
Army assessed liquidated damages against Sun Eagle and withheld that amount
from the remaining balance on the contract.
58
Sun Eagle, in turn, submitted
a claim letter, challenging the assessment of liquidated damages and asserting
that the government caused the delays.
59
e government moved to dismiss
the contractor’s claim because it was not properly certied under the CDA.
60
e court held that the plain meaning of the CDA requires a contractor
to certify its own claim where it (1) submits its own claim letter to the CO
and, of course, (2) seeks interest on the sum.
61
Relying on Placeway, the
court stated that, if a contractor did not submit its own claim letter to the
CO, “it still could sue for that amount in the Claims Court by contesting
the government claim, but would not receive a decision by the contracting
ocer on its own claim, nor would it be awarded interest if successful.”
62
In
Sun Eagle, certication was required to the extent that the contractor had
led its own claim with the CO seeking the amount withheld for liquidated
damages—an amount in excess of the CDA threshold—with interest.
63
In the end, the court did not directly address whether the court would in
fact retain jurisdiction over the contractor’s defense of the government claim,
because, between its rst opinion and reconsideration, the parties engaged
in settlement negotiations.
64
e court stated, however, that if the contractor
had not properly certied the claim, “the result would call for the dismissal
without submitting its own claim, but that where a contractor’s defense actually claimed
some type of relief, such as entitlement to time extensions, such a defense constituted a
contractor claim, which must rst be submitted to a CO for consideration before the court
could exercise jurisdiction over the defense).
56
23 Cl.Ct. 465 (1991).
57
Id. at 476–82.
58
Id. at 474.
59
Id. at 476, 480.
60
Id. at 474 (citing the CDA).
61
Id. at 482. See generally 41 U.S.C. §7109(a)(1) (Supp. V 2011) (“Interest...found
due a contractor on a claim shall be paid to the contractor for the period beginning with
the date the contracting ocer receives the contractor’s claim...until the date of the pay-
ment of the claim.”)
62
Sun Eagle, 23 Cl.Ct. at 482 (citation omitted).
63
Id. (stating that “[t]he contractor made the claim in its claim letter and, if it recovers,
the CDA would award the contractor interest on its claim”).
64
Id.
C C’ R R A D
of all of its contractor claims, and the court would retain jurisdiction only
over the government claim.”
65
Sun Eagle dierentiated between a claim and a defense.
66
In the rst, the
contractor submits a claim to the CO for recovery of funds withheld for
liquidated damages and seeks interest on the sum.
67
Conversely, in a defense
to a government claim of liquidated damages, the contractor neither submits
a claim to the CO nor seeks interest on it.
68
e court held that a contractor
must meet the jurisdictional prerequisites of the CDA for a claim but not
with regard to a defense.
69
e Maropakis majority reconciled Placeway and Garrett with its decision,
agreeing that a court or board would have jurisdiction over a contractor’s
appeal of an adverse ruling on a government claim.
70
e court reasoned,
however, that neither case addressed whether the lower court or the boards
would have jurisdiction over a contractor’s defense where the contractor did
not bring its own claim.
71
e majority also found support for its decision in
Sun Eagle, quoting the Claims Court’s language that, if a contractor did not
meet the CDA’s jurisdictional prerequisites, the contractor’s claims would be
dismissed, and the court would retain jurisdiction only over the government
claim.
72
We nd this reading articial and unduly restrictive.
Judge Newman read the precedent dierently, nding that Sun Eagle
specically held that a contractor’s defense to a government claim did not
need to satisfy the CDA’s jurisdictional prerequisites.
73
Judge Newman also
opined that Placeway and Garrett only addressed the court’s jurisdiction
over the government claims and not the contractor’s defenses, because a
defense does not have a jurisdictional dimension.
74
Further, a more reasonable
reading of Placeway and Garrett leads to the conclusion that the court would
not explicitly rule that: (1) a contractor can appeal an adverse ruling on a
government claim; and (2) the court’s jurisdiction in such cases is based on
65
Id.; see also Roxco, Ltd. v. United States, 77 Fed.Cl. 138, 147–48, 151 (2007) (hold-
ing that where the contractor had not submitted claims to the CO, the court would retain
jurisdiction over the portion of the contractor’s claim that disputed the government’s liqui-
dated damages claim).
66
Sun Eagle, 23 Cl.Ct. at 482.
67
Id.
68
Id.
69
Id.
70
MaropakisII, 609 F.3d 1323, 1330 n.1 (Fed. Cir. 2010).
71
Id.
72
Id. at 1331 n.2 (citing Sun Eagle, 23 Cl.Ct. at 482).
73
Id. at 1334 (citing Sun Eagle, 23 Cl.Ct. at 480).
74
Id. at 1333 (citing Placeway Constr. Corp. v. United States, 920 F.2d 903, 906 (Fed.
Cir. 1990), and Garrett v. Gen. Elec. Co., 987 F.2d 747, 749 (Fed. Cir. 1993)).
T F C B J V. , N.
the government claim, if the court did not intend for the contractor to be
able to make a defense once its appeal was heard.
II. Inconsistency, Injustice, and Uncertainty
e Federal Circuit erred in changing well-established law and practice.
No statute, regulation, or policy appears to support its decision. Moreover,
the impact—specically, the ineciency and expense associated with ling
unnecessary claims and litigating unproductive jurisdictional issues—imposed
upon the contractor community serves no productive end.
75
While the Justice
Department may enjoy wielding a new and potent wedge that interferes with
contractors’ abilities to defend themselves in litigation, the public is ill served
by this decision.
76
It is tempting to conclude that the public is served, in the long run by
court decisions that, on the one hand, limit contractor rights or remedies and,
on the other hand, facilitate aggressive litigation postures advanced by the
Department of Justice.
77
Arguably, such precedent protects the government’s
sovereign immunity and the public sc.
78
Yet, the government’s adoption of a
scorched-earth litigation strategy may not make good economic sense. Each
of these individual litigation victories may ultimately increase the prices that
the government pays for the goods, services, and construction it procures.
Limiting contractors’ rights to pursue valid claims or protect their interests
through litigation “slowly and subtly, but inexorably changes the fundamental
bargain between purchasing agencies and [contractors], which eventually leads
to the government paying more for what it buys.”
79
One of us previously described government eorts to constrain contractor-
disputes litigation as a “breach of the contingency promise.”
80
Consider that the
fundamental premise upon which most government contracts depend is that,
in exchange for the contractor not inating its price (at the time of contract
award) as insurance against unanticipated problems that may arise during
performance, the government promises to make the contractor whole—through
a number of standard remedy-granting clauses—if any number of problems
75
See Schooner, Postscript, supra note 12, at 18; see also Pushkar & Ganderson, supra
note 6, at 7–8.
76
See Schooner, Postscript, supra note 12 at 18; see also Pushkar & Ganderson, supra note
6, at 7–8; see also Steven L. Schooner, Fear of Oversight: e Fundamental Failure of Business-
like Government, 50 A.U.L.R. 627, 695 (2001).
77
See Schooner, Fear of Oversight, supra note 76, at 695.
78
See id.
79
Id.
80
Id. at 695–98.
C C’ R R A D
or contingencies do arise.
81
is bargain makes particularly good business
sense if (as experience suggests) problems are the exception, rather than the
rule.
82
If, however, the government signals to the contractor community that
it does not intend to deal with its contractors on a level playing eld and
that it is willing to protect the public sc without regard for the reasonable
expectations of its business partners, contractors will increase their prices to
protect themselves.
83
Below, we accumulate a number of perspectives that reveal the error
and injustice in the majority’s holding in Maropakis. We begin with Judge
Newman’s dissent, which vehemently chronicles the aws in the majority’s
reasoning.
84
We then highlight the Federal Circuit’s increasing tilt to a
formalism that too often produces injustice, particularly in the government
contracts context.
85
We briey review the purpose behind the CDA and nd
that Maropakis contravenes congressional intent. We examine some basic
principles of civil procedure and nd the majority opinion in Maropakis
squarely at odds with these fundamental concepts. We oer an analysis of
cases applying a similar statutory scheme—the Financial Institution Reform,
Recovery, and Enforcement Act of 1989 (“FIRREA”)—which reveals how the
general jurisdiction circuit courts reached the opposite conclusion from the
Federal Circuit in a strikingly similar context. Finally, we note that the recent
COFC cases applying Maropakis starkly display the resulting ineciency and
uncertainty.
81
Id. at 695–96.
82
To the extent that relatively few contract disputes arise given the number of contracts
the government enters into (and, of course, the hundreds of billions of dollars in purchasing
the government engages in each year), the bargain proves quite ecient for the government
and the taxpayer. More specically, for example, fewer than 1,000 contract disputes reached
the agency boards of contact appeals in Fiscal Year 2011 (432 at the ASBCA, Memorandum
from Paul Williams, Chairman, ASBCA, to Sec’ys of Def., the Army, the Navy, the Air Force,
Gen. of Dep’t of Def., and Dir. of the Def. Logistics Agency (Oct. 21, 2011), available at
http://www.asbca.mil/Reports/FY2011%20Reports/FY2011_annual.pdf; 421 at the CBCA,
Donald G. Featherstun & Kevin P. Connelly, Disputes, in W G C
Y R C: C C B 8-1 (2012); and 117
at the COFC, U.S. Court of Federal Claims—Cases Filed, Terminated, and Pending for
the 12-Month Period Ending September 30, 2011, available at http://www.uscourts.gov/
uscourts/Statistics/JudicialBusiness/2011/US_Court_of_Federal_Claims_all.pdf;), despite the
fact that the federal government entered into millions of contracts worth more than $500
billion for services, goods, and construction in each of the last four scal years.
83
Schooner, Fear of Oversight, supra note 76, at 696.
84
MaropakisII, 609 F.3d 1323, 1332–35 (Fed. Cir. 2010) (Newman, J., dissenting).
85
Schooner, A Random Walk, supra note 6, at 1069.
T F C B J V. , N.
A. e Newman Dissent: Fairness and Common Sense
(or, Well, Justice)
Judge Newman led a vigorous dissent in Maropakis, arguing that the
majority failed to recognize the well-established distinction between an
armative claim and a factual defense.
86
“When a claim is within a tribunal’s
jurisdiction, like the government’s claim for delay damages, the tribunal
routinely has jurisdiction to consider defenses to the claim. is rule is not
negated by any provision of the Contract Disputes Act.”
87
Judge Newman
reasoned that—by the time the case was before the Federal Circuit—Maropakis
sought neither a modication of the contract nor damages nor additional
compensation.
88
Instead, Maropakis merely sought to defend against the
government’s claim, and “[n]o rule or precedent holds that a contractor forfeits
its right of defense if it does not le its own claim.”
89
Judge Newman explained:
e right to defend against an adverse claim is not a matter of “jurisdiction,” nor of
grace; it is a matter of right. e denial of that right, argued by the government on
a theory of “jurisdiction” that was supported by the Court of Federal Claims and is
now supported by this court, is contrary to the purposes of the CDA, contrary to
precedent, and an aront to the principles upon which these courts were founded.
90
Judge Newman’s articulate prose demonstrates that she found the distinction
between a claim and a defense rather obvious and that simple logic supports
the distinction.
91
Focusing upon the demand and the relief available simplies
the analysis. A contractor’s claim for time extensions (based upon Government
delay or interference with the contractor’s progress)—submitted to the
CO
92
—both quanties and demands additional payment for the extra time
spent and additional work that the contractor completed on the contract,
in addition to seeking interest on both the extra payment sought and any
remaining balance on the contract withheld by the government.
93
By contrast,
a defense to a government claim for liquidated damages was not previously
86
MaropakisII, 609 F.3d at 1334 (Newman, J., dissenting).
87
Id. at 1333.
88
Id. at 1332.
89
Id. at 1334.
90
Id. at 1334–35. See also infra Part II.C. (discussing the nding of a jurisdictional rule).
91
MaropakisII, 609 F.3d at 1334–35 (Newman, J., dissenting).
92
A decision by the CO is required for both contractor claims and government demands.
A contractor claim demands a CO decision under the CDA. See CDA, 41 U.S.C. §7103(f)
(5) (Supp. V 2011). A government claim is generally a demand for payment. Neither type
of claim is a defense, but instead they are both a demand for a “sum certain.” See 48 C.F.R.
§2.101 (2010) (dening the term “claim”).
93
See MaropakisII, 609 F.3d at 1334–35 (Newman, J., dissenting); Sun Eagle Corp.
v. United States, 23 Cl.Ct. 465, 482 (1991); Pushkar & Ganderson, supra note 6, at 3–4.
C C’ R R A D
required to be submitted to the CO and, similarly, does not accrue interest.
94
As the moniker suggests, a defense serves only to deter the government
from withholding payment due the contractor under the contract and from
collecting any further damages that the government seeks.
95
e purported
distinction has a checkered history,
96
but the basic parameters did not appear
to be in question.
Prior decisions of both the [BCAs] and the COFC’s predecessor courts have discussed
the dierences between a contractor’s armative CDA claims...to combat a liquidated
damages assessment versus a contractor’s defenses against an assessment through an attack
of its factual underpinnings. e key to understanding this distinction is in the form of
relief requested. An armative CDA claim is an attempt to modify or adjust the contract
to counter the liquidated damages assessment (e.g., compensable time extensions as
a result of government delays). A factual defense to a liquidated damages assessment
merely serves to attack the assessment itself (e.g., the government’s assessment was
incorrect because the delay was excused as a result of government delays). Plainly stated,
a CDA claim seeks armative relief under the contract through a contract adjustment; a
factual defense only attempts to reduce or eliminate the liquidated damages assessment.
97
Professor Ralph Nash also agreed with Judge Newman and made no eort
to hide his exasperation with the majority in Maropakis:
It is dicult to conceive of a more bizarre holding than this rule that if a defense
looks like an armative claim, it can only be asserted if it meets the standard of being
a proper CDA claim....[N]othing in the CDA...would lead to this conclusion
and it surely ies in the face of the congressional purpose of providing contractors a
fair procedure for resolving disputes. We never had any problem with the holding in
Ruhnau-Evans-Ruhnau Associates v. U.S., 3 Cl.Ct. 217 (1983), that precludes interest
on a Government claim unless it is converted into a contractor claim. However, it is
[a] far stretch to hold that a contractor cannot even assert a defense to a Government
claim unless it is converted into a contractor claim.
98
Similarly, Staneld Johnson explained: “e CDA had plainly given the
sovereign’s consent to Maropakis’ appeal from the nal decision asserting
the government claim, a right that should not have been emasculated by
attributing an abnormal meaning to ‘defense.’ Even a strict construction
requires a reasonable basis, consistent with the purpose of the waiver.”
99
Yet
94
See Sun Eagle, 23 Cl.Ct. at 482.
95
See MaropakisII, 609 F.3d at 1334–35 (Newman, J., dissenting); Sun Eagle, 23 Cl.Ct.
at 482; Ruhnau-Evans-Ruhnau Assocs. v. United States, 3 Cl.Ct. 217, 218–19 (1983)
(holding that though contractor successfully defended against the government’s claim for
damages, the contractor was not entitled to interest because it never submitted a claim of
its own); see also Pushkar & Ganderson, supra note 6, at 3–4.
96
See Pushkar & Ganderson, supra note 6, at 2–4.
97
Id. at 2–3 (underscore added).
98
Nash, A Weird ought, supra note 6, at 135.
99
W. Staneld Johnson, e Federal Circuit’s Great Dissenter and Her “National Policy
of Fairness to Contractors”, 40 P.C.L.J. 275, 342 (2011) [hereinafter Johnson, e
T F C B J V. , N.
despite what appears patently obvious to the government contracts bar, the
distinction between a contractor’s armative claim and a factual defense
was lost on the majority, resulting in “one of the court’s most formalistic
decisions.”
100
Judge Newman also found the decision unjust and unfair.
101
Judge Newman found it wholly unnecessary for a contractor to submit a
claim in order to defend against the government claim.
102
First, she reasoned
that the court’s jurisdiction solely depended on the government’s claim.
103
She noted that the court in Placeway “based jurisdiction on the government’s
claim; a defense does not have a jurisdictional dimension.”
104
Second, she
rejected the majority’s nding that the contractor’s defense amounted to a
claim for contract modication.
105
“e routine defense that the government
contributed to delay is a defense, not a contract modication. Failure to meet
the CDA requirements for certication, naming a sum certain, requesting a
nal decision, or modifying the contract, does not preclude defending against
the government’s claim.”
106
Accordingly, Judge Newman saw neither a statutory
nor a policy rationale for requiring the contractor to le a separate claim.
107
Her pleas for fairness to government contractors seem to have fallen on deaf
Federal Circuit’s Great Dissenter]. Judge Newman’s dissent is just the latest example of her
“unique judicial approach to government contracts cases.” Schooner, A Random Walk, supra
note 6, at 1077. Labeling Judge Newman “e Federal Circuit’s Great Dissenter,” Staneld
Johnson recently explained how her general viewpoint in government contract cases diers
from that of her colleagues:
At the core of Judge Newman’s dissenting jurisprudence is the premise that the sovereign
as a contracting party should be accountable for its actions, subject only to limited
exceptions not to be presumed, unnecessarily expanded, or imposed in a formalistic,
doctrinaire way that ignores or masks the facts of government conduct. Where the facts
justify it, contractors should be entitled to a “fair and just” remedy, and the Federal
Circuit is there to make sure this happens.
Johnson, e Federal Circuit’s Great Dissenter, supra note 99, at 333. Johnson nds “[h]er
jurisprudence...so consistent with the authorized history of the jurisdiction inherited from
the Court of Claims, declaring the court as a nation’s ‘conscience,’ that one wonders why
she appears a maverick among the judges of the Federal Circuit.” Id.; see also Schooner, A
Random Walk, supra note 6, at 1079 (“Judge Newman proved true to form...dissenting in
[Maropakis], expressing disapproval, if not exasperation, with the majority’s unwillingness
to protect the interest of a government contractor.”).
100
Schooner, A Random Walk, supra note 6, at 1095, 1098.
101
MaropakisII, 609 F.3d 1323, 1334–35 (Fed. Cir. 2010) (Newman, J., dissenting).
102
Id. at 1332.
103
Id. at 1333.
104
Id. at 1333 n.2.
105
Id. at 1332.
106
Id. at 1334.
107
Id.
C C’ R R A D
ears as the Federal Circuit continues to depart from its intended role as the
nation’s conscience in government contracts jurisprudence.
108
B. e Formalist Trend Continues
Viewing Maropakis in the context of the Federal Circuit’s recent jurisprudence
reects the court’s ongoing shift toward formalism,
109
which stands in stark
contrast to the approach of its predecessor, the Court of Claims.
110
Congress
established the U.S. Court of Appeals for the Federal Circuit in 1982, replacing
the appellate level of the Court of Claims and (somewhat as an afterthought)
enshrining the court as the primary appellate court for government contract
cases.
111
Since then, the Federal Circuit has appeared intent on distinguishing
itself from the Court of Claims, not just in name, but also in its view of its
role.
112
One potential cause of this changed perspective is that the Federal
Circuit—unlike its predecessor—does not exclusively hear claims against the
government.
113
erefore, the Federal Courts Improvement Act enabled a shift
from a well-established specialty court to a far more generalized institution
114
:
In terms of Federal Circuit caseload, while the formal jurisdiction of the court is dened
by subject matter (which itself is substantially varied), the kinds of issues dealt with
by any particular judge of the court is a function of the luck of the draw in cases and,
over time, will run a wide gamut of legal issues.
115
Not only do Federal Circuit judges hear relatively few government contract cases
each year, but they—as a group and individually—lack any pre-appointment
108
Schooner, A Random Walk, supra note 6, at 1078–79.
109
Id. at 1069.
110
Id. at 1078–79. Prior to the creation of the Federal Circuit, the Court of Claims ex-
ercised jurisdiction over government contract cases (with divided jurisdiction between trial
and appellate levels). Richard H. Seamon, e Provenance of the Federal Courts Improvement
Act of 1982, 71 G.W.L.R. 543, 544 (2003).
111
Federal Courts Improvement Act of 1982 (FCIA), Pub. L. No. 97-164, sec.127,
§1295, 96 Stat. 25, 37–38 (codied in scattered sections of 28 U.S.C.). e same statute
created the U.S. Claims Court—now the COFC—to replace the trial level of the Court of
Claims. Id. sec.133, §1491, 96 Stat. at 39–41. e court hears appeals of both protests (or
disappointed oeror suits) and contract disputes.
112
Ralph C. Nash, e Government Contract Decisions of the Federal Circuit, 78
G.W.L.R. 586, 587–88 (2010) [hereinafter Nash, Government Contract Decisions].
113
Id. at 588; see also Schooner, A Random Walk, supra note 6, at 1081.
114
See S. Jay Plager, e United States Court of Appeals, the Federal Circuit, and the Non-
Regional Subject Matter Concept: Reections on the Search for a Model, 39 A. U. L. R.
853, 860 (1990).
115
Id. (footnote omitted).
T F C B J V. , N.
experience in the eld.
116
Prior to retiring, Chief Judge Michel acknowledged
the court’s expertise vacuum in government contract law
117
:
Judge Michel urged the members of the Government contracts bar to consider seeking
the nomination of persons with Government contracts expertise and experience as
replacements for the Federal Circuit judges who would be retiring or taking senior
status....Judge Michel stated that the appointment of one or more individuals with
such experience could go a long way towards raising the court’s understanding of the
real-world eects of its decisions in the Government contracts area.
118
As a result, the court is “not a specialized court in any meaningful sense of
the word.”
119
Like the COFC, the Federal Circuit is neither a specialty court
nor a general court, but somewhere in the middle.
120
By contrast, “the Court
of Claims was marked by a jurisdiction dependent upon the provision of the
particular remedy (monetary awards) for a particular harm (breach of contract)
and upon the presence of a particular defendant (the United States).
121
ese
dierences in makeup and jurisdiction appear to have caused the Federal
Circuit to distinguish itself from the Court of Claims.
122
e trend has been dicult to watch. “e Court of Claims perceived
itself as the conscience of the nation. at is to say, it believed that one of its
major tasks, as the court where citizens could obtain redress for actions of the
government, was to show those citizens that the government treated them
fairly.”
123
As the Federal Circuit has slowly drifted away from that view,
124
it
seems that, rather than elevating fairness to the citizen as its foremost priority,
the court has adopted a strong deference toward the government, regardless of
whether in the role of plainti or defendant.
125
is shift was most explicitly
conrmed by the congressionally established Acquisition Advisory Panel.
126
e
116
Schooner, A Random Walk, supra note 6, at 1070–71.
117
See id. at 1069.
118
Human, supra note 16; see also Schooner, A Random Walk, supra note 6, at 1069.
119
Plager, supra note 114, at 864 (citing Daniel J. Meador, A Challenge to Judicial Ar-
chitecture: Modifying the Regional Design of the U.S. Courts of Appeals, 56 U.C.L.R.
603, 612 (1989)).
120
Steven L. Schooner, e Future: Scrutinizing the Empirical Case for the Court of Federal
Claims, 71 G.W.L.R. 714, 719–20 (2003).
121
Judith Resnick, Of Courts, Agencies, and the Court of Federal Claims: Fortunately Outliv-
ing One’s Anomalous Character, 71 G.W.L.R. 798, 801 (2003).
122
Nash, Government Contract Decisions, supra note 112, at 588.
123
Id. at 587.
124
Id. at 588; see also Schooner, A Random Walk, supra note 6, at 1081.
125
Schooner, A Random Walk, supra note 6, at 1079.
126
A A P, R A A P
O F P P U S C 84 (Jan.
2007), available at https://www.acquisition.gov/comp/aap/nalaapreport.html.
C C’ R R A D
panel’s 2007 report articulated the premise that the “fundamental dierence
between government and commercial contracting is unequal treatment of the
parties in the contracting process. e government enjoys certain contractual
‘advantages’ by virtue of its status as the ‘sovereign’ resulting in benets from
the centuries-old, judicially created doctrine of sovereign or governmental
immunity.”
127
By contrast, “[t]he United States Supreme Court . . . has
held for some 130 years that the same rules of contract interpretation and
performance apply to both the government and contractors.”
128
Unfortunately
government contractors sustain harm from this ever-increasing deference to
the government.
129
e Federal Circuit also appears to have adopted a preference for rigid rules
in the area of government procurement.
130
“ere seems to be a belief that
there are no shades of gray in contracting—that the issues are either black or
white. e problem is that the contracting process—in both commercial and
government contracts—is not that way.”
131
e Federal Circuit seems to have
abandoned the Court of Claims’s method of considering all relevant evidence
in the case in favor of this formalistic approach.
132
Where the Federal Circuit once resolved issues based upon “all the facts and
circumstances,” it now more often applies a discrete list of factors. Where the court
once employed standards, it now employs rules. Where the court once had dense rules,
they have become leaner. In short, the Federal Circuit has embraced an increasingly
formal jurisprudence.
133
Instead of looking to the parties’ intent in drafting the contract, the court
rigidly adheres to the language of the contract without reference to context.
134
is proves surprisingly problematic. “Armed with dictionaries and thesauruses,
a clever attorney can propound interpretations that never occurred to the
parties at the time they entered into the contract.”
135
127
Id.
128
Id. at 85.
129
Schooner, Postscript, supra note 12, at 18.
130
Nash, Government Contract Decisions, supra note 112, at 612; Schooner, A Random
Walk, supra note 6, at 1081; John R. omas, Formalism at the Federal Circuit, 52 A. U.
L. R. 771, 773–75 (2003) (discussing “formalism” of the Federal Circuit in the context
of patents).
131
Nash, Government Contract Decisions, supra note 112, at 612.
132
Id. at 592.
133
omas, supra note 130, at 773–74 (footnotes omitted).
134
Nash, Government Contract Decisions, supra note 112, at 592–93.
135
Id. at 593. Ironically, even the dictionaries contradict the court’s nding in Maropakis.
Webster’s Dictionary denes “defense” as “a denial, answer, or plea” or “the collected
facts and method adopted by a defendant to protect and defend against a plainti’s
action”—with no mention of “claim.” Black’s Law Dictionary denes “defense” as a
T F C B J V. , N.
e preference for such strict construction takes “discretion away from the
judges on the Court of Federal Claims and the boards of contract appeals to
assess the facts fully and seek a fair outcome.”
136
In the Maropakis decision,
both the court’s strict adherence to rigid rules and its deference to the sovereign
make a meaningful appearance.
137
C. e Contract Disputes Act: No Drive-By Jurisdictional Rulings
Maropakis also appears sharply at odds with both the statutory language and
purpose of the CDA.
138
Congress designed the CDA to streamline the dispute
resolution process for government contracts, intending to create an ecient
process through which contractor and government claims could be resolved.
139
Congress aspired to reduce litigation by encouraging dispute resolution
through negotiation prior to litigation; provide dierent forums suitable for
dierent types of disputes; and create a fair and equitable system of dispute
resolution for both government contractors and government agencies.
140
In
short, Congress trumpeted that the CDA was enacted “to ‘streamline contract
disputes’ and ‘clarify what [were then] confusing procedures.’”
141
Congress
perceived the statutory scheme as a way to “release[] contractors from the
limited connes of administrative law by providing direct access to a judicial
forum,” which in turn “eliminated procedural delays and returned the focus
of the disputes process to the merits of claims.”
142
To encourage resolution prior to litigation, the CDA imposes specic
jurisdictional prerequisites before the government or a contractor may initiate
“defendant’s stated reason why the plainti...has no valid case—also with no mention
of “claim” (in more than two pages of additional denitions). e CDA had plainly
given the sovereign’s consent to Maropakis’ appeal from the nal decision asserting
the government claim, a right that should not have been emasculated by attributing
an abnormal meaning to “defense.” Even a strict construction requires a reasonable
basis, consistent with the purpose of the waiver.
Johnson, e Federal Circuit’s Great Dissenter, supra note 102, at 342 (alteration in original)
(quoting M-W’ C D 326 (11th ed. 2003), and B’
L D 482–85 (9th ed. 2009)).
136
Nash, Government Contract Decisions, supra note 112, at 613.
137
See supra Part I.
138
See CDA, 41 U.S.C. §§7101–7109 (Supp. V 2011); S. R. N. 95-1118, pt. 1, at
1 (1978), reprinted in 1978 U.S.C.C.A.N. 5235, 5235.
139
Johnson, A Retrospective on the CDA, supra note 9, at 570.
140
Id.
141
Id. (quoting 124 C.R. 36,264 (1978) (statement of Sen. Metzenbaum)).
142
Clarence Kipps et al., e Contract Disputes Act: Solid Foundation, Magnicent System,
28 P.C.L.J. 585, 591 (1999).
C C’ R R A D
a suit in the COFC or the BCAs.
143
First, the Act requires that a contractor
submit all claims against the government to the CO.
144
Second, all claims
must be in writing.
145
ird, if their claims (currently) exceed $100,000, the
contractor must certify that, among other things, the claims are made in good
faith and are accurate to the best of the contractor’s knowledge.
146
Fourth,
the contractor must receive a nal decision from the CO on the claim.
147
Only after fullling these requirements may the contractor initiate litigation
with regard to its claim before either an agency board
148
or the COFC.
149
If
a contractor fails to fulll these jurisdictional mandates, the court and the
boards lack subject matter jurisdiction over the claim.
150
Although the CDA regime essentially “revolves around the ‘claim,’”
151
the
CDA does not dene “claim,”
152
and the meaning of the term remains rather
143
CDA, 41 U.S.C. §7104(a), (b)(1). One of the goals of the CDA was to provide an
election of forum or concurrent alternative forums to which a contractor could appeal an
adverse decision by a CO. S. R. N. 95-1118, pt. 1, at 1. See generally Michael J. Schaen-
gold & Robert S. Brams, Choice of Forum for Government Contract Claims: Court of Federal
Claims vs. Board of Contract Appeals, 17 F.C.B.J. 279 (2008) [hereinafter Schaengold,
Choice of Forum 2008]; omas C. Wheeler, Let’s Make the Choice of Forum Meaningful,
28 P.C.L.J. 655 (1999); Michael J. Schaengold, Robert S. Brams & Christopher
Lerner, Choice of Forum for Contract Claims: Court vs. Board, 3 F.C.B.J. 35 (1993).
144
CDA, 41 U.S.C. §7103(a)(1); see also 48 C.F.R. §2.101 (2010). e CO oversees the
contract and generally has authority to bind the government in contract, make changes to the
contract, and rule on contract claims. John S. Pachter, e Incredible Shrinking Contracting
Ocer, 39 P.C.L.J. 705, 709–10 (2010).
145
CDA, 41 U.S.C. §7103(a)(2).
146
Id. §7103(b).
147
Id. §7104. In the alternative, failure by the CO to issue a decision within a prescribed
period may be deemed to be a nal decision, and the contractor may then le an appeal.
Id. §7103(f)(5).
148
Examples of agency boards include the Armed Services Board of Contract Appeals
and the Civilian Board of Contract Appeals. Id. §7105.
149
Id. §7104(a), (b)(1).
150
England v. Swanson Grp., Inc., 353 F.3d 1375, 1379–80 (Fed. Cir. 2004); see also
James M. Ellett Constr. Co. v. United States, 93 F.3d 1537, 1541–42 (Fed. Cir. 1996) (stating
that a contractor must properly submit a claim and receive a decision from the CO before
a reviewing court will have jurisdiction over a claim).
151
Johnson, A Retrospective on the CDA, supra note 9, at 569.
152
CDA, 41 U.S.C. §§7101–7103. e CDA does dene other terms such as “executive
agency,” “contractor,” and “misrepresentation of fact.” Id. §7101.
T F C B J V. , N.
unclear.
153
e Federal Circuit has looked to the Federal Acquisition Regulation
(“FAR”) for guidance.
154
e FAR denes a claim as:
a written demand or written assertion by one of the contracting parties seeking, as a
matter of right, the payment of money in a sum certain, the adjustment or interpretation
of contract terms, or other relief arising under or relating to the contract....A
voucher, invoice, or other routine request for payment that is not in dispute when
submitted is not a claim.
155
While the CDA does not require a contractor to submit a claim in a certain
form or use particular language, the claim must contain “a clear and unequivocal
statement that gives the contracting ocer adequate notice of the basis and
amount of the claim.”
156
erefore, a contractor must be sure that its “claim”
meets the above denition and that the CO issues a nal decision on that
claim before ling an appeal to the BCAs or the COFC.
157
In contrast to a contractor claim, when the government asserts a claim (or,
in eect, makes a formal demand for payment), a contractor may properly
appeal a nal decision on the government’s claim to the BCAs or the COFC
without submitting a claim of any type to the CO.
158
Not surprisingly, neither
the CDA nor the FAR require a contractor to submit a claim outlining its
armative defenses to a government claim.
159
While the language of the Act
seems clear, courts and boards nonetheless disagree on the proper application of
these procedures in the case of a contractor’s defense to a government claim.
160
Regrettably, the majority opinion in Maropakis contravenes the legislative
intent of the CDA to insure fair and equitable treatment of both contractors
and the government.
161
Whereas Congress enacted the CDA “to ‘streamline
153
Johnson, A Retrospective on the CDA, supra note 9, at 569 (stating that “[t]wo decades
later, after repeatedly revisiting the subject in litigation, regulation, and statutory amendment,
we are still not completely certain what ‘claim’ means”).
154
Reectone, Inc. v. Dalton, 60 F.3d 1572, 1575 (Fed. Cir. 1995) (en banc).
155
48 C.F.R. §2.101 (2000).
156
MaropakisII, 609 F.3d 1323, 1327 (Fed. Cir. 2010) (quoting Contract Cleaning Maint.,
Inc. v. United States, 811 F.2d 586, 592 (Fed. Cir. 1997) (internal quotation marks omitted)).
157
James M. Ellett Constr. Co. v. United States, 93 F.3d 1537, 1543–44 (Fed. Cir. 1996).
158
CDA, 41 U.S.C. §§7103(a), (e) (contents of decision), 7104(a), (b)(1) (Supp. V
2011); Garrett v. Gen. Elec. Co., 987 F.2d 747, 749 (Fed. Cir. 1993).
159
See CDA, §§7103(a), 7104(a), 7104(b)(1); 48 C.F.R. §52.211-11 (2000) (stating that
if the contract makes a successful defense it will not be charged with liquidated damages).
160
See, e.g., Kemron Envtl. Servs. Corp., ASBCA No. 51536, 00-1 BCA ¶30,664 (1999);
Sun Eagle Corp. v. United States, 23 Cl.Ct. 465, 479–82 (1991); Elgin Builders, Inc. v.
United States, 10 Cl.Ct. 40, 44 (1986).
161
S. R. N. 95-1118, pt. 1, at 1 (1978), reprinted in 1978 U.S.C.C.A.N. 5235, 5235;
see Nash, A Weird ought, supra note 6.
C C’ R R A D
contract disputes’ and ‘clarify . . . confusing procedures,’”
162
Maropakis
complicates and confuses the disputes process. Maropakis cautions contractors
to anticipate claims by the government and expend resources to resolve
previously non-existent jurisdictional issues or be left helpless to defend against
sizable liquidated damages claims brought by the government.
163
us, instead
of eliminating procedural delays and returning the focus to the merits of a
case,
164
Maropakis creates additional procedural delays and forces contractors
to meticulously focus on counter-intuitive procedural requirements now
complicating their disputes.
165
e opinion also seems contrary to the role of the agency boards and the
COFC to equitably and eciently resolve disputes between contractors and
the government.
166
Instead of facilitating fair and ecient outcomes, the
Maropakis majority enables and even encourages the government to drag
out expensive litigation and block recovery and resolution on jurisdictional
grounds.
167
e decision has and will likely continue to result in contractors
bringing more claims simply to preserve their right to defend against government
claims—even where it is unnecessary to do so under Maropakis or would have
been unnecessary but for Maropakis.
168
Maropakis is not the rst instance of
unnecessarily rigid interpretation of the CDA.
169
Just as in prior decisions that
have further complicated the CDA process, here “[t]he plans of its framers, if
well laid, have plainly gone awry because of regulations and decisions focusing
on ‘denitional structures’ at odds with the CDA’s basic purposes.”
170
Furthermore, the Federal Circuit in Maropakis seemingly disregarded the
Supreme Court’s recent decisions warning lower courts against imposing
162
Johnson, A Retrospective on the CDA, supra note 9, at 569–70 (quoting 124 C.
R. 36,264 (1978) (statement of Sen. Metzenbaum)).
163
See MaropakisII, 609 F.3d 1323, 1334–35 (Fed. Cir. 2010) (Newman, J., dissenting);
Sun Eagle, 23 Cl.Ct. at 476.
164
Kipps et al., supra note 142, at 591.
165
Schooner, Postscript, supra note 12, at 21; see MaropakisII, 609 F.3d at 1334–35
(Newman. J., dissenting).
166
See S. R. N. 95-1118, pt. 1, at 1; Wheeler, supra note 143, at 656 (describing
how procedures in the BCAs have become complicated in contravention of the purpose
and mandate of the CDA).
167
See Sun Eagle, 23 Cl.Ct. at 476 (“e amount of litigation engendered by the terms
or requirements of the CDA relating to jurisdiction is staggering, and the results have not
been satisfactory at both the trial and appellate levels; hence, litigation continues.”); see also
MaropakisII, 609 F.3d at 1334–35 (Newman, J., dissenting).
168
See Pushkar & Ganderson, supra note 6, at 6.
169
See Johnson, A Retrospective on the CDA, supra note 9, at 574–77 (reviewing cases
analyzing the meaning of “claim”).
170
Id. at 584.
T F C B J V. , N.
jurisdictional bars based on claim-processing rules in the absence of a
clear congressional mandate.
171
“Our recent cases evince a marked desire to
curtail...‘drive-by jurisdictional rulings,’ which too easily can miss the ‘critical
dierences’ between true jurisdictional conditions and nonjurisdictional
limitations on causes of action.’”
172
e Court specically stated that, in the
case of claim-processing rules, courts should refrain from labeling a rule as
jurisdictional absent a clear congressional mandate to do so.
173
“Among the
types of rules that should not be described as jurisdictional are what we have
called ‘claim-processing rules.’ ese are rules that seek to promote the orderly
progress of litigation by requiring that the parties take certain procedural steps
at certain specied times.”
174
If the Legislature clearly states that a threshold limitation on a statute’s scope shall
count as jurisdictional, then courts and litigants will be duly instructed and will not be
left to wrestle with the issue. But when Congress does not rank a statutory limitation
on coverage as jurisdictional, court should treat the restriction as nonjurisdictional
in character.
175
e Court explained that because a jurisdictional rule has drastic consequences,
harm results if a court erroneously labels a rule as jurisdictional.
176
“Jurisdictional
rules may also result in the waste of judicial resources and may unfairly
prejudice litigants.”
177
In Maropakis, the Federal Circuit created a jurisdictional bar that lacks an
obvious basis in the CDA, much less a clear congressional label.
178
e CDA
does not contain statutory language addressing civil procedure, nor does the
statute suggest that a court is without jurisdiction to hear armative defenses
that have not rst been led as claims before the CO.
179
As the Supreme Court
171
Henderson v. Shinseki, 131 S.Ct. 1197, 1203 (2011) (unanimous decision (with
Justice Kagan not participating)) (reversing an en banc decision of the Federal Circuit);
Reed Elsevier v. Muchnick, 130 S.Ct. 1237, 1244 (2010); Arbaugh v. Y & H Corp., 546
U.S. 500, 514–16 (2006); see also Gonzalez v. aler, 132 S.Ct. 641, 648–49 (2012);
Howard M. Wasserman, e Roberts Court and the Civil Procedure Revival, 31 R.L.
313, 317–318 (2012).
172
Reed Elsevier, 130 S.Ct. at 1244 (citations and brackets omitted); Arbaugh, 546 U.S.
at 511.
173
See Henderson, 131 S.Ct. at 1203.
174
Id.
175
Arbaugh, 546 U.S. at 515–16 (citation omitted).
176
Henderson, 131 S.Ct. at 1202 (giving examples such as a litigant’s ability to raise the
issue of subject matter jurisdiction after losing a trial and being able to get the case dismissed
on the jurisdictional ground after the trial is over).
177
Id. at 1202.
178
See MaropakisII, 609 F.3d 1323, 1331–32 (Fed. Cir. 2010).
179
See supra Part II. A.
C C’ R R A D
observed, the result of creating such a jurisdictional hurdle wastes judicial
resources and unfairly prejudices litigants.
180
D. Maropakis Contradicts Fundamental Practices and Rules of
Civil Procedure
e majority’s decision in Maropakis also contradicts commonly understood
and generally accepted principles of civil procedure, which distinguish
armative defenses from claims.
181
“Armative defenses are the way defendant
sets forth defenses that cannot be conveyed by simply admitting or denying the
factual allegations of the complaint. An armative defense generally involves
the assertion of matter extraneous to plainti’s claims that would bar or limit
recovery....”
182
An armative defense must be pled in the opposing party’s
answer.
183
More specically, defenses to liquidated damages are typically pled
as armative defenses under state common law.
184
Additionally, armative defenses are distinct from counterclaims.
185
“Unlike a defense, which simply denies plainti’s right to recover under the
theories alleged, a counterclaim is an armative demand for something from
plainti.”
186
“Since [a counterclaim and cross-claim] are not portions of an
answer but constitute a new complaint against the parties to whom they are
directed, counterclaims and cross-claims are treated quite dierently than are
armative defenses.”
187
180
Henderson, 131 S.Ct. at 1202.
181
J H. F, ., C P 293 (2d ed. 1993) (stating that “the
distinction between counterclaims and cross-claims and armative defenses is an important
one”).
182
1 B C L F C 679 (Robert L. Haig,
ed., 3d ed. 2011).
183
F, supra note 185, at 290.
184
See, e.g., J.M. Beeson Co. v. Sartori, 553 So.2d 180, 181 (Fla. Dist. Ct. App. 1989)
(stating that “where liquidated damages are attacked, it is the burden of the defendant to
raise the excessiveness of the damages as an armative defense” (citing C.T. MC,
H L D 622–23 (1977)); Tex. All Risk Gen. Agency, Inc. v.
Apex Lloyds Ins. Co., No. 10-10-00017, 2010 WL 4572738, at *5 (Tex. App. Nov. 10, 2010)
(stating that “an assertion that a liquidated damages provision is a penalty is an armative
defense that a defendant has the burden of pleading and proving”).
185
F, supra note 185, at 292–93.
186
Haig, supra note 186, at 697.
187
F, supra note 185, at 292–93 (stating that, as an example, counterclaims
and cross-claims must be answered by reply pleading, but usually armative defenses will
be taken as denied without further pleading by the plainti).
T F C B J V. , N.
From a simplistic perspective, jurisdiction generally is not based on defenses,
but is rather based on the original claim.
188
at is why “[a] defense that raises
a federal question is inadequate to confer federal jurisdiction.”
189
Likewise,
where a court has jurisdiction to hear a claim, it also enjoys jurisdiction over
the factual defenses to the claim.
190
e majority’s reasoning in Maropakis clearly deviates from these basic
principles of civil procedure. e court took an armative defense that
intended to present facts to bar or limit the government’s recovery and asserted
that it was a “claim” for a sum certain.
191
Furthermore, it erroneously held
that the armative defense needed its own jurisdictional grounds, despite the
court’s admission that it had jurisdiction over the government’s claim.
192
Such
a peculiar departure from civil procedure norms might be understandable if
the statutory scheme required such an approach. As discussed above, however,
no such mandate derives from the CDA’s language or Congress’s intent in
enacting the CDA.
193
E. A Useful Analogy
Maropakis’s awed reasoning and contradiction of general principles of civil
procedure is illustrated through analogy to a similar statutory scheme—one
with which the Federal Circuit has more than a passing familiarity.
194
Congress
enacted FIRREA to address the savings and loan crisis of the 1980s.
195
FIRREA
188
See, e.g., Merrell Dow Pharm., Inc. v. ompson, 478 U.S. 804, 808 (1986).
189
Id. (citing Louisville & Nashville R.R. Co. v. Mottley, 211 U.S. 149 (1908)).
190
See MaropakisII, 609 F.3d 1323, 1334–35 (Fed. Cir. 2010) (Newman, J., dissenting).
See generally F. R. C. P. 8(c), 8(c)(1) (“Armative Defenses”) (discussed in the context
of “responding to a pleading”). Note that Rule 8(c)(2) provides that“[i]f a party mistakenly
designates a defense as a counterclaim, or a counterclaim as a defense, the court must, if
justice requires, treat the pleading as though it were correctly designated.” Rule 13, on the
other hand, deals with “counterclaims” and “crossclaims.” F. R. C. P. 13(a)–(e) (coun-
terclaims), (g) (crossclaims).
191
MaropakisII, 609 F.3d at 1327.
192
See id. at 1330–32.
193
See id. at 1334–35 (Newman, J., dissenting).
194
Financial Institutions Reform, Recovery and Enforcement Act of 1989, Pub. L. No.
101-73, 103 Stat. 183 (codied in scattered sections of 12 and 15 U.S.C.). Granted, it ap-
pears that neither the contractor nor the government’s counsel referenced any of these cases
in their appellate briefs.
195
e Federal Circuit and the government contracts bar, of course, are both familiar
with FIRREA and its after-eects. Alan R. Burch, Purchasing the Right to Govern: WINSTAR
and the Need to Reconceptualize the Law of Regulatory Agreements, 88 K.L.J. 245 (2000);
John Cibinic, Jr., Retroactive Legislation and Regulations and Federal Government Contracts,
51 A.L.R. 963 (2000); Rodger D. Citron, Lessons Learned From the Damages Decisions
C C’ R R A D
created the Resolution Trust Corporation (“RTC”) under the exclusive
management of the Federal Deposit Insurance Corporation (“FDIC”).
196
Under FIRREA, the (then RTC or, now) FDIC can be appointed as receiver
of a failed depository institution and assume responsibility for managing its
assets and liabilities in an ecient manner.
197
Under 12 U.S.C. §1821(d)(3),
the receiver can decide claims against the failed institution subject to de novo
review in the district courts.
198
FIRREA contains a jurisdictional bar similar
to that of the CDA, Section 1821(d)(13)(D):
Except as otherwise provided in this subsection, no court shall have jurisdiction over–
(i) any claim or action for payment from, or any action seeking a determination of rights
with respect to, the assets of any depository institution for which the Corporation
[199]
has been appointed receiver, including assets which the Corporation may acquire from
itself as such receiver; or
(ii) any claim relating to any act or omission of such institution or the Corporation
as receiver.
200
e exception refers to §1821(d), which provides for de novo review by
the district courts of the receiver’s decisions concerning claims against the
Following United States v. WINSTAR Corp., 32 P.C.L.J. 1 (2002); David Dana &
Susan P. Koniak, Bargaining in the Shadow of Democracy, 148 U.P.L.R. 473 (1999);
Stanley I. Langbein, e rift Crisis and the Constitution, 53 W.LL.R. 159
(1996); Michael P. Malloy, When You Wish Upon WINSTAR: Contract Analysis and the Future
of Regulatory Action, 42 S.LU.L.J. 409 (1998); Joshua I. Schwartz, e Status of the
Sovereign Acts and Unmistakability Doctrines in the Wake of WINSTAR: An Interim Report,
51 A.L.R. 1177 (2000); Richard E. Speidel, Contract Excuse Doctrine and Retrospec-
tive Legislation: e WINSTAR Case, 2001 W.L.R. 795 (2001); Jerry Stouck & David
R. Lipson, United States v. WINSTAR Corp.: Arming the Application of Private Contract
Law Principles to the Federal Government, F.C.B.J. 315 (1996);Gerard Wimberly &
Kristin Amerling, e Sovereign Acts Doctrine After WINSTAR, F.C.B.J. 127 (1996).
196
Anthony C. Providdenti, Jr., Playing with FIRREA, Not Getting Burned: Statutory
Overview of the Financial Institutions Reform, Recovery and Enforcement Act of 1989, 59
FL.R. S323, S337 (1991).
197
See id.; see also Tri-State Hotels, Inc. v. FDIC, 79 F.3d 707, 710 (8th Cir. 1996); Nat’l
Union Fire Ins. Co. v. City Sav., F.S.B., 28 F.3d 376, 376 (3d Cir. 1994) (RTC as receiver).
e RTC no longer exists, and the FDIC now wields this power. See, e.g., Lee Davison, e
Resolution Trust Corporation and Congress, 1989-1993, PART II: 1991-1993, FDIC B
R. (Apr. , ), available at http://www.fdic.gov/bank/analytical/banking/2007apr/
article1/ (“[C]ongressional oversight of the RTC continued until the agency closed in 1995,
but the legislative story ends with the passage of the 1993 Completion Act—the last signi-
cant legislative activity involving the RTC.”).
198
12 U.S.C. §1821(d)(3)–(6) (2006).
199
“Corporation” refers to the RTC.
200
12 U.S.C. §1821(d)(13)(D).
T F C B J V. , N.
failed institution.
201
e courts have thus “characterized the jurisdictional
restriction. . . as a statutory exhaustion requirement: in order to obtain
jurisdiction to bring a claim in federal court, one must exhaust administrative
remedies by submitting the claim to the receiver in accordance with the
administrative scheme for adjudicating claims detailed in [the statute].”
202
FIRREA’s jurisdictional bar blocks any type of claim, including a
determination of rights,
203
and it extends to all claimants, whether creditors,
debtors or others.
204
In addition to paying creditors, the receiver of the failed
institution may also seek monetary recovery from the institution’s debtors.
205
Under this regime, a number of circuit courts confronted an issue that mirrored
Maropakis: whether the jurisdictional bar applied to the debtors’ armative
defenses to claims brought against them by the receivers.
206
ese circuits,
unlike the Federal Circuit in Maropakis, accurately distinguished a claim
from an armative defense and allowed the debtors to defend themselves
against monetary claims.
207
1. Similarities Between the FIRREA Cases and Maropakis
e similarities between the FIRREA scenario and the situation in Maropakis
are striking. First, the receiver in these cases has presented a claim for monetary
relief against a debtor based on a contract under which the debtor agreed to
pay a certain amount of money.
208
Similarly, in Maropakis, the government
claimed monetary relief from the contractor based on a contract under which
the contractor agreed to pay a certain amount in liquidated damages for each
day of delay.
209
Second, under the exhaustion requirement in FIRREA, claims
had to be submitted to the receiver—the party against whom the claims were
asserted.
210
Likewise, under the CDA, claims are submitted to the CO—a
representative of the government against whom the claims are asserted.
211
201
Nat’l Union, 28 F.3d at 383.
202
Id. at 383 (citations omitted); see also Tri-State, 79 F.3d at 715 n.12 (stating in dicta
that the administrative claims procedure and the jurisdictional bar have concurrent scope).
203
Nat’l Union, 28 F.3d at 393.
204
Tri-State, 79 F.3d at 714 (holding that the jurisdictional bar applies to debtors as well
as creditors).
205
Id.
206
See, e.g., Nat’l Union, 28 F.3d at 383.
207
See, e.g., id. at 394; see also infra note 221 (collecting circuit court cases).
208
See, e.g., Nat’l Union, 28 F.3d at 380.
209
MaropakisII, 609 F.3d 1323, 1325 (Fed. Cir. 2010).
210
FIRREA, 12 U.S.C. §1821(d) (2006).
211
CDA, 41 U.S.C. §7103 (Supp. V 2011).
C C’ R R A D
ird, the jurisdictional bar is just as broad—if not broader—under FIRREA
as under the CDA.
212
[Section 1821(d)(13)(D) of FIRREA] bars jurisdiction over four categories of actions:
(1) claims for payment from assets of any depository institution for which the RTC
has been appointed receiver; (2) actions for payment from assets of such depository
institution; (3) actions seeking a determination of rights with respect to assets of
such depository institution; and (4) a claim relating to any act or omission of such
institution or the RTC as receiver.
213
As noted above, the CDA requires that any claim against the government
relating to a government contract be submitted to the CO before it is
adjudicated in the COFC or the BCAs.
214
erefore, the courts addressing
armative defenses under FIRREA faced a strikingly similar issue to that
presented to the Federal Circuit in Maropakis.
215
2. Circuit Courts Distinguish a Claim and Armative Defense
under FIRREA
When the district courts rst addressed the issue of armative defenses,
there was some disagreement as to whether these defenses were subject to
FIRREA’s jurisdictional bar.
216
Once the issue reached the federal appellate
courts, however, the courts distinguished between a claim and an armative
defense and held that the latter were not barred by §1821(d).
217
e ird
Circuit stated that “it is plain enough that a defense or an armative defense is
neither an ‘action’ nor a ‘claim,’ but rather is a response to an action or a claim,
212
Compare Nat’l Union, 28 F.3d at 393 (describing the jurisdictional bars of FIRREA)
with England v. Swanson Grp., Inc., 353 F.3d 1375, 1379 (describing the jurisdictional bar
of the CDA).
213
Nat’l Union, 28 F.3d at 393.
214
CDA, 41 U.S.C. §§7103, 7104; see also supra Part II.C.
215
See MaropakisII, 609 F.3d 1323, 1331–32 (Fed. Cir. 2010).
216
See Resolution Trust Corp. v. Midwest Fed. Sav. Bank, 36 F.3d 785, 792 (9th Cir.
1993) (discussing the disagreement among the district courts).
217
See, e.g., Am. First Fed., Inc. v. Lake Forest Park, Inc., 198 F.3d 1259, 1264 (11th
Cir. 1999) (following all three circuit courts that had addressed the issue and holding that
armative defenses are not barred under §1821(d)); Tri-State Hotels, Inc. v. FDIC, 79
F.3d 707, 715 n.13 (8th Cir. 1996); Nat’l Union, 28 F.3d at 394; Resolution Trust Corp.
v. Love, 36 F.3d 972, 978 (10th Cir. 1994); cf. Midwest Fed. Sav. Bank, 36 F.3d at 792–93
(allowing armative defense of mutual mistake where the issue could not have been asserted
in an armative claim through the administrative process); see also Jacobs v. PT Holdings,
Inc., No. 8:11-CV-106, 2012 WL 458418, at *8 n.7 (D. Neb. Feb. 13, 2012) (collecting
circuit court cases that distinguish between a claim and a defense in connection with FIR-
REA’s jurisdictional bar). e circuit courts claried that only true armative defenses—as
opposed to counterclaims—could proceed without meeting the exhaustion requirement.
Nat’l Union, 28 F.3d at 394.
T F C B J V. , N.
and that therefore defenses and armative defenses do not fall under any of
the...four categories of actions” placed beyond the courts’ jurisdiction.
218
e circuit courts also reasoned that barring armative defenses would
not serve the purpose behind FIRREA
219
:
In barring declaratory judgment actions, “Congress apparently...determined that
the societal benets resulting from the right to bring...declaratory judgment actions,
are outweighed by the societal benets resulting from the RTC being able to avoid
costly and perhaps unnecessary litigation.” However, when the FDIC has completed
its administrative review, and has chosen a judicial forum in which to prosecute its
rights, the policy of avoiding unnecessary litigation is no longer applicable, and the
party’s Due Process rights to defend the claims in the FDIC’s lawsuit become paramount.
220
Expanding on the due process concerns, the ird Circuit stated that if
FIRREA’s jurisdictional bar were read to prohibit a party from presenting
armative defenses, it would violate the Due Process Clause
221
:
If parties were barred from presenting defenses and armative defenses to claims which
have been led against them, they would not only be unconstitutionally deprived of
their opportunity to be heard, but they would invariably lose on the merits of the claims
brought against them. Such a serious deprivation of property without due process of
law cannot be countenanced in our constitutional system.
222
Again pointing to the statute, the Tenth Circuit concluded that if Congress
had wanted to bar armative defenses, it would have done so explicitly
223
:
Signicantly, the statute never uses the term “defense”, “armative defense” or “potential
armative defense”....[I]f Congress had intended “to remove from the jurisdiction
of the courts any and all actions, claims or defenses which might diminish the assets
of any depository institution...or [which might] diminish or defeat any claims of
the Corporation in any capacity, it would [have] been simple to so provide.” But
Congress did not so provide.
224
From a practical standpoint, the courts found that “such a literal application
of the statute...would lead to the patently absurd consequence of requiring
presentment and proof to the RTC of all potential armative defenses that
might be asserted in response to unknown and unasserted claims or actions
218
Nat’l Union, 28 F.3d at 393; see also 12 U.S.C. § 1821(d)(13)(D); Tri-State, 79 F.3d
at 715.
219
See Nat’l Union, 28 F.3d at 395; see also Tri-State, 79 F.3d at 715 n.13.
220
Tri-State, 79 F.3d at 715 n.13 (alterations in original) (emphasis added) (citation
omitted) (citing Nat’l Union, F.3d at 388, 394 ).
221
Nat’l Union, 28 F.3d at 394.
222
Id.
223
See Resolution Trust Corp. v. Love, 36 F.3d 972, 977–78 (10th Cir. 1994).
224
Id. (third, fourth, and fth alterations in original) (citation omitted) (quoting RTC
v. Conner, 817 F.Supp. 98, 100 (W.D. Okla. 1993)).
C C’ R R A D
by the RTC.”
225
Maropakis demonstrates the wisdom of the Tenth Circuit’s
analysis: to the extent that Congress did not explicitly mandate contractor
claims submission as a jurisdictional predicate to raising an armative defense
to a government claim, Maropakis leads to a “patently absurd consequence.”
226
e ird Circuit’s National Union decision was one of the rst circuit
court cases to address this issue and squarely presented the court with the task
of distinguishing a claim from an armative defense.
227
e failed institution
had policies with two insurance companies prior to its failure.
228
e insurance
companies led a declaratory judgment action in the district court, asserting
the right to rescind the insurance policies issued to the failed institution.
229
In response, the receiver led a counterclaim to collect under the insurance
policies on behalf of the failed institution and led a motion to dismiss
the insurance companies’ claims for failure to exhaust their administrative
remedies.
230
e district court granted the motion to dismiss and also held
that the insurance companies were likewise barred from raising the argument
of rescission as an armative defense to the receiver’s counterclaim.
231
e
ird Circuit armed in part and reversed in part.
232
e court held that the
insurance companies’ declaratory judgment claim was barred for failure to
exhaust its administrative remedies;
233
but the ird Circuit concluded that
the companies could raise the same argument related to the right to rescind
in an armative defense to the receiver’s counterclaim.
234
3. Analogizing the FIRREA Cases
e Federal Circuit, in Maropakis, should have followed the circuit
courts’ reasoning in the FIRREA cases. First, the Federal Circuit should
have distinguished between a claim and an armative defense. Second, the
court should have considered the due process concerns implicated when it
stripped Maropakis of its ability to defend itself. ird, the court should
have recognized that once the government had “completed its administrative
review, and ha[d identied] a judicial forum in which to prosecute its rights,
the policy of avoiding unnecessary litigation is no longer applicable, and the
225
Nat’l Union, 28 F.3d at 395 (quoting Conner, 817 F.Supp. at 102) (internal quotation
marks omitted).
226
See MaropakisII, 609 F.3d 1323 (Fed. Cir. 2010).
227
Nat’l Union, 28 F.3d at 380.
228
Id.
229
Id. at 381.
230
Id.
231
Id.
232
Id. at 395.
233
Id. at 392.
234
Id.
T F C B J V. , N.
party’s Due Process rights to defend the claims in the...lawsuit become
paramount.”
235
Fourth, the Federal Circuit should recognize that its decision
produces the “patently absurd consequence of requiring presentment and
proof to the [government] of all potential armative defenses that might
be asserted in response to unknown and unasserted claims or actions by
the [government].”
236
Fifth, the court should have recognized that the CDA
“never uses the term ‘defense’, ‘armative defense’ or ‘potential armative
defense’...[;] if Congress had intended ‘to remove from the jurisdiction of
the courts any and all actions, claims or defenses...it would [have] been
simple to so provide.’ But Congress did not so provide.”
237
Finally, even if the
Federal Circuit prefers to eschew commonly accepted practices and procedures
in government contract disputes in favor of a more formalistic (or generalist)
approach, the most compelling precedent in an analogous setting (outside of
government contracts, and outside of the Federal Circuit) also favored the
status quo (that there are no jurisdictional prerequisites to raising armative
defenses).
F. Ineciencies and Uncertainty: Feared and Realized
Following the Maropakis decision in 2010, the contractor community was
troubled by how the ruling might change and impede the contract disputes
process.
238
At the very least, a contractor appealing a liquidated damages
assessment that resulted in an oset of the contract amount must submit
a claim for time extensions before raising the defense that the government
caused the delays.
239
e majority, however, gave no clear indication of the
decision’s limitations.
240
It remains unclear whether the reasoning could or
would be applied to other defenses, not only against liquidated damages,
but also related to other government claims.
241
As a result, the only way for
contractors to ensure that their armative defenses are preserved is to anticipate
235
Tri-State Hotels, Inc. v. FDIC, 79 F.3d 707, 715 n.13 (citing Nat’l Union, 28 F.3d
at 394).
236
Nat’l Union, 28 F.3d at 395 (quoting RTC v. Conner, 817 F.Supp. 98, 102 (W.D.
Okla. 1993)) (internal quotation marks omitted).
237
RTC v. Love, 36 F.3d 972, 977–78 (10th Cir. 1994) (nal alteration in original)
(citation omitted) (quoting Conner, 817 F.Supp. at 100).
238
See Pushkar & Ganderson, supra note 6, at 6; see also Nash, A Weird ought, supra
note 6; Government Contractors Must Now Assert Some Defenses as Armative Claims Or
Lose em, H W LLP, 3 (July 2010), available at http://www.hunton.com/
(follow “News & Events” hyperlink; then search for keyword “Government Contractors”)
[hereinafter “H W”].
239
See Pushkar & Ganderson, supra note 6, at 6.
240
See id. at 8–9.
241
Id.
C C’ R R A D
all possible defenses and le armative claims with the CO setting forth such
defenses. Consequently, it seemed unavoidable that Maropakis would generate
an increase in claims, costing both the contractor and the government time
and money.
242
It did not take long for these fears to be realized.
243
Although
the initial cases have percolated up through the COFC, no clarity appears
forthcoming.
244
1. Sikorsky Aircraft Corp. v. United States
In Sikorsky Aircraft Corp. v. United States,
245
a COFC judge was presented
with the issue of whether the court had jurisdiction over a contractor’s
armative defenses when the contractor did, in fact, submit a separate claim
for its armative defenses, but only after the litigation had commenced.
246
Sikorsky’s Corporate Administrative Contracting Ocer (CACO)
247
issued
a nal decision, claiming about $80 million against Sikorsky as a result of its
cost allocation practices on various contracts for aircraft and spare parts.
248
Sikorsky challenged the determination by ling a complaint in the COFC in
December of 2009, alleging various defenses to the government’s assessment.
249
After learning of the Maropakis decision, “out of an abundance of caution,”
Sikorsky submitted a second claim to its contacting ocer reasserting its
armative defenses.
250
e CO rejected the claim, stating that he lacked
authority to render a decision because the matter was already in litigation
before the COFC.
251
Sikorsky, taking this as a denial, led a second complaint
with the COFC asserting its armative defenses; the government moved to
dismiss this second complaint.
252
e court, in addressing the government’s
motion, bemoaned the convoluted process in “what was already an abstruse
case.”
253
e government asserted that Maropakis had no bearing on its motion.
254
It argued that the CO lost his authority to rule on Sikorsky’s claim once the
242
Cf. id.; H W, supra note 238, at 3.
243
See Sikorsky Aircraft Corp. v. United States, 102 Fed.Cl. 38 (2011).
244
See, e.g., id.; see also Structural Concepts, Inc. v. United States, 103 Fed.Cl. 84 (2012).
245
102 Fed.Cl. 38 (2011).
246
Id. at 40–41.
247
See generally 48 C.F.R. §42.6 (2011).
248
Sikorsky, 102 Fed.Cl. at 44.
249
Id.
250
Id.
251
Id.
252
Id. at 44–45.
253
Id. at 44.
254
Id. at 47.
T F C B J V. , N.
matter entered litigation before the COFC.
255
e government asserted that 28
U.S.C. §516, which gives the Attorney General and the DOJ sole authority
to litigate on behalf of the government in the federal courts,
256
dispossessed
the CO of any authority to “reject” Sikorsky’s claim.
257
As such, it contended
that Sikorsky had failed to meet the jurisdictional prerequisites of the CDA,
and the claim therefore needed to be dismissed for lack of jurisdiction.
258
Judge Lettow rejected the government’s argument, reasoning that regardless
of whether Maropakis applied, the court had jurisdiction to hear Sikorsky’s
armative defenses, one way or another.
259
“On the assumption that Maropakis
does not apply to Sikorsky’s armative defenses, the court would continue to
entertain Sikorsky’s armative defenses as pled in Sikorsky’s rst complaint.
Alternatively, if Maropakis’s ling requirement does apply to Sikorsky’s
armative defenses, then this court manifestly has jurisdiction over Sikorsky’s
second complaint....”
260
If Maropakis applied, Sikorsky’s claim for armative
defenses submitted to the CO would be a separate claim from the litigation.
261
us, “the contracting ocer’s choice to decline issuing a nal decision on
Sikorsky’s second set of claims would be incorrect: the claims would not have
been already in litigation, so the contracting ocer should have issued a nal
decision within 60 days or a reasonable time.”
262
e CO’s refusal to decide
the claim would constitute a deemed denial and the second complaint would
be jurisdictionally proper, though still redundant of the defenses raised in
the rst complaint.
263
Judge Lettow reasoned that “Sikorsky need not be put
to the Hobson’s choice of preserving its armative defenses only through its
original complaint or not at all.”
264
e court attempted to use a footnote to dierentiate Maropakis from the
situation at hand:
265
255
Id.
256
See Schooner, Postscript, supra note 12, at 5 (citing Sharman Co. v. United States, 2
F.3d 1564 (Fed. Cir. 1993)); see also Ralph C. Nash, Contracting Ocer Decision During
Litigation: Are ey Valid?, 22 NCR. ¶13 (Feb. 2008); Ralph C. Nash &
John Cibinic, Procedural Litigation on Default Terminations: Will it Never End?, 8 No. 7
NCR. ¶42 (July 1994).
257
See Sikorsky, 102 Fed.Cl. at 47.
258
Id.
259
Id. at 47–48.
260
Id. at 47.
261
Id. at 47–48.
262
Id. at 48.
263
Id.
264
Id. at 47.
265
Id. at 48 n.14 (citations omitted).
C C’ R R A D
First, Maropakis’ holding only extends to counterclaim defenses that seek contract
modication. e Maropakis plainti sought an extension of time, which is typically
considered an equitable adjustment and resolved under doctrines concerning contractual
changes. By contrast, Sikorsky’s armative defenses are traditional common law defenses
that are independent of the means by which a party seeks equitable adjustment to a
government contract.
266
Judge Lettow further dierentiated Maropakis, stating that Maropakis only
had one armative defense that shared an identity with its dismissed claim
for time extensions.
267
Second, Maropakis’ dismissed claim for a time extension “was the only defense asserted
against the government’s counterclaim for liquidated damages.” e time-extension
claim could not be used as a sword, so in the procedural setting of that case, neither
could it be used as a shield. Sikorsky’s armative defenses are not claims for additional
relief, nor is Sikorsky in the hapless position of proering a defense that shares an
identity with a dismissed claim.
268
Nonetheless, in the end, the court declined to decide whether Maropakis
applied to the situation at hand, nding that it had jurisdiction to hear
Sikorsky’s armative defenses either way.
269
e good news was that the judge sought to dierentiate Maropakis, give
it a limited reading, and constrain its application.
270
However, because the
other COFC judges are not bound by Sikorsky’s holding, the contractor
community holds no guarantee that Maropakis will be read narrowly before
266
Id. (citations omitted) (citing Travelers Cas. & Sur. of Am. v. United States, 74 Fed.Cl.
75, 97 (2006)); see also Metric Constr. Co. v. United States, 81 Fed.Cl. 804, 818 (2008); J
C, J. ., A G C 567–76 (4th ed. 2006).
267
Sikorsky, 102 Fed.Cl. at 48 n.14.
268
Id. (citing MaropakisII, 609 F.3d 1323, 1331–32 (Fed. Cir. 2010)); Sun Eagle Corp.
v. United States, 23 Cl.Ct. 465, 474 (1991) (invoking Elgin Builders, Inc. v. United States,
10 Cl.Ct. 40, 44 (1986) for the proposition that, absent presentment to the CO, a con-
tractor’s defenses are “limited to the nature of, and the issues presented in, the assessment
itself,” rather than those that could serve as armative claims for contract modication).
Similarly, in Z.A.N. Co. v. United States, 6 Cl.Ct. 298 (1984), the court observed that the
nality of a CO’s decision
is not [diminished] by any absence of certication by the contractor when it seeks
solely to defend against the government’s assertion of its claim for liquidated dam-
ages. On the other hand, if the contractor further asserts, in addition to its defense of
the government’s claim, its right to additional relief such as extensions of time and/
or money..., then this portion of the dispute may be identied as a claim by the
contractor....
Id. at 304 (footnote and citation omitted).
269
Sikorsky, 102 Fed.Cl. at 48.
270
See Schooner, Postscript, supra note 12.
T F C B J V. , N.
Judge Lettow’s colleagues.
271
Consequently, contractors must continue to act
with “an abundance of caution” to preserve their armative defenses,
272
with
no guaranteed outcome.
2. Structural Concepts, Inc. v. United States
A second COFC case applying Maropakis gives greater cause for concern
because of the government’s argument before the court.
273
In Structural Concepts,
Inc. v. United States,
274
Structural Concepts, Inc. (“SCI”) contracted with the
Air Force, in 1999, to alter and repair a building on a base within a year.
275
SCI did not complete the project until late 2003 or early 2004.
276
SCI led a
claim with its CO, claiming damages in the form of additional compensation
due to government-caused delay and other government actions.
277
While the
government admitted suspending work and modifying the contract to extend
the completion date, it nonetheless asserted that SCI was responsible for 384
days of delay, resulting in $776,448 in liquidated damages.
278
e CO denied
SCI’s claim and upheld the government’s liquidated damages assessment.
279
SCI
led suit in the COFC, and the government counterclaimed for liquidated
damages.
280
Both parties moved for summary judgment on the liquidated
damages claim.
281
e government asserted that, under Maropakis, the court lacked jurisdiction
to hear SCI’s armative defenses to the government’s counterclaim, because
the contractor had not presented “a separate claim to the CO providing
adequate notice of the total number of days requested in extension as a defense
to the Government’s claim assessing liquidated damages.”
282
Fortunately,
Judge Bush saw this argument as an extension of Maropakis and refused to
accept it.
283
e court dierentiated Maropakis, noting “that SCI did present
a valid CDA claim to the CO requesting damages caused by government-
271
Id. at ¶21.
272
Sikorsky, 102 Fed.Cl. at 44.
273
Structural Concepts, Inc. v. United States, 103 Fed.Cl. 84 (2012).
274
Id.
275
Id. at 84–85.
276
Id. at 85.
277
Id.
278
Id. at 85.
279
Id.
280
Id.
281
Id.
282
Id. at 89.
283
Elizabeth A. Ferrell & Justin M. Ganderson, COFC Rejects Government’s Attempt
to Extend Holding in M. Maropakis Carpentry v. United States, 97 F.C.R. 227
(Mar. 6, 2012).
C C’ R R A D
caused delay, placing this plainti in a dierent position than the plainti
in Maropakis. us, the Maropakis decision provides limited guidance in the
case at bar.”
284
e court found that Maropakis did “not directly address the
question of whether a contractor who has already led a valid CDA claim for
damages caused by government delay must necessarily then le a separate claim
once it has learned the full extent of the government’s liquidated damages
assessment.”
285
Judge Bush looked to other Federal Circuit precedent, stating
that CDA claims before the COFC need not rigidly adhere to the original
claim presented to the CO, but only must “‘arise from the same operative
facts, claim essentially the same relief, and merely assert diering legal
theories for that recovery.’”
286
e court found that much of SCI’s defense
to the government’s counterclaim had, indeed, been presented to the CO.
287
In the end, Judge Bush denied the cross motions for summary judgment on
the issue of liquidated damages, nding that SCI’s claim for damages due to
government delay and the government’s claim for liquidated damages were
so related that they must both be preserved for trial.
288
While the issue resolved favorably for SCI, the case shows just how far
Maropakis may be taken by another judge who is not bound by the Structural
Concepts decision.
289
Under the government’s theory, a contractor would need
to present a separate claim to the CO even if it had already made a claim
for time extensions under the CDA.
290
In Structural Concepts, the government
specically contended that even if SCI’s original claim asserted that the
government caused some of the delays covered by the liquidated damages
assessment, the claim did not cover the entire period of delay claimed by the
government.
291
erefore, not only would a contractor have to make a claim
for government-caused delays, but it would have to le a separate claim if the
government’s liquidated damages claim covered a greater or dierent time
period.
292
Perhaps most troubling is that the government did not need to read
Maropakis all that broadly to form its theory. If a contractor’s armative
defenses to a government claim for liquidated damages dier from its original
claim for delay damages, then under Maropakis a judge could rule that those
284
Structural, 103 Fed.Cl. at 89.
285
Id.
286
Id. (quoting Scott Timber Co. v. United States, 333 F.3d 1358, 1365 (Fed. Cir. 2003)).
287
Id. (quoting Scott Timber Co., 333 F.3d at 1365).
288
Id. at 91.
289
See Ferrell & Ganderson, supra note 283 (warning contractors that another COFC
judge is not bound by Structural and may not rule as favorably).
290
Structural, 103 Fed.Cl. at 89.
291
See id. at 89.
292
See id.
T F C B J V. , N.
portions of the armative defenses not covered by the contractor’s claim have
not met the jurisdictional prerequisites of the CDA.
293
Sikorsky and Structural Concepts demonstrate just how abundantly cautious
contractors must be (in preparing and submitting unnecessary and unproductive
claims that anticipate government claims for liquidated damages).
294
After
Sikorsky, a contractor cannot be sure what types of defenses are covered by
Maropakis and whether it must le a separate claim with the CO to assert such
defenses.
295
Under the government’s theory in Structural Concepts (which the
government is in no way estopped from attempting before all other COFC
judges), the contractor must submit a separate claim for its armative defenses
even where it has presented its own claim for delay damages (or at the very
least must ensure that its claim asserts enough to counter the entire amount
claimed by the government in liquidated damages).
296
Accordingly, Maropakis and these recent decisions will undoubtedly lead to
contractors preparing and submitting multiple claims at multiple times to the
CO “out of an abundance of caution,” generating ineciency and unnecessary
consideration of claims both at the agency level and before the COFC and
the BCAs.
297
“Although [the] requirement [to submit a valid CDA claim to
preserve defenses]...is counterintuitive and ignores the distinction between
an armative claim and a defense to a government claim, contractors cannot
dismiss the importance of this necessary, albeit articial, step.”
298
3. Another COFC and BCA Split?
e ineciencies created by Maropakis might also be analogized to the process
through which a contractor can defend against another type of government
claim—termination for default.
299
Because a termination for default is a
government claim, the contractor need not present its own claim to the CO
in order to merely defend against the government’s claim (or challenge the
propriety of the default termination) before the BCAs.
300
e standard default
clauses identify a number of defenses that a contractor can make against a
293
See MaropakisII, 609 F.3d 1323, 1329–32 (Fed. Cir. 2010).
294
Schooner, Postscript, supra note 12, at 18–19, 21; Structural, 103 Fed.Cl. at 87–91.
295
Schooner, Postscript, supra note 12, at 18–19, 21.
296
See Structural, 103 F.3d at 87–91.
297
However, Sikorsky has virtually no bearing on proceedings before the BCAs because the
agencies retain authority over the matters even after the case goes before one of the boards,
so a CO would not lose his or her authority as they may when a case goes to the COFC.
298
Ferrell & Ganderson, supra note 283.
299
See Schooner, Postscript, supra note 12, at 21.
300
See id.
C C’ R R A D
termination for default,
301
and the BCAs do not require a contractor to submit
its own claim to the CO to appeal a default termination.
302
Before the COFC,
however, the contractor must present a settlement proposal for a (hypothetical)
termination for convenience as a “claim” to the CO before defending against
a termination for default, even though a termination for convenience has
yet to occur.
303
e dierence in COFC and the BCA procedures reects one
of the most signicant dierences today in what, generally, is perceived as
concurrent and parallel jurisdiction.
304
In defense of the COFC, the case of defending against a termination for
default is a much more compelling case for requiring a contractor to submit
its own armative claim, because the single remedy for invalidating a
termination for default is a convenience termination, which brings with it an
explicitly regulated monetary recovery.
305
Conversely, the remedy for defeating
a liquidated damages claim is simply that the contractor does not owe the
government any money;
306
the contractor receives no armative monetary
recovery. erefore, there is little justication for requiring a contractor to take
the inecient extra step of ling a separate claim before asserting its defenses.
e government’s litigation strategy in Sikorsky eventually might lead
to a split between the COFC and the BCAs similar to that present in the
termination for default context. In light of Maropakis, any COFC judge could
accept this, or a similar, argument from the government and hold that: (1) a
contractor cannot raise armative defenses that it did not previously present
to its CO; and (2) the contractor cannot achieve anything by presenting the
defenses in a separate claim because the CO lost any decisional authority when
the contractor initiated suit in the COFC. Conversely, because a CO retains
authority while a matter is pending before the BCAs, this distinction could
301
For example:
the Contractor shall not be liable for any excess costs if the failure to perform the
contract arises from causes beyond the control and without the fault or negligence
of the Contractor. Examples of such causes include (1)acts of God or of the public
enemy, (2)acts of the Government in either its sovereign or contractual capacity,
(3)res, (4)oods, (5)epidemics, (6)quarantine restrictions[,] (7)strikes, (8)freight
embargoes, and (9)unusually severe weather. In each instance the failure to perform
must be beyond the control and without the fault or negligence of the Contractor.
48 C.F.R. §52.249-8(c) (2000).
302
See Steven L. Schooner, More Bites of Red Herring: Claims Court/BCA Dierences in
Handling Default Terminations, NCR. ¶21, at (Apr. 1988) (quoting
Lisbon Contractors, Inc. v. United States, 828 F.2d 759 (Fed. Cir. 1987)).
303
See Schooner, Postscript, supra note 12, at 21.
304
See Schooner, supra note 302, at 55.
305
48 C.F.R. §52.249-8(g); see also Schooner, Postscript, supra note 12, at 21.
306
48 C.F.R. §52.211-11(c); see also Schooner, Postscript, supra note 12, at 21.
T F C B J V. , N.
create another split between the courts and the boards. Yet little purpose—
other than to articially restrict a contractor’s pre-existing statutory right to
an election of forum—would be served by such a split.
All of which points to the same conclusion—Maropakis was wrongly decided.
If left unchanged, the decision will continue to cause costly problems, not
only for contractors, but also for the government, by generating expensive
and unproductive litigation. is result stands in direct opposition to the
intent of the CDA—to streamline the contract disputes process and avoid
costly litigation.
307
erefore, in order to abide by the legislative intent of the
CDA, to conform the contract disputes process to well-accepted rules of civil
procedure, and to prevent further unjust results, the CDA should be amended
to supersede Maropakis.
III. Solution: Amending the Contract Disputes Act
Maropakis unfairly disadvantaged government contractors attempting to
exercise their right to defend themselves in the congressionally constructed
contract disputes process. Of course, an en banc Federal Circuit panel could
quickly undo the damage done and restore the status quo. Until then, a
legislative solution is necessary to restore a level playing eld in government
contracts litigation. e Maropakis decision nullies the Supreme Court’s
consistent admonition that “[w]hen the United States enters into contract
relations, its rights and duties therein are governed generally by the law
applicable to contracts between private individuals.”
308
However, as the law
currently stands, contractors are held to a much more rigid, inecient, and
unfair standard than the government.
When a contractor makes an armative claim, it must follow the require-
ments of the CDA, certifying (when appropriate) the amount it claims and
providing full support for each assertion and the amount claimed.
309
Conversely,
when the government makes a “claim,” it simply demands something from
the contractor, giving only a short explanation in support of its assertions.
As a result, the only way a contractor can dispute the government claim is by
taking on the role of the plainti and ling suit in the COFC or appealing
to the BCAs.
Now, under Maropakis, when the government asserts a right to contractor
funds, the contractor must not only anticipate but also fully disclose its
defenses to the government’s claim before it even initiates suit in the COFC
or the BCAs. To be clear, before the government les its initial pleading in
307
See supra Part II.C.
308
Lynch v. United States, 292 U.S. 571, 579 (1934); see also Franconia Assocs. v. United
States, 536 U.S. 129, 141 (2002).
309
See CDA, 41 U.S.C. §7103 (Supp. V 2011).
C C’ R R A D
an action in which the government is claiming money, the contractor must
identify and fully document its defenses by submitting a claim outlining those
defenses.
310
Such a requirement, that a contractor must anticipate all defenses
before it even knows the details of the government’s litigation strategy, is as
unfair as it is inecient. And, again, the government has no corresponding
burden when defending against contractor claims.
To remedy such an unfair and inecient result, Congress should amend
the CDA. e CDA should be amended to treat armative defenses just as
they are treated under the rules of civil procedure. Further, Congress should
explicitly amend the Act to state that a contractor need not submit its own
claim in order to raise armative defenses to a government claim.
Congress should amend the CDA to simply state that armative defenses
under the CDA are treated the same as under traditional civil procedure rules.
For example, Congress could add to 41 U.S.C. §7101
311
the following language:
(10) Armative defense. e term “armative defense” shall be interpreted consistent
with the Federal Rules of Civil Procedure pursuant to title 28. A contractor need not
submit a claim to raise an armative defense to a government claim in an appeal to
an agency board of contract appeals or in litigation in a Federal court.
e proposed amendment to the CDA would allow for a more fair and
equitable result for contractors. Maropakis left contractors who were not
inclined to pursue monetary claims against the government unnecessarily
defenseless when the government chooses to demand money from them.
312
As a result, when the COFC refused to exercise jurisdiction over Maropakis’s
defense, the government may have received a windfall.
313
Under the proposed
amendments to the CDA, the outcome of Maropakis may have been markedly
dierent. e COFC would have had jurisdiction over Maropakis’s factual
defenses, particularly its defense that the government had contributed to the
310
See id. Additionally, the contractor must keep in mind the dierent time limitations in
the two fora, thereby further complicating the problem. From the date of receipt of a CO’s
decision, a contractor has either ninety days to le a notice of appeal to the appropriate board
or twelve months to le a formal complaint in the COFC. CDA, 41 U.S.C. §7104(a), (b)
(1), (3) (Supp. V 2011). While either party may appeal the decision to the Federal Circuit,
the time limitations for an appeal dier. Once a judgment or order is rendered, a party has
60 days to appeal an adverse COFC decision, Fed. R. App. P. 4(a)(1)(B)(i), but 120 days
to appeal an adverse board decision, CDA, 41 U.S.C. §7107(a)(1) (Supp. V 2011). See
Schaengold, Choice of Forum 2008, supra note 143, at 311, 336.
311
e authors do not suggest that this particularly placement is unique or superior to
alternatives. For example, similar language might be placed at 41 U.S.C. §7103(a)(6) or
41 U.S.C. §7105(e)(3) (Supp. V 2011).
312
See MaropakisII, 609 F.3d at 1334–35 (Newman, J., dissenting).
313
See id.
T F C B J V. , N.
delays.
314
Maropakis could have defended against the liquidated damages claim
and prevented the government from recovering all or part of the liquidated
damages claimed.
315
But again, Maropakis would have been entitled to nothing
more than the right to defend itself in court.
316
e contractor could not
have recovered added expenses due to the delay, nor could it have recovered
interest on added expenses or on the portion of the contract balance that
was withheld.
317
Conclusion
e Federal Circuit’s drive-by jurisdictional decision in Maropakis broke
from precedent, contravened the purpose of the CDA, and produced inef-
ciency and uncertainty. Subsequent COFC cases oer compelling examples
of the inecient litigation that is sure to result from Maropakis. Comparisons
with basic principles of civil procedure and case law under similar statutory
schemes illuminate the injustice produced by the decision. is lengthy list
of problems can only be solved by: (1) a Supreme Court or Federal Circuit
decision overturning Maropakis, or (2) a statutory amendment to the CDA.
Failure to change course may generate lucrative work for the bar, but no obvious
policy is served by maintaining the status quo. If the Federal Circuit chooses
not to right its error, a prompt, simple, statutory solution is appropriate.
314
See id. at 1326, 1329–30 (majority opinion).
315
See id. at 1329–30.
316
See id.
317
See Ruhnau-Evans-Ruhnau Assocs. v. United States, 3 Cl.Ct. 217, 218–19 (1983);
Nash, A Weird ought, supra note 6.
