Court Affirms Arnold & Porter's Precedent-Setting Statute of Limitations Win for Raytheon under the Contract Disputes Act

In response to an April 2, 2012 decision in which the Court of Federal Claims denied a government claim against Raytheon Company in the amount of $25 million under the Contract Disputes Act statute of limitations, the government filed a motion for reconsideration. On July 26, 2012, the court affirmed its original decision by denying the motion for reconsideration and thereby again denying the government's claim. Raytheon Company v. United States, __ Fed. Cl. __ (No. 09-306C, July 26, 2012).

This was only the fourth case denying a government claim under the statute of limitations and was important in fleshing out the law. As the Court's opinion on reconsideration shows, the government argued that a government claim could not accrue until the government knows of a claim through issuance of an audit. This is an extremely important case for industry because the subject of statute of limitations (especially involving a government claim) has become very hot. Since the Raytheon case in April, there have been three more published decisions on this subject and there was a decision about a month before the Raytheon case.

The government's audit argument -- that it has to have actual knowledge -- would have applied universally to contractors. The court held on reconsideration that in its original decision, "The court ruled that the statute of limitations begins to run when information that equates to knowledge of a potential claim becomes available to the Government."

Arnold & Porter's legal team included partners Paul E. Pompeo and Ronald A. Schechter, and associates C. Scott Morrow, and Dominique L. Casimir.