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January 23, 2020

Federal Circuit Opinion Relaxes Contract Disputes Act Jurisdiction

Appellate Law360, Government Contracts Law360

The decision of the US Court of Appeals for the Federal Circuit in DAI Global LLC v. Administrator of the US Agency for International Development,1 provides a welcome step in the right direction toward simplifying the Contract Disputes Act's jurisdictional requirements, particularly with respect to claim certification.

DAI Global rejects a line of decisions followed by the various agency boards of contract appeals and some US Court of Federal Claims judges holding that they lack jurisdiction where a certification defect is nontechnical or "the failure properly to certify in the first instance was fraudulent, in bad faith, or with reckless or grossly negligent disregard of the requirements of the relevant statutes or regulations."

The Federal Circuit declined to engage with the broader argument that the CDA certification requirement is not jurisdictional at all. The DAI Global opinion, however, conspicuously avoids any affirmative statement that the CDA certification requirement is jurisdictional. Moreover, several nonprecedential remarks from the Federal Circuit suggest the court is skeptical that certification retains jurisdictional status following the 1992 CDA amendments.

Nevertheless, the boards and some Court of Federal Claims judges treat lack of certification as a jurisdictional defect, continuing the need for the Federal Circuit (or Congress) to weigh in.

This article provides context for the CDA certification requirement, the DAI Global decision and the decision's implications. In full disclosure—the author has argued elsewhere that, following a clear and consistent line of Supreme Court precedent, most of the CDA's procedural rules (claim submission, certification and timely appeal) are not jurisdictional, but rather mere claim processing rules.2

DAI raised this argument in its briefing, but the Federal Circuit decided the case on narrower grounds. Nevertheless, the DAI Global decision warrants cautious optimism that the Federal Circuit may one day realign the CDA with Congress' clear intent to create an efficient and fair dispute resolution process, rather than to create jurisdictional traps for unwary—most likely small and nontraditional—contractors.

Of course, jurisdictional or not—contractors are still best advised to diligently comply with all CDA and Federal Acquisition Regulation claim submission and certification requirements. FAR 33.207(c) provides the certification language—please use it.

Context For CDA Certification

The CDA requires that contractor claims seeking more than $100,000 must be accompanied by a certification that:

  • (A) the claim is made in good faith;
  • (B) the supporting data are accurate and complete to the best of the contractor's knowledge and belief;
  • (C) the amount requested accurately reflects the contract adjustment for which the contractor believes the Federal Government is liable; and
  • (D) the certifier is authorized to certify the claim on behalf of the contractor.3

FAR 33.207(c) provides exact certification language.

Early Federal Circuit precedent labeled the CDA certification requirement as a jurisdictional prerequisite and established strict, but often unpredictable, standards for certification. The result was a consistent flood of motions to dismiss for lack of jurisdiction based on purportedly inadequate certifications.

Litigation of these fact-specific procedural motions served to undermine the CDA's purpose. As professors Nash & Cibinic remarked in 1990:

There have been so many defective certification cases over the years that they would make a veritable rogue's gallery of wasted effort . ... I would guess that this has happened approximately 500 times since the CDA was passed . ... The result is mighty curious for an Act that was passed to make the disputes process for efficient—and certainly reveals a serious flaw in the CDA.4

Reflecting on her tenure at the Armed Services Board of Contract Appeals, former Administrative Judge Ruth Burg addressed the impact of certification-related motions:

This plethora of motions was extremely frustrating since it impacted not only a particular case where, if the certification was invalid, the matter had to start all over, but also the entire docket. I still relive the feeling of futility I felt every time a motion to dismiss for failure to certify was submitted for one of the cases before me.5

This inefficiency (and countless unjust outcomes) led Congress to attempt a legislative remedy through the Federal Courts Administration Act of 1992, which: (1) clarified who could certify a claim, (2) provided that the contracting officer had no obligation to issue a final decision on a claim that was not properly certified, and (3) affirmed that "[a] defect in the certification of a claim shall not deprive a court or an agency board of jurisdiction over that claim."6

Just before Congress sent the final bill to President Bill Clinton, its sponsor, then-Sen. Howell Heflin, D-Ala., explained that the amendment "will eliminate the confusion and waste of resources that has resulted from the Contract Disputes Act certification being deemed jurisdictional."7

Since the 1992 amendments, the Federal Circuit has not provided a precedential holding as to whether failure to certify is still a jurisdictional defect; however, it has suggested in dicta and nonprecedential opinions that failure to certify may not be a jurisdictional issue.8

Often citing FAR provisions and unenacted passages of legislative history, these decisions generally distinguish between defective certification and failure to certify, the latter of which is still treated as a jurisdictional bar.

They further limit the scope of correctible defective certifications to those suffering a technical defect. Under this line of decisions, a defective certification cannot be remedied (and therefore destroys jurisdiction) where "the failure properly to certify in the first instance was fraudulent, in bad faith, or with reckless or grossly negligent disregard of the requirements of the relevant statutes or regulations."9

DAI Global

Prior Proceedings

The DAI Global appeal involved several subcontractor claims submitted by DAI to the USAID contracting officer. DAI submitted the subcontractor claims under a DAI cover letter that was characterized as a certification, but the cover letter did not match the FAR's template certification language.

The contracting officer initially notified DAI that she would issue a decision on the claims by July 10, 2017; however, on "July 19, 2017, 70 days after DAI submitted its claims, the contracting officer sent a second letter informing DAI that the submission did not contain a contractor certification."10

DAI appealed to the Civilian Board of Contract Appeals. The government sought dismissal for lack of jurisdiction due to inadequate certification. The board rejected the argument that DAI's various correspondences with USAID qualified as a correctable, technically defective certification. The board recited the line of decisions holding that "if the certification is made with intentional, reckless, or negligent disregard for the applicable certification requirements, it is not correctable."11

After comparing the DAI correspondence with USAID to prior decisions, the board found that DIA's claim submission was reckless with respect to certification and "therefore not salvageable."12

Federal Circuit's Decision

DAI appealed to the Federal Circuit, arguing principally that its certification was defective, but correctable. More specifically, DAI argued that the board deviated from the plain language of the 1992 CDA amendment by relying on unenacted legislative history to impose the narrow technical defect standard. DAI further argued that, in light of Supreme Court precedent, the certification requirement is not jurisdictional at all.13

The Federal Circuit reversed and remanded. Judge Kimberly Ann Moore authored the unanimous precedential opinion, joined by Judge Alvin Schall and Judge Richard Taranto. The DAI Global decision squarely rejects the line of decisions holding that only technically defective certification may be corrected:

Contrary to the Board's statement of the law, there is no statutory requirement that a defect in a certification be merely 'technical' to be correctable. Nor is there a statutory basis for finding a defective certification uncorrectable based on 'intentional, reckless, or negligent disregard for the applicable certification requirements.' In reaching the opposite conclusion, the Board relied on the text of an unenacted version of the governing statute, which passed only in the Senate...

The statute, as enacted, mentions only 'defective certification[s]' without reference to the technical nature of the defect or mens rea. It is axiomatic that a statute should not be read to implicitly include language specifically rejected by Congress. … We hold that § 7103(b)(3) does not limit defects to those that are technical in nature nor does it limit a contractor's right to correct a defect if the initial certification was made with 'intentional, reckless, or negligent disregard for the applicable certification requirements.'14

The Federal Circuit did not address the broader issue of whether certification is a jurisdictional requirement, avoiding any direct assertion that certification is or is not jurisdictional.

The opinion concludes by recognizing that, because the contracting officer admittedly did not issue her decision rejecting the claim for lack of certification until more than 60 days after the claim was submitted, the claim was deemed denied and therefore properly appealable to the board:

It is undisputed that the contracting officer failed to notify DAI of the defect within the statutory period. DAI submitted its claims on May 10, 2017 and did not receive notice of the defect until July 19, 2017, more than 60 days after DAI filed its claim. The contracting officer was therefore required to issue a decision on DAI's claims. But the contracting officer failed to do so. Because the contracting officer failed to issue a decision within the statutory period, DAI's claim was deemed denied and became appealable to the Board.15

Implications and Conclusion

Again—contractors are best advised to closely abide by all CDA and FAR claim submission requirements. That said, there is much to be gained from decisions that, like DAI Global, rightly relax and simplify the CDA's jurisdictional requirements, which are often used to justify dismissal of valid claims based on hyper-technical, nonprejudicial deviations from the CDA and FAR-prescribed procedures. As the Supreme Court has emphasized, jurisdictional tests should be as simple and predictable as possible.16 From that perspective, eliminating the distinction between technical and other defects that might arise in the claim certification process is a step in the right direction for the long-term success of the CDA as a dispute resolution vehicle.

A further incremental step in the right direction would be to eliminate any remaining confusion that the CDA certification requirement is jurisdictional at all. Despite decisions of the boards and some Court of Federal Claims judges, even where a required certification is omitted entirely there is no basis to dismiss a contractor's claim for lack of jurisdiction in light of the plain meaning of the 1992 CDA amendments and governing Supreme Court precedent.

Demoting the certification requirement from jurisdictional status does not eliminate its importance or any contractor's incentive to take certification seriously.17 The contractor cannot obtain any remedy under the contract until it provides proper certification, and the government is never forced to decide an uncertified claim. This addresses any concern of gaming the disputes system by submitting unsubstantiated claims for unjustifiably high payments, only to settle for a reduced amount.

Separate statutory provisions providing monetary and other penalties for claims that are unsupportable due to fraud and misrepresentations address any additional concerns of foul play. And once the contracting officer does issue a decision, only unfairness and inefficiency result from treating failure to certify as a jurisdictional defect—particularly when the CDA expressly requires that certification be provided before entry of final judgment.18

Beyond certification, the author is cautiously optimistic that it is only a matter of time before the Federal Circuit recognizes that most of the CDA and related FAR procedures—including claim submission, certification and timely appeal—are merely claim processing requirements, not jurisdictional preconditions.19 Again, demoting these mandatory procedural rules from their current jurisdictional status does not mean they are optional or unimportant, nor would it place the public fisc at risk. Rather, doing so realigns the CDA with Congressional intent and Supreme Court direction—and ensures that the CDA serves to facilitate, not burden, the government's ability to contract with the private sector.

  1. DAI Global LLC v. Administrator of the U.S. Agency for International Development, 945 F.3d 1196 (Fed. Cir. 2019); No. 2019-1330

  2. See Nathaniel E. Castellano, After Arbaugh: Neither Claim Submission, Certification, Nor Timely Appeal Are Jurisdictional Prerequisites to Contract Disputes Act Litigation, 47 Pub. Cont. L.J. 35, 35-37 (2017).

  3. 41 U.S.C. § 7103(b)(1).

  4. Ralph C. Nash & John Cibinic, The Contract Disputes Act: A Prescription for WheelSpinning, 4 Nash & Cibinic Rep. 29 (May 1991).

  5. Ruth C. Burg, The Role of the Court of Appeals for the Federal Circuit in Government Contract Disputes: A Historic View from the Bench, 42 Pub. Cont. L.J. 173, 175 (2012).

  6. Federal Courts Administration Act of 1992, Pub. L. No. 102−572, § 907, 106 Stat. 4506, 4518 (codified in scattered sections of 18 and 28 U.S.C.)

  7. See 138 Cong. Rec. 34,204 (1992).

  8. See M. Maropakis Carpentry, Inc. v. United StatesJ&E Salvage Co. v. United States, No. 97-5066, 1998 WL 133265, at *6 n.4 (Fed. Cir. Mar. 25, 1998) ("Pursuant to the Federal Courts Administration Act of 1992, proper certification of a CDA claim is no longer a jurisdictional requirement.") James M. Ellet Constr. Co., v. United States, 93 F.3d 1537, 1545 (Fed. Cir. 1996) ("We part ways with the government as its predicate: that a proper certification of the settlement proposal was a jurisdictional prerequisite."

  9. 138 Cong. Rec. 21,033, 21,036 (1992); see Dev. Alternatives, Inc. on Behalf of Ersm (Afghanistan) Ltd., d/b/a Edinburgh Int'l, 18-1 B.C.A. (CCH) ¶ 37147 (Sept. 27, 2018).

  10. DAI Global, ., No. 2019-1330, 2019 WL 7202669, at *1.

  11. Dev. Alternatives Inc. on Behalf of ERSM (Afghanistan) Ltd., d/b/a Edinburgh Int'l, 18-1 B.C.A. (CCH) 37147 (Sept. 27, 2018).

  12. Id.

  13. See DAI Opening Brief, 2019 WL 1499406 at 13-20, 25-26 (citing Nathaniel E. Castellano, After Arbaugh: Neither Claim Submission, Certification, Nor Timely Appeal Are Jurisdictional Prerequisites to Contract Disputes Act Litigation, 47 Pub. Cont. L.J. 35, 69-72 (2017)).

  14. DAI Global, No. 2019-1330, 2019 WL 7202669, at *2 (internal citations omitted)

  15. Id. at *3.

  16. See Hertz Corp. v. Friend, 130 S. Ct. 1181, 1185–86 (2010).

  17. See Castellano, After Arbaugh, 47 Pub. Cont. 69-72.

  18. 41 U.S.C. § 7103 (b)(3).

  19. See Castellano, After Arbaugh, 47 Pub. Cont. 63-75.