Reid Prouty is a Vice Chairman at the Armed Services Board of Contract Appeals. He speaks only for himself in this article, of course, and the opinions expressed herein are not necessarily those of the Board or the Department of Defense (DoD), nor does he intend to indicate how he might adjudicate any future appeal before him.
From the perspective of this member of the Armed Services Board of Contract Appeals (ASBCA), the practice before the Boards of Contract Appeals is thriving as the Contract Disputes Act (CDA)1 hits middle age. To push a metaphor that I hope is not too tired: at forty, the practice has grown more solid and is of more substance. Though it is, perhaps, a little less flexible than it was in its youth, it has found ways to work around those limitations. For the Boards, forty is the new [insert optimum age here], and our most interesting days are ahead of us.
In a nutshell, my view is this: the Boards, for many reasons, have never been more important in the development of federal contract law, and there has been inevitable “process creep,” as would be expected of any tribunal subject to review. The greater emphasis on alternative dispute resolution (ADR) and the availability of expedited proceedings, however, provide means to meet the Boards’ mission of providing for expeditious and inexpensive conflict resolution2 for those parties that wish to utilize them.
When attending the Government Contracts Year in Review Conference, one may be struck (if you are into this sort of thing) by the proportion of contract cases3 coming from the Boards, compared to the Court of Federal Claims (CoFC) and the Federal Circuit. This should not be surprising upon reflection. The only thing the ASBCA handles is government contract disputes, and it is the primary duty of our colleagues at the Civilian Board of Contract Appeals (CBCA)4 and the Postal Service Board of Contract Appeals (PSBCA).5 CoFC (with fewer judges than the ASBCA),6 by contrast, has a much broader jurisdictional grant under the Tucker Act,7 including Fifth Amendment takings cases, military and civilian pay disputes, copyright and patent matters, bid protests, and Vaccine Court appeals, to name a few.8 According to CoFC’s statistics, in Fiscal Year (FY) 2017, 147 “contract” cases were filed before CoFC, out of 652 filings altogether.9 This number, which includes non-CDA “contract” cases (but not bid protests), is less than twenty-three percent of all CoFC cases.10 FY 2012 figures were similar, though with a slightly larger proportion of government contract cases.11 I have been told, anecdotally, that the government contract dispute numbers are slightly down proportionally in recent years, but not dramatically so. According to research done by two ASBCA staff attorneys, the number of CoFC published opinions on dispositive motions or after hearings regarding CDA disputes has hovered around or slightly lower than thirty per year in recent years. By contrast, in FY 2017, the ASBCA issued decisions on the merits disposing of 139 appeals.12
With respect to law coming from the Federal Circuit, the number of appeals touching upon CDA matters has been quite low in recent years. In 2017, for example, there were only two opinions from our reviewing court that touched upon the CDA,13 although, of course, the Federal Circuit’s opinions, binding upon all Boards and CoFC, are proportionally the most important.14
That said, in addition to the raw numbers, the Boards’ decisions have greater influence than they might otherwise because they are binding precedent. Decisions issued by CoFC, “while persuasive, do not set binding precedent for separate and distinct cases in that court.”15 ASBCA decisions are binding precedent for future ASBCA appeals,16 just as CBCA decisions are binding precedent for future CBCA appeals.17 Thus, when a decision is issued by one of the Boards, except in the extremely rare case of it being overturned by the Federal Circuit, or the even rarer case of it being reversed by the Board’s en banc equivalent, it firmly sets the law for disputes before that body in a way that CoFC decisions do not.18 The consolidation of the ASBCA and CBCA from separate agency boards,19 completed in January 2007, only has enhanced the reach of the precedent from each.
In my opinion, this is a good thing. To be sure, allowing multiple judges to interpret the law differently, as CoFC does, may help develop the law in a sort of “marketplace of ideas,” with questionable decisions receding to the background as the best-reasoned, most persuasive opinions become dominant. This is no small benefit to the contracting community and provides a jurisprudential good. Nevertheless, in government contracting, certainty is a very valuable commodity. For even if the ASBCA got the interpretation of a Federal Acquisition Regulation (FAR) or Cost Accounting Standard (CAS)20 provision wrong (perish the thought), future contractors would at least know what the provision is deemed to mean and be able to negotiate their contracts accordingly. Similarly, if we come to a result not necessarily intended when the FAR provision was drafted, the clarity of precedential decisions, applicable to a large portion of the government, can support government efforts to redraft the provision to obtain the result that it wanted, rather than muddle through with a contract provision with an uncertain meaning.
With this greater heft (back to the middle-aged metaphor) has come greater process. As Chair Somers of the CBCA notes in her article that is concurrently running in this Journal issue,21 the CDA drafters had hoped that the Boards would avoid “judicialization” and remain more informal and expeditious than comparable proceedings in the courts.22 Not surprisingly, however, judicialization has happened.23
Much of this is driven by the parties.24 As the Boards are used increasingly by larger commercial players with more sophisticated legal teams, it is inevitable that they will seek more process from the Boards. It is, after all, what they are used to. Moreover, lawyers are risk averse, and those whose clients can afford it will almost certainly seek more, not less, opportunities to be heard upon matters and more, not less, discovery. To be sure, the Boards are not technically required to grant all the process that is requested by the parties, but greater demands ultimately move the baselines, especially when, for the larger appeals, both parties seek the increased process.
“Process creep,” moreover, is, I think, a near certainty for any tribunal that is reviewed by another. Decisions invariably will need to be heavier on the facts to permit adequate appellate review, and procedural protections are usually a one-way ratchet. Though Board decisions sometimes have been criticized for including lumbering “Facts” sections (a criticism that I join), this logorrhea is not entirely self-imposed. I can point to at least one Federal Circuit decision, Santa Fe Engineering, Inc. v. United States,25 which remanded an ASBCA decision for failure to include adequate findings of fact for judicial review. The ASBCA decision that was so rejected, however, does not at first blush appear to be particularly scanty in its factual recitation.26 I suspect that the parties, having been immersed in the litigation, well understood the Board’s decision and its bases, but the most important audience on appeal — the Federal Circuit — did not. One can imagine that neither the ASBCA nor any other Board has any interest in repeating that result.
Likewise, procedural shortcuts, in keeping with the Boards’ founding expectation of being less process-driven than courts, are not always well received on appeal. In JRS Management v. Lynch,27 the Federal Circuit reversed a grant of summary judgment by the CBCA that it issued after converting a government motion to dismiss to a motion for summary judgment, without explicitly informing the parties. In deciding this appeal, the Federal Circuit determined that, since the situation was not contemplated explicitly by the CBCA’s rules, the Federal Rules of Civil Procedure provided guidelines to consider, which were not followed in that case.28 I do not intend to criticize here the Federal Circuit’s decision in JRS, for one can easily understand the court’s perspective and why the procedural approach taken there was seemingly to the prejudice of the appellant, but the decision underscores the risks that the Boards take in following abbreviated procedures. Again, with this kind of result, the Boards would have every incentive to ensure that they not economize (or be perceived as economizing) on process.
The rules of the two largest Boards have approached the process/ judicialization issue differently. The CBCA, as Chair Somers has written, is in the final stages of enacting a new set of rules.29 In many ways, they are similar to the Federal Rules of Civil Procedure,30 although they are certainly shorter. To this outsider, it appears that they have accepted a certain amount of process creep as inevitable, but written their rules to minimize it. We at the ASBCA will be very interested to hear how these changes have worked for them in practice and will happily glean any lessons learned.
Although the ASBCA has revised its own rules relatively recently,31 we have resisted following the Federal Rules model. To us, this seems to be the best method of preserving flexibility, although to those not familiar with our rules, and more familiar with the Federal Rules, they may feel “clunky.” We are currently in the process of moving to an electronic case management/ electronic case filing (ECM/ECF) system.32 When that system is up and operating and we have greater experience with it, we will likely amend our rules to take advantage of it as appropriate.33
These rule changes, however, can only go so far in combatting judicialization of the Boards so long as Board decisions remain reviewable by the Federal Circuit, for the reasons discussed above. Thus, the obvious remedy to judicialization is to remove judicial review. I joke. Slightly. What I mean, though, is that we can limit judicialization for a significant number of the appeals before us by following pathways to resolution from which there is no appeal, namely ADR34 and the CDA’s small claims procedure.35
At the contemporary ASBCA, ADR is such a part of the culture that it is easy to forget that it was not always so. The ASBCA’s first formally designated ADR proceeding was in 1987, and ADR was not even mentioned in our Annual Report until the 1990s.36 In the meantime, we have taken actions to institutionalize ADR and make it a more regular part of Board routine. In 2011, we sacrificed one of our four courtrooms37 to create a modern ADR center: it was a good trade. We now perform about twenty-four ADRs a year (many encompassing multiple appeals), and the vast majority are successful. To be sure, far more appeals would be good candidates for ADR than we currently see, but it should also be very clear that the procedure provides an increasingly used avenue to obtain the informal, inexpensive, and expeditious dispute resolution for which the Boards were intended.
The other review-free means of obtaining informal, inexpensive, and expeditious resolution of disputes before the Boards is the small claims procedure that the CDA provides. Under this process, if the amount in dispute is less than $50,000 (or less than $150,000 if appellant is a “small business concern”), the contractor may request recourse to the “small claims procedure” in which the appeal is resolved within 120 days of the contractor’s electing the procedure; is decided by a single judge; has no precedential value; and may not be set aside except in the case of fraud.38 We have implemented this process in Board Rule 12.2.39
The small claims procedure, perhaps with higher dollar thresholds, could provide an escape route for those appellants who wish a quick, simple result, without the judicial trappings. Along with ADR, it is a viable work-around for the natural stiffness of this middle-aged Board. But, in our experience, contractors do not utilize it in the vast majority of appeals for which the procedure is available. Why not?
Anecdotally (and I am afraid the only evidence we have is anecdotal), I have been told by members of the private bar that many clients are reluctant to waive their appellate rights and rights to discovery as is necessary to use the small claims procedure. This is consistent with a point I made earlier, which is that process creep is driven, in part, by what lawyers feel comfortable with.40 In any event, eschewing the small claims procedure to preserve appellate rights is not necessarily a rational business decision. For the appeal right to be valuable, the contractor must not only lose at the Board, but lose in such a way that a viable appeal may be taken and then won at the Federal Circuit. On top of that, the unrecoverable costs on appeal41 mean that even a successful appeal will cost the contractor money. With only $50,000 (or $150,000 for a small business) at stake, the value of appellate rights may well be about chasing sunk costs.
It also may underscore that, complain about it though practitioners may, judicialization at the Boards is not always a bad thing. Thus, some parties may not truly mind being thrown into the procedural briar patch. To be sure, it is imperative that the Boards remain accessible to the small contractor that feels it was wronged by a monolithic government and needs the quick, inexpensive redress the Boards were designed to afford. And we take such contractors’ needs very seriously: a $30,000 dispute over a maintenance contract may not be the most monetarily significant thing on my desk at a given moment, but it could be the most important thing in the life of the small contractor involved, and our organizational ethos is that it deserves to be treated that way. Nevertheless, for decisions that are of a substantial dollar figure or may have a wide ranging effect on government-wide contracting rules, it is especially important to get them right. And the means that lawyers use to get decisions right is process. Process that we can and do furnish for the parties.
Thus, I have an optimistic view of what’s in store for the Boards in the next forty years, as well as their ability to handle it. The legal issues before us continue to change in ways that we did not necessarily anticipate and should keep us busy. To name just a few, post Todd Construction,42 there has been an uptick in contractor performance ratings issues, just as Metcalf 43 has had an effect on allegations regarding the implicit duty of good faith and fair dealing. Laguna Construction,44 in the meantime, opened the door to a government defense before the Boards that looks very much like the Special Plea in Fraud45 applicable to CoFC, though with important limitations.46 I suspect the struggle to keep off weight (i.e., to limit untoward judicialization) will be ongoing, but that with a little effort, it will be properly kept in check. I will let you know my thoughts in 2058.
- The Contract Disputes Act of 1978 is codified presently at 41 U.S.C. §§ 7101–7109 (2012).
- See, e.g., Welcome, Armed Servs. Bd. of Contract Appeals, http://www.asbca.mil/ [https://perma.cc/ZY9U-GHCA] (last visited Aug. 16, 2018) (discussing the ASBCA’s emphasis on ADR as a tool to resolve post-award contract disputes).
- To be clear, I am referencing CDA matters, which generally involve disputes over contract administration. Disputes over contract procurement are almost exclusively in the realm of the Government Accountability Office (GAO) and CoFC.
- See United States Civilian Board of Contract Appeals, Civilian Bd. of Contract Appeals, https://www.cbca.gov/ [https://perma.cc/P7VP-3QBS] (last visited Aug. 16, 2018).
- See Judicial Officer Department, USPS, https://about.usps.com/who-we-are/judicial/welcome.htm [https://perma.cc/8A4M-LD3Q] (last visited Aug. 16, 2018).
- At present, CoFC has five active judges, with eleven more on senior status. Judges-Biographies, U.S. Ct. of Fed. Cl., https://www.uscfc.uscourts.gov/judicial-officers [https://perma.cc/H6MR-BYND] (last visited Aug. 16, 2018). My understanding, however, is that most senior judges have full or nearly full dockets. The ASBCA has twenty-four judges; the CBCA, fourteen; and the PSBCA, four. Administrative Judge Biographies, Armed Servs. Bd. of Contract Appeals, http://www.asbca.mil/Bios/biographies.html; Judges, CBCA, https://www.cbca.gov/board/judges.html [https://perma.cc/J5AF-6JYP] (last visited Aug. 14, 2018); Judicial Officer Department, USPS, http://about.usps.com/who-we-are/judicial/welcome.htm [https://perma.cc/EXZ5-4SFT] (last visited Aug. 16, 2018).
- 28 U.S.C. § 1491 (2012) (detailing the Tucker Act).
- See United States Court of Federal Claims Statistical Report for the Fiscal Year October 1, 2016 – September 30, 2017 (2017), available at https://www.uscfc.uscourts.gov/sites/default/files/FY17%20stats%20for%20website.pdf.
- See United States Court of Federal Claims Statistical Report for the Fiscal Year October 1, 2011 – September 30, 2012 (2012) available at https://www.uscfc.uscourts.gov/sites/default/files/FY17%20stats%20for%20website.pdf [https://perma.cc/MQ5H-289S].
- Memorandum from Armed Servs. Board of Contract Appeals on Report of Transactions and Proceedings of the Armed Services Board of Contract Appeals for the Fiscal Year Ending 30 September 2017 to Secretary of Defense et al. (Oct. 10, 2017), available at http://www.asbca.mil/Reports/FY2017%20Reports/FY2017_annual.pdf [https://perma.cc/9LYY-5K5V].
- See Garco Constr., Inc. v. Sec’y of Army, 856 F.3d 938 (Fed. Cir. 2017); Lee’s Ford Dock, Inc. v. Sec’y of Army, 865 F.3d 1361 (Fed. Cir. 2017).
- To give but one example, Metcalf Constr. Co. v. United States, 742 F.3d 984 (Fed. Cir. 2014), was a Federal Circuit decision of outsized importance on the doctrine of the duty of good faith and fair dealing.
- W. Coast Gen. Corp. v. Dalton, 39 F.3d 312, 315 (Fed. Cir. 1994).
- See SWR, Inc., ASBCA No. 56708, 15-1 BCA ¶ 35,832 at 175,220.
- See Bus. Mgmt. Research Assocs., Inc. v. Gen. Servs Admin., CBCA No. 464, 07-1 BCA ¶ 33,486.
- Of course, one can argue that precedent is not quite as ironclad as judges like to assert and that decisions can elide it by such things as distinction on the facts. Nevertheless, in our experience, the constraint set by binding precedent is significant.
- The NASA Board of Contract Appeals was merged into the ASBCA in 1993, and the Corps of Engineers Board of Contract Appeals was merged into the ASBCA in 2000. The CBCA, established on January 6, 2007, merged eight boards of contract appeals encompassing the entire federal government except for NASA, the DoD and its constituent agencies that are embraced by the ASBCA, and the PSBCA and Tennessee Valley Authority Board of Contract Appeals. See The Board, CBCA, https://cbca.gov/board/index.html [https://perma.cc/VFB8-YE4Z] (last visited Aug. 16, 2018).
- A sometimes seemingly trivial thing but which has the potential to have enormous pecuniary implications.
- Jeri Kaylene Somers, Comments on the Fortieth Anniversary of the Contract Disputes Act, 48 Pub. Cont. L.J. 1 (2018).
- See generally S. Rep. No. 95-1118, at 12–13 (1978).
- As will be discussed near the end of this essay, like most things in life, “judicialization” is not wholly a good or bad thing. See infra.
- Again, as Chair Somers notes, this was foreseen by the CDA’s drafters. See S. Rep. No. 95-1118, at 12–13.
- 937 F.2d 624 (Fed. Cir. 1991) (unpublished).
- See Santa Fe Eng’rs, Inc., ASBCA No. 36682, 90-3 BCA ¶ 23,020.
- 621 F. App’x 978 (Fed. Cir. 2015).
- See Civilian Board of Contract Appeals; Rules of Procedure for Contract Disputes Act Cases, 83 Fed. Reg. 13,211 (Mar. 28, 2018).
- This is certainly advantageous to new practitioners who are already familiar with the Federal Rules and the law interpreting them.
- The revised rules were published July 21, 2014. See Defense Federal Acquisition Regulation Supplement: Rules of the Armed Services Board of Contract Appeals, 79 Fed. Reg. 42,214 (July 21, 2014).
- Because the ASBCA falls under the DoD umbrella, we are subject to particularly stringent information-technology limitations (e.g., I cannot email a case link to a colleague). These limitations are well-meant and in keeping with the threat environment in which DoD operates, but they have slowed our entry into the early twenty-first century. Our acquisition of the ECM/ECF system has been long and challenging, to say the least, though it is very nearly complete as I write these words.
- Even without the formal ECM/ECF system, we have increased dramatically the use of electronic “filings” at the ASBCA since I began about three years ago. Now, the majority of briefs are submitted through email to the Recorder’s Office, and most new Rule 4 files are submitted on compact disc, rather than paper, while most orders are served on the parties via email. These changes cannot come soon enough for this judge.
- There are two main varieties of ADR at the ASBCA. The first is the traditional mediation performed by a Board judge. These are the majority by far. The second is a summary trial with a binding decision by the one judge who hears it with no appeal rights—what many would think of as an arbitration. I have been told that the summary trial route was more common in the past, though we are seeing a slight resurgence of its use lately. I am pleasantly surprised to see the government acceding to its increased use: when I was at the Department of Justice, the branch I worked for would NEVER have agreed to such a procedure. See Rules of the Armed Services Board of Contract Appeals, Addendum II, ASBCA, www.asbca.mil/Rules/forms/Final%20Rule%20Formatting%20pgl.pdf#page=24 [https://perma.cc/G87B-WD53] (last visited Aug. 16, 2018).
- Another way to avoid review by the Federal Circuit is to have the parties waive such review by the terms of the dispute clauses in their contracts, as was permitted in Minesen Co. v. McHugh, 671 F.3d 1332, 1338 (Fed. Cir. 2012). Such clauses, however, are rarae aves outside of the nonappropriated funds instrumentality context.
- See Carol Park Conroy & Martin J. Harty, Alternative Dispute Resolution at the ASBCA, Briefing Papers No. 00-7 (June 2000).
- When we moved into our current facilities in the mid-1980s, four small courtrooms was about right for our workload and the types of hearings held. Now, with somewhat fewer, but longer, trials, and with far more reliance on document-intensive, electronically-presented hearings, we are considering consolidating into two larger courtrooms set up to meet modern electronic standards.
- See 41 U.S.C. § 7106(b).
- The CDA provides for an accelerated procedure where less than $100,000 is in dispute, but this accelerated procedure is not insulated from appellate review, see 41 U.S.C. § 7106(a), and Board Rule 12.3 implementing it, still requires the consideration of such appeals by at least two judges, so it does not address the root causes of judicialization, even if it supports limitations on discovery and shorter briefing schedules.
- See supra text accompanying notes 24–28.
- The dollar limits on Equal Access to Justice Act fee rates, see 28 U.S.C. § 2412(d)(2)(A) (2012), generally mean that, even when successful, appellants will not be made whole for their attorney fees.
- See Todd Constr., L.P. v. United States, 656 F.3d 1306, 1314 (Fed. Cir. 2011).
- See Metcalf Constr. Co. v. United States, 742 F.3d 984 (Fed. Cir. 2014).
- See Laguna Constr. Co. v. Carter, 828 F.3d 1364 (Fed. Cir. 2016).
- See 28 U.S.C. § 2514 (2012).
- See Supply & Serv. Team GmbH, ASBCA No. 59630 17-1 BCA ¶ 36,678, at 178,601.