Highway contractors and other public contractors are intimately familiar with formal claims processes and the attendant pitfalls along the way that are mostly designed to protect the public entity but sometimes are used as a sword by public entities to invalidate otherwise legitimate claims. Another area of concern—especially for lawyers who are brought in at a later date and asked to file suit—involves how closely the allegations of the lawsuit must mirror what the contractor contended in the claim that was submitted to the public entity. A recent case decided by the U.S. Court of Federal Claims provides some relief to that concern.
Included are the facts
In DeAtley Construction Inc. v. U.S., a contractor performing a project for the Federal Highway Administration (FHWA) on government-owned land was responsible for placing aggregate base on a roadway that would be paved by others at a later date. The contractor also was responsible for producing the aggregate in accordance with the project specifications from a rock borrow area the government supplied.
The contractor produced and stockpiled all aggregate in 2001 and returned to the project the following year to place it. After completing a portion of the roadway, the contractor discovered that the aggregate had degraded and thus would not pass the prescribed tests. The contractor offered to provide FHWA with a credit of $21,425, or 25% of the contract price, rather than replace it with new aggregate, but FHWA declined and ordered the contractor to remove and replace the aggregate with new aggregate. The contractor did so and then filed a claim seeking additional compensation for the costs associated with the added work.
In the claim, the contractor recited the facts in support of entitlement and adequately set forth its claimed damages. The FHWA denied the claim, and the contractor filed a six-count complaint against the government. The government contended that since the contractor argued only differing site conditions in the claim it submitted to the contracting officer, the court had no jurisdiction to consider other counts contained in the lawsuit for breach of contract, defective specifications, constructive change and economic waste.
The court observed from prior cases that a contractor’s claim to the government need not be in “any particular form or use any particular wording,” but it must provide “a clear and unequivocal statement that gives the contracting officer adequate notice of the basis and amount of the claim.” In this regard, the court held that the complaint filed in the lawsuit need not set forth the same legal theories identified in the claim so long as they “arise from the same operative facts” and “claim essentially the same relief” as the underlying claim previously submitted to the government.
The court then set out to determine whether the claim the contractor presented to the government contained all facts necessary to support each of the four legal theories in question. The court concluded the facts necessary to support those legal theories were included. On the other hand, it determined that the contractor failed to set out in the claim all of the crucial facts supporting defective specifications. Consequently, the court dismissed the count for defective specifications, but allowed the other three counts to remain.
The DeAtley case is a favorable one for contractors because it rejects the notion that a contractor’s lawsuit must be a mirror image of the claim submitted to the government for decision. However, the case also serves as an impetus to contractors to closely consider all potential legal theories.
