Case: 19-1621 Document: 42 Page: 1 Filed: 05/19/2020
United States Court of Appeals
for the Federal Circuit
______________________
ELECTRIC BOAT CORPORATION,
Appellant
v.
SECRETARY OF THE NAVY,
Appellee
______________________
2019-1621
______________________
Appeal from the Armed Services Board of Contract Ap-
peals in No. 58672, Administrative Judge David D’Alessan-
dris, Administrative Judge J. Reid Prouty, Administrative
Judge Richard Shackleford.
______________________
Decided: May 19, 2020
______________________
IAN GERSHENGORN, Jenner & Block LLP, Washington,
DC, argued for appellant. Also represented by MATTHEW
S. HELLMAN, D. JOE SMITH.
WILLIAM JAMES GRIMALDI, Commercial Litigation
Branch, Civil Division, United States Department of Jus-
tice, Washington, DC, argued for appellee. Also repre-
sented by JOSEPH H. HUNT, MARTIN F. HOCKEY, JR.,
ROBERT EDWARD KIRSCHMAN, JR.; ALANA M. SITTERLY,
RUSSELL SHULTIS, Naval Litigation Office, United States
Department of the Navy, Washington, DC.
Case: 19-1621 Document: 42 Page: 2 Filed: 05/19/2020
2 ELEC. BOAT CORP. v. SEC’Y OF THE NAVY
______________________
Before LOURIE, MOORE, and CHEN, Circuit Judges.
MOORE, Circuit Judge.
Electric Boat Corporation appeals from the Armed Ser-
vices Board of Contract Appeals’ grant of partial summary
judgment to the United States Department of the Navy,
holding that Electric Boat’s Contract Dispute Act (CDA)
claim is barred by the statute of limitations. Because the
Board correctly held that Electric Boat’s claim is barred by
the statute of limitations, we affirm.
BACKGROUND
On August 14, 2003, Electric Boat and the Navy en-
tered into a contract (the Contract) for the construction of
up to six separate Virginia-class nuclear-powered subma-
rines (SSNs), SSN 778 through SSN 783. 1 The Contract
established a target price for each submarine, comprising
the sum of the target cost and the target profit. See J.A. 84
(SSN 783). Electric Boat was entitled to periodic progress
payments proportional to Electric Boat’s overall construc-
tion progress. J.A. 271–79 (Clause H-29). The Navy was
required to fully compensate Electric Boat under the Con-
tract until Electric Boat’s invoiced costs exceeded
1 The Contract between Electric Boat and the Navy
funded full construction of only the first submarine, SSN
778. Pursuant to Clause H-17 of the Contract, the remain-
ing five submarines were funded on an installment basis
and the parties’ obligations under the Contract were en-
tirely contingent on the future availability of funds. J.A.
238–39. The Navy modified the Contract in January 2004,
transitioning the contract to a multi-year procurement con-
tract for the remaining five submarines. J.A. 396. Clause
H-20 of the modified contract maintained the installment
funding and contingency provisions of Clause H-17.
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ELEC. BOAT CORP. v. SEC’Y OF THE NAVY 3
construction progress at the target price, less certain ad-
justments. Id.
The Contract incorporates by reference the standard
Changes Clause under
48 C.F.R. §§ 52.243-1, -2. J.A. 335,
344. The Changes Clause requires that the Navy’s Con-
tracting Officer “make an equitable adjustment in the con-
tract price, the delivery schedule, or both” in the event that
the Contracting Officer makes a change to the contract that
“causes an increase or decrease in the cost of, or the time
required for, performance.”
48 C.F.R. § 52.243-1(b). The
Contract also includes a “Change-of-Law Clause,” which
provides for a price adjustment in the event that compli-
ance with a new federal law, or a change to existing federal
laws or regulations, directly increases or decreases Electric
Boat’s costs of performance. J.A. 279–81 (Clause H-30).
The Change-of-Law Clause specifies that no cost adjust-
ments shall be made thereunder for the first two years af-
ter the effective date of the Contract (i.e., until August 15,
2005). J.A. 280. After two years, adjustments shall only
be made if a qualifying change of law increases Electric
Boat’s costs of performance “in excess of $125,000 per ship.”
J.A. 281 (Clause H-30(c)).
The Change-of-Law Clause requires that Electric Boat
promptly notify the Navy’s Contracting Officer of a quali-
fying enactment or change in federal law. J.A. 281 (Clause
H-30(d)). Section (e) of the Change-of-Law Clause further
provides that requests for price adjustments thereunder be
made in accordance with the procedures set forth in Clause
H-9, entitled “Documentations of Requests for Equitable
Adjustment.” J.A. 281 (Clause H-30(e)). Clause H-9 sets
forth uniform procedures for submitting requests for equi-
table adjustments under all articles of the Contract, includ-
ing the standard Changes Clause. J.A. 228.
On September 15, 2004, OSHA issued a new federal
regulation entitled Fire Protection in Shipyard Employ-
ment (the OSHA Regulation). See
69 Fed. Reg. 55,668
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4 ELEC. BOAT CORP. v. SEC’Y OF THE NAVY
(Sept. 15, 2004) (codified at
29 C.F.R. § 1915.501 et seq.).
The OSHA Regulation, which became effective on Decem-
ber 14, 2004, required companies to post a fire watch if cer-
tain conditions are present during “hot work” in shipyard
employment. See id.;
29 C.F.R. § 1915.504(b). On Febru-
ary 24, 2005, Electric Boat submitted a Notification of
Change to the Navy. J.A. 453–57. The Notification stated
that “Electric Boat anticipates that compliance with [the
OSHA Regulation] will result in an increase in the cost of
performance [under the Contract] in excess of $125,000 per
ship.” J.A. 453.
On June 27, 2007, Electric Boat submitted a cost pro-
posal to the Navy, seeking price adjustments across all six
submarines. J.A. 459–69. In October 2008, the Navy coun-
tered, challenging Electric Boat’s calculations of certain
costs. J.A. 554–57. In April 2009, Electric Boat submitted
a revised cost proposal to the Navy. J.A. 559–67. On May
2, 2011, the Contracting Officer of the Navy issued a mem-
orandum decision formally denying Electric Boat “entitle-
ment to an adjustment of the contract price.” J.A. 705–10.
The memorandum stated that Electric Boat’s cost pro-
posals had “inadequate support” and that there were “dis-
crepancies between [Electric Boat’s] proposal and the
Government’s review of various documents related to the
OSHA change.” J.A. 708. The memorandum further stated
that if Electric Boat decided to further pursue an adjust-
ment related to the OSHA Regulation, “it should seek ad-
justment pursuant to [regulations governing] ‘Requests for
Equitable Adjustment’” by June 3, 2011.
Id.
On December 19, 2012, Electric Boat filed a certified
claim with the Navy, seeking a price adjustment for in-
creased costs it allegedly incurred in complying with the
OSHA Regulation. J.A. 711–12. On February 27, 2013, the
government issued a Contracting Officer’s Final Decision
denying Electric Boat’s claim. J.A. 713–30. Electric Boat
appealed the Contracting Officer’s Final Decision to the
Board. The Navy moved for summary judgment that
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ELEC. BOAT CORP. v. SEC’Y OF THE NAVY 5
Electric Boat’s claim was barred by the statute of limita-
tions. Electric Boat filed a cross-motion for summary judg-
ment that its claim was timely filed.
On December 10, 2018, the Board granted-in-part the
Navy’s motion for summary judgment and dismissed Elec-
tric Boat’s complaint. 2 J.A. 17. The Board determined that
Electric Boat knew of its claim no later than February
2005, when Electric Boat submitted its Notification of
Change to the Navy. J.A. 10. The Board further held that
Electric Boat “suffered some injury not later than August
15, 2005, the date two years after the effective date of the
[C]ontract when [the Change-of-Law Clause] would first
provide the right to a price adjustment.” J.A. 10. Because
Electric Boat’s Claim was not filed until December 2012,
more than six years after the August 2005 accrual date, the
Board held that Electric Boat’s claim was untimely. J.A.
17. Electric Boat appeals. We have jurisdiction pursuant
to
28 U.S.C. § 1295(a)(10).
DISCUSSION
We review the Board’s grant of summary judgment de
novo. Gates v. Raytheon Co.,
584 F.3d 1062, 1067 (Fed. Cir.
2009). Interpretation of a government contract is question
of law, which we also review de novo. See Forman v. United
States,
329 F.3d 837, 841 (Fed. Cir. 2003). Though not
binding on the Court, we give the Board’s legal conclusions
careful consideration in view of the Board’s considerable
experience in construing government contracts. See Gates,
584 F.3d at 1067.
2 The Board denied the Navy’s motion for summary
judgment as it pertained to Electric Boat’s claim for costs
incurred by Electric Boat’s subcontractor, Huntington
Ingalls, Inc. J.A. 17–18. The Navy has not challenged this
aspect of the Board’s decision on appeal.
Case: 19-1621 Document: 42 Page: 6 Filed: 05/19/2020
6 ELEC. BOAT CORP. v. SEC’Y OF THE NAVY
I.
A CDA claim “shall be submitted within 6 years after
the accrual of the claim.”
41 U.S.C. § 7103(a)(4)(A).
Whether and when a claim has accrued is determined ac-
cording to the Federal Acquisition Regulation (FAR), the
language of the contract, and the facts of the particular
case. Kellogg Brown & Root Servs., Inc. v. Murphy,
823
F.3d 622, 626 (Fed. Cir. 2016). The FAR defines claim ac-
crual as “the date when all events, that fix the alleged lia-
bility of either the Government or the contractor and
permit assertion of the claim, were known or should have
been known.” See
48 CFR § 33.201. Although “monetary
damages need not have been incurred,” “[f]or liability to be
fixed, some injury must have occurred.”
Id. We conclude
the Board correctly determined that Electric Boat’s claim
accrued more than six years before Electric Boat submitted
its claim and that Electric Boat’s claim is therefore barred
by the statute of limitations.
The plain language of the Contract compels our conclu-
sion. It provides that:
(b) If, at any time after the effective date of this
contract, a New Federal Law is enacted or a change
is made to a Currently Applicable Federal Law or
a New Federal Law or regulations thereunder
promulgated by Federal authorities, and compli-
ance with such new law or change directly results
in an increase or decrease in the Contractor’s cost
of performance of this contract, the contract
price(s) shall be adjusted . . . . No such adjustment
shall be made for contract costs incurred or pro-
jected to be incurred during the two (2) year period
after the effective date of this contract.
J.A. 280 (Clause H-30(b)). Electric Boat’s injury under the
Contract was the enactment of the OSHA Regulation, the
compliance with which Electric Boat contends directly in-
creased its costs of performance by more than $125,000 per
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ELEC. BOAT CORP. v. SEC’Y OF THE NAVY 7
submarine. See J.A. 453. Because the OSHA Regulation
became effective in December 2004, the Navy’s liability for
a price adjustment became fixed under the Contract on Au-
gust 15, 2005, when Clause H-30 first provides a right to a
price adjustment. See J.A. 280. The Board correctly deter-
mined that the Navy’s liability was fixed, and therefore
Electric Boat’s claim accrued, on August 15, 2005, more
than six years before Electric Boat filed its claim. See
48
C.F.R. § 33.201.
Electric Boat contends that its claim for costs did not
accrue until May 2, 2011 when the Navy’s Contracting Of-
ficer denied its request for a price adjustment. It argues
that it was not injured under the Contract until it received
notice of the Navy’s intent to not adjust the contract price.
Citing our decision in Kellogg Brown, Electric Boat argues
that the Board therefore erroneously determined that the
procedures required by the Change-of-Law Clause did not
delay accrual of Electric Boat’s claims. We do not agree.
Although “the limitations period does not begin to run
if a claim cannot be filed because mandatory pre-claim pro-
cedures have not been completed,” the contract here did not
require that Electric Boat undertake any such procedures.
See Kellogg Brown, 823 F.3d at 628. In Kellogg Brown, the
Army required that the contractor resolve disputed costs
with the subcontractor before filing a claim for reimburse-
ment. Id. We held that the contractor’s claim therefore did
not accrue until the contractor resolved cost disputes with
the subcontractor as required by the contract. Id. at 628–
29. The Contract here, however, expressly states that re-
quests for price adjustments under the Change-of-Law
Clause “shall be made in accordance with the procedures of
the requirement entitled ‘DOCUMENTATION OF
REQUESTS FOR EQUITABLE ADJUSTMENT.’” J.A.
281 (Clause H-30(e)). The Contract therefore required that
Electric Boat follow the standard equitable adjustment
procedures set forth in Clause H-9 of the Contract. See J.A.
228, J.A. 334. Although the Change-of-Law Clause
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8 ELEC. BOAT CORP. v. SEC’Y OF THE NAVY
required Electric Boat to “promptly notify” the Navy of a
qualifying change in law, Electric Boat was not required to
await a unilateral Navy price adjustment prior to filing a
claim. See J.A. 281. Indeed, Electric Boat’s injury under
Clause H-30 of the contract was the enactment of the
OSHA Regulation, not the Navy’s refusal to adjust the
price. 3 That the Navy did not formally refuse to adjust the
price until May 2, 2011 therefore does not excuse Electric
Boat’s failure to timely file a claim in compliance with the
CDA and the plain language of the Contract. See J.A. 228;
see also J.A. 334 (incorporating by reference the FAR’s
standard Disputes Clause).
II.
Electric Boat argues two alternative theories of partial
timeliness. First, Electric Boat contends that its claim is
timely as to five of the six submarines, SSN 779 through
SSN 783, because Electric Boat’s costs for these subma-
rines did not exceed the target price until after December
19, 2006 (the Critical Date). Because its claims did not ex-
ceed the target price, Electric Boat argues that it was being
fully compensated and therefore had no claim for equitable
adjustment for these submarines until after the Critical
Date. Electric Boat’s contention is unavailing.
3 Electric Boat’s complaint alleged two counts of re-
lief: one count for an entitlement to a price adjustment and
the other count for breach of contract arising from the
Navy’s May 2, 2011 denial of Electric Boat’s request for ad-
justment. J.A. 75. Electric Boat waived any argument of
timeliness under common law breach of contract principles
by failing to argue before the Board that its injury arose
from the Navy’s alleged breach of contract on May 2, 2011.
See J.A. 14 (identifying Electric Boat’s alleged first date of
actual injury as December 15, 2006).
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ELEC. BOAT CORP. v. SEC’Y OF THE NAVY 9
Electric Boat was not required to incur actual costs for
each submarine before filing a claim for equitable adjust-
ment under the Contract. Instead, when Electric Boat’s
claim accrued in August 2005, Electric Boat had six years
to file a claim for an equitable adjustment to the contrac-
tual price terms, including the target cost for each subma-
rine. See J.A. 280. That the Navy made progress payments
to Electric Boat as required by Clause H-29 of the Contract
does not excuse Electric Boat’s untimeliness as to any of
the six submarines. See J.A. 271–79 (Clause H-29). The
Navy’s payment of scheduled progress payments does not
amount to agreement that Electric Boat is entitled to in-
creased actual costs. There was an express provision under
the contract for seeking such increased costs—equitable
adjustment.
Second, Electric Boat contends that its claims are
timely as to the last two submarines, SSN 782 and SSN
783, because the Navy did not authorize funds for Electric
Boat to begin construction on the final two ships until De-
cember 28, 2006 and January 10, 2008, respectively. Be-
cause Clause H-20 of the Contract made Electric Boat’s
performance contingent upon funding, Electric Boat argues
it could not have known the “sum certain” of additional
costs that it would incur for these submarines until after
the Critical Date. This contention is also unavailing.
Clause H-20 of the Contract merely provides that Elec-
tric Boat’s expenditure for each fiscal year is contingent on
the appropriation of funds. J.A. 245. It establishes that
Electric Boat was not authorized to make expenditures or
incur obligations in excess of the amounts that the Con-
tracting Officer had specified as available for performance.
J.A. 245. Clause H-20 does not, however, make Congres-
sional appropriation a condition precedent for seeking a
price adjustment for each submarine. Thus, while Electric
Boat was precluded from incurring actual costs in the hull
construction of the final two submarines until funding had
been approved, it was not precluded from filing a claim for
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10 ELEC. BOAT CORP. v. SEC’Y OF THE NAVY
adjusted target costs for these two submarines under
Clause H-30. 4 We therefore reject Electric Boat’s second
theory of partial timeliness, which runs counter to the
plain language of the Contract and would needlessly delay
the filing of claims for equitable price adjustments.
CONCLUSION
We have considered Electric Boat’s remaining argu-
ments and find them unpersuasive. For the foregoing rea-
sons, we conclude that the Board correctly determined that
the statute of limitations barred Electric Boat’s claim and
therefore affirm the Board’s decision.
AFFIRMED
No Costs.
4 The Board rejected Electric Boat’s argument that
its claim did not accrue until June 2007, when it allegedly
had the information necessary to assert its claim. J.A. 13.
The Board determined that the accrual of Electric Boat’s
claim was not suspended between August 2005 and June
2007, while Electric Boat gathered the information it
deemed necessary to calculate its projected costs. J.A. 13.
Because Electric Boat does not challenge this determina-
tion on appeal, it has waived any argument that its claim
did not accrue until it could calculate the “sum certain” of
its incurred costs.
