Electric Boat Corporation v. Secretary of the Navy
958 F.3d 1372
| Fed. Cir. | 2020Background
- Aug. 14, 2003: Electric Boat contracted with the Navy to build up to six Virginia‑class submarines (SSN 778–783). Contract included a Change‑of‑Law clause (H‑30) allowing price adjustments for new federal laws only after the first two contract years and only if increased costs exceed $125,000 per ship.
- OSHA issued a shipyard fire‑protection regulation effective Dec. 14, 2004; Electric Boat notified the Navy on Feb. 24, 2005 that compliance was expected to increase costs by more than $125,000 per ship.
- Electric Boat submitted a cost proposal June 27, 2007 (and a revised proposal in Apr. 2009); the Navy’s contracting officer issued a formal denial on May 2, 2011 and told Electric Boat to seek a formal request for equitable adjustment by June 3, 2011 if it wished to proceed.
- Electric Boat filed a certified CDA claim Dec. 19, 2012; the contracting officer issued a final denial Feb. 27, 2013; Electric Boat appealed to the Armed Services Board of Contract Appeals (ASBCA).
- ASBCA granted the Navy partial summary judgment (Dec. 10, 2018), holding Electric Boat’s CDA claim accrued on Aug. 15, 2005 (the first date H‑30 could provide relief) and thus was filed more than six years late; ASBCA denied Navy summary judgment only as to subcontractor‑related costs.
- The Federal Circuit affirmed, holding the claim accrued when the Change‑of‑Law clause first exposed the government to liability (Aug. 15, 2005) and that subsequent refusal to adjust price in 2011 did not delay accrual.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Electric Boat's CDA claim was time‑barred (accrual date) | Claim did not accrue until May 2, 2011 when the contracting officer denied the price adjustment (injury occurred on denial). | Claim accrued Aug. 15, 2005, when the Change‑of‑Law clause first permitted a price adjustment (OSHA rule effective Dec. 2004; two‑year delay in clause ended Aug. 15, 2005). | Accrual date Aug. 15, 2005; CDA claim filed in Dec. 2012 was untimely and barred. |
| Timeliness as to five ships (SSN 779–783) because costs did not exceed target price until after Critical Date | No entitlement to an equitable adjustment until actual costs exceeded target payments; thus those ship claims are timely. | Claim accrues based on contractual right to adjustment, not actual incurrence of each ship’s costs; progress payments do not preclude earlier accrual. | Rejected — untimely as to those five ships; accrual governed by Clause H‑30, not later actual cost exceedance. |
| Timeliness as to last two ships (SSN 782–783) due to funding contingencies (Clause H‑20) | Funding delayed authorization to incur costs, so plaintiff couldn’t know sum certain for those ships until after funding dates; accrual therefore later. | Clause H‑20 limits expenditures but does not make appropriation a condition precedent to filing for price adjustment; accrual not delayed. | Rejected — funding contingency did not postpone accrual or right to seek equitable adjustment. |
Key Cases Cited
- Gates v. Raytheon Co., 584 F.3d 1062 (Fed. Cir. 2009) (standard of review for ASBCA summary judgment and deference to Board expertise)
- Forman v. United States, 329 F.3d 837 (Fed. Cir. 2003) (interpretation of government contracts is a question of law reviewed de novo)
- Kellogg Brown & Root Servs., Inc. v. Murphy, 823 F.3d 622 (Fed. Cir. 2016) (limitations period tolled where contract required completion of mandatory pre‑claim procedures before accrual)