Kellogg Brown & Root Services, Inc. v. Murphy, 2016 U.S. App. LEXIS 9044

Background

In 2001 the Army contracted with KBR under a cost-plus-award-fee LOGCAP contract; KBR subcontracted work to KCPC/Morris to build dining facilities and provide meal services in Iraq.
KBR terminated the KCPC/Morris subcontract for default on July 31, 2003; KCPC/Morris disputed the termination and continued performance until transition on September 12, 2003.
KCPC/Morris sued KBR in 2004; in January 2005 KBR and KCPC/Morris executed a written agreement splitting KCPC/Morris’ costs into a $17.4 million “Settlement Amount” (paid) and additional costs/profit (the group (b) costs) to be pursued cooperatively.
KCPC/Morris submitted a certified claim to KBR on August 26, 2006; KBR forwarded that claim to the Army on November 3, 2006, but the Army declined to deal directly with subcontractors and required KBR to resolve subcontract issues first.
KBR later certified and then withdrew a claim (2007–2010); after settling with KCPC/Morris in February 2012, KBR filed a certified CDA claim with the Army on May 2, 2012 for $10,464,493; the contracting officer’s inaction created a deemed denial and KBR appealed to the ASBCA.
The ASBCA dismissed for lack of jurisdiction on statute-of-limitations grounds, holding the claim accrued either on September 12, 2003 (subcontract end) or January 24, 2005 (settlement agreement); this appeal followed.

Issues

Issue	KBR's Argument	Army's Argument	Held
Whether KBR's CDA claim accrued before May 2, 2006 (six-year limit)	Claim did not accrue until KCPC/Morris presented a sum certain (Aug 26, 2006) and until KBR could reasonably present a sum certain to the Army	Accrual fixed when prime became liable to subcontractor (either Sept 12, 2003) or when parties agreed to cooperate (Jan 24, 2005); amount need not be exact to accrue	Reversed: claim did not accrue before May 2, 2006; dismissal on limitations grounds improper
Whether subcontract termination was a per se non-routine government action triggering immediate accrual	Termination of subcontract by prime was not an unforeseen government action; routine/resolution requirements prevented accrual	Termination fixed liability and thus triggered accrual as a non-routine event	Rejected Army/Board: non-routine doctrine misapplied; accrual depends on circumstances and a sum certain must be knowable
Whether Severin doctrine makes prime’s accrual coterminous with subcontractor’s accrual	Accrual requires ability to demand a sum certain from government; Severin governs liability relationships but not accrual timing under FAR §33.201	When subcontractor’s claim accrued against the prime, the prime’s claim against the government accrued as well	Rejected Army: Severin addresses liability, not FAR accrual timing; accrual occurs when contractor can reasonably state a sum certain
Whether equitable tolling or prior withdrawn claims tolled the limitations period	Tolling unnecessary because accrual occurred after May 2, 2006; withdrawn 2008 claim did not toll	Argued limitations had run; Board found no equitable tolling	Court did not reach equitable tolling because it held claim did not accrue before the critical date

Key Cases Cited

Parsons Global Servs. v. McHugh, 677 F.3d 1166 (Fed. Cir.) (accrual assessed by FAR, contract language, and facts)
James M. Ellett Constr. Co. v. United States, 93 F.3d 1537 (Fed. Cir.) (distinguishes routine vs non-routine requests for payment)
Reflectone, Inc. v. Dalton, 60 F.3d 1572 (Fed. Cir.) (defines routine/non‑routine request and claim accrual principles)
Crown Coat Front Co. v. United States, 386 U.S. 503 (U.S.) (limitations may not run until required administrative procedures are complete)
Bay Area Laundry & Dry Cleaning Pension Trust Fund v. Ferbar Corp., 522 U.S. 192 (U.S.) (limitations should not begin where suit would be premature due to required pre-suit procedures)
Sikorsky Aircraft Corp. v. United States, 773 F.3d 1315 (Fed. Cir.) (CDA statute of limitations is nonjurisdictional)