First things first.  Thanks to the website PubKLaw.Com for bringing this important ASBCA decision to our attention before the Board published it on its own website.What makes this particular ASBCA decision important is the following:

The Board of Contract Appeals dismissed the Government’s case against Boeing because it was filed more than six years after the claim accrued.

We’ve reported on this issue before—namely, right here.  In fact, the Board cited to that particular decision as support for its decision in the Boeing matter.

Let’s recap.

• In October 2000, Boeing submitted a revised CASB Disclosure Statement that included revised cost accounting practices, to become effective January 1, 2001.
• Upon request, Boeing provided a cost impact analysis.
• The cost impact analysis was audited by DCAA, who issued its audit report on June 14, 2002 to the cognizant DCMA administrative contracting officer (ACO).  That audit report asserted that Boeing’s changed cost accounting practices would result in $7.4 million in increased costs (consisting of decreased costs on Boeing’s fixed-price contracts).
• On September 15, 2003, the cognizant ACO prepared a “prenegotiation memorandum that “a determination that Boeing's accounting revision was not in the government's interests, barring the government from paying resulting increased costs, and described a negotiation strategy for obtaining reimbursement of costs the government had incurred.”
• On September 17, 2003, the cognizant ACO wrote Boeing stating the findings and offering to settle the matter by using Boeing’s cost impact to establish the unallowable increased costs.  To Boeing’s numbers, the ACO added amounts for assumed profit and an interest rate on the costs.
• On December 23, 2003, Boeing responded to the ACO’s letter, disagreeing with pretty much everything.
• “The accounting change was raised at a series of additional meetings between the parties between 2004 and April 2005. During those meetings, Boeing also contended that the accounting revision's effect upon fixed-price contracts should not have been included in the assessment of its costs, and that interest was not recoverable by the government.”
• “Subsequently, between 2005 and 2010, some ‘intermittent discussions and evaluations continued between [the contracting officer] and Boeing representatives in an attempt to settle the matter’.”
• On October 25, 2010, the ACO issued a Final Decision, demanding $6.42 million from Boeing.
• Boeing submitted an appeal of the ACO’s Final Decision to the ASBCA.

In the words of the ASBCA decision:  “Quite simply, [Boeing] contends that because the decision was issued more than six years after the government's claim for those costs accrued, it is a nullity.”The Government argued against Boeing’s motion, but on rather interesting grounds.  The ASBCA summarized the Government’s arguments as follows—

The government's 25 October 2010 final decision quite succinctly describes the events upon which it premises its claim, and demonstrates that the government knew of those events more than six years earlier. …

Although it does not deny the accrual date of its claim, the government advances two arguments in response to Boeing's motion. First, the government suggests that its 25 October 2010 decision is not the relevant final decision in this appeal. According to the government, the contracting officer's 17 September 2003 letter to Boeing is the contracting officer's final decision asserting the government's claim for the costs of the accounting revision. … Alternatively, the government contends that its 25 October 2010 final decision is valid because the six-year limitation for bringing the claim was equitably tolled by Boeing's conduct …. Neither argument is persuasive.

We’ll elide recital of the Government’s first argument, focusing instead on the second argument.  As the ASBCA wrote

As support for its contention, the government emphasizes that three months after the contracting officer issued the 17 September 2003 letter, Boeing ‘unexpectedly took issue with each and every facet of the...1etter’… . The government contends that Boeing could have raised that issue sooner, and then waited another year and a half, until 14 April 2005, before presenting the evidence it claimed supported that position. Similarly, the government complains that Boeing initially agreed in 2002 that the accounting revision costs affected fixed price contracts, but then reversed that position during discussions in 2004. …

The government summarizes its position by accusing Boeing of leading the contracting officer ‘to believe that the contract adjustment issue was on the verge of settling’ but then it ‘belatedly interjected entirely new, overriding issues into the discussions; and finally it compounded the situation by providing supporting information in a thoroughly, untimely manner.’ According to the government, these actions breached Boeing's duty not to ‘hinder or delay the [government] in performance of the contract’ by ‘play[ing] [the contracting officer] along’ which then ‘induced [her] into allowing the limitations period to pass.’ Therefore, the six-year limitation should be considered tolled.

As noted above, the Board was unconvinced by the Government’s arguments.  It concluded—

We do not perceive any misconduct by Boeing that could have induced or tricked the government into missing the deadline for submitting its claim for the accounting revision costs. We do not perceive any misconduct by Boeing that could have induced or tricked the government into missing the deadline for submitting its claim for the accounting revision costs.  … Although Boeing may have unexpectedly disputed her conclusions, which it continued to do with various arguments and materials it presented to her in meetings that occurred over the next year and half, nothing about that constituted misconduct, or should have induced her not to protect the government's rights. If anything, Boeing's continued resistance to the government's conclusions, and to settling the matter, should have heightened the government's awareness of the need to issue a final decision to preserve its claim before the deadline expired. It should not have caused the government to believe that a final decision would be unnecessary. …

Given the facts, it seems clear that it was lack of diligence, and not any misconduct by Boeing, that was the reason the government sat on its rights here until it was too late.

The Board devoted considerable attention to other cases and matters that may have had implications on its decision, a recital that we will spare our readership.  (You are welcome.)The Board concluded with the following statement:

Because the government's 25 October 2010 final decision claiming the accounting revision costs was untimely, it is not valid. Given that it is invalid, it is a nullity and we lack jurisdiction to entertain an appeal from it. Accordingly, we dismiss the appeal for lack of jurisdiction.

As was the case with the defective pricing matter we previously brought to your attention, the Government’s failure to file a claim within six years of believing it had been injured caused it to lose its case.  We expect the Government to appeal this decision but, until then, this is a great victory for Boeing.