The Federal Circuit Court of Appeals opinion in K-Con Building Systems, Inc. v. United States illustrates the difficulties a contractor may face when pursuing a claim before a Contracting Officer. After nearly 10 years of litigation, the court found that the contractor’s claim to the Contracting Officer did not contain enough detail to allow the claim to proceed. That’s a lot of time and resources wasted on a claim that was dead from the start.
K-Con was awarded a $582,000 job to design and build a Coast Guard support building in Michigan. K-Con was unable to complete the project by the finish date and the Coast Guard assessed liquidated damages of $109,554. K-Con contested the assessment of liquidated damages by submitting a one paragraph letter asserting that it was not the sole cause of the alleged delays; that the government was at fault for the delay; and the liquidated damages were an impermissible penalty. The Contracting Officer ultimately denied K-Con’s claim and K-Con appealed to the Court of Claims.
K-Con must have understood that even if it won its appeal in the Court of Claims, it would not be able to recover additional compensation to which K-Con thought it was due. So, K-Con filed another claim before the Contracting Officer to recoup money owed for extra work. The Contracting Office denied K-Con’s claim and K-Con then added these claims to its Court of Claims action.
The parties continued to litigate all issues for three more years. Then, in 2013, the government raised a jurisdictional argument—that K-Con had not raised all issues pending before the court in its first claim to the Contracting Officer and thus the Court of Claims did not have jurisdiction to hear K-Con’s claim for additional compensation. The Court of Claims agreed and dismissed K-Con’s claim for additional compensation. The Court of Claims then ruled against K-Con on the remaining claim that liquidated damages should not be imposed.
K-Con appealed the Court of Claims decision, but lost again. So, after nearly 10 years of litigation, K-Con lost all of its claims and had to pay liquidated damages to the Coast Guard.
Take Away: Government contracting claims can prove difficult and if you don’t do it right, you may lose your right to make the claim. Make sure you review and understand the requirements of the FAR regulations before submitting your claim.