United States: Recent Data Suggests Contractors Are Getting A Fair Shake Before The ASBCA

William Pannier, Senior Counsel in our Los Angeles office

The Armed Services Board of Contract Appeals recently released its Report of Transactions and Proceedings for FY2015. The data reveals some interesting trends and provides useful guidance for contractors considering their options on appeal. Cases before the ASBCA routinely involve appeals of claims arising under contracts with government agencies, including the Army, Navy, Air Force and other defense agencies such as the Corps of Engineers, DLA and DCMA, as well as the CIA, NASA and even the Washington Metropolitan Area Transit Authority. The Civilian Board of Contract Appeals hears appeals with respect to the remaining federal agencies and reports its results separately. As an alternative to filing appeals with either of the Boards, contractors can appeal claims to the Court of Federal Claims. We will analyze data from the Civilian Board and the Court in future posts.

Of course, a prudent contractor will develop and present a well-documented and supported claim to the contracting officer in the first place. This approach maximizes the prospect of the claim being paid and the dispute process being avoided entirely. However, should a contractor find it necessary to file an appeal, it will be equipped to present a strong case where the factual and legal grounds have already been cogently identified. The best practice, clearly, is to submit a claim that is factually and legally sound and not to wait until after the claim is denied to engage counsel and work up a more robust submittal. 

Highlight of the Report

• The number of cases docketed (668) and resolved (647) remain about the same from 2014, but going back to 2010, docketed cases are up about 50 percent.
• The number of cases pending (1,067) is consistent with 2014, but nearly double the number of pending cases from 2010.
• Of 121 merits decisions, contractors obtained favorable decisions in 64 cases, or more than 50 percent of the time.
• The vast majority of appeals resolved (546) were "dismissed", and the Board notes the majority of those dismissals were the result of settlements.
• Based on the above it is clear that contractors are achieving a success rate well in excess of 50 percent.
• Other data released shows an uptick in appeals of DLA and DCMA decisions.

Appeals Filed and Resolved

The report also provides historical data about the source of appeals filed:

This data reflects that the number of appeals filed dropped slightly from 2014, but remains more than 50 percent higher than 2010. The figures above demonstrate a couple of interesting trends. First, there continues to be a growth in DLA & DCMA cases. In addition, claims involving the Corps dropped for a second straight year, but remain more than 50 percent above 2010 numbers. And appeals involving the Army followed roughly the same pattern.

For claimants, the report's discussion of case dispositions continues to be encouraging.

Just over half of the cases disposed of on the merits were sustained in whole or in part, which is on par with prior years. The number of cases dismissed, meaning settled by the parties, is up significantly, though generally consistent with prior years on a percentage basis.  In all, contractors continue to fare well on appeal, with settlement or a favorable decision being reached well more than half the time.

It is also noteworthy that the Court of Appeal for the Federal Circuit, which hears appeals of ASBCA cases, resolved 12 such appeals in FY15, affirming the ASBCA in nine of them. So roughly 10 percent of ASBCA decisions are ultimately appealed.

Pending Appeals – the backlog has not abated

According to the report, the number of appeals pending before the Board on 1 October, the first day of the new fiscal year, have increased by nearly 90 percent compared to six years ago.

Given that the number of cases filed remains relatively flat, it is reasonable to infer that cases are being resolved more slowly (the report does not discuss the average time it takes to resolve cases).  Contractors should take this time lag into account in setting expectations regarding appeals.

Of course, an appeal docketed and disposed of during a single fiscal year (e.g., between 2 Oct 2014 and 30 Sep 2015) would not be accounted for in the two tables above.  Still, it reasonably appears the number of ASBCA cases is generally on the rise, that the size of the docket backlog is growing, or both.

Where did the pending Appeals originate and are some agency appeals moving slower than others?

By agency, the 1087 cases that are active to start FY2015 are allocated as follows:

Let's revisit the data presented in the first table above, to show the total number of cases filed, by agency, from 2011 to 2015:

Comparing the active/pending cases versus the total number of cases filed suggests that appeals of Corps decisions are taking appreciably longer than appeals from most other agencies.

Lastly, the report indicates that parties have made productive use of the Board's ADR services, with nonbinding ADR being far more popular than binding ADR.  In FY2015, 29 cases (covering 51 matters) were successfully resolved and dismissed, whereas ADR was unsuccessful in only 2 cases (covering four matters).  ADR is by no means a silver bullet, but where parties are open to settlement, it can be a helpful tool to effect resolution.

In sum, cases filed at the ASBCA remain well above 2010 levels and contractors continue to receive relief in a substantial majority of cases.  However, the backlog of cases and the time it takes appeals to be resolved, continues to rise. 

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.