United States Court of Appeals
for the Federal Circuit
__________________________
PARSONS GLOBAL SERVICES, INC.
(ON BEHALF OF ODELL INTERNATIONAL, INC.),
Appellant,
v.
JOHN MCHUGH, SECRETARY OF THE ARMY,
Appellee.
__________________________
2011-1201
__________________________
Appeal from the Armed Services Board of Contract
Appeals in no. 56731, Administrative Judge Robert T.
Peacock.
__________________________
Decided: April 20, 2012
__________________________
ROBERT M. TYLER, McGuire Woods, LLP, of Houston,
Texas, argued for appellant. On the brief was JAMES J.
GALLAGHER, McKenna Long & Aldridge LLP, of Los
Angeles, California.
STACEY K. GRIGSBY, Trial Attorney, Commercial Liti-
gation Branch, Civil Division, United States Department
of Justice, of Washington, DC, argued for appellee. With
her on the brief were TONY WEST, Assistant Attorney
2
General, JEANNE E. DAVIDSON, Director, and BRYANT G.
SNEE, Deputy Director.
__________________________
Before RADER, Chief Judge, NEWMAN and PROST, Circuit
Judges.
Opinion for the court filed by Circuit Judge PROST.
Dissenting opinion filed by Circuit Judge NEWMAN.
PROST, Circuit Judge.
This is an appeal from the Armed Services Board of
Contract Appeals (“Board”) regarding whether the Board
has jurisdiction over Parsons Global Services, Inc.’s
(“Parsons”) sponsored claim on behalf of subcontractor
Odell International, Inc. (“Odell”). The Board held that
Parsons’s request for payment was “routine” and thus,
under 48 C.F.R. (FAR) § 2.101, needed to be in dispute to
constitute a claim over which the Board had jurisdiction.
Because we agree that the Board did not have jurisdiction
over Parsons’s request for payment, we affirm.
BACKGROUND
In March 2004, the Army awarded Parsons contract
no. W914NS-04-D-006 (“the prime contract”), an indefi-
nite-delivery-indefinite-quantity contract for design-build
work in Iraq. The cost reimbursement contract incorpo-
rated various Federal Acquisition Regulations (“FAR”),
including regulations relating to reimbursement of sub-
contractor costs during the contract and after termination
for convenience. Subsequently, Parsons entered into a
basic ordering agreement (“BOA agreement” or “subcon-
tract”) with Odell, effective as of March 25, 2004. The
subcontract required Odell to construct health care facili-
ties and deliver medical equipment in Iraq pursuant to
3
the prime contract. Initially, the contract did not specify
an overhead rate.
In May 2004, prime contract Task Order 0004 was is-
sued for the construction, restoration, rebuilding, and
development of public projects in Iraq, and in October
2004, Task Orders 0011 and 0012 issued requiring the
construction of various health care facilities in Iraq.
Parsons awarded Odell subcontract task orders to support
Task Orders 0004, 0011, and 0012.
On October 27, 2004, Parsons and Odell amended
their subcontract, effective March 26, 2004, to reflect the
parties’ agreement that Odell was entitled to compensa-
tion for its overhead and general and administrative
(“G&A”) costs. Specifically, the amendment added para-
graph 1.0C(a), which states that “[a] mark-up of 1.75%
will be added to Subcontractor’s direct labor rates to cover
G&A, [overhead] and other indirect costs . . . .” Supple-
mental App. 11. In accompanying remarks, the parties
noted that this provision was inadvertently omitted from
the original subcontract. The parties again amended the
subcontract on January 19, 2005, effective March 26,
2004, to better clarify paragraph 1.0C(a) to the subcon-
tract. The newly amended language read “[a] mark-up of
1.75 (175%) will be added to [Odell’s] direct labor rates to
cover G&A, [overhead] and some other [in]direct costs.”
J.A. 3 (first emphasis added) (second and fourth altera-
tions in original). Despite these amendments, Odell
continued to invoice its costs to Parsons at a 75% mark-
up.
On February 28, 2006, the Defense Contract Audit
Agency (“DCAA”) determined that Odell’s provisional
indirect cost rate for 2005 was 187% and informed Odell
that it had been billing Parsons using the incorrect 75%
4
mark-up. On March 3, 2006, the Army terminated for
convenience Task Orders 0004, 0011, and 0012. Four
days later, on March 7, Odell submitted a memorandum
to Parsons with an attached invoice for $2,113,864.99—
the difference between the 75% mark-up Odell had billed
Parsons and the 187% rate that DCAA determined was
Odell’s 2005 provisional indirect cost rate. Parsons
refused to pay the invoice, explaining that the 187% was a
provisional indirect rate and “its time and materials BOA
with Odell did not entitle Odell to use a mark-up of 187
percent.” Supplemental App. 12.
The government, through a modification to the prime
contract, assigned termination contracting officer (“TCO”)
authority to the Defense Contract Management Agency.
In July 2007, Parsons submitted a termination settlement
proposal for each terminated task order to the TCO, none
of which mentioned the additional costs Odell sought or
any mark-up rate issues between Parsons and Odell.
Pursuant to settlement of the prime contract, the TCO
requested that the DCAA audit Parsons’s billed costs for
Task Order 0011 of the prime contract, including Odell’s
costs. The DCAA’s June 2008 report discussed, inter alia,
the appropriate mark-up for labor costs incurred under
the subcontract. The DCAA clarified that the 187% mark-
up discussed in its initial audit “would not apply to this
subcontract as the 175% rate is a fixed rate specified in
the subcontract agreement.” J.A. 208.
On July 8, 2008, Odell submitted a revised invoice to-
taling $2,444,976 for the claimed difference between the
labor costs previously billed at 75% and the costs billed at
the revised mark-up of 175%. 1 In August 2008, Parsons
1 Odell also submitted invoices for close-out costs
related to the termination. Because these costs were not
5
submitted three Payment Approval Requests reflecting
the costs submitted by Odell to the TCO. The TCO orally
informed Parsons that it would not settle directly with
Odell pursuant to FAR 49.108-8 because it was not in the
best interest of the government. On December 22, 2008,
Parsons submitted a sponsored “Certified Claim for
Payment” under the Contract Disputes Act of 1978
(“CDA”) on behalf of Odell to the Procurement Contract-
ing Officer (“PCO”). 2 The claim was accompanied by a
CDA certification and sought reimbursement for
$2,585,642.71 for costs incurred under the subcontract for
Task Orders 004, 0011, and 0012. 3 On January 3, 2009,
the PCO denied the claim and Parsons filed an appeal to
the Board.
On appeal, the government moved to dismiss for a
lack of jurisdiction, arguing that Parsons’s “routine”
requests for payment did not amount to a claim under the
CDA. Parsons countered that because its requests for
payment occurred two years after the termination of the
task orders and thus could not be subject to routine
invoicing and termination procedures, the request was
at issue in the Board’s decision or argued before this
court, we do not address them.
2 Unlike the TCO, who was responsible exclusively
for any costs, procedures, and requests that emerge from
the government’s termination for convenience of the
prime contract, the PCO is responsible for any such issues
relating to activity under the normal course of the con-
tract.
3 While the claim itself discussed invoices from sub-
contractor work flowing from Task Orders 0004, 0011,
and 0012, the documents attached listed the subcontrac-
tor costs stemming from prime contract Task Order 0007.
We address this discrepancy below, see infra note 7.
6
non-routine and sufficient in itself to constitute a claim.
The Board agreed with the government that Parsons had
failed to submit a valid sponsored claim and dismissed
Parsons’s appeal for lack of jurisdiction. Parsons Global
Servs., Inc., ASBCA No. 56731, 11-1 BCA ¶ 34,632. The
Board determined that the request for Odell’s costs in-
curred under the subcontract was “routine”; as such, it
did not become a claim under the CDA until it was dis-
puted by the government or the government unreasonably
delayed payment. Id. Because its routine request was
not in dispute, the Board held that Parsons had not
submitted a claim under the CDA for which it had juris-
diction. Id. The Board also questioned whether Parsons,
without conducting its own audit of the subcontractor
costs, was actually liable to Odell for the costs because of
statements that it will pay Odell only to the extent the
government pays it. Id.
This appeal followed. We have jurisdiction to review
the Board’s final decision under 28 U.S.C. § 1295(a)(10).
DISCUSSION
Pursuant to 41 U.S.C. § 7107(b)(1), we review deci-
sions by the Board on questions of law de novo. Thus, we
review the Board’s determination of jurisdiction under the
CDA and its interpretation of the applicable FAR provi-
sions de novo. Sys. Dev. Corp. v. McHugh, 658 F.3d 1341,
1344 (Fed. Cir. 2011).
As a prerequisite for the Board’s jurisdiction, the CDA
requires a contractor to present a valid claim over which
the contracting officer has rendered a final decision. 41
U.S.C. § 7103; England v. Swanson Grp., Inc., 353 F.3d
1375, 1379 (Fed. Cir. 2004). Because the statute itself
does not define what constitutes a “claim,” we evaluate
7
whether a particular request for payment amounts to a
claim based on the FAR implementing the CDA, the
language of the contract in dispute, and the facts of each
case. James M. Ellett Constr. Co. v. United States, 93
F.3d 1537, 1542 (Fed. Cir. 1996); Reflectone, Inc. v. Dal-
ton, 60 F.3d 1572, 1575 (Fed. Cir. 1995) (en banc). The
FAR defines “claim” as follows:
Claim means a written demand or written asser-
tion by one of the contracting parties seeking, as a
matter of right, the payment of money in a sum
certain, the adjustment or interpretation of con-
tract terms, or other relief arising under or re-
lated to the contract. . . . A voucher, invoice, or
other routine request for payment that is not in
dispute when submitted is not a claim. The sub-
mission may be converted to a claim, by written
notice to the contracting officer as provided in
33.206(a), if it is disputed either as to liability or
amount or is not acted upon in a reasonable time.
FAR 2.101 (emphasis added). Under this definition,
demands for payment can be classified into two catego-
ries: “routine” and “non-routine.” As this court, sitting en
banc, explained in Reflectone, Inc. v. Dalton, if the request
is “non-routine,” all that is required is that “it be (1) a
written demand, (2) seeking, as a matter of right, (3) the
payment of money in a sum certain”; the request does not
need to be in dispute. 60 F.3d at 1575-76. If the request
for payment is “routine,” a pre-existing dispute is neces-
sary for it to constitute a claim under the CDA. Id. at
1576 & n.6.
The distinction between a routine and non-routine re-
quest for payment is a factual one, dependent on the
circumstances in which the requested costs arose. A
8
routine request is one incurred and submitted “in accor-
dance with the expected or scheduled progression of
contract performance.” Ellett Constr., 93 F.3d at 1542-43.
Such requests are “made under the contract, not outside
it” and include invoices, vouchers, progress payments, and
other requests for costs under the contract’s terms.
Reflectone, 60 F.3d at 1577. By contrast, a non-routine
request is one “seeking compensation because of unfore-
seen or unintended circumstances.” Ellett Constr., 93
F.3d at 1543; Reflectone, 60 F.3d at 1577. Such requests
include requests for equitable adjustments for costs
incurred from “government modification of the contract,
differing site conditions, defective or late-delivered gov-
ernment property or issuance of a stop work order” and
other government-ordered changes, Reflectone, 60 F.3d at
1577; for damages resulting from the government’s ter-
mination for convenience and termination settlement
proposals that have reached an impasse, Ellett Constr., 93
F.3d at 1542-43; for compensation for additional work not
contemplated by the contract but demanded by the gov-
ernment, Scan-Tech Sec., L.P. v. United States, 46 Fed.
Cl. 326, 333 (2000); for the return of contractor property
in the government’s possession, J & E Salvage Co. v.
United States, 37 Fed. Cl. 256, 261 n.4 (1997), aff’d, 152
F.3d 945 (1998) (table); and for damages stemming from
the government’s breach of contract or cardinal change to
the contract, Ky. Bridge & Dam, Inc. v. United States, 42
Fed. Cl. 501, 518-19 (1998). 4 A common thread among
these examples is the presence of some unexpected or
unforeseen action on the government’s part that ties it to
the demanded costs.
4 While the Court of Federal Claims’ decisions are
not binding on this court, we reference them to better
illustrate the distinction between routine and non-routine
requests.
9
Both parties agree that jurisdiction over Parsons’s
claim rises and falls based on how its request is classified.
Parsons argues that its request for the payment of Odell’s
overhead and G&A costs should be classified as non-
routine because the DCAA did not determine Odell’s
entitlement to a 175% mark-up until 2008, two years
after Parsons’s contract was terminated and when the
vehicles for submission available during the contract were
no longer viable. The government counters that a request
for payment that was routine before the termination of
the task orders should not transform into a non-routine
request merely because it is submitted after the termina-
tion. The government notes that the prime contract
provides for routine request mechanisms for Odell’s costs
during the contract and after the termination. Further-
more, the government notes that the costs are not a result
of any unforeseen circumstances but rather Odell’s own
billing error, and as such, the demand is closer in sub-
stance to a routine demand.
We agree with the government that Parsons’s request
for payment is routine. The costs originate from sched-
uled contract work Odell performed on Parsons’s behalf
from 2004 to 2006. None of the work was additional or
unforeseen work at the government’s behest. The prime
contract explicitly covers these costs. The “Allowable Cost
and Payment” provision, FAR 52.216-7, provides for the
submission of invoices to the government for “costs in-
curred, but not necessarily paid for . . . supplies and
services purchased directly for the contract and associated
financial payments to subcontractors.” J.A. 5. Indeed,
pursuant to this provision, Parsons submitted invoices for
Odell’s costs and received payment from the government
at a 75% mark-up. The payment Parsons now seeks—the
difference between the 75% and 175% mark-up—is not a
result of intervening unforeseen circumstances or gov-
10
ernment action. It would have been accounted for in the
invoices submitted during the contract’s duration if not
for Odell’s own billing error and both Parsons’s and
Odell’s failure to enforce the agreed-upon terms of their
2004 subcontract. Because Parsons’s request should be
submitted under the prime contract and in accordance
with the expected progression of contract performance, it
is routine. See Ellett Constr., 93 F.3d at 1543; Reflectone,
60 F.3d at 1577 (describing routine requests as those
“submitted for work done or equipment delivered by the
contractor in accordance with the expected or scheduled
progress of contract performance”).
Parsons admits that if submitted during the course of
contract performance, its request would have been rou-
tine, yet argues that its request became non-routine after
the task orders terminated because it was left with no
other mechanisms for obtaining payment. 5 Parsons’s
argument fails because the contract’s termination did not
divest Parsons of mechanisms for requesting payment of
Odell’s costs. See Scan-Tech Sec., 46 Fed. Cl. at 333 n.4
5 During oral argument, the government argued for
the first time that Odell’s costs do not stem from any of
the terminated task orders, but rather Task Order 0007,
which it alleges remains open. Although the invoices
accompanying Parsons’s sponsored claim list Task Order
0007 as the prime contract task order corresponding to
Odell’s subcontract costs, this appears to be a typographi-
cal error. Those same invoices note that they relate to
“DCAA Audit Correction Task Order 0011.” Supplemen-
tal App. 18. Furthermore, each and every invoice submit-
ted, including those relating to close-out costs for Task
Orders 0004, 0011, and 0012, list Task Order 0007. To
the extent that this is not a typographical error and the
costs Parsons is seeking on Odell’s behalf are related to
Task Order 0007, our holding that the request is routine
applies with equal force.
11
(“[A] routine invoice for scheduled work could be submit-
ted after the contract’s termination date, yet would still
be considered a routine request.”). The prime contract
contains post-termination mechanisms for payment of
such costs, such as FAR 49.302, which allows for vouchers
or fee proposals to be submitted after termination, or FAR
49.108-3, which allows prime contractors to settle with
subcontractors and then submit these settlements to the
TCO for approval. 6 Parsons could also amend its settle-
ment with the government to account for the corrected
mark-up. Parsons, in its briefs, alleged that none of these
mechanisms are available to it two years after termina-
tion, but during oral argument it admitted that it could
have submitted a voucher, but chose not to. The govern-
ment affirmed that invoicing is still a viable option.
Alternatively, Parsons could settle with Odell and submit
the subcontractor settlement to the TCO or, in the ab-
sence of any evidence on the record that its settlement is
final, amend its settlement agreement with the govern-
ment to account for Odell’s costs. What Parsons cannot
do is classify its request as non-routine so it can submit it
directly to the PCO as a claim without first pursuing the
proper avenues under the prime contract.
6 Determining whether a request is routine or non-
routine depends largely on the facts under which it arose
relative to the “overall scheme of the contract and the
parties’ expectations.” Ellett Constr., 93 F.3d at 1543.
Thus, nothing in this opinion alters our previous holding
that the presence of contract clauses that set forth proce-
dures for requesting costs in unforeseen circumstances,
such as differing site conditions or termination for con-
venience, alters the nature of an otherwise non-routine
request. See id. at 1542-43; see also Scan-Tech Sec., 46
Fed. Cl. at 333. Indeed, had the costs that Parsons re-
quested resulted directly from the government’s termina-
tion for convenience, its request would likely have been
classified differently.
12
Because Parsons’s request is routine, it must be in
dispute before Parsons can submit “a written demand . . .
seeking, as a matter of right, the payment of money in a
sum certain” that would constitute a claim over which the
Board has jurisdiction. FAR 2.101; Reflectone, 60 F.3d at
1577. Parsons makes no argument that its request is in
dispute. Indeed, the record does not indicate that the
PCO, the appropriate government official to evaluate the
request at issue, ever received a proper request for pay-
ment, such as a voucher. Without a pre-exiting dispute
over its routine request, Parsons has not submitted a
valid claim.
The Board lacked jurisdiction over Parsons’s routine
request for payment and thus we affirm the Board’s
dismissal. 7
AFFIRMED
7 Because the Board does not have jurisdiction, we
do not address whether Parsons was required to pay Odell
prior to bringing its alleged claim.
United States Court of Appeals
for the Federal Circuit
__________________________
PARSONS GLOBAL SERVICES, INC.
(ON BEHALF OF ODELL INTERNATIONAL, INC.),
Appellant,
v.
JOHN MCHUGH, SECRETARY OF THE ARMY,
Appellee.
__________________________
2011-1201
__________________________
Appeal from the Armed Services Board of Contract Ap-
peals in No. 56731, Administrative Judge Robert T. Pea-
cock.
__________________________
NEWMAN, Circuit Judge, dissenting.
This is a simple situation, in which the government de-
termined, through its own audit, that certain payments are
owed to the subcontractor. Two contracting officers then
declined to make the payments, although the obligation was
not, and is not, denied. The Armed Services Board of Con-
tract Appeals held it did not have “jurisdiction,” and this
court now accepts this negation of the procurement system
and the Contract Disputes Act. The Defense Contract Audit
Agency found that the payments are allowable, allocable,
and reasonable, yet the government declines to pay, and on
this appeal presents a plethora of creative excuses, none of
PARSONS GLOBAL v. ARMY 2
which were raised by the contracting officers, none of which
affects the government’s conceded obligation. Thus a simple
correction of a billing error has morphed into a nearly four-
year litigation, with no end in sight. I respectfully dissent.
The facts are not in dispute. Parsons Global Services
was the prime contractor and Odell International a subcon-
tractor for construction of some healthcare facilities in Iraq.
On February 28, 2006 the DCAA determined that Odell had
applied an incorrect mark-up rate for its overhead and other
indirect costs. Odell used a mark-up rate of 75% instead of
the contract rate of 175%; the DCAA final report in June
2008 stated that Odell’s overhead and G&A costs at the
175% mark-up were supported and appropriate. Parsons
submitted, in August 2008, payment requests for the under-
charged mark-up. The Termination Contracting Officer
declined to act on the requests separately from the Parsons
termination for convenience claims, for the major portions of
the Parsons contracts had been terminated for convenience
on March 3, 2006. As Parsons points out, the Odell under-
charges, and the DCAA confirmatory audit, all relate to the
period before termination.
Parsons then, on December 22, 2008, submitted the
Odell claim to the Procurement Contracting Officer, who
denied the claim; the reasons for this denial are not men-
tioned by the Board or shown in the record provided to this
court. Parsons appealed the denial to the Armed Services
Board of Contract Appeals (“Board” or “ASBCA”) in accor-
dance with the Contract Disputes Act. The Act states that
the Board “has jurisdiction to decide any appeal from a
decision of a contracting officer.” 41 U.S.C. §7105(e)(1)(A).
However, the Board held that it did not have jurisdiction
under the Contract Disputes Act, for the reason that Par-
sons had made a “routine” request for payment of the un-
dercharged mark-up. The Board stated that “[t]he
3 PARSONS GLOBAL v. ARMY
government maintains that it has not disputed, and in fact
could not dispute, its liability for payment of the costs
because of the absence of such a request,” and that a “rou-
tine request for payment that is not in dispute when sub-
mitted is not a claim.” Parsons Global Servs., Inc., ASBCA
No. 56731, 11-1 BCA ¶34,632, 2010 ASBCA LEXIS 110, at
**23, 24 (Dec. 3, 2010) (quoting FAR 2.101). Thus the Board
declined to remedy the contracting officers’ refusal to pay
the amount to which the DCAA found Odell to be entitled.
Parsons has attempted to fit this situation into the lan-
guage of precedent, and states that “Parsons’ CDA claim
was a non-routine request for payment, and the require-
ment that a dispute exist prior to its submission of its claim
did not apply.” Parsons Br. 9. The court explained in
Reflectone, Inc. v. Dalton that if the request for payment is
“non-routine,” all that is required is “(1) a written demand,
(2) seeking, as a matter of right, (3) the payment of money
in a sum certain.” 60 F.3d 1572, 1575 (Fed. Cir. 1995) (en
banc) (citing FAR 33.201). This court stated in Reflectone
that “[a] demand for compensation for unforeseen or unin-
tended circumstances cannot be characterized as ‘routine.’”
60 F.3d at 1577. Major billing errors are neither foreseen
nor intended. The government does not dispute that this
claim meets the Reflectone criteria.
Nonetheless, the ground on which the ASBCA relied to
deny its own jurisdiction is that the request is “routine.”
And the creative arguments now presented by government
counsel, on points not raised by the contracting officers, are
readily resolved or irrelevant. For example, the government
now states that it needed reassurance that Parsons would
pay Odell the amount that Parsons is requesting on Odell’s
behalf – an obligation set by law; see Severin v. United
States, 99 Ct. Cl. 435 (1943) (a prime contractor may submit
a subcontractor’s pass-through claim to the government as
PARSONS GLOBAL v. ARMY 4
long as the prime contractor remains liable to pay the
subcontractor the payment received from the government).
The ASBCA mentioned the government’s theory that per-
haps Parsons should first pay Odell for its accounting error,
although this was not the basis for the Board’s denial of its
own jurisdiction. The government mentions the termination
for convenience, although it is not disputed that the DCAA
audit related solely to Odell’s underbillings before the
termination for convenience.
Parsons complied with the protocols of claim submission
as set forth in the FAR and the CDA, after the contracting
officers denied the claim. See 41 U.S.C. §7103; England v.
Swanson Grp., Inc., 353 F.3d 1375, 1379 (Fed. Cir. 2004).
Nonetheless, the ASBCA held that there was no appealable
action, leaving the contractor without recourse. Precedent
is clear that the request for payment, or the amount, does
not have to be in dispute, for a CDA claim to arise and incur
the Board’s jurisdiction to resolve outstanding issues.
Reflectone, 60 F.3d at 1575-76.
The ASBCA and this court err in holding that since the
mark-up obligation is “routine” and not disputed, there is no
CDA jurisdiction to obtain its payment. The agency’s re-
fusal to pay Parson’s claim, having acknowledged the obli-
gation and having audited it through its own Audit Agency,
is contrary to the guiding principle that “The Federal Acqui-
sition System will [c]onduct business with integrity, fair-
ness, and openness.” FAR 1.102(b)(3). See also Corliss
Steam-Engine Co. v. United States, 10 Ct. Cl. 494 (1874)
(the government “must abide by its own acts and agree-
ments, with the added obligation, because it is a govern-
ment and more powerful than any individual, to deal with
the individual in the strictest fairness and justice”). My
colleagues’ endorsement of the refusal also overlooks the
Court’s guidance in I.N.S. v. Abudu, 485 U.S. 94, 107 (1988)
5 PARSONS GLOBAL v. ARMY
that “[t]here is a strong public interest in bringing litigation
to a close as promptly as is consistent with the interest in
giving the adversaries a fair opportunity to develop and
present their respective cases.”
This lengthy litigation of a conceded governmental obli-
gation is an embarrassment. I respectfully dissent.