14287520378_7b26b29d20_kMaritime government contracting is a multi-billion dollar industry involving the Navy, Army, Coast Guard and other agencies. Most contractors are familiar with the Federal Acquisition Regulation (FAR) 33.211 provision at the end of each contracting officer’s (“CO’s”) decision on a Contract Disputes Act (“CDA”) claim stating: “Instead of appealing to the agency board of contract appeals, you may bring an action directly in the United States Court of Federal Claims (except as provided in 41 U.S.C. 7102(d), regarding Maritime Contracts) within 12 months of the date you receive this decision.” As a result of this language specifically referencing the U.S. Court of Federal Claims (“COFC”), some maritime contractors incorrectly appeal CO final decisions on maritime claims to the COFC.  Unfortunately these contractors do not understand that this language limits court appeals of a CO’s decision on a maritime contract claim to U.S. District Courts.  The question for the COFC then becomes whether to transfer to U.S. District Court or dismiss the case. Certainly, no contractor wants to find itself in this situation because their claim has appealed to the wrong court.

The CDA’s language establishes the alternative procedure for claims arising under maritime contracts, such as contracts for the repair of vessels, ship management, stevedoring, port facilities and dredging.  The effect of § 7102(d) is that contractors who are a party to a maritime contract may, after receiving a decision from the CO, (1) file an appeal at the board of contract appeals (“BCAs”) within 90 days of receipt of the decision, or (2) file an “action” appealing the decision directly in U.S. District Court within 12 months.

Importantly, the U.S. District Court jurisdiction for CDA maritime claims provides interesting considerations, such as a decision may be issued in a shorter period of time.  A local Assistant U.S. Attorney will generally be responsible for representing the government, rather than agency counsel, and U.S. District Court judges do not have the same background in government contracts as the CDA requires for board administrative judges.  District court judges therefore may approach government contract law in a much different manner than board or COFC judges, which may be helpful (or harmful) to a contractor.  Also, as opposed to the agency boards, which generally decide entitlement but not quantum (the amount of money a contractor should receive), district courts decide both entitlement and quantum.  This is a major consideration for a contractor because it leads to faster payment of the claim amount.

Since a CO’s decision on a maritime government contract CDA claim cannot be appealed to COFC, an appeal of the U.S. District Court’s decision does not go to the U.S. Court of Appeals for the Federal Circuit (the “Federal Circuit”). Rather, appeals of U.S. District Court decisions on a direct action appealing a CO’s decision must be filed with the cognizant U.S. Court of Appeals.

Even more unique is the right of appeal of agency BCA decisions in maritime CDA claims.  In traditional non-maritime CDA claim, if the CO’s decision is appealed to the agency BCA, and appeal of the agency’s BCA decision would go straight to the Federal Circuit.  Conversely, for maritime CDA claims, appeals of the decisions of the agency’s BCA must be filed with the cognizant U.S. District Court, and then appeals of these district court appellate decisions are also to the cognizant U.S. Court of Appeals.   This sets up the novel situation that a contractor who appeals a board decision concerning a maritime claim is afforded two opportunities to appeal from the trial forum: to the U.S. District Court, and then to the U.S. Court of Appeals with jurisdiction over the district court.

Accordingly, U.S. District Court maritime claim jurisdiction affords contractors with a unique choice of forum under the CDA – U.S. District Court and not the Court of Federal Claims.

Image courtesy of flickr (licensed) by Bernard Niess