Alert
Alert
11.02.20
The Armed Services Board of Contract Appeals (the Board or ASBCA) issued its FY 2020 annual report on October 27, 2020, covering the period October 1, 2019 through September 30, 2020. The statistics offer some insight for contractors considering whether to file new appeals at the Court of Federal Claims or the Board. Contractors docketed 497 new appeals in FY 2020. For the first time since FY 2014, the Board experienced a year-to-year increase in new appeals, as FY 2019 saw 418 new appeals. We attribute this increase, at least in part, to the Department of Defense’s increased spending over the past several years. The Department of Defense budget increased seven percent from FY 2017 to 2018 and seven percent again from 2018 to 2019.
Correspondingly, the number of cases in the Board’s docket also increased. The Board had 813 active appeals on October 1, 2019. That number rose to 947 active appeals at the conclusion of FY 2020. Further, the number of appeals disposed of in FY 2020 dropped significantly—from 506 dispositions in FY 2019 to 363 in FY 2020. This represents the fourth consecutive fiscal year that the Board disposed of fewer appeals than it had accomplished during the previous year.
With respect to the appeals docketed in FY 2020, contractors adverse to the Navy accounted for 95 of the 497 new appeals. Contractors docketed 82 appeals adverse to the Army Corps of Engineers, 63 adverse to the Army, 47 adverse to the Air Force, and 45 adverse to the Defense Contract Management Agency. The ASBCA decided 123 appeals on the merits in FY 2020, a decrease from the 154 merits decisions reached in FY 2019. We attribute this decrease in decisions rendered to delays and inefficiencies caused by the COVID-19 pandemic, particularly during its first few months. The Board sustained 52.8 percent of those FY 2020 appeals in whole or in part. This compares unfavorably to the 69 percent sustain rate in FY 2018 and is only slightly higher than the 48 percent sustain rate in 2019, which represented a 20-year low. Also, the Court of Appeals for the Federal Circuit affirmed 13 of the 16 appealed Board decisions it disposed of in FY 2020.
The parties requested ADR in 32 cases during FY 2020. Twenty-five of those matters successfully resolved, which is a 78 percent success rate. This represents a modest decrease from the FY 2019 success rate of 89 percent. While the ADR success rate remains high, the decrease in ADR usage is an interesting fact. (Parties requested ADR for 76 cases in FY 2019.) In his closing remarks, Judge John Thrasher, the Board’s Chairman, provided an explanation for the decline in ADR cases. He noted that the Board has developed the capability to conduct ADR proceedings remotely; however, “litigants have continued to push them forward into the future, presumably in the hope the proceedings could soon be conducted in person.”
Further, Judge Thrasher noted that despite the challenges presented by the COVID-19 pandemic, the Board was able to “carry out its mission almost seamlessly.” Judge Thrasher credited the Board’s staff and a new electronic case management system for its successful transition to remote work. The Board’s improved method for accepting ASBCA Rule 4 filings and supplements also has aided both contractors and the Government.
Achieving a fair settlement with the Contracting Officer before any litigation begins remains the best option. When that is not possible, defense contractors must choose between the Board and the Court of Federal Claims to resolve their claims. While recent trends represent only one factor in that decision, the rise in docket, the year-to-year decrease in resolved appeals, the decreasing sustain rate, and the diminishing use of ADR must be considered. If you have questions on strategies or the best forum to resolve your contract disputes, consult with experienced counsel to ensure your claims are substantiated, properly filed, and aggressively prosecuted.