Armed Services Board of Contract Appeals Addresses Notice Defense and Its Exceptions

In Harry Pepper and Associates, Inc.,¹ the Armed Services Board of Contract Appeals addressed three exceptions to the strict enforcement of claim notice requirements in the context of a Government motion for summary judgment dismissal of the contractor's claims.

According to the Board, the first exception—that the Contracting Officer actually considered the contractor's claim on its merits without invoking the protest or notice requirement—applies to the Contracting Officer's final decision, not any interim action by the Contracting Officer such as in this appeal, the issuance of a modification.

The second exception—actual or constructive notice of the conditions encountered—may include oral notice, if documented, but notice must be provided in a manner that should have put the Government on notice of a potential claim. Notably, the Board indicated that the required notification can be provided via RFIs.

The third exception—lack of prejudice—can be raised even if the Government did not have actual or constructive notice, and the burden is on the Government to establish that it was prejudiced by the absence of the required notice. Examples of prejudice would be if the lack of notice prevents any verification of the claim or the employment of alternate remedial procedures.

The Board then applied the second and third exceptions to deny the Government's motion on several of the asserted claims. Most notably, the Board's basis for denial was often that the Government had failed to establish prejudice with the degree of specificity the Board required.

The teaching point of this decision is that even if there is a lack of contractual compliance with claim notice provisions, there are exceptions to that notice that a government contractor should consider. Notwithstanding this fact, the better (and safer) practice is to timely comply with the claim notice requirements in the contract.

FOOTNOTE

1  ASBCA No. 62038 (December 10, 2020).