Government Contracts Monitor

Pick Your Forum Carefully, Subcontractors: The CBCA May Not Hear Your Claim

October 5, 2012

In a short opinion highlighting the Civilian Board of Contract Appeals’ (CBCA) limited jurisdiction, the Board held that it had does not have jurisdiction to hear a claim brought by a subcontractor against the Government for the prime contractor’s failure to pay.  Eagle Peak Rock & Paving, Inc. v. Dep’t of Interior, CBCA 2770 (Sept. 19, 2012). 

The prime contractor in this case, Sunland Industries, entered into a contract with the National Park Service (NPS) to supply 9,700 tons of gravel.  Sunland subsequently contracted with Eagle Peak Rock & Paving to supply the gravel.  The gravel was delivered and NPS paid Sunland in full.  However, Sunland did not pay Eagle Peak. 

In an attempt to evade the Board’s traditional refusal to entertain claims from subcontractors, Eagle Peak filed a claim against NPS asserting that NPS is a third-party beneficiary to the contract between Sunland and Eagle Peak.  The Board noted that the cases cited by Eagle Peak allowing third-party beneficiary claims against the Government were valid only in the Court of Federal Claims, which derives its jurisdiction from the Tucker Act.  Unfortunately for Eagle Peak, the Board is subject to a more limited jurisdictional statute, the Contract Disputes Act, which requires a plaintiff bringing a claim against the Government to have privity of contract, i.e., a direct contractual relationship with the Government.  Thus, the Board dismissed Eagle Peak’s claim for lack of jurisdiction. 

The lesson from this case: choose your forum, and your counsel, carefully.

 

Jeffry Cook is the attorney responsible for the content of this article.