Thursday, January 8, 2015

PowerPoint Slides Do Not Trigger Statute of Limitations

The Boeing Company filed a motion with the ASBCA (Armed Services Board of Contract Appeals) to dismiss a government claim for $650 thousand plus interest. The issue, which isn't really relevant to this discussion, involved required cost accounting practice changes resulting from consolidating a couple of divisions.

Boeing contended that the Government's claim "accrued no later than February 2, 2007 whereas the Government contended that it accrued no earlier than February 16, 2007. One wouldn't necessarily think that two weeks would make any difference. However, this two-week difference is critical because of the contracting officer's final decision at issue was dated February 8, 2013, and the Contract Disputes Act contains a six-year statute of limitations on claims.

In July 2006, Boeing disclosed its intention to consolidate two of its sites in California in early 2007. From November 2006 to February 2007, the contracting officer repeatedly implored Boeing to comply with the cost accounting disclosure requirements contained in FAR. Boeing submitted a revised CAS Disclosure Statement and revised it twice. It met with the Government and made presentations on PowerPoint slides. However, throughout this process, Boeing never submitted was is referred to in FAR as a general dollar magnitude (GDM) of the change until February 8, 2007.

Although the GDM was not submitted until February 8, 2007, Boeing maintained that it had advised the Government of the cost impact before that date through PowerPoint presentations. Boeing placed a lot of emphasis on information convened in its PowerPoint slides used in its presentations in November 2006 and again in January 2007. Boeing requested the ASBCA to conclude that it conveyed enough information through those slides to trigger accrual of the claim. The ASBCA stated that Boeing's request was a "tall order" given that i) the Board was not at the meetings where the slides were discussed, ii) the Board did not hear live testimony (subject to cross-examination) from witnesses who were at the meetings; iii) the shorthand style of communication in the slides means that they are inherently subject to multiple interpretations and iv) the Board lacks a full appreciation of the highly complex business relationship between the parties - a relationship characterized by highly sophisticated contracts, people, and most of all, accounting practices - making it difficult to determine the accrual date of the government's claim using PowerPoint slides as a guide.

The Board concluded that Boeing did not convey sufficient information to the government in a timely manner to trigger the statute of limitations. As a result, the Board denied Boeing's motion. Now, the issue will need to be decided on its merits rather than thrown out on a technicality.

You can read the entire ASBCA decision here.

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