The Armed Services Board of Contract Appeals (ASBCA) recently issued its Fiscal Year 2017 annual report, as well as its annual report on Alternate Dispute Resolution (ADR). The reports offer statistics that highlight the high success rate for contractors based on the contractor winning outright or receiving some recovery, a doubling of ASBCA Rule 12 accelerated and expedited appeals, a very high number of appeals resolved through ADR, and a reduction in the ASBCA’s backlog of appeals. All in all, great news for contractors.
In FY 2017, of the 139 appeals decided on the merits, 57.6% were found meritorious, in whole or in part. This number is the highest success for contractors since 2007, when the meritorious appeal rate reached 71%. Moreover, the number of appeals resolved through dismissal was 539, and as the ASBCA observed, “In the majority of cases, a dismissal reflects that the parties have reached a settlement.” This again evidences some sort of contractor recovery or relief.
As an alternative to the traditional ASBCA appeals decisions, for smaller claim amounts the ASBCA also offers Accelerated and Expedited procedures under ASBCA Rule 12 to dispose of appeals, which for small businesses can be an amount in dispute up to $150,000. During FY 2017, there were 64 elections (40 expedited and 24 accelerated) to have appeals processed under Rule 12, which is more than double the number of Rule 12 elections in FY 2016. Expedited appeals are decided in 4 months and Accelerated appeals in 6 months. Rule 12 appeals are a much quicker option for qualifying claim amounts.
ADR remains an attractive option for its efficiency and success rate. Compared to a traditional three-judge written decision on an standard appeal, which can take years, ADR is a streamlined and speedier option for contractors. The rate of appeals successfully resolved through non-binding ADR in FY 2017 is reported at 87 percent of cases. Of course, ADR means that both parties will have to give up something in order to reach settlement, but still the success rate evidences some form of relief for contractors.
In FY 2017, the ASBCA reversed a five-year trend of increasing its case backlog by reducing the pending appeals by 10%, from 1,118 to 970 active appeals. The U.S. Army Corp of Engineers continues to account for the greatest number of appeals. The ASBCA has increased its number of judges to 23. These new judges were added in 2017 to help decrease the appeal backlog and relieve other judges nearing retirement.
The bottom line is that the ASBCA remains an attractive forum to litigate appeals of contracting officer’s decisions on contractor claims for money and Government claims such as terminations for default.