Government Contracting -- 2006



BP American Production Co. v. Burton   (U.S. Supreme Court)

Statute of limitations for administrative proceedings

The Supreme Court granted certiorari 4/17/06 to determine the statute of limitations governing administrative proceedings brought by the Government for money damages for breach of contract. A federal statute, 28 U.S.C. § 2415(a), bars any “action” by the United States seeking “money damages” for breach of contract unless the “complaint” is filed within six years of when the right of action accrues or within one year of a final decision in an administrative proceeding, whichever is later. In an opinion authored by then-Judge Roberts, the D.C. Circuit, consistent with an unpublished opinion of the Fifth Circuit, concluded that this limitations period does not apply to an administrative order demanding payment of money owed to the Government (here, royalties due under the Mineral Leasing Act). The D.C. Circuit reasoned that such an order is neither an “action” for “money damages” nor a “complaint” within the meaning of section 2415(a) because those terms refer exclusively to actions filed in court. In contrast, the Ninth and Federal Circuits have held, in other contexts, that the six-year limitations period of section 2415(a) applies both to agency enforcement proceedings and to in-court lawsuits seeking damages for breach of contract. Chief Justice Roberts and Justice Breyer recused themselves from this case.

On 12/11/06, the Supreme Court uunanimously affirmed, holding that the six-year statute of limitations for government contract actions does not apply to administrative payment orders. This case is important to any individual or business that may be subject to a statute, like the Mineral Leasing Act, under which an agency may initiate proceedings to recover money pursuant to an agreement.