FLANDREAU SANTEE SIOUX TRIBE, a federally recognized Indian tribe v. United States of America et al

UNITED STATES DISTRICT COURT
DISTRICT OF SOUTH DAKOTA
SOUTHERN DIVISION
FLANDREAU SANTEE SIOUX TRIBE, a
federally recognized Indian tribe,
Plaintiff,
vs.
UNITED STATES OF AMERICA; ALEX M.
AZARII,in his official capacity as Secretary of
the United States Department of Health and
Human Service; RADM MICHAEL D.
WEAHKEE,in his official capacity as Director
ofthe Indian Health Service; and DAVID
BERNHART in his official capacity as Secretary
ofthe United States Department ofInterior,
Defendants.
4:20-CV-4142
MEMORANDUM OPINION AND ORDER
GRANTING IN PART AND DENYING IN
PART DEFENDANTS' MOTION TO
DISMISS
Plaintiff Flandreau Santee Sioux Tribe ("the Tribe") has filed a lawsuit against Defendants
United States ofAmerica; Alex M.Azar II, in his official capacity as Secretary ofthe United States
Department of Health and Human Service; Radm Michael D. Weahkee,in his official capacity as
Director of the Indian Health Service; and David Bemhart in his official capacity as Secretary of
the United States Department ofInterior (collectively,"Defendants"). In its Complaint, the Tribe
alleges that Defendants failed to pay the full amount ofcontract support costs due to it in violation
of their obligations imder the Tribe's Indian Self Determination Education and Assistance Act
("ISDEAA") contracts for fiscal years 2011 through 2013 and in violation of the ISDEAA.
Pending before the Court is Defendants' Motion to Dismiss Coimts II, III, and VI of the Tribe's
Complaint pursuant to Rule 12(h)(1) of the Federal Rules of Civil Procedure for lack of subject
matter jurisdiction. For the following reasons. Defendants' Motion to Dismiss Counts II and III is
granted and is granted in part and denied in part as to Count VI as set forth in the Court's Order.
BACKGROUND
A. ISDEAA and Contract Support Costs
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The Indian Self-Determination and Education Assistance Act("ISDEAA"), Pub. L. No.
93-638, as amended,25 U.S.C. § 5301 etseq., authorizes the government and Indian tribes to enter
into contract in which the tribes promise to supply federally funded services, for example tribal
health services,that a Government agency would otherwise provide. (Doc. 1, 16-17); Cherokee
Nation of Okla. v. Leavitt, 543 U.S. 631, 634 (2005)(citing § 450f(a)). 25 U.S.C. § 5325(a)(1)
provides for direct program funding, sometimes referred to as the "Secretarial amount,"
representing the amount the Secretary "would have otherwise provided for the operation of the
programs." (Doc. 1,^18). Added to the Secretarial amount are "contract support costs"("CSC")
which "consist of an amoimt for the reasonable costs for activities which must be carried on by a
tribal organization as a contractor to ensure compliance with the terms ofthe contract and prudent
management...." (Doc. 1, Tf 19)(citing 25 U.S.C. § 5325(a)(2)).
Contract support costs are mostly "administrative expenses." (Doc. 1, Tf 20) (citing
Cherokee Nation, 543 U.S. at 634-35). They are generally categorized as "indirect" contract
support costs which are overhead costs applicable to more than one program, and "direct" contract
support costs, which are those that benefit one particular program("such as workers' compensation
insurance"). (Doc. 1,	|	20)(citing Cherokee Nation, 543 U.S. at 635). The ISDEAA obligates
IHS to pay "reasonable and allowable costs" of "direct program expenses" plus "any additional
administrative or other expense incurred by the goveming body of the Indian Tribe ... and any
overhead expense incurred by the tribal contractor in coimection with the operation ofthe Federal
program..." provided that the contract support cost payment does not duplicate an amount paid in
the Secretarial amount. {See Doc. 1,^ 21); 25 U.S.C. § 5325(a)(3)(ii).^
^ ISDEAA defines contract support costs as:
The contract support costs that are eligible costs for the purposes of receiving funding under this
subchapter shall include the costs of reimbursing each tribal contractor for reasonable and
allowable costs of—
(I) direct program expenses for the operation of the Federal program that is the subject of
the contract, and
(II) any additional administrative or other expense incurred by the governing body of the
Indian Tribe or Tribahorganlzatlon and any overhead expense incurred by the tribal
contractor in connection with the operation of the Federal program,function, service, or
activity pursuant to the contract,
except that such funding shaii not duplicate any funding provided under subsection (a)(1) of this
section.
25 U.S.C. § 5325(a)(3)(A).
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Indirect contract support costs are typically calculated by reference to an indirect cost rate.
(Doc. 1,^ 27). An indirect cost rate is a common accoimting tool that recipients offederal funds
employ to allocate administrative and overhead costs across multiple programs supported by
pooled administrative activities (Doc. 1, 27). Such pooled activities typically include,financial
management and accounting systems, information technology systems, insurance, facilities,
procurement activities, and personnel management systems." (Doc. 1,^27). An indirect cost rate
is calculated by pooling these administrative costs into an "indirect cost pool," and then dividing
that pool by the total amount of direct program costs that are supported, served, or benefited by
the pool. (Doc. 1,128). This calculation results in a rate known as an indirect cost rate, which is
then applied to a direct cost base of each program supported by the pool. (Doc. 1,	|	28). The
direct cost base is comprised of the funds spent under the IHS contract and includes programs
"received or initiated by the [Tribe] subsequent to the negotiation of the [indirect cost rate]... if
the program received administrative support from the indirect cost pool." (Doc. 1, Tf 29)(citing
2011 Indirect Cost Negotiation Agreement at II(J)(2)). This method permits a contractor to
allocate its pooled indirect costs to each ofthe supported programs based on the one indirect cost
rate. (Doc. 1,129).
B. Tribe's ISDEAA Agreements
From fiscal years 2011 through 2013, the Tribe operated various Indian Health Service
("IHS") health care programs, functions, services, and activities within its jurisdictional area to
eligible Indians and other eligible beneficiaries pursuant to its Self-Determination Contracts
authorized by Title I of the ISDEAA. (Doc. 1,	|	10). From October 1, 2010 to September 30,
2013, the Tribe operated federal IHS programs pursuant to Contract No. HHS-I-241-2011-00004
as modified, and funding agreements awarded pursuant to the contract. (Doc. 1, T| 10). Funding
'agreements for Title I funds are issued annually and are often amended throughout the year to take
aceount ofnew funds made available to the Tribe. (Doc. 1,f 14). The Tribe's funding agreements
are fully incorporated into its contracts. (Doc. 1,114). The health services provided by the Tribe
during the years at issue include hospitals and clinics, dental, mental health and social services, an
alcohol and substance abuse program, community health representatives and services, contract
health services, public health nursing, and general health and human services. (Doc. 1,111).
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When IHS runs a health care prograra, it bills Medicare, Medicaid, and private insurance
programs, collects revenues from those programs, and then uses those revenues to operate
additional and larger prpgfams. (Doe. 1,130). Revenue from these programs is generally called
"third-party revenue," and the generation and expenditure of these revenues is alleged to be an
integral part ofIHS operations. (Doc. 1,^ 30). It is alleged that IHS's comprehensive health care
programs include, and are funded by, both appropriated funds and third-party revenues. (Doc. 1,
If 30).
C. Procedural History
On September 27, 2017, the Tribe submitted a claim letter for "the right to immediate
payment of $278,739.00 plus iiiterest, arising out of the Indian Health Services' failure to pay
Claimant's full contract support costs ("CSC"), as otherwise required by the [ISDEAA], other
applicable federal law, and the provisions of the contracts and funding agreements, as.amended,
in effect between the parties for fiscal year 2011." (Doe. 1-3). In that claim letter, the Tribe
detailed its calculation of the 2011 claim amount as follows: 1) failure to pay/underpayment of
indirect support costs in the amount of $242,255; 2) claim for $34,042 for the wrongful
carryforward adjustments(average effect on IDC Rate oftribal wrongful carryforward adjustments
for second cycle of double dipping (.89%) and restoration of shortfall dollars in carryforward
template (.78%) x direct costs; 3) failure to pay direct contract support costs in the amount of
(
$1,705; 4)failure to pay indirect costs on direct contract support costs in the amount of $737; 5)
expectancy and other damages in the amount of $0. (Doc. 1-3). The Tribe's fiscal year 2011
CDA claim stated that "IHS failed to meet its contractual and statutory obligations by failing to
pay the full amount of Claimant's contract support cost requirement calculated pursuant to IHS's
policies, and by applying an unlawful policy limiting the total amount that would be paid to
Claimant." (Doc. 1-3).
The Tribe's November 3, 2017, CDA claims letter claimed the right to "payment of
$900,869.00 plus interest, arismg out ofthe Indian Health Services' failure to pay Claimant's full
contract support costs ("CSC"), as otherwise required by the [ISDEAA], other applicable federal
law, and the provisions of the contracts and funding agreements, as amended, in effect between
the parties for fiscal years 2012 and 2013." (Doc. 1-3). Both the September and November 2017
claim letters wer signed and certified by Tribal President, Anthony Reider and addressed to the
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Acting Director of Indian Health Service and the Acting Chief of the Contracting Office in
Aberdeen, South Dakota. (Doc. 1-3). The letter stated that the claim amount was calculated
pursuant to the Tribe's Contract Dispute Calculation and Information forms, copies of which were
attached to the letter, and which were incorporated therein by reference. (Doc. 1-3).
The Tribe's Contract Dispute Calculation and Information form for fiscal year 2012 was
for $305,694 and included the following claims: 1)claim 1 - underpayment ofNBC awarded rate
(shortfall claim)in the amount of$305,694; 2)claim 2 in the amount of"$-"for rate making error
- inclusion of non paying agencies in base; 3) claim 3 in the amount of "$-" for wrongful
carryforward adjustments second cycle of double dipping; 4) claim 4 in the amount of"$-" for
wrongful carryforward adjustments, restore shortfall dollars in carryforward template; 5) claim 5
- failure to pay direct contract support costs in the amount of"$-"; 6) claim 6 - failure to pay
indirect support costs on unpaid direct contract support costs in the amount of"$-"; 7) claim 7-
expectancy damages in the amount of "$-"which included the "amount of unpaid direct contract
support costs and indirect costs paid jfrom direct cost funding that should have been available for
additional program services" and the "amount of third party revenues that would have generated
from the unpaid direct contract support costs and indirect costs paid from direct cost funding based
upon the% ofthird party revenues compared to the direct cost award.(% multiplied by $= amount
of expectancy claim.). (Doc. 17-1). The Tribe's Contract Dispute Calculation and Information
form for fiscal year 2013 was for $595,175 and included the following claims: 1) claim 1 -
underpayment ofNBC awarded rate (shortfall claim)in the amount of$595,175; 2)claim 2 in the
amount of"$-"for rate making error-inclusion of non paying agencies in base; 3)claim 3 in the
amount of"$-" for wrongful carryforward adjustments second cycle of double dipping; 4)claim
4 in the amount of "$-" for wrongful carryforward adjustments, restore shortfall dollars in
carryforward template; 5) claim 5 in the amoimt of"$-" for failure to pay direct contract support
costs; 6) claim 6 in the amount of"$-" for failure to pay indirect support costs on unpaid direct
contract support costs; 7)claim 7 in the amount of"$-" for expectancy damages which included
the "amount ofunpaid direct contract support costs and indirect costs paid from direct cost funding
that should have been available for additional program services" and the "amormt of third party
revenues that would have generated from the unpaid direct contract support costs and indirect costs
paid from direct cost funding based upon the % ofthird party revenues compared to the direct cost
award.(% multiplied by $ = amount of expectancy claim.)." (Doc. 17-1).
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The Tribe's Dispute Calculation and Information form for fiscal years 2012-13 was also
shared with Jamie Whitelock, an attorney from the Office of General Counsel with the Department
of Health and Human Services who Indian Health Service authorized to respond to and resolve
through possible settlement, the Tribe's claims. (Doc. 31-2 at 307). On June 25, 2018, Ms.
Whitelockrespondedbyletterto the Tribe's claims(Doc. 31-2 at 307-311). On October 19,2018,
counsel for the Tribe responded by letter labeled "Rule 408 Privileged Communication" in which
it stated, among other things, that funding from third party revenues, which were used to provide
services under the funding agreements, amoimted "to an increase in the direct cost base of
$1,013,079, $635,269, and $874,248 for fiscal years 2011 through 2013, respectively." (Doc. 31-
2 at 312). The Tribe stated that this third-party funding adds:(1)$841,226 in total to the Tribe's
Claim 1 - Underpayment of NBC Awarded Rate (Shortfall Claim)($319,323 inFY 11; $210,147
in FY 12; and $311,757 in FY 13); (2)$21,559 total to Claim 5 - Failure to Pay Direct Contract
Support Costs($8,658 in FY 11; $5,429 in FY 12; $7,472 in FY 13);(3)and $7,205 total to Claim
6- Failure to Pay Indirect Costs on Unpaid Direct Contract Support Costs. The Tribe also noted
that after further analysis, its Claim 1 for fiscal year 2012 was decreased by $27,287 to $278,407.
The Tribe concluded its October 19,2018,letter by offering to the settle its claims for a designated
amount.
On December 26, 2018, responding by letter to the Tribe's October 19, 2018, settlement
proposal, Ms. Whitelock stated that the Tribe's "new claims for third-party funding based on
Navajo Health Foundation—Sage Memorial Hospital, Inc. v. Burwell, 263 F.Supp.3d 1083
(D.N.M. Nov. 3, 2016)(Sage)" had not been presented to Indian Health Services. (Doc. 31-2 at
318). Ms. Whitelock stated on behalf ofIHS tha;t since the Tribe had not presented this argument
as a proper claim to the contracting officer, the Agency could not consider this argument. (Doc.
31-2 at 320). The Tribe responded by letter dated February 1, 2019, arguing that its claim for
"total contract costs" under the ISDEAA encompassed its claims based on a failure to include
third-party dollars in the direct cost base. The Tribe argued that these were not new claims but
rather was "additional evidence pertaining to damages springing from . . . [the] same factual
claim[s]" for indirect and direct contract support cost shortfalls" and argued that the Tribe "is not
precluded from changing the amount of the' claim or producing additional data in support of
increased damages." The Tribe also stated that even if this increase in damages were held to be a
new claim, given IHS's litigation position and the recent mandate issued in Sage, equitable tolling
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would apply, as acknowledged by the Court of Federal Claims in Al-Jurthoor Contracting Co. v.
United States, 120 Fed.Cl. 599,615 (2016).
On September 30, 2019, the Chief of the Contracting Office in Aberdeen, South Dakota
sent its final decision to Mr. Reider, President of the Tribe, denying the Tribe's CDA claims and
asserting a counterclaim.^ (Docs. 1,147; 1-4). IHS detailed the following reasons for the denial:
1)IFIS met the Government's contractual responsibilities to the Tribe in fiscal years 2011-2013 by
paying the full amount of contract support costs incurred by the Tribe for those years; 2)IHS fully
obligated the.Congressional cap on contract support costs in fiscal years 2011-2013 and is barred
from paying additional contract support costs for those years; and 3) the wrongful carryforward
adjustment claim for fiscal year 2011 is unsupported by fact or law. (Doc. 1-4 at 143). In the
September 30, 2019,letter, IHS made a counterclaim for $392,240 seeking a refund on an alleged
overpayment. (Docs. 1,147; 1-4 at 146).
The Tribe filed an action in federal court against Defendants within 12 months after receipt
ofthe IHS decision, as authorized by the Contract Disputes Act. (Doc. 1, 48)(citing 41 U.S.C.
§ 7104(b)(3)). In its Complaint, the Tribe seeks a declaratory judgment that in fiscal years 2011
through 2013 the Secretary acted in violation ofthe ISDEAA and breached its contracts with the
Tribe by failing to'pay the full amount of contract support costs that the Tribe alleges it was due
under its ISDEAA contracts and the statute, and seeks a money judgment of $2,383,332, together
with interest, and attorneys' fees. (Doc. 1, Tf 80). Specifically, the Tribe alleges the following
claims: 1) Count I - breach of contract (underpayment of direct and indirect support costs) for
$1,705 and;$1,169,394 in damages, respectively; 2) Count II - breach of contract (failure to pay
indirect contract support costs associated with third-party revenues-funded portion ofthe program
for $835,998 in damages; 3)Count III-breach ofcontract(lost third-party revenues)for $349,657
in damages^; 4) Count IV - breach of contract (lost indirect csc funding on unpaid direct csc
funding for $737 in damages; 5)Count Y-breach of contract(wrongful carryforward adjustment)
^ The contracting officer's final decision letter did not address any relief sought by the Tribe based on third-
party revenues.
^ With regard to Count III, the Tribe alleges that IHS's failure to fully fund the Tribe's indirect contract support
costs for fiscal years 2011 through 2013 caused the Tribe to divert program dollars to cover fixed administrative and
overhead costs which would have been available for additional program services and associated third-party
revenues. (Doc. 1, DH 36, 65).
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for $26,578 in damages;6)Count VI- breach of statutory right for $2,383,332 in damages. (Doc.
1).
Defendants have moyed to dismiss Counts II, III, and VI ofthe Tribe's Complaint pursuant
to Rule 12(b)(1) ofthe Federal Rules of Civil Procedure for lack of subject matter jurisdiction for
allegedly failing to present these claims to the Indian Health Service. (Docs. 15, 16). The motion
has been fully briefed by the parties and is ready for disposition.
LEGAL STANDARD
"Federal courts are not courts of general jurisdiction and have only the power that is
authorized by Article III of the Constitution and statutes enacted by Congress pursuant thereto."
Winnebago Tribe of Neb. v. Babbitt, 915 F.Supp. 157, 162 (D.S.D. 1996) (quoting Marine
Equipment Mgmt. Co. v. United States, 4 F.3d 643, 646 (8th Cir. 1993)). "The threshold inquiry
in every federal case is whether the court has jurisdiction and the Eighth Circuit has admonished
district judges to be attentive to a satisfaction of jurisdictional requirements in all cases." Id.
(internal quotations and citation omitted).
Under the Contract Disputes Act("CDA")"[ejach claim by a contractor against the Federal
Government relating to a contract shall be submitted to the contracting officer for a decision," "in
writing," and "[f]or claims of more than $100,000 ... the contractor shall certify [the claim]." 41
U.S.C. § 7103(a),(b). Thus,"[a] valid final decision by the contracting officer [on a claim] is a
'jurisdictional prerequisite' to further legal action thereon." Johnson Controls World Servs., Inc.
V. United States, 43 Fed.Cl. 589, 592(1999){qaotmg Sharman Co. v. United States, 2 F.3d 1564,
1568 (Fed. Cir. 1993)). As a waiver of sovereign immunity, the CDA must be strictly construed
in favor of the sovereign. Diversified Maintenance Sys., Inc. v. United States, 110 Fed.Cl. 612,
614(2013).
"A court deciding a motion under Rule 12(b)(1) must distinguish between a 'facial attack'
and a 'factual attack.'" Osborn v. United States, 918 F.2d 724, 729 n.6 (8th Cir. 1990). A facial
attack onjurisdiction "is based on the complaint alone or on undisputed facts in the record." Harris
V. P.A.M. Transp., Inc., 339 F.3d 635, 637 (8th Cir. 2003). In a facial attack, the court restricts
itself to the face of the pleadings, and the non-moving party receives the same protections as it
would defending against a motion brought under Rule 12(b)(6). Carlsen v. GameStop, Inc., 833
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F.3d 903,908(8th Cir. 2016). In a factual attack,the court considers matters outside the pleadings,
and the non-moving party does not have the benefit of 12(b)(6) safeguards. Id. Considering
"matters outside the pleadings, when subject matterjurisdiction is challenged under Rule 12(b)(1)"
does not "convert the 12(b)(1) motion to one for summary judgment." Harris, 339 F.3d at 637
n.4.
Because at issue in a factual 12(h)(1) motion is the trial court's jurisdiction—its
very power to hear the case—^there is substantial authority that the trial court is free
to weigh evidence and satisfy itself as to the existence ofits power to hear the case.
In short, no presumptive truthfulness attaches to the plaintiffs allegations, and the
existence of disputed material facts will not preclude the trial court from evaluating
for itself the merits ofjurisdictional claims.
Osborn, 918 F.2d 724, 730 (8th Cir. 1990). The Tribe, as the party invoking jurisdiction, bears
the burden to establish it. See Green Acres Enters., Inc. v. United States, 418 F.3d 852, 856 (8th
Cir. 2005).
t
It appears to the Court that Defendants characterize their motion as factual attack on the
Court's jurisdiction because they are asking the Court to consider in its analysis the Dispute
Calculation and Information forms that were attached as exhibits to the Defendant's Declaration
in support ofits Motion to Dismiss,(Doc. 17-1). (Doc. 24 at 242)("In determining subject-matter
jurisdiction, the court has authority to looking beyond the pleadings. The government
acknowledges as much in asking the Court to review the Tribe's CDA claims letters to determine
whether they were properly presented and exhausted."). However,the Court finds that the Dispute
Calculation and Information forms are not extraneous to, but rather are embraced by the pleadings.
See Ashanti v. City of Golden Valley, 666 F.3d 1148, 1151 (8th Cir. 2012)(stating that materials
embraced by the complaint include "documents whose contents are alleged in a complaint and
whose authenticity no party questions, but which are not physically attached to the pleading.").
Attached to the Tribe's Complaint is the November 3,2017,letter setting forth the Tribe's Contract
Disputes Act claim for unpaid contract support costs due in fiscal years 2012-2013. (Doc. 1-3).
Although the Dispute Calculation and Information forms that support the Tribe's fiscal years 2012-
2013 claims were not attached to the complaint, they were explicitly referenced in the November
3"^ letter and incorporated therein by reference. (Doc. 1-3) ("The claim amount is calculated
pursuant to the Flandreau Santee Sioux Tribe Contract Dispute Calculation and Information forms,
copies of which are attached hereto, which forms are incorporated herein by this reference."). The
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parties do not dispute the authenticity of the Dispute Calculation and Information forms and the
Court concludes that they are embraced by the pleadings.
However, as Defendants have challenged the jurisdietional factual assertion that the Tribe
filed claims for reimbursement of all of its unpaid contract support costs incurred in fiscal years
2011 through 2013 (see Doc. 1,	|	46), the court may consider relevant evidence outside the
pleadings to resolve that factual dispute. See Diversified Maintenance Sys., Inc. v. United States,
110 Fed.Cl. 612, 615 (2013). In ruling on this type of Rule 12(b)(1) motion, the court need not
accept bare allegations in a plaintiffs pleadings. Disability Support Alliance v. Heartwood
Enterprises, LLC, 885 F.3d 543, 547 (8th Cir. 2018). In a fact-based Rule 12(b)(1) challenge to
subject matter jurisdiction, the court has discretion to hold an evidentiary hearing, weigh the
evidence, and make findings to resolve disputed fact issues. See id. The court may receive
competent evidence such as affidavits, deposition testimony, and the like in order to determine the
factual dispute. Titus v. Sullivan, 4 F.3d 590, 593 (8th Cir. 1993); see also Osborn, 918 F.2d at
730("As no statute or rule prescribes a format for evidentiary hearings on jurisdiction, any rational
mode of inquiry will do.").
In its briefin opposition to Defendant Motion to Dismiss, the Tribe stated that with regard
to the Tribe's fiscal year 2012-2013 claims, it provided at the contracting officer's request, a
document in support ofthe Claims Letters that included the amount ofcontract support costs owed
on the Tribe's third-party program income. (Doc. 24 at 251). However, the additional
documentation allegedly provided to the contracting officer was not presently in the record on the
Motion to Dismiss. To assist the Court in its jurisdietional analysis, on September 15, 2021, the
Court issued an Order requesting the parties to file by stipulation, if possible, any documents the
Tribe provided to Indian Health Service in support of its claims based on third-party revenues.
On September 23, 2021, the Government filed an Unopposed Motion to File Settlement
Correspondence Under Seal and filed concurrently under seal documents responsive to the Court's
Order. (Doc. 31). On September 24, 2021, Government also filed a Motion for Leave to File a
Separate Response to the Court's Order. (Doc. 32). The Court granted both motions. (Docs. 33;
n 34).
DISCUSSION
10
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Under the Contract Disputes Act, "[e]ach claim by a contractor against the Federal
Government relating to a contract shall be submitted to the contracting officer for a decision." 41
U.S.C. § 7103(a)(1). "A valid final decision on a claim by the contracting officer is a
'jurisdictional prerequisite' to further legal action thereon." Johnson Controls World Servs., Inc.
V. United States, 43 Fed.Cl. 589, 592(1999) Sharman Co. v. United States, 2 F.3d 1564,
1568-69(Fed. Cir. 1993)); see also K-Con Bldg. Sys., Inc. v. United States, 778 F.3d 1000, 1005
(Fed. Cir. 2015)("Jurisdiction requires both that a claim meeting certain requirements has been
submitted to the relevant contracting officer and that the contracting officer has issued a final
decision on that claim."). Although the CDA does not specify the elements ofa valid claim, courts
have adopted the definition set forth in 48 C.F.R.(FAR)§ 2.101:"[A] written demand or written
assertion by one of the contracting parties seeking, as a matter of right, the payment of money in
a sum certain, the adjustment or interpretation of contract terms, or other relief arising under or
relating to the contract.'" Claude Mayo Constr. Co. v. United States, 128 Fed.Cl. 616,621 (2016)
(citing 48 C.F.R. § 2.101). "A claim need not be submitted in any particular form or use any
particular wording,but it must provide a clear and unequivocal statement that gives the contracting
officer adequate notice ofthe basis and amount ofthe claim." K-Con Bldg. Sys., Inc., 778 F.3d at
1005 (Fed. Cir. 2015)(cleaned up).
Because a contracting officer's final decision is a prerequisite for the court's jurisdiction,
the court may not consider "new" claims a contractor failed to present to the contracting officer.
See id. at 1005. A claim is new when it either requests "different remedies (whether monetary or
non-monetary) or assert[s] grounds that are materially different from each other factually or
legally." Id.-, see also Santa Fe Eng'rs, Inc. v. United States, 818 F.2d 856, 859 (Fed. Cir. 1987)
(concluding that the claim was determined to he new,not the same because "a profound alteration
occurred in the scope of th[e] claim."). "[Mjerely adding factual details or legal argumentation
does not create a different claim, hut presenting a materially different factual or legal theory . .
.does create a different claim." K-Con Bldg., 778 F.3d at 1006. "Materially different claims will
necessitate a focus on a different or unrelated set of operative facts." Lee's Ford Dock, Inc. v
Secretary ofthe Army,865 F.3d 1361,1369(Fed. Cir. 2017).
In determining whether the assertion constitutes a new claim, the critical test is whether
the contracting officer's right to adjudicate the claim is undermined by circumventing his statutory
role "to receive and pass judgment on the contraetor's entire claim." Cerberonics, Inc. v. United
11
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States, 13 Cl.Ct. 415, 418 (1987); see also K-Con, 778 F.3d at 1006 ("This approach, which has
been applied in a practical way,serves the objective of giving the contracting officer an ample pre-
suit opportumty to rule on a request, knowing at least the relief sought and what substantive issues
are raised by the request."); Pueblo ofZuni v. United States, 467 F.Supp.2d 1099, 1107(D.N.M.
2006) (stating that the exhaustion requirement "gives the agency an opportunity to resolve its
contract disputes without litigation"). Plaintiff bears the burden of establishing this Court's
jurisdiction by a preponderance ofthe evidence. Diversified Maintenance Sys.,110 Fed.Cl. at 615.
Defendants have moved to dismiss Counts II, III and VI ofthe Tribe's Complaint. Counts
II and III involve elaims for breach of contract. In Coimt II, the Tribe alleges IHS "failed to
calculate and pay the administrative costs of operating the third-party revenue-funded portion of
the IHS contracts by failing to include third-party revenue in the direct program base against which
the Tribe's indirect costs rate was applied[.]" (Doc. 1, ]f 62).'' In Count III, the Tribe seeks
damages in the form of lost-third-party services and revenues. (Doc. 1,	|	65). Specifically, the
Tribe alleges that IHS's failure to pay the Tribe's administrative costs associated with operating
the third-party revenue-funded portion of the IHS contracts caused the Tribe to divert program
dollars to cover fixed administrative and overhead costs. (Doc. 1,136). It is alleged that absent
IHS's failure to pay the full amount ofindirect contract support costs, these program dollars would
have been available for additional program services from which the Tribe could have received
additional third-party revenue; (Doc. 1,136). In Count VI,the Tribe alleges that IHS's failure to
pay the Tribe the full contract support costs was also in breach of its statutory duties under 25
U.S.C. § 5325(a)(2)-(3).
In its Memorandum in Support of its Motion to Dismiss, Defendants argue that Counts II,
III, and VI do not arise from the same set of operative facts or legal theories as the claims the Tribe
Plaintiff alleges in the Complaint that the indirect cost rate is calculated by pooling indirect CSC into an
"indirect cost pool," and then dividing that pool by the total amount of direct program costs that are supported,
served, or benefited by the pool. (Doc. 1, U 28). The indirect cost rate is then applied to (multiplied by) the direct
cost base of each program supported by the pooi. (Doc. 1, H 28). When iHS runs a health care program, it bills
Medicare, Medicaid, and private insurance programs, collects revenues from those programs ("third-party
revenues"), and uses those revenues to operate additional larger programs. (Doc. 1, H 30). Plaintiffs allege that IHS
wrongly applied the Tribe's indirect cost rate to the Tribe's direct cost base funded with IHS appropriations only and
failed to apply the rate to that portion of the base funded with third-party revenue program dollars. (Doc. 1, H 31).
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presented to IHS. (Doc. 16 at 192). In addition, Defendants argue that the Tribe has failed to state
a requisite sum certain for these claims.
In response, the Tribe contends that the relief sought in this Court is the same as that
claimed before the contracting officer: "damages arising out of the failure of the Indian Health
Service ... to pay Claimant no less than the full amount of contract support costs." (Doc. 24 at,
21). The Tribe argues that:
The operative facts underlying that claim are the negotiated indirect cost rate and
the Tribe's direct cost base against which that rate is measured. The rate times the
base gives the amount owed on the contract. These are the same operative facts as
underlie the Complaint.
(Doc. 24 at 21-22).
A. Different factual or legal basis?
In examining whether the Tribe's claims present a different factual or legal basis than those
presented to Indian Health Services, the Court fmds it helpful to discuss some of the cases that
have analyzed this issue.
In Scott Timber Co. v. United States, the Court of Federal Claims concluded that the
plaintiffs claims alleged in federal court were the same as those presented to the contracting
officer, despite the fact that the plaintiff was asserting slightly differing legal theories ofrecovery.
40 Fed.Cl. 492(1998), aff'd in relevantpart on appeal, 333 F.3d 1358(Fed. Cir. 2003). There, a
dispute arose when the Forest Service suspended Scott's performance on timber contracts in order
to protect a tiny bird indigenous to the forest areas covered by the contract. Id. at 499. Scott
submitted formal claims to the contracting officer under the CDA, claiming that the Forest
Service's prolonged suspensions of its contracts constituted a breach of contract. Id. The
contracting officer denied all of Scott's breach of contract claims and Scott subsequently filed
breach of contract actions for each of its contracts in the United States Court of Federal Claims.
Id. In his lawsuit, Scott argued that the Forest Service lacked the authority to suspend operations
under the contracts for an indefinite and extended period oftime and sought damages equal to the
cost of obtaining replacement timber in the open market. Id. at 499-500.
The Forest Service contested the court's jurisdiction over several claims asserted by Scott,
arguing that Scott raised new claims in the lawsuit that were not previously presented to the
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contracting officer as the CDA requires. Id. The Federal Claims Court rejected the Government's
argument and found that although Scott highlighted specific contractual provisions to support his
federal claims,"the basic theory underlying his claim is essentially the same as the theory that was
presented to the CO—^namely, that the Forest Service's suspension of plaintiffs-contracts was
wrongful, and therefore a breach of the contracts." See id. The court also found that "the relief
sought . . . [was] essentially the same relief that plaintiff sought in its claim to the CO—
specifically, consequential damages for the government's alleged breach of its contracts with
plaintiff." Id. at 500. On summary judgment, the court determined that it had jurisdiction over
Scott's claims and denied both parties' cross motions for summary judgment. Id. at 499-500, 508.
Scott filed an appeal with the Federal Circuit Court of Appeals. In its defense of the
lawsuits, the Forest Service again raised its claim that Scott alleged new claims in the lawsuit that
were not previously presented to the contracting officer. Scott Timber Co. v. United States, 333
F.3d 1358 (Fed. Cir. 2003). Specifically, the Forest Service reasoned that:
Scott's original CDA claims questioned broadly the authority ofthe Forest Service
to suspend the § 318 contracts and the reasonableness of the duration of those
suspensions....Scott cannot raise new claims, such as the clause C6.25 warranty
issue^, the objections to Forest Service's preparation and administration of the
contracts, and the claims for reimbursement provided under eontract terms®...those
claims were not "clearly and unequivocally" presented to the CO.
Id. at 1365. The Federal Circuit concluded that the Court of Federal Claims eorrectly found that
it had jurisdiction over Scott's claims. Id. at 1365-66. The court reasoned that:
In this case, Scott gave the CO clear notice of a purported breach of contract based
on the prolonged and allegedly unauthorized suspensions. Moreover Scott sought
from the CO the same remedy sought from the trial court, namely consequential
damages for the alleged breach. Scott may have posed slightly different legal
theories for the breach, but Scott's claim is essentially the same as presented to the
CO. Thus, Scott's claims in this case would not "subvert the statutory purpose of
requiring contractors first to submit their claims to the [CO]" to allow the CO to
receive and pass judgment on the contractor's entire claim.
^ Scott had argued in his lawsuit that contract clause C6.25 did not create a warranty or representation that
adequate measures had been taken to protect sensitive species In designing the § 318 contracts. Id. at 1364.
® Scott argued that the suspensions constituted a contract modification "to provide additional protection"
for the endangered bird giving rise to reimbursement of out-of-pocket costs under contract clause C6.25. id. at
1364.
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Id. at 1365-66.
As mScott,in Cerberonics, Inc. v. United States, 13 Cl.Ct. 415(1987),the Court ofFederal
Claims concluded that the plaintiffs alleged claims were the same claims as those presented to the
contracting officer. In Cerberonics, the plaintiff sought monetary relief from the Government
under the terms ofa service contract with the Navy. Id. at 416. The plaintiff submitted a claim to
the Navy contracting officer seeking a "fair and equitable fee" of $36,120 on account of finance
charges incurred due to a late payment by the Government as well as services rendered in procuring
a jet engine at the best available price. Id. In addressing the Government's argument, the court
acknowledged that the plaintiffs action, although in the identical sum of$36,120, was not couched
in exactly the same language as the claim presented to the contracting officer. Id. at 418. The
court noted:
In its three causes of action, plaintiff seeks an "equitable adjustment" of the home
office logistics support line, either(1)pursuant to contract section H-6 authorizing '
adjustments offixed price items and award fee to reflect changed requirements,(2)
pursuant to the contract's changes clause, or (3) in recognition of a constructive
change to the contract. The second and third causes of action specify that the
equitable adjustment claimed is for "additional costs incurred and a reasonable
c profit thereon." Thus, plaintiffs Claims Court complaint deviates from the
terminology of the original claim before the contracting officer, omitting such
wording as "finance charges (resulting from a) late payment" and "obtaining the
best available price," and inserting citations to specific contract provisions.
Id. The court concluded, however, that,
[N]either the language of plaintiffs complaint nor its explanation of this action in
accompanying briefs and at oral argument indicate that it is based on a different set
ofoperative facts or seeks different categories ofrelief. Both the "fair and.equitable
fee" sought by Cerberonics in its claim with the contracting officer and the
"equitable adjustment" sought in this court are based on the work and experience
associated with procuring the spare jet engine.
Id. In Cerberonics, the court stated "[a]t the contracting officer level,[the plaintiff] simply stated
the elements of its claim and left to the CO the task of determining the applicable contract
provisions on which to base a ruling." Id. The court in Cerberonics concluded that:
As such, plaintiffs complaint augments the legal theories'underlying its claim. But
it does not change the essence ofthat claim—i.e., that plaintiff is entitled, based on
its contractual relationship with defendant, to compensation of $36,120 for the
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procurement services and late payment penalty associated with the purchase ofthe
spare jet engine.
Mat 419.^
In contrast to Cerberonics and Scott, in Santa Fe Engineers, Inc. v. United States, the
/
Federal Circuit Court of Appeals concluded that it lacked jurisdiction over plaintiffs claims
because plaintiffs had failed to exhaust their claims before the proper governmental administrative
agency. 818 F.2d 856(Fed. Cir. 1987). There, the plaintiffs had entered into a contract with the
Government for additions and renovations to Ireland Army Hospital, Fort Knox, Kentucky. Id. at
857. The plaintiff certified a claim to the contracting officer for labor costs associated with three
change orders, designated "AD,""CD," and "HK" that were issued by the Government. Id. In
proceedings before the Armed Services Board of Contract Appeals (Board), the plaintiffs sought
to recharacterize its claims as a "total job disruption" and stated that its claim represented not only
the total impact from change orders"CD" and "HK" but also from "the collective nature of all the
problems, changes and directives that were issued on the project." Id. at 857-58. The plaintiffs
alleged in federal court that "[a] multiplicity of change orders were issued at Fort Knox to resolve
and correct problems, and the problems are what the claim is based on." Id. at 858. The plaintiff
stated that it submitted a total labor cost claim for inefficiencies because there was no way to
quantify the impact from any individual change on the project. Id.
On appeal before the Federal Claims Court, the court affirmed the Board's finding that it
had no jurisdiction over the plaintiffs claim for the total increase in costs because that general
claim had not been presented or certified to the contracting officer. Id. at 859. The court stated
that "[n]ot only did petitioner's representatives attribute the claim it was now making before the
Board to the collective nature of all changes or the multiplicity of change orders or design
difficulties unrelated to those three particular change orders on which its original claim was
grounded, but such unrelated problems (e.g. the "attic space" and "duct work" problems) were
directly brought out as part of petitioner's claim." Id. at 859-60.; see also Lee's Ford Dock, Inc.
V. Secretary ofthe Army, 865 F.3d 1361, 1370(2017)(concluding that the Armed Service Board
of Contract Appeals did not have jurisdiction over the plaintiffs misrepresentation claim because
^ The Court finds that these facts are similar to those in Scott where the facts underlying the breach of
contract were the same as those presented to the contracting officer, but the contractor based its breach of contract
claims raised in federal court upon different provisions in the contract.
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the allegations in the plaintiffs administrative complaint were limited to the Corp's "mistaken
belief about the condition of Wolf Creek Dam," and did not encompass any "knowing
misrepresentation" as to the state of the dam); K-Con Bldg. Sys., Inc. v. United States, 778 F.3d
1000, 1006 (Fed. Cir. 2015)(concluding that a claim for "breach of contract for not constructing
a building on time" is different from a claim of"breach ofcontract for constructing with the wrong
materials"); Kiewit Constr. Co. v. United States, 56 Fed. Cl. 414, 420 (2003) (finding no
jurisdiction where "the Type I differing site conditions claims submitted to the contracting officer
and the defective specifications claim made in Count I [of the complaint before the court] rely
upon different operative facts"); ThermoCor, Inc. v. United States, 35 Fed. Cl. 480, 489 (1996)
(finding jurisdiction for a claim where "[t]he factual bases for the equitable adjustment claim for
increased quantities were submitted to the contracting officer [and] [p]laintiff has not raised a
claim for any additional expenses or items"); LDG Timber Enters., Inc. v. United States, 8 Cl. Ct.
445, 452-53 (1985) (finding that the Claims Court had no jurisdiction over a new claim for
damages related to mismarked Forest Service timber, when the claim presented to the contracting
officer was only for damages related to faulty estimates ofthe amount and type oftimber available
for harvest).
In Dodson Livestock Co. v. United States, the plaintiff filed a certified claim with a
government contracting officer concerning damages allegedly sustained by the plaintiff because
of breach of representations concerning sheep purchased by the plaintiff from the United States
Meat Animal Research Center. 42 Fed.Cl. 455, 457-58 (1998). The Department of Agriculture
issued a fmal rejection ofthe plaintiffs claim and the plaintiff subsequently filed his complaint in
the Federal Court of Claims alleging claims for breach of representation of warranty for 18 sheep
he had purchased from the Government. Id. at 458-59. The Government filed a motion to disniiss
on the basis that the plaintiff had failed to present his claims to the contracting officer for damages
related to all 18 sheep purchased from the Government, arguing that the plaintiffs administrative
claim was limited to damages resulting from a single ram that was infected with paratuberculosis.
Id. at 459. Because they had come into contact with the infected ram, the plaintiff sold for
slaughter his remaining herd and cashmere goats and sought damages for lost profits estimated at
$57,628,202. Id. at 456.
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The court in Dodson found that the plaintiffs claim to the contracting officer was limited
to breach of warranty for the single ram purchased, not for all 18 sheep purchased. Id. at 462. The
court rejected the plaintiffs argument that the introduction to his claim encompassed all eighteen
sheep. Id. at 461. The court found that although the introduction spoke generally of "sheep
purchased," the introduction provided no information on how many sheep were offered for sale,
how many were purchased, or how many sheep on which the government "breached
representations." Id. The court found that "[i]n contrast to this generality and lack of specificity
in the introductory paragraph, there is particularity in the words used to present the specifics of
plaintiffs claim to the contracting officer." Id. The court noted that throughout the claim, there
was specific reference made to one ram, and no other sheep and that the claim incorporated by
reference a single bill of sale. Id. The court acknowledged that while a contractor may increase
the amount of its claim, it may not raise new claims or theories of recovery not presented to the
contracting officer for final decision. Id. at 460. The court found that breach of warranty claims
regarding all but the one ram referenced in plaintiffs administrative claim were new claims and
concluded that it did not have jurisdiction over these new claims because they had not been
presented to the contracting officer. Id. at 461-62.
Pueblo of Zuni v. United States involved a class action seeking damages for the
government's alleged failure to pay the full contract amounts specified in contracts between Indian
Tribes and Indian Health Services that were awarded under the Indian Self-Determination and
Education Assistance Act. 467 F.Supp.2d 1099(D.N.M. 2006). In April 2001, prior to filing the
lawsuit, plaintiff notified the IHS contracting officer oftwenty-two contract disputes related to its
contracts in effect during fiscal years 1993-1998.; Id. at 1104. The legal basis for these CDA
claims was that IHS allegedly had failed to pay the full amount ofZuni's indirect contract support
costs, as calculated under the plaintiffs indirect cost rate ("shortfall claims"). Id. The plaintiffs
amended their CDA claims in September 2001 to include a claim for IHS's alleged failure to make
adjustments in calculating the full amount of costs associated with 7 of the 22 contracts plaintiffs
had presented to the contracting officer in April 2001 ("miscalculation claims"). See id. There
were no contracts after fiscal year 1995 submitted to the contracting offic'er under the
miscalculation theory. Id. at 1104-05. According to the government's description of the two
categories ofclaims,"Claim One" asserted that IHS should have awarded indirect contract support
costs by calculating the contract's direct program base funding and multiplying that amount by
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Zuni's indirect cost rate in effect in that year. Id. at 1104 n.2. For these claims,the plaintiff sought
a total of $324,213.36. Id. The government described "Claim Two" as alleging that IHS should
have awarded indirect contract support costs only after first upwardly adjusting Zuni's indirect
cost rate in effeet in that year to account for the alleged underpayment ofindirect contract support
costs in connection with other, non-ISA (and non-IHS) federal contracts. Id. at 1304 n.2. The
amended claims brought the total amount of relief sought to $339,933.44. Id. at 304.
The defendants in Pueblo ofZuni brought a motion to dismiss the plaintiffs' elaims for
fiscal years subsequent to any of the claims which were submitted to the contracting officer (for
example, any claims from contract disputes in fiscal years after 1998). 7J. at 1111. Other claims
the defendants sought to dismiss were those from the same fiscal years which may already have
been exhausted in April 2001, but which requested additional funding based on a different theory
ofrelief—IHS's alleged failure to correctly adjust the indirect cost rate. Id.
The court dismissed for lack ofjurisdiction plaintiffs' claims arising subsequent to fiscal
year 1998 on the basis that they did not involve the same set of operative facts as those which arose
from prior to fiscal year 1998. Id. The court stated that "[cjontract disputes from fiscal years
beyond FY 1998 will necessarily'concern facts as well as negotiated terms and amounts which
differ from contracts arising from previous years." Id. The court also dismissed any
miscalculation claims beyond fiscal year 1993 that had not been submitted to the contracting
officer in September 2001. See id. The court reasoned that "these claims request relief over and
above the amounts requested in the contracts submitted in April 2001, based on a new legal basis
underlying IHS' alleged deficiency." Id. The eourt stated that "[o]ne way to ascertain whether
the new set of claims involves a distinct set of operative facts is to ask whether the denial of one
elaim or type of claim "would not necessarily preclude recovery ofthe other." Id. (citing Johnson
Control's,43 Fed.Cl. at 593). The court found that "Plaintiff could theoretically fail on the merits
on a miscalculation theory, without necessarily precluding monetary reliefon the shortfall claims."
Id. Additionally, the court found that the plaintiffs' September 2001 elaims rested on a different
set of operative faets because the claims submitted to the contracting officer in April 2001 alleged
that IHS failed to pay each contract in full and did not mention a failure to adjust the indirect cost
rate. Accordingly, the court found that it lacked jurisdiction over any miscalculation claims for
fiscal years that had not been submitted to the eontracting officer in September 2001. Id.
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As stated above,the guiding principle in determining whether the Tribe is asserting a new
claim is whether the contracting officer was provided an opportunity "to receive and passjudgment
on the contractor's entire claim." Cerberonics, Inc. v. United States, 13 Cl.Ct. at 418 (1987);
Pueblo ofZuni v. United States,467 F.Supp.2d at 1110("The contracting officer must be afforded
'adequate notice ofthe basis and amount ofthe claim.'"). In the Scott and Cerberonics cases, the
plaintiffs' breach of contract claims before the contracting officer and in federal court were based
on the same set offacts, but the plaintiffs had grounded their federal claims on alleged breaches of
specific and/or different contractual provisions. In both cases,the contracting officer was provided
an opportunity to pass judgment on the claimant's entire claim even though the contracting officer
was left to the task of determining the applicable contract provisions on which to base a ruling.
By contrast,the courts concluded in Santa Fe Engineers and in Dodson that the contracting officer
was not provided an opportunity to pass judgment on the plaintiffs' entire claim, finding in the
case of Santa Fe, that a claim for labor costs limited to 3 change orders was not the same as one
for labor costs resulting jfrom all project changes and problems, and finding in the case ofDodson,
that a claim for damages based on the sale of one ram was not the same as a claim based on the
sale of 18 sheep. The Court finds instructive the Pueblo ofZuni case which is factually more
similar to the present case. Like the Tribe in the instant case, the plaintiffs in Pueblo ofZuni had
claimed to the contracting officer that IHS had failed to pay each contract in full. 467 F.Supp.2d
at 1111. However,the court found that after fiscal year 1993, there was no mention in the claims
before the contracting officer about a failure by IHS to adjust the indirect cost rate. Id. Although
a failure to adjust the indirect cost rate upward certainly influenced the total contract costs paid to
the plaintiffs, the court concluded that this claim had not been presented to the contracting officer
because they were "based on a new legal basis imderlying IHS' alleged deficiency" and "rest[ed]
on a different set of operative facts." Id.
The Court finds that there are many variables that influence the contract support costs owed
to a tribe under an ISDEAA agreement. For example, in examining the Tribe's fiscal year 2012
and 2013 claims to the contracting officer, one finds that a failure to pay the full amount ofcontract
support costs may result firom deficiencies including, but not limited to: 1) the underpayment of
the National Business Center ("NBC") approved rate as calculated by multiplying the NBC
approved indirect cost rate by the IHS direct contract base for each fiscal year; 2)the inclusion of
non-paying agencies in the direct cost case, resulting in an improper reduction in the indirect cost
20
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rate; 3) the improper reduction in the indirect cost rate resulting from wrongful carryforward ^
adjustments for the second cycle of double dipping; 4)the shortfall in dollars in the carryforward
template; 5)the failure to pay the full amount of direct contract support costs; and 6)the failure to
pay indirect costs on unpaid direct contract support costs. (Doc. 17-1). The case law does not
support the Tribe's argument^ that its claims are the same as those presented to the contracting
officer regardless of the factual basis the Tribe presented to the contracting officer to support its
contract support costs shortfall claim. See, e.g., Tunica-Biloxi Trihe ofLa. v. United States, 577
F.Supp.2d 382, 413(D.D.C. 2008)("Ramah Navajo could not have raised both the Rate Dilution
and Carry-Forward Claims without demonstrating the amount of funding lost by each of these
alleged practices because the damages arising from them are discrete and cumulative; i.e., they
could not be determined by reference to each other, but only by engaging in separate analyses with
respeet to each claim, the results of which could then be considered together to produce a final
damages calculation."). IHS may find that the Tribe is entitled to monetary relief for its shortfall
claim stated in Claim 1 even if it rejected the Tribe's claim that it was entitled to unpaid contract
supports costs on the third-party revenue-funded portion of the Tribe's operations. See Johnson
Control's, 43 Fed.Cl. at 593 ("One way to ascertain whether the new set of claims involves a
distinct set of operative facts is to ask whether the denial of one claim or type of claim would ...
preclude recovery of the other."). Under the instruction provided by the courts iuythe Pueblo of
Zuni, Dodson, and Santa Fe Engineers cases the Tribe must have presented the factual and legal
bases and monetary relief sought for these claims to the contracting officer for his or her
consideration. Failure to do so would prevent IHS from giving the contracting officer adequate
notice ofthe basis and amount ofthese claims and pass judgment thereon.
In its fiscal year 2011 Dispute Calculation and Information form, the Tribe did not detail
the factual or legal basis for its claims based on third-party revenues, nor did it detail a "sum
certain"for this claim. The Tribe's fiscal year 2011 form detailed "expectancy and other damages"
in the amount of $0. (Doc. 1-3). In its fiscal year 2011 form, the Tribe asserted a claim "for all
damages arising out ofthe failure ofIndian Health Service(IHS)to pay full contraet support costs
® See Doc. 24 at 21("The relief sought In this Court under the Complaint, however,is the same as that claimed
before the contracting officer:'damages arising out of the failure of the Indian Health Services ... to pay Claimant
no less than the full amount of contract support costs...
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(including indirect costs and direct contract support costs) in a timely manner and in compliance
with those aforementioned statutes and applicable law." (Doc. 1-3). In its fiscal year 2011 claim,
the Tribe further asserted that "IHS failed to meet its contractual and statutory obligations by
failing to pay the full amount of Claimant's contract support cost requirement calculated pursuant
to IHS's policies, and by applying an unlawful policy limiting the total amount that would be paid
to Claimant." (Doc. 1-3).
The Coiut finds, however, that the Tribe did present the factual and legal basis for Counts
II and III in its fiscal year 2012-13 Contract Dispute Calculation and Information form.^ (Doc. 17-
1). In Count II of the Tribe's Complaint, the Tribe alleges that IHS "failed to calculate and pay
the administrative costs of operating the third-party revenue-funded portion of the IHS contracts"
by failing to include third-party revenue in the "direct program base against which the Tribe's
indirect costs rate was applied[.]" (Doc. 1, ^ 62).^" In Count III, Plaintiff seeks damages in the
form oflost-third-party services and revenues. (Doc. 1,165). The factual and legal basis for these
claims were detailed in the Tribe's Claim 7 for Expectancy damages in which the Tribe claimed
the following:(1)the amount of unpaid direct contract support costs and indirect costs paid from
direct cost funding that should have been available for additional program services; and (2) the
amount of third party revenues that would have been generated from the unpaid direct contract
support costs and indirect costs paid from direct cost funding based upon the % of third party
revenues compared to the direct cost award.(% multiplied by $ = amoimt of expectancy claim.).
(Doc. 17-1). However, as pointed out by Defendants, an issue remains as to whether the Tribe
® As discussed above, the Tribe's FY2012-2013 Contract Dispute Calculation and Information forms were
incorporated by reference into the Tribe's Contract Disputes Act claim letter for these fiscal years, a letter which was
attached to the Tribe's Compiaint. (Doc. 1-3).
The Tribe alleges in the Complaint that the indirect cost rate is calculated by pooling indirect CSC into an
"indirect cost pool," and then dividing that pool by the total amount of direct program costs that are supported,
served, or benefited by the pool. (Doc. 1,1l 28). The indirect cost rate is then applied to (multiplied by) the direct
cost base of each program supported by the pool. (Doc. 1, H 28). When IHS runs a health care program, it bills
Medicare, Medicaid, and private insurance programs, collects revenues from those programs ("third-party
revenues"), and uses those revenues to operate additional larger programs. (Doc. 1,11 30). The Tribe alleges that
IHS wrongly applied the Tribe's indirect cost rate to the Tribe's direct cost base funded with IHS appropriations only
and failed to apply the rate to that portion of the base funded with third-party revenue program dollars. (Doc. 1,1l
31). IHS's failure to fully fund the Tribe's indirect CSC for fiscal years 2011 through 2013, the Tribe alleges, caused
the Tribe to divert program dollars which otherwise would have been available to provide additional program
services for additional third-party revenues. (Doc. 1, H 36).
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satisfied the jurisdictional requirement that these claims detail a "sum certain." This issue will be
addressed further below.
In addition to their breach ofcontract claims,in Count VI ofits Complaint,the Tribe alleges
1
that the IDEAA creates a right of action for money damages to remedy the Secretary's breach of
his obligations arising under the statute, 25 U.S.C. § 5331. (Doc. 1,176). The Tribe alleges that
under 25 U.S.C. § 5325(a)(2)-(3), the Secretary in fiscal years 2011 through 2013 had a statutory
duty to pay the Tribe full contract support costs and that the Tribe lost an additional amount of
$376,235 as a result ofthis statutory violation. (Doc. 1, 78-79). The Tribe alleges that in order
to remedy the Secretary's breach of his statutory obligations, the Tribe is entitled to damages of
no less than $2,383,332 plus interests and attorneys' fees and costs. (Doc. 1,f 80).
Defendants contend that the Tribe failed to present to IHS a "breach of a statutory right"
as a legal basis of recovery in any of its claims letters from fiscal years 2011 through 2013, and
argues that vfithout any elaboration,the Tribe seeks $376,235 in damages for this new legal theory.
(Doc. 16 at 195). Defendants argue that neither this claim nor this "sum certain" appear in the
Tribe's claim letters and assert that the Tribe's damages claim for this alleged statutory violation
"is untethered to any ... other count in the complaint." (Docs. 16 at 195; 28 at 288). The Tribe
contends that their breach of statutory right claim is not a new claim, but "reiterates the violation
of the contract and hence the statute (ISDEAA) containing the model agreement and payment
requirements alleged in the Tribe's CSC shortfall, wrongful carryforward, and expectancy claims
present in FYs 2011-2013." (Doc. 24 at 263).
The Court agrees that the factual and legal bases for the Tribe's breach of statutory right
claim are the same as those underlying the Tribe's breach of contract claims alleged in its
Complaint. The $2,007,097 in contract support costs claimed for Defendants' alleged statutory
violation is equal to the sum of the contract support cost deficiencies claimed by the Tribe for
Defendants' breaches of contract alleged in paragraphs 56 ($1,705), 57 ($1,169,394), and 63
($835,998). In addition, the $376,235 in contract support costs claimed for Defendants' alleged
statutory violation equals the sum ofthe contract damages claimed by the Tribe for lost-third party
revenues alleged in paragraph 65 ($349,657) and from the alleged wrongful carryforward
adjustment in paragraph 73 ($26,578). The Court also finds that the Tribe presented the factual
and legal basis for the alleged statutory violations to the contracting officer. (See Docs 1-3)
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(claiming right to payment "arising out of Indian Health Services' failure to pay Claimant's full
contract support costs ("CSC") as otherwise required by the [ISDEAA], . . . other applicable
federal law, and the provisions on the contracts and the funding agreements, as amended,in effect
between the parties... However, as discussed below,the Court concludes that the Tribe has not
established that it submitted a valid "claim" for unpaid CSC on the third-party revenue-funded
portion of the Tribe's operations or for lost third-party revenues to the contracting officer for a
final determination.
B. Did Plaintiffs fulfill the sum certain requirement?
Under the CDA,"[t]here are no 'magic words' required for a claim, hut to recover money
damages, a claim ... must be'	(1) a written demand or assertion,(2)seeking as a matter of right,
(3)the payment of money in a sum certain. United Constructors, LLC v. United States, Civ.
No.08-757C,2009 WL 875358, at *6(Fed. Cl. 2009)(citing James M. Ellett Constr. Co. v. United
States, 93 F.3d 1537, 1542(Fed. Cir. 1996)). The purpose of the CDA requirement that a claim
contain a request for a sum certain is to provide the contracting officer with "adequate notice of
the basis and amount of [the] claim." Williams v. United States, 118 Fed.Cl. 533, 539 (2014)
(citing Maropakis Carpentry, Inc. v. United States, 609 F.3d 1323, 1328 (Fed. Cir. 2010)). For
claims that are made by a contractor for more than $100,000, the contractor is also required to
certify that—
(A) the claim is made in good faith;
(B) the supporting data are accurate and complete to the best ofthe contractor's knowledge
and belief; ^
(C)the amount requested accurately reflects the contract adjustment for which the contractor
believes the Federal Government is liable; and
(D)the certifier is authorized to certify the claim on behalf ofthe contractor.
41 U.S.C. § 7103(b).
In Count 11 of its Complaint, the Tribe claims $835,998 in damages for IHS's alleged
failure "to calculate and pay the administrative costs of operating the third-party revenue-funded
As stated above, although the CDA does not specify the elements of a valid claim, courts have adopted the
definitions set forth in 48 C.F.R.(FAR)§ 2.101: "[A] written demand or written assertion by one of the contracting
parties seeking, as a matter of right, the payment of money in a sum certain, the adjustment or interpretation of
contract terms, or other relief arising under or relating to the contract.'" Claude Mayo Constr. Co. v. United States,
128 Fed.Cl. 616,621(2016)(citing 48 C.F.R. § 2.101).
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portion of the IHS contracts by failing to include third-party revenue in the direct program base
against which the Tribe's indirect costs rate was applied[.]" In Count III of its Complaint, the
Tribe claims $349,657 in damages in the form oflost-third-party services and revenues. There are
no allegations or evidence before the Court showing that either of these sums were presented to
the contracting officer. The Tribe's fiscal year 2011 Contract Dispute Calculation and Information
form detailed expectancy and other damages in the amount of $0. (Doc. 1-3). The Tribe's fiscal
year 2012-13 Dispute Calculation and Information forms did not detail any dollar amount for
expectancy damages relating to the "amount of unpaid direct contract support costs and indirect
costs paid from direct cost funding that should have been available for additional program
services," and the Tribe's fiscal year 2012-13 form detailed for the "[ajmount ofthird-party
revenues that would have been generated from the unpaid direct contract support costs and indirect
costs paid from direct cost funding based upon the% ofthird-party revenues compared to the direct
cost award.(% multiplied by $ = amount of expectancy claim.)". (Doc. 17-1).
Defendants argue that the Tribe's claim of $0 or does not meet the "sum certain"
requirement as it does not provide IHS with adequate notice ofthe basis and amount ofthe Tribe's
claim. The CDA plainly requires a claimant to identify a"sum certain" amount and it is clear that
a sum of$0 or"$-"in expectancy damages does not satisfy this requirement. See, e.g., RCSEnter.,
Inc. V., United States,46 Fed.Cl. 509,514(2000)("The problem is that plaintiffs claim letter failed
to ask for any amount based on such a claim."); CPS Meek Contractors v. United States, 59
Fed.Cl. 760, 764(2004)(finding no CDA claim when contractor "failed to provide the CO with
any dollar figure or documentation that would be used to compute a dollar figure.").
" The Court also finds cases addressing the "sum certain" requirement under the Federal Tort Claims Act
("FTCA") provide insight into how courts analyze this issue. Similar to the Contract Disputes Act, the presentation of
a claim to an appropriate administrative agency is a jurisdictional prerequisite to fiiihg a suit under the FTCA. See
Farmers State Savings Bank v. FmHA,866 F.2d 276, Til (8th Cir. 1974). The Eighth Circuit has held that the notice
requirement for filing a claim under the FTCA is met if a claimant "provide in writing (1) sufficient information for
the agency to investigate the claims, and (2) the amount of damages sought).]" Id. Courts interpreting the "sum
certain" requirement for a money damages daim under the FTCA have required a claimant to state a specific
monetary amount claimed. See, e.g. Kokaras v. United States, 980 F.2d 20, 22(1st Cir. 1992)(denying a FTCA claim
for personal injury which stated "to be determined" without giving a monetary amount as there was no evidence
that a sum certain was ever stated orally or in writing by plaintiffs' attorney); Adams v. United States, 807 F.2d 318,
321-22 (2d Cir. 1986) (finding a claim "in excess of $1,000.00" met the sum certain requirement for a claim of
$1,000.00, regardless of accompanying complaint requesting $4,000,000.00 in damages); Val-U Const. Co. ofS.D. v.
United States, 905 F.Supp. 728, 739-40 (D.S.D. 1995) (J. Piersol) (finding that Val-U's administrative claim, which
requests damages in the amount of "$698,330.68 together with statutory interest and for damages in the amount
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Citing to H.L Smith, Inc. v. Dalton, 49 F.3d 1563 (Fed. Cir. 1995), the Tribe argues that
the CE)A does not require each line of a claimant's "sum certain" to be accounted for to satisfy the
presentment requirement. (Doc. 24 at 252). The Court does not find Dalton to be instructive in
this ease. In Dalton,the contractor, on behalf ofits subcontractor, submitted various claims letters
explaining the circumstances warranting equitable adjustments and time extensions under the
contract along with the sums requested. Id. at 1563. The contracting officer handling the
contractor's submissions replied that he did not consider the contractor's letters to be valid claims
under the disputes clause of the contract because the contractor did not attach invoices, cost
breakdowns, or other documentation explaining how it arrived at the sums requested. Id.
Receiving no invoices, cost breakdowns, or other supporting financial documentation, the
contracting officer took no further action and declined to make final decisions. Id. The contractor
appealed the contracting officer's inaction to the Armed Servcies Board of Contract Appeals which
dismissed the contractor's claims for lack of jurisdiction. Id. The Board held that absent
information regarding calculation ofthe asserted amounts,the letters were not proper CDA claims.
Id.
On appeal, the Federal Circuit court reversed, citing to its decision in Transamerica Ins.
Corp. V. United States, 973 F.2d 1572(Fed. Cir. 1992). As in Dalton, the issue in Transamerica
was whether a contractor was required to provide cost and pricing data to support the sums
requested in its claim for an equitable adjustment. The Dalton court noted that in Transamerica,
it had found that compliance with the contracting officer's request for a detailed cost breakdown
was unnecessary for a valid CDA claim, stating that the contracting officer's desire for more
information did not change the "claim" status of the contractor's letter. Id. at 1565. The court in
Dalton found that the contractor's requests, like those in Transamerica, met all the requirements
for a valid claim because they were in writing, were submitted to the contracting officer for a
decision, requested payment of a sum certain, and gave the contracting officer adequate notice of
the basis and the amount of the claim. Id. at 1565.
The issue in this case, unlike in Dalton and Transamerica, is not that the Tribe has failed
to submit data supporting the sums requested for its claims for lost third-party revenues and for
of judgments plus accruing interest taken against Vai-U Construction fails to state a sum certain in excess of
$698,330.68.");.
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administrative costs paid on the third-party revenue-funded portion of its operations, but that the
Tribe failed to submit a "sum certain" that accounted for the monetary relief the Tribe sought for
these claims. There is no indication that the sum certain figures for any of the claims the Tribe
submitted to the contracting officer in its claims letters and Dispute Calculation and Information
forms encompassed the relief sought by the Tribe for administrative costs paid on the third-party
revenue-funded portion ofthe Tribe's operations or its claims for lost third-party revenues. In its
Complaint, the Tribe claims $1,204,461 in damages in excess ofthe damages amount presented to
IHS, with the Tribe's third-party revenues-based claims ($1,185,655 in alleged damages)
accounting for the majority ofthis difference. If the Tribe does not specify the amount of relief it
believes it is entitled to for these claims, "the contracting officer cannot settle the claim by
awarding a specific amount of money because such a settlement would not preclude the contractor
from filing suit seeking the difference between the amount awarded and some larger amount never
specifically articulated to the contracting officer." See North Star Alaska Housing Corp. v. United
State, 16 Fed.Cl. 158,184(2007)(internal citations and quotation omitted).
The Tribe argues that there is nothing that precludes it from seeking additional amount of
damages for this claim in federal court. (Doc. 24 at 253)("The amount claims may change after
the claim is submitted."). It is true, as the Tribe argues, that courts have declined to impose so
rigid of a standard as to preclude adjustments in claim amounts "based upon matters developed in
litigation." K-Con Bldg. Sys., Inc. v. United States, 778 F.3d 1000, 1004(Fed. Cir. 2015)(citing
Tecom, Inc. v. United States, 732 F.2d 935,937-38 (Fed. Cir. 1984)("It would be most disruptive
of normal litigation procedure if any increase in the amoimt of a claim based upon matters
developed in litigation before the court [or board] had to be submitted to the contracting officer
before the court [or hoard] could continue to a final resolution on the claim.")); J.F. Shea Co. v.
United States, 4 Cl.Ct. 46, 54(1983)(stating that a contractor is not precluded from changing the
amount of the claim or producing additional data in support of increased damages based upon
matter developed in litigation). The Federal Court of Claims has stated that a court may exercise
jurisdiction over a claim,the dollar amount ofwhich has been enlarged in the court over the amount
presented to the contracting officer if:
(1) the increase in the amount of the claim is based on the same set of operative
facts previously presented to the contracting officer; and
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(2) the court finds that the contractor neither knew nor reasonably should have
known^-at the time when the claim was presented to the contracting officer, of
the factors justifying an increase in the amount of the claim.
Al-Juthoor Contracting Co. v. United States, 129 Fed.Cl. 599, 619 (2016); see also Johnson
Controls World Servs., Inc. v. United States, 43 Fed.Cl. 589, 593 (1999); AAI Corp. v. United
States, 22 Cl.Ct. 541, 544(1991). Although the Tribe presented the factual and legal basis for its
third-party revenues-based claims to the contracting officer as Claim 7 in its fiscal year 2012 and
2013 Dispute Calculation and Information forms,^^ the Tribe did not submit a sum certain for these
claims and thus they failed to constitute a valid claim under the CDA. In this case, the Tribe does
not argue that its claim for administrative costs paid on the third-party revenue-funded portion of
its operations or its claim for lost third-party revenues was based on information gained in
discovery, nor does the court see how this would be so since it appears that information relating to
lost third-party revenues was always in the Tribe's possession. Nor can the Tribe claim that the
increased damages amount alleged by the Tribe for these claims was due to any miscalculation
because the Tribe never submitted to the contracting officer an initial sum certain for these claims.
Finally, the Tribe does not argue that it had no knowledge of the factors justifying an increase in
the amount ofits reliefsought for these claims. See Pueblo ofZuni,467 F.Supp.2d at 1112(finding
that the increase in damages amount requested by the plaintiff could not be attributed to error in
the plaintiffs miscalculation ofdamages,or from the plaintiffs learning offacts subsequent to the
time the federal complaint was filed which would increase the damages amount);see also Baha v.
United States, 123 Fed.Cl. 1, 6(2015)(finding damages for unpaid rent accruing for consecutive
three months after claim was submitted to the contracting officer arose from "same operative facts"
and were permissible); Kellogg Brown & Root Servs., Inc. v. United States, 115 Fed.Cl. 46, 54-55
n.5 (2014)("Increases in the amount of a claim due to the mere passage of time do not generally
change a CDA claim into a new claim."); Modeer v. United States, 68 Fed.Cl. 131, 137 (2005)
("[I]fthe dollar value of a claim increases based on new information available only after the claim
was submitted to the contracting officer," the plaintiff was entitled to increased damages that
"[arose]from the same operative facts as the original claim and claims the same categories ofrelief
... Because the holdover rent claim for the entire holdover period arises from the same operative
facts and claims the same category of relief as the holdover rent claim for the first month of the
"The Court notes that the factual basis for the Tribe's cialrns based on third-party revenues was not detailed in its
fiscal year 2011 claims.
\
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holdover period, and because the length of the holdover tenancy could not have been known by
the Modeers at the time they presented the claim to the contracting officer, this court has
jurisdiction over the entire holdover rent claim."); Contract Cleaning Maint, Inc. v. United States,
811 F.2d 586, 591 (Fed. Cir. 1987)("The amount ofthe claim increased because the appellant had
not originally included the nonpayment of the final invoice and the government's audit of the
second year of the contract had resulted in the disallowance of additional amounts for which the
appellant had submitted invoices. The increase in the claim, like the increase in Tecom,thus was
"reasonably based on further information."); Kunz Constr. Co. v. United States, 12 Cl.Ct. 74, 79
(1987)(stating that because "the plaintiff should reasonably have included an item for increased
home-office overhead in the claim in which it submitted to the contracting officer, but failed to do
so, the court concludes that it cannot properly take jurisdiction over the increased home-office
overhead item which the plaintiff has included in the claim presented to the court"); Tecom, Inc.
V. United States, 732 F.2d 935, 937 (Fed. Ch. 1984)("Where no certification of the claim was
earlier compelled because the amount asked was properly less than $50,000 at that time, the
contractor could legally increase its monetary demand before the ASBCA in view of the
intervening prolongation ofthe contract and the experience of actual operation.").
Another argument presented by the Tribe is that it has satisfied the "sum certain"
requirement because this claim was "stated hi a manner which allows for reasonable determination
of the recovery available at the time [was] presented.'' (Doc. 24 at 253)(quoting Metric Constr.
Co. V. United States, 1 Cl. Ct. 383, 391 (1983)). A monetary CDA claim may be saved from a
failure to identify a sum certain if a simple mathematical calculation or the contractor's
documentary submission to the contracting officer would determine the amount of the claim.
Tambolina Servs., Inc. v. United States, Civ. No. 14-478, 2015 WL 4053490, at *3 (Jul. 2, 2015);
seealsoN. Star Alaska Hons. Corp. v. United States, 76 Ted.Cl. 158,184(2007)(stating that "this
court has consistently interpreted the 'sum certain' requirement to include amounts in dispute that
'can he easily determined by a simple mathematical calculation or from the contractor's
submission to the contracting officer.'"); Modeer y. United States, 68 Fed.Cl. 131, 137 (2005)
("The sum certain requirement is met ifthe contracting officer can determine the amount claimed
by a simple mathematical calculation."), aff'd, 183 Fed.Appx. 975 (Fed. Cir. 2006)):
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In examining the Tribe's September and November 2017 claims letters and the Tribe's
fiscal year 2012 and 2013 Dispute Calculation and Information forms,the Court does not find that
the Tribe provided the contracting officer with any dollar figure for tbird-party revenues that the
Tribe believed should be included in the direct cost base and applied to the indirect cost rate.
Neither does the Court find that the Tribe provided any dollar figure for lost tbird-party revenues.
Accordingly, the Court concludes that the Tribe's claims based on tbird-party revenues could not
be easily determined fiom a simple mathematical calculation. See Exec. Court Reporters, Inc. v.
United States, 29 Fed.Cl. 769, 775 (1993) (stating that the "simple mathematical calculation"
approach will not save a contractor's claim if the contractor has not included dollar figure in the
claim submitted to the contractor officer); see also Tambolina Servs., Inc., 2015 WL 4053490 at
*4 ("Not only do [claimant's] April 2013 letters fail to provide the basis for any mathematical
formula, they also fail to provide any indicators which would have informed Mr. Harris of the
monetary amounts requested by [the claimant] under the CDA."). In addition, the Court finds that
the Tribe did not specify to the contracting officer any other documents that provided a clear and
unequivocal indication as to the amount sought by the Tribe on these claims. See N. Star Alaska
Hons. Corp. v. United States,76 Fed.Cl. 158,185(2007)(stating that administrative claims carmot
"be cobbled together from various documents . . . possessed by defendant ... [if] there are no
select group of documents, supplied by plaintiff or otherwise, that provide a 'clear and
unequivocal' indication as to the amount sought by plaintiff").
In its brief in opposition to Defendants' Motion to Dismiss, the Tribe argues that with
regard to the Tribe's fiscal year 2012-2013 claims, it provided, at the contracting officer's request,
a document in support of the Claims Letters that included the amount of eontract support costs
owed on the Tribe's tbird-party program-income. (Doc. 24 at 251). Specifically, the Tribe stated
in its brief:
The contracting officer responded to the Tribe's Claim with an acknowledgment of
receipt under 41 U.S.C. § 7103(f)(2) and requested further information on "CSC
that the Tribe actually incurred" to establish the additional amount ofCSC the Tribe
claims it is owed under the contract. Ex. 1 (Claims Acknowledgment Letters) at 1-
2(FY 11), 4-5(FYs 12-13). After responding with additional data showing CSC
incurred on the full base amount, ineluding appropriated dollars and third-party
program income, the eontracting officer determined that the Tribe was not entitled
to the relief sought under the contract, holding in part that "IHS met the
Government's contractual responsibilities to the Tribe in FYs 2011-2013 by paying
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the full amount of CSC incurred by the Tribe for those years .. . Compl. Ex. 4
at 6, ECFl-4.
(Doc. 24 at 261). The additional documentation allegedly submitted by the Tribe to support its
third-party revenues claims was not initially part of the record on the Motion to Dismiss. The
parties disputed whether,in determining whether the Tribe presented these claims to Indian Health
Service,the Court was precluded from considering such evidence under Federal Rules ofEvidence
408.
Because a CDA claim may take the form of one or several documents, on September 15,
2021, the Court ordered the parties to file by stipulation, if possible, any documents to support its
claims based on third-party income that were submitted by the Tribe prior to IHS's final decision
denying the Tribe's claims. The Court concluded that it was not precluded under Rule 408 from
considering this evidence in determining whether it had jurisdiction over the Tribe's claims. See
Love V. Talbert House, Civ. No. 19-0448, 2020 WL 6440256, at *2 (S.D. Ohio Nov. 3, 2020)
("Rule 408 does not prohibit the consideration of [statements made as part of settlement
negotiations] for other purposes; specifically, it does not prohibit their consideration to establish
that a plaintiff fulfilled administrative exhaustion requirements."); Weinstein's Federal Evidence
§ 408.08[9]("Rule 408 does not prohibit evidence ofa settlement when it is used either to establish
or to attack the court's jurisdiction").
Pursuant to the Court's Order, the Government filed an Unopposed Motion to File
Settlement Correspondence Under Seal. On June 25,2018, Jamie Whitelock, an attorney from the
Office of General Counsel with the Department of Health and Human Services responded on
behalf ofIndian Health Service regarding the Tribe's claims.^(Doc. 31-2at307). On October 19,
2018, counsel for the Tribe responded by letter labeled "Rule 408 Privileged Communieation" in
which it stated, among other things, that funding from third party revenues which were used to
provide services under the funding agreements, amounted "to an increase in the direct cost base of
$1,013,079,$635,269, and $874,248 for fiscal years 2011 through 2013,respectively." The Tribe
stated that this third-party funding adds: (1) $841,226 in total to the Tribe's Claim 1 -
Underpayment ofNBC Awarded Rate (Shortfall Claim)($319,323 in FY 11; $210,147 in FY 12;
and $311,757 in FY 13); (2) $21,559 total to Claim 5 - Failure to Pay Direct Contract Support
Costs ($8,658 in FY 11; $5,429 in FY 12; $7,472 in FY 13);(3) and $7,205 total to Claim 6 -
Failure to Pay Indirect Costs on Unpaid Direct Contract Support Costs. The Tribe also noted that
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after flirther analysis, its Claim 1 for fiscal year 2012 was decreased by $27,287 to $278,407. The
Tribe concluded its October 19, 2018, letter by offering to the settle its claims for a designated
amount.
On December 26,2018, Ms. Whitelock responded by letter to the Tribe's October 19,2018,
settlement proposal in which it stated that the Tribe's "new claims for third-party ftinding based
on Navqjo Health Foundation—Sage Memorial Hospital, Inc. v. Burwell, 263 F.Supp.Sd 1083
(D.N.M. Nov. 3, 2016)(Sagey had not been presented to Indian Health Service. Ms. Whitelock
stated on behalf of IHS that since the Tribe had not presented this argument as a proper claim to
the contracting officer, the Agency could not consider this argument. (Doc. 31-2 at 320). The
letter also indicated that claims for years prior to FY 2012 were time-barred.
The Tribe responded by letter dated February 1, 2019, arguing that its claim for "total
contract costs" under the ISDEAA encompassed its claims based on a failure to include third-party
dollars in the direct cost base. The Tribe argued that these were not new claims but rather was
"additional evidence pertaining to damages springing from . . . [the] same factual claim[s]" for
indirect and direct contract support cost shortfalls" and argued that the Tribe "is not precluded
from changing the amount of the claim or producing additional data in support of increased
damages." The Tribe also stated that even ifthis increase in damages were held to be a new claim,
given IHS's litigation position and the recent mandate issued in Sage, equitable tolling would
apply, as acknowledged by the Court of Federal Claims in Al-Juthoor Contracting Co. v. United
States, 129 Fed.Cl. 599, 615 (2016). There is no evidence before the Court that the Tribe made
any additional submissions to the contracting officer beyond its claims letters and Dispute
Calculation and Information forms that were submitted in September and November 2017.
At the outset, the Court notes that the Tribe's claims to the contracting officer and the
Tribe's settlement communications are completely devoid ofa sum certain monetary claim''^ based
In its claims presented to the contracting officer for fiscai years 2011-2013, the Tribe claimed that it was
owed $1,179,608 under its iSDEAA contracts. Even if the Court was to consider the additionai dollar figures provided
by the Tribe in settlement communications as amending thejribe's claims,the sum total for the Tribe's ciaims would
increase to $2,022,311 which is $361,758 less than the $2,384,069 in totai damages claim the Tribe seeks to recover
in its federai lawsuit. The majority of the discrepancy between the sum total of the claims presented to the
contracting officer and the sum total of damages sought in this lawsuit is accounted for by the $349,657 in damages
the Tribe alleges it suffered from iost third-party revenues. j
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on lost revenues. Because the Tribe has not met the sum certain jurisdictional requirement for its
claim for lost third-party revenues, the Court lacks jurisdiction over this claim.
In addition, the Court concludes that Tribe's settlement communications regarding lost
third-party revenues and regarding administrative costs paid on the third-party revenue-funded
portion of the Tribe's operations do not constitute a valid claim or an amendment to the Tribe's
claims. First, these figures were not"submitted to the contracting officer" for a decision, but were
provided to Ms. Whiteloek, an intermediary employed by the Office of General Counsel with the
Department of Health and Human Services who was had been appointed by the Tribe to respond
to the Tribe's claims in settlement negotiations. See 25 C.F.R. § 900.217(a)("Before issuing a
decision on a claim, the awarding official should consider using informal discussions between the
parties, assisted by individuals who have not substantially participated in the matter, to aid in
resolving differences."). It is the receipt of the claim which,activates the contracting officer's
obligations under the CDA. Lakeview Const. Co. v. United States, 21 Cl.Ct. 269, 276 (1990); 41
U.S.C. § 7103(f)(2)("A contracting officer shall, within 60 days ofreceipt of a submitted certified
claim over $100,000. . . ."). The Court acknowledges that courts have held that the term
"submitted" in the CDA can embrace the idea of delivery through an intermediary. Lakeview
Const. Co.,21 Cl.Ct. at 276;see also Arn. Pacific Roofing Co. v. United States, 21 Cl. Ct. 265,268
(1990). However, as stated by the Court of Federal Claims in Lakeview Construction Company,
"the critical issue is whether the claim reached the CO." Id. For example, in American Roofing
Co., the plaintiff entered into a roofing contract wdth the Navy to install new waterproofing on the
roof at the Naval Postgraduate School. 21 Cl.Ct. at 266. After the roof allegedly continued to
leak, the Navy directed the plaintiff to repair the leaks. Id. The plaintiff submitted a claim for
repair costs to the Resident Officer in Charge of Construction(ROICC)pursuant to the terms of
the contract and the claim requested a final decision from the CO. Id. Pursuant to Navy procedure,
the ROICC forwarded the claims to the CO and the CO denied the plaintiffs claim. Id. The court
held that it had jurisdiction over the plaintiffs claim because the plaintiffs contract advised it to
direct all "requests for payment" to the ROICC and the claim document to the ROICC explicitly
requested a final decision from the CO and had been forwarded to and received by the CO who
rendered a final decision thereon. See id. at 268.
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The court in American Pacific Roofing distinguished its decision in West Coast General
Corp. V. United States, 19 Cl.Ct. 98(1989)in which it held that the plaintiffs letters to the ROICC
asserting that it had performed additional work did not constitute a "claim" under the CDA. The
court found significant the fact that the letters in West Coast did not request a final decision by the
CO, did not assert any specific basis for monetary relief, and did not contain the proper
certification. American Pac. Roofing, 21 Cl.Ct. at 268 (citing West Coast Gen. Corp., 19 Cl.Ct. at
99). The court stated that "[t]his ambiguous document could easily confuse a CO about 'what he
is dealing with, and what he is expected to do.'" Id. (quoting West Coast Gen. Corp., 19 Cl.Ct. at
101).
The Court finds that the facts of this case are more similar to those in West Coast rather
than American Pacific Roofing Co. First, unlike in American Roofing, the Tribe has not indicated
that any contractual provisions require submission ofthe Tribe's request for payment to any other
individual or entity other than the contracting officer. Although the Tribe's settlement
communications asserted that that the inclusion of third-party revenues in the direct cost base
added $841,226 total to the Tribe's shortfall claim stated in Claim 1,$210,147 to the Tribe's claim
for failure to pay direct contract support costs stated in Claim 5, and $7,250 to the Tribe's claim
for failure to pay indirect costs on unpaid direct contract support costs stated in Claim 6,the Tribe
did not state that it was seeking an amendment ofthese claims, nor did it request that these amounts
be forwarded to the contracting officer for a final decision thereon. The Tribe simply referenced
these additional sums to support its settlement proposal. See Hoffman Constr. Co. v. United States,
1 Cl.Ct. 518, 525(1985)(stating that the letter expressed a "willingness to reach an agreement as
opposed to a demand that the contracting officer reach a final decision."). The Tribe was informed
by Ms. Whitelock that the Tribe's claims based on third-party revenues had not been presented as
proper claims to the contracting officer for IHS and therefore that IHS could not consider these
claims in its settlement negotiations, however the Tribe took no additional steps to submit a new
claim or amend its claims before the contracting officer. Even if the Tribe had clearly indicated
its intent in its settlement negotiations with the Department ofHealth and Human Services to assert
a claim for lost third-party revenues and for unpaid contract support costs on the third-party
revenue-funded portion of the Tribe's operations, the Tribe would bear the risk of non-
transmission since there is no evidence that DHHS was designated by the Tribe's contract or by
the contracting officer to receive the Tribe's CDA claims. Lakeview Const. Co., 21 Cl.Ct. at 276
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("If receipt by the CO is determinative, it is the contractor who must bear the risk of non-
transmission of a claim if it uses an intermediary not designated by the contract, by regulation, or
by the CO."); see also Robin Indus., Inc., Tadcol Gov't Serv. Civ. v. United States, 22 Cl.Ct. 448,
453 (1991) ("By addressing the letter to the DISC attorney, plaintiff bore the risk of non-
transmission of the claim to the CO."); Am. Pac. Roofing Co., 21 Cl.Ct. at 268 ("The contractor
bears the risk for delayed or lost submissions prior to receipt by the CO.");.
Also ofimportance is the fact that the settlement communications by the Tribe did not meet
the certification requirements for claims over $100,000. The Certification of claims of $100,000
is ajurisdictional prerequisite to suing in this Courtimder the CDA. See CSXTrans., Inc. v. United
States, 123 Fed.Cl. 244,250(2015). The Federal Circuit had held that "the statutory mandate that
all claims over [a specified amount] must be certified is one of the most significant provisions of
the CDA." Fidelity Const. Co. v. United States, 700 F.2d 1379,1384(Fed. Cir. 1983),superceded
by statute on other grounds,Ardestani v. I.N.S., 502 U.S. 129(1991). The purpose of certification
is to facilitate settlements based upon a truthful submission of the contractor's costs. Medina
Constr., Ltd. v. United States, 43 Fed. Cl. 537, 547 (1999). Certification discourages the
submission of fraudulent or inflated claims by making contractors liable for fraudulent
representation. J & E Salvage Co. v. United States, 37 Fed.Cl. 256, 263 n.6 (1997). Although a
technically deficient certification neither prevents a contractor from stating a claim nor precludes
the Court's jurisdiction over a claim, a "complete failure to provide a certification at all may not
be deemed a defective certification." Medina Const., Ltd., 43 Fed.Cl. at 547 (citing 48 C.F.R. §
33.201)("Failure to certify shall not be deemed a defective certification.").
The Tribe's claim for unpaid contract support costs on the third-party revenue-funded
portion of the Tribe's operations and the Tribe's claim for lost third-party revenues each exceed
$100,000 and are therefore subject to the certification requirements of the CDA. In order for the
Court to even consider the Tribe's settlement communications to be a claim or an amendment of
their fiscal year 2012 and 2013 claims for unpaid contract support costs on the third-party revenue-
funded portion ofthe Tribe's operations and the Tribe's claim for lost third-party revenues, it must
be accompanied by a contemporaneous certification that makes all the assertions required by 41
U.S.C. § 7103(b). See D.L. Braughler Co. v. West, 127 F.3d 1476, 1483 (Fed. Cir. 1997). It is
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clear from the Court's review ofthe Tribe's settlement communications that they did not contain
even a technically deficient certification.
In sum, the Court concludes that the Tribe failed to submit to the contracting officer for a
final decision its claims for lost third party revenues and for unpaid contract support costs on the
third-party revenue-fimded portion of the Tribe's operations. Accordingly, the Court concludes
that it lacksjurisdiction over these claims whether they be based on a breach ofcontract or a breach
of a statutory duty to pay contract support costs.
Accordingly, it is hereby ORDRED that Defendants' Motion to Dismiss (Doc. 15) is
GRANTED IN PART and DENIED IN PART as follows:
1) GRANTED as to Claim II and III; the Court lacks jurisdiction over these claims and
they are dismissed without prejudice; and
2) GRANTED IN PART AND DENIED IN PART as to Claim VI. The Court lacks
jurisdiction over the Tribe's statutory violation claims for lost third-party revenues and
for unpaid contract support costs on the third-party revenue-funded portion of the
Tribe's operations and these claims are dismissed without prejudice. The Court has
jurisdiction over the Tribe's remaining claims alleged in Claim VI.
n^a:	Dated this50-^tay ofSeptember,2021.
BY THE COURT:
iawrence L. Piersol
ATTEST: MJnited States District Judge
MATTHEW W. THELEN,CLERK
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