Board of Contract Appeals General Services Administration Washington, D.C. 20405 ____________________________ ORDER: October 14, 1999 ____________________________ GSBCA 14705 SPRINT COMMUNICATIONS COMPANY, L.P., Appellant, v. GENERAL SERVICES ADMINISTRATION, Respondent. David S. Cohen and John J. O'Brien of Cohen Mohr, Washington, DC; and George J. Affe and Anthony L. Cogswell of Sprint Communications Company, L.P., Herndon, VA, counsel for Appellant. John E. Cornell, Michael J. Ettner, and Michael D. Tully, Office of General Counsel, General Services Administration, Washington, DC, counsel for Respondent. Before Board Judges BORWICK, NEILL, and GOODMAN. NEILL, Board Judge. This case concerns a dispute between Sprint Communications Company, L.P. (Sprint) and the General Services Administration (GSA) over payment of charges included on invoices submitted to GSA under Sprint's FTS2000 contract (contract number GS00K89AHD0009). The charges are said to represent contributions Sprint made to the Universal Service Fund (USF) during 1998. The USF has traditionally been used to assist with the cost of providing basic telephone service to rural communities and low-income users. More recently it has been designated to help schools, libraries, and eligible health care facilities obtain leading-edge telecommunication services. In a decision dated June 11, 1998, the contracting officer concluded that the FTS2000 contract does not permit payment of the USF surcharges included in Sprint's contract invoices. Sprint has appealed from that decision. The complaint filed by Sprint in conjunction with this dispute contains two counts. Count I states that the contracting officer's failure to adjust the contract price to reflect the USF charges constitutes a breach of contract. Count II states that under the filed rate doctrine, by law, Sprint must charge the price stated in its filed tariff. Since the USF charges are now contained in the Federal Communications Commission (FCC) tariff that covers Sprint's FTS2000 contract, Sprint contends that they must be included in contract invoices. GSA has moved that we dismiss Count II of Sprint's complaint on the ground that we have no jurisdiction to decide it since it concerns a claim which has never been the subject of a contracting officer's decision. On September 17, counsel for Sprint filed an opposition to the Government's motion to strike Count II. On that same date, Sprint also filed a motion for summary relief on Count II. On September 28, Sprint filed a motion to compel discovery on issues relating to Count II of its complaint. The motion was accompanied by a second motion asking for expedited consideration of the motion to compel on the ground that Sprint planned to supplement its opposition to the motion to strike based on material to which it anticipated getting access through this discovery. In a conference with counsel for the parties on October 1, the Board denied the motion for expedited consideration of the motion to compel. Instead, it was agreed that the Board would first address the threshold question raised in the motion to strike, namely, whether Count II of the complaint raises a claim different from that which was the subject of the contracting officer's decision. The Board, therefore, deferred action on the motion to compel pending its decision on this threshold issue. It was recognized that if the Board's conclusion should be that Count II involves the same claim as was addressed by the contracting officer in his decision of June 11, the motion to strike would be denied and the parties could then proceed, without delay, to address Sprint's motion for summary relief. On the other hand, if the Board should conclude that Count II involved a different claim, the Board agreed that it would take up again Sprint's motion to compel before issuing a final ruling on the motion to strike. For the reasons set out in detail below, we conclude that the underlying claim in Count II is, in fact, distinct from the claim addressed in the appealed contracting officer's decision. Nevertheless, before turning to Sprint's pending motion to compel, we are seeking from Sprint clarification regarding its certified claim filed with the contracting officer in August 1998. Background By letter dated November 6, 1997, a Sprint attorney wrote to GSA's associate administrator in the agency's Office of Acquisition Policy concerning contributions to the USF. The attorney explained that FCC Order No. 97-157, issued on May 8, 1997, required interexchange carriers like Sprint to contribute, on a gross receipts basis, to a new funding mechanism to provide access to certain telecommunication services to libraries, educational institutions, and rural health care providers. He further explained that Sprint intended to reflect this new charge on its invoices beginning January 1, 1998, and that the company believed that both its contracts with GSA and the filed rate doctrine authorized it to do so. The letter includes two brief paragraphs describing in general terms each of these two alleged justifications for passing through this charge to GSA. Although the letter specifically referred to Sprint's FTS2000 contract with GSA, it also noted that Sprint had other contracts with GSA that would be affected by this change and asked that the associate administrator help in obtaining an agency-wide policy decision on this matter. Appeal File, Exhibit 1. The associate administrator apparently passed on Sprint's letter of November 6 to the contracting officer for the FTS2000 contract. By letter dated November 25, 1997, the contracting officer provided GSA's response to Sprint's letter. The letter was addressed to Sprint's manager of government contracts. It noted that the issue presented by Sprint was not a simple one and that its dollar impact could be significant. In a separate two- page attachment to the letter, the contracting officer posed eleven specific questions. Sprint was asked to explain how it planned to describe the new charge on customer bills, how it would label and explain the charge, and how it would implement the new customer charge in an equitable and nondiscriminatory fashion. Sprint was also asked to indicate the amount the Universal Service Administrator had assessed Sprint for 1998; how this assessment would flow down to customers; whether Sprint planned an equal, across-the-board percentage charge to all customer bills; and whether the surcharges Sprint proposed to pass through on GSA contracts included any elements other than the recovery of the company's contributions to support schools, libraries, and rural health care facilities. The contracting officer's final two questions concerned the possibility of passing through to GSA these increased costs based on the contract provision authorizing the pass-through of after-imposed taxes. Appeal File, Exhibit 2. On December 3, 1997, Sprint provided GSA with a position paper on the USF. During this period, Sprint had broached the matter of the USF surcharge not only to GSA but also to the Department of Defense (DOD). The position paper had been prepared in response to a request from DOD. An informational copy, however, was provided to GSA. The position paper makes no mention of the filed rate doctrine; rather, it focuses exclusively on the issue of whether the USF charges qualify for pass-through to the Government as an after-imposed tax or duty under the contract clause "Federal, State and Local Taxes." Appeal File, Exhibit 3. Towards the close of 1997, Sprint filed a revision page 10.1 of its FCC Tariff No. 4, "Specialized Common Carrier Service" for FTS2000 services. The revision, effective January 1, 1998, added the following to paragraph 2.6, "Payment of Charges": .2 Carrier Universal Service Charge In addition to all other rates in this tariff, effective January 1, 1998, business customers will be assessed a Carrier Universal Service Charge ("CUSC") of 4.9% of all interstate and international retail charges (including usage, non-usage and Presubscribed Line Charge). Appeal File, Exhibit 41; Complaint 19; Answer 19. By letter dated February 4, 1998, Sprint formally advised GSA that USF contributions would be passed through on the FTS2000 contract "at the rate filed in Sprint's tariffs." Enclosed with the letter was a copy of the position or background paper previously provided to DOD and GSA in which Sprint argued that, under its contracts with the Government, these charges can be passed through as an after-imposed tax or duty. Appeal File, Exhibit 7. By letter dated February 17, Sprint provided the contracting officer with specific answers to the eleven questions he had submitted to the company in his letter of November 25, 1997. In answering questions ten and eleven, Sprint referred to its position paper in which it contended that the USF charges qualify for pass-through to the Government under the contract clause "Federal, State and Local Taxes." Appeal File, Exhibit 9. On March 2, 1998, the chief of GSA's Billing Verification and Service Order Support Branch advised Sprint by letter that GSA was withholding payment of $200,610.86 listed in Sprint's invoice for January 1998 as a surcharge for the USF. Appeal File, Exhibit 12. In a letter to the contracting officer, dated March 19, 1998, Sprint demanded payment of the USF charge. This letter noted that GSA had failed to respond to the position paper provided in late 1997 or to the answers more recently provided (by letter of February 17, 1998) to the eleven specific questions previously posed by GSA. Sprint advised that further withholding by the Government would be deemed a Government claim immediately appealable under the Contract Disputes Act (CDA). Id., Exhibit 14. In a letter dated March 23, 1998, the contracting officer responded to Sprint's demand for payment. He acknowledged receipt of the materials previously provided by Sprint and emphasized the complexity and sensitivity of the issues involved. He explained that more information was required on the issue of why Sprint had elected to pass through to customers its contributions to the USF and on the quantum-related questions concerning Sprint's calculation of the surcharge. The letter assured Sprint of GSA's willingness to consider any additional information as it sought to determine if the company was entitled to the USF surcharge and, if so, how much. The letter also offered to issue a contracting officer's decision on the matter if Sprint preferred to handle this matter as a formal contract dispute. Appeal File, Exhibit 15. By letters dated March 31 and April 24, 1998, the chief of GSA's Billing Verification and Service Order Support Branch again advised Sprint of further withholding of payment of USF surcharges on two subsequent monthly invoices ($157,999 for February and $172,356.01 for March). Appeal File, Exhibit 12. On April 30, Sprint replied to the contracting officer's letter of March 23. In that letter, Sprint stated that the contract did not provide the contracting officer with discretion regarding his obligation to adjust the contract price for Sprint's USF contributions. In addition, the letter stated: "[W]e formally request the issuance of a final decision on the Government's claim." Id., Exhibit 16. On June 11, 1998, the contracting officer issued his decision. The opening paragraph of the decision reads: This constitutes the Contracting Officer's final decision on the question of whether the FTS2000 contract (Contract No. GS00K89AHD0009) allows GSA to pay Sprint for a 4.9% charge added to monthly invoices for contributions the company makes to the Universal Service Fund (USF contributions). The contracting officer relies on three principal reasons in support of his conclusion, namely: For the government to pay a cost for Sprint's USF contributions would be contrary to the essential nature of our fixed price FTS2000 contract. There exists no provision in Contract No. GS00K89AHD0009 allowing for reimbursement of a USF contribution cost. . . . Far from being a new or unexpected item, Sprint's contributions to the Universal Service Fund are a continuation of a traditional aspect of Sprint's telecommunications business operations -- a cost which the company has long absorbed as a cost of doing business. . . . Sprint's USF contributions must be considered not in isolation, but in the context of the recent broad restructuring of Sprint's cost responsibilities ordered by the FCC. Appeal File, Exhibit 20. Sprint did not immediately appeal the contacting officer's decision. Rather, by letter dated August 25, 1998, it submitted a certified claim for $486,110.76 (later corrected to $1,486,110.76 by a resubmission received by GSA on August 31, 1998). Appeal File, Exhibits 22-23. In this claim letter, Sprint referenced the specific correspondence between the parties starting with Sprint's letter of November 6, 1997, to GSA's associate administrator for procurement. The claim letter noted that, as of the date of the contracting officer's final decision of June 11, the Government did not possess a CDA certification from Sprint. The $1,486,110.76 claimed represented USF surcharges withheld from payment of Sprint's invoices up to and including July 1998 (June usage). The letter providing the certification stated: To avoid potential jurisdictional disputes as to whether or not the Government withholding action amounts to a "Government claim" or a contractor claim requiring CDA certification, Sprint requests that the Contracting Officer reissue his decision of June 11, 1998, after receipt of this Certification to render moot all questions regarding the jurisdiction of the General Services Administration Board of Contract Appeals over this matter. Id. The claim letter closed with a statement that Sprint would file a "protective" appeal of the contracting officer's decision of June 11. Sprint did, in fact, file a notice of appeal from the contracting officer's decision of June 11. The notice was received by the Board on September 4, 1998. Discussion It is of course true that Sprint, in its letter of November 25, 1997, in which it broached the issue of USF surcharges, did state that it believed that it was entitled to recover the charges both under the contract and by reason of the filed rate doctrine. Nevertheless, subsequent discussions focused exclusively on the issue of whether Sprint was entitled to payment of the USF charges under the contract and, in particular, under the contract clause providing for the pass-through of after-imposed taxes or duties. The Government s questions sent to Sprint on November 25, 1997, specifically address this provision but say nothing regarding the filed rate doctrine. The same can be said of Sprint s answers to those questions. Sprint's position paper also relies heavily upon the same contract provision but says nothing regarding the filed rate doctrine. Although the CDA does not define the term "claim," the Federal Acquisition Regulation (FAR) defines it as: 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 related to the contract. 48 CFR 33.201 (1999) (FAR 33.201). This definition has been applied by the Court of Appeals for the Federal Circuit. Reflectone Inc. v. Dalton, 60 F.3d 1572, 1575 (Fed. Cir. 1995) (en banc). Sprint would have us conclude that the claim which was the subject of the contracting officer s decision of June 11, 1998, was simply the contractor s continuing claim for the payment of USF surcharges which first appeared on contractor invoices for services rendered in January 1998. We disagree. Rather, the documentation in the record convinces us that the dispute between the parties prior to the contracting officer s decision was one of contract interpretation. We find no evidence at that point in time of Sprint formally seeking, as a matter of right, the payment of money in a sum certain.[foot #] 1 Rather, Sprint requested the contracting officer to render a decision on the Government s claim and expressly recognized after the decision was rendered that this was not a certified claim. In August 1998, after the issuance of the contracting officer s decision from which this appeal arises, Sprint did file its own certified claim for $1,486,110.76. As a contractor s certified claim for a sum certain, this claim goes considerably beyond the scope of the Government's claim which was the subject of the contracting officer s decision. No longer is the issue restricted to contract interpretation. Rather, the issue now is whether the GSA is legally obliged, under the contract or otherwise, to pay the USF surcharges appearing on the contract invoices. Order In reviewing Sprint's complaint, we conclude that the allegations of breach in Count I are unquestionably germane to the Government's claim addressed by the contracting officer in his decision of June 11. By contrast, we find Count II relates rather to the broader issue raised in Sprint's certified claim. ----------- FOOTNOTE BEGINS --------- [foot #] 1 It is of course true that Sprint, in its demand letter of March 19, 1998, advised that further withholding would be deemed a Government claim immediately appealable under the CDA. Nevertheless, no such appeal was ever taken, possibly because the notices of withholdings were not the subject of a communication from the contracting officer, but rather were sent by the chief of GSA's Billing Verification and Service Order Support Branch. See Sprint Communications Co., L.P. v. General ___ __________________________________________ Services Administration, GSBCA 14263, 97-2 BCA 29,249. _______________________ ----------- FOOTNOTE ENDS ----------- Ten days after filing its certified claim, Sprint filed its notice of appeal from the contracting officer's decision of June 11. We can find nothing in the record, however, indicating that GSA did reissue its decision of June 11 in response to Sprint's certified claim or that Sprint eventually filed an appeal from a deemed denial of its certified claim. It may be that Sprint believes its notice of appeal filed on September 4, 1998, served both as a notice of appeal from the contracting officer s decision of June 11 and from his failure to issue a decision regarding Sprint s certified claim for payment. Upon examining the notice of appeal, we are not convinced that this single notice can serve this two-fold purpose. If it was or is the intention of appellant to appeal from a deemed denial of its certified claim, then, before proceeding further in ruling on this pending motion to strike, we insist on Sprint's confirming this fact for the record. Appellant is asked, therefore, to clarify its intentions in this regard. In the event that Sprint is of a mind to appeal from a deemed denial, that appeal, once filed, would naturally be consolidated with the present case thus rendering moot the pending motion to strike. _____________________ EDWIN B. NEILL Board Judge We concur: ______________________ ______________________ ANTHONY S. BORWICK ALLAN H. GOODMAN Board Judge Board Judge