Disputes between federal agencies and their contractors regarding contract performance are governed by the rules outlined in the Contract Disputes Act, 41 U.S.C. Chapter 71. This piece of legislation sets the rules for the “claims” process, which presents challenges regarding timing and the preparation of a claim and opportunities for less formal venues for disputes than contractors may be accustomed to with typical disputes with private customers.  Call GovSpring now for immediate assistance: (202) 609-7501. Our Managing Attorney will likely answer or call you back within thirty minutes. Or Email: info@govspringlegal.com

What the “Claims” Process Covers

Claim is defined at FAR 2.101 to mean “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.”

This definition establishes the three categories of claims that contractors can assert. Claims for “payment of money in a sum certain,” usually known as monetary claims, encompass many of the most common performance disputes that contractors encounter, including changes, delays, and differing site conditions. Claims for “adjustment or interpretation of contract terms” can encompass disputes where the contractor does not seek payment in some form, such as disputes over whether the contractor is required to continue performance. And claims seeking “other relief arising under or relating to the contract” can include declaratory judgments, for example that a contractor’s interpretation of a contract provision is correct.

The right to assert a claim is not a right unique to the contractor — government claims make up a significant part of the claims process as well. Common monetary claims asserted by the government may include defective pricing and other cost accounting violations or debt collections and setoffs stemming from property damage or poor workmanship. And an agency decision to terminate for default is among the most common non-monetary claims.

Because each basis of relief is considered an individual claim, the statutory requirements for asserting a claim or appealing a contracting officer’s decision apply to each basis of relief, not to the contract as a whole. The government’s decision to terminate for default and its decision to pursue excess reprocurement costs are considered to be separate claims, just as a contractor’s assertion of its data rights will be entirely separate from a claim for an equitable adjustment stemming from a constructive change. When handled well, this can mean less time spent waiting and lower litigation costs — so contractors considering action on multiple claims should be sure to assess their options early.

What a Claim Requires

A dispute or a negotiation between a contractor and an agency does not become a claim until the contractor submits a request that meets all mandatory elements. There are three mandatory elements of a claim, and two other elements that may required:

• The claim must be submitted in writing.

Claims must be submitted in writing. Verbally notifying a contracting officer of differing site conditions or of additional costs incurred as a result of a delay does not constitute a claim. The claim must be a written demand or assertion seeking relief. This can include electronic communications, though, so an email that contains all the necessary requirements can constitute a claim.

• The claim must request a final decision.

However it is submitted, the written document must clearly indicate to the CO that you are requesting a final decision.This is the distinction that frequently separates a request for equitable adjustment (REA) from a claim. Contractors will often write REAs in a way that allows the agency to consider the request and respond without strictly requiring a response (and thereby starting the appeals clock explained below). However, even a document that styles itself as an REA can meet the requirements of a claim if it demands the contracting officer’s final decision.

• The claim must give adequate notice of basis.

The claim must provide the CO with enough detail to understand the factual and legal basis of the dispute. While it doesn't need to be a formal legal brief, it must allow the government to investigate the matter.

• Monetary claims must contain a “sum certain.”

For any monetary claim, you must state a specific dollar amount. You cannot submit a claim for "approximately $1 million" or "damages to be determined." Hedging the amount can allow an agency to challenge the adequacy of the claim at a future stage and seek the dismissal of an appeal.

While a “sum certain” is only required for monetary claims, courts and boards do not allow contractors to avoid this requirement by dressing up monetary claims as claims for contract interpretation. Under the Securiforce test, a claim is a “monetary claim” if its “only significant consequence” is to entitle the contractor to monetary damages against the government.

• Monetary claims in excess of $100,000 must contain a certification.

If a monetary claim exceeds $100,000, the contractor must certify that:

• The claim is made in good faith;
• The supporting data are accurate and complete;
• The amount requested accurately reflects the contract adjustment for which the contractor believes the government is liable.

While a defective certification (such as a signature by the wrong individual) can often be corrected, courts and boards have historically considered a missing certification to be a jurisdictional defect that will prevent them from issuing a decision on the merits. As a general rule, contractors seeking to submit an REA instead of a claim can often avoid accidentally submitting a claim by not including this certification. But agency regulations can amend this general rule and require that REAs be certified: the DoD, for example, requires REAs to be certified in accordance with DFARS 252.243-7002. Contractors that seek to submit an acceptable REA instead of a claim should be sure to consult their agency-specific regulations.

When Claims and Appeals Must Be Submitted

The Contract Disputes Act creates separate timeliness requirements for submitting a claim and for appealing a claim that a contracting officer has denied. A successful claim must meet both of these requirements.

First, claims must be presented to the contracting officer in a timely manner. The CDA requires that claims must be submitted within six years after the "accrual of the claim.” Accrual is the date when all events that fix the alleged liability of the government—and permit the assertion of the claim—were known or should have been known. This date is not when a contractor understands the extent of their liability, but when the injury that entitles the contractor to some form of recovery occurs.

The CDA allows contractors two different windows to appeal a contracting officer’s final decision denying a claim. First, contractors have only 90 days after receiving the written final decision to appeal to the Boards of Contract Appeals. If a contractor does not file with the applicable board within 90 days, they instead have the option to file an appeal with the Court of Federal Claims within 12 months of the date of receipt of the final written decision. If a contractor fails to appeal or bring an action within this timeframe, the contracting officer’s decision becomes final and conclusive and is not subject to review by any forum or tribunal.

When the contracting officer does not issue a final decision, the CDA affords the contractor the best of both remedies. Contracting officers are required to issue a decision on claims for $100,000 or less within 60 days of receipt of a claim. For claims in excess of $100,000, the contracting officer must either issue a decision or notify the contractor of the time where that decision will be issued. If the contracting officer fails to act within 60 days, the claim is “deemed denied,” and the contractor has the ability to appeal to either the Boards or to the Court of Federal Claims, However, the deadlines to appeal a claim do not begin until the contractor receives written notice of the denial; a deemed denial does not start the appeals clock.

For appeals of government claims, the same 90-day and 12-month deadlines apply. However, contractors should be aware that they are not required to request a final decision or reconsideration from the contracting officer. The agency’s decision to terminate for default, for example, constitutes a government claim that a contractor can immediately appeal.

Contractors should act quickly to decide where to appeal — and GovSpring Legal brings specific experience with claims appeals

Contractors that make proactive moves to prepare for an appeal must make the important choice of the forum that will hear their appeal.

Appeals to the four Boards of Contract Appeals — Armed Services, Civilian, Postal Service, TVA — can offer faster resolution before subject-matter experts. The judges at the Boards are required to have previous experience with government contracts, and CDA appeals make up large portions of their dockets. Further, the processes for gathering evidence are simplified, and contractors can request accelerated procedures that generally require a decision in less than 180 days.

On the other hand, appeals to the Court of Federal Claims resemble traditional federal litigation. These appeals abide by federal rules of evidence and discovery, and the judges who hear these disputes also hear a variety of other federal disputes. The Department of Justice also takes over these appeals, including settlement authority.

Here at GovSpring Legal, we bring extensive understanding of the government contracts claims appeals and can help guide your company through the entirety of the claims process. Each of our team members has experience clerking at the Civilian Board of Contract Appeals (Marcus as a full-time clerk, and Alexander as a multi-semester student clerk), which informs both our legal and practical understanding of these appeals. Whether your company is preparing to navigate a future dispute, considering its options after a denied REA, or seeking immediate assistance after a contracting officer’s final decision, we are ready to help protect your company’s reputation and right to payment.

Call GovSpring now for immediate assistance: (202) 609-7501. Our Managing Attorney will likely answer or call you back within thirty minutes. Or Email: info@govspringlegal.com.