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Contract Disputes Act Claims

Request for Equitable Adjustment vs. "Claim" under Contract Disputes Act

In federal Government contracts, you have the right to file a claim under the Contract Disputes Act.  As the Act's name infers, there must be a "dispute" between the parties before a "claim" can be filed.  If the Government has yet to disagree with a contractor's request for additional time or compensation, it would be premature to file a claim under the Contract Disputes Act.

Our strategy starts with first filing a Request for Equitable Adjustment ("REA").  This approach avoids a possible chilling effect on the parties' desire to settle rather than go through the claims process.

Additionally, this approach takes advantage of the FAR rule that costs incurred in preparing a REA are allowable administrative costs, including legal fees.  Appeal of American Mechanical, 03-1 BCA ¶ 32,134, ASBCA No. 52,033 (legal expenses recoverable where incurred prior to the Contracting Officer's decision on REA for the purposes of furthering negotiations with the Government)  While the contractor will forgo interest under the Contract Disputes Act, REA preparation costs usually exceed CDA interest.

In contrast, FAR 31.205-47(f)(1) provides that costs are unallowable if incurred in connection with the "defense against Federal Government claims or appeals or the prosecution of claims or appeals against the Federal Government."

The term "claim" is defined at FAR 2.101:

Claim means 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. However, a written demand or written assertion by the contractor seeking the payment of money exceeding $100,000 is not a claim under the Contract Disputes Act of 1978 until certified as required by the Act. A voucher, invoice, or other routine request for payment that is not in dispute when submitted is not a claim. The submission may be converted to a claim, by written notice to the contracting officer as provided in 33.206(a), if it is disputed either as to liability or amount or is not acted upon in a reasonable time.

Thus, a claim is filed if the Contracting Officer refuses to respond to a REA or after the contractor and the Government have reached an impass.  At this point, the contractor cannot recover legal fees and should convert the REA to a Contract Disputes Act ("CDA") Claim. 

Contracting Officer Must Objectively and Fairly Examine CDA Claim

The Contracting Officer has a duty to impartially and objectively render a final decision.  This duty has been compared to an impartial, unbiased judge.  Penner Installation Corp. v. United States, 116 Ct. Cl. 550 (1950)  A Contracting Officer who follows a decision of his superiors without making a personal and independent judgment on the merits is invalid.  John A. Johnson Contracting Corp. v. United States, 132 Ct. Cl. 645 (1955)

Time to Issue a Contracting Officer's Final Decision

When the Contracting Officer, receives a certified claim of over $ 100,000, the Contract Disputes Act, 41 U.S.C. §§ 601-613, requires him or her to either (a) issue a decision within sixty days of receipt of the claim, or (b) notify the contractor within sixty days of receipt of the claim "of the time within which a decision will be issued."  Court and board decisions have interpreted 41 U.S.C. § 605(c)(2)(B) to require the CO to provide a fixed date or date certain on which a decision will be issued.  Aerojet General Corporation, ASBCA No. 48136, 95-1 BCA P 27,470 (Contractor filed claim based on a deemed "denial" because CO's notice that a decision would be issued in the early March 1995 time frame contingent upon the contractor's cooperation failed to provide a specific time); The Boeing Co. v. United States, 26 Cl. Ct. 257, 259 (1992) ("That a fixed date is required is clear from the tolling provision")

Appeal of Contracting Officer's Final Decision

After a Final Decision is rendered, the Contractor may:

- Appeal of a CO's Final Decision to the Board of Contract Appeals within 90 days after final decision, or

- Litigation before the United States Court of Federal Claims within 1 year of final decision

What if Contracing Officer does Not Issue Final Decision When Due?

Under the Contract Disputes Act, if a Contracting Officer fails to issue a final decision when due, the contractor can appeal based on a "deemed denial".  See 41 USC 7103(f)(5), which states that "failure by a contracting officer to issue a decision on a claim within the required time period is deemed to be a decision by the contracting officer denying the claim and authorizes an appeal or action on the claim."   This prevents the Contracting Officer from attempting to delay the claims process.  This is especially important give that the contractor, in most cases, must proceed with the work even though there is a dispute.

Six Year Statute of Limitations

There is a six-year statute of limitations on contractor and government claims.  (FAR 33.206, Initiation of a Claim)

Legal Help

Lawyers at Manfredonia Law Offices will help you through this process by first assisting in the preparation of a certified REA.  In many cases, the parties are able to settle the REA without having to go through the claims process.  If not, we can assist in the preparation of a certified Contract Disputes Act Claim.  This claim must provide both the factual and legal grounds for recovery against the federal Government.  This include all supporting cost documentation to ensure it withstands scrutinty by a Government auditor.  Attorneys at our firm have experience with Government auditors, including the DCAA, and can review your monetary claim for allowability under the FAR cost principles.

Our firm has successfully litigated cases before the Civilian Board of Contract Appeals, Armed Services Contract Appeals and the Court of Federal Claims.   We encourage you to contact our office for a complimentary consultation.  We will review the Contracting Officer's Final Decision, if you have one, and provide a preliminary prognosis of your case.

Contract Disputes Act Claims
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