Government Contracting Database
Disputes Process – Asserting a Claim
The most important law with regard to the submission of claims, and the disputes process, is the Contract Disputes Act of 1978 (41 U.S.C. § 7101-7109). The Act is incorporated in the disputes clause of federal construction contracts. See FAR 52.233-1.
The disputes procedure places the Contracting Officer in a very important role. He wears two hats in that he serves both as the administrator of the contract for the government, as well as a “decision maker” whose responsibility is to step back and review disputes between his own staff and the contractor. Most importantly, the Contracting Officer has the authority to settle, compromise, pay, or otherwise adjust all claims by either party relating to the contract.
All claims must be first submitted to the Contracting Officer for consideration and decision. Although the Contract Disputes Act does not define a claim, regulations have defined a “claim” as a “written demand by one of the contracting parties seeking, as a legal right, the payment of money, adjustment or interpretation of contract terms or other relief, arising under or related to the contract.” Submission of a claim to the Contracting Officer is a prerequisite to review by either the Board of Contract Appeals or the United States Claims Court. In order to submit a claim, the party must be in privity of contract with the government.
It is very important for you to remember that claims over $100,000 must be certified in order to be valid. The following certification should be attached to your claim:
I certify that the claim is made in good faith; that the supporting data are accurate and complete to the best of my knowledge and belief; that the amount requested accurately reflects the contract adjustment for which the contractor believes the government is liable; and that I am duly authorized to certify the claim on behalf of the contractor.
NAME OF COMPANY
For claims under $100,000, the certification need not be included.
Interest begins to run on a properly certified claim over $100,000, or an uncertified claim under $100,000, from the date of submission of the claim. Failure to certify, where required, will relieve the government from the responsibility to pay interest, and also will render a decision by the Contracting Officer unnecessary. Even if the Contracting Officer erroneously issues a decision on an uncertified claim, it has been held that the Boards of Contract Appeals and United States Claims Court are without jurisdiction to consider an appeal based on an uncertified claim.
A claim should be for a sum certain and not indefinite or qualified in any way. If it is impossible for you to determine an exact amount, you should make it clear that the claim has been based on reasonable estimates, and these estimates should be revised as historical data becomes available. The failure to indicate that a claim is based on an estimate, rather than historical cost data, could lead to the allegation later that you have submitted a false claim, or committed an act of fraud.
Once a properly certified claim has been submitted to the Contracting Officer, Section 6(a) of the Act requires that a decision be issued in writing within 60 days if the claim is less than $100,000, or within a reasonable time if the claim is over $100,000. In addition, the Contracting Officer is required to advise the contractor, within 60 days, of the time when a decision on a claim in excess of $100,000 will be issued. The decision should contain the following:
- A description of the claim and dispute.
- A reference to pertinent contract provisions.
- A statement of the factual areas of agreement and disagreement.
- A statement of the Contracting Officer’s decision with supporting rationale.
- A notice of the appeal rights available to the contractor.
The contractor should be aware that the opportunity to negotiate and resolve disputes does not cease merely because a formal claim has been submitted to the Contracting Officer. At all times, including while the claim is under active review by the Contracting Officer, and even after an adverse decision has been issued, the contractor should keep the dialogue open and explore all possibilities of settlement. government agencies are usually willing to cooperate in such discussions and it is rare to find a Contracting Officer who is not willing to meet and discuss your differences.
If a Contracting Officer’s decision is issued, it is virtually certain that that decision will deny your claim either totally or in substantial part. If the Contracting Officer fails to issue a written decision on a claim less than $100,000 within 60 days of receipt of the claim, you may regard his failure to do so as a “deemed denial” of the claim. In other words, the contractor may treat the failure to issue the decision as though a decision had been issued denying the claim, and proceed according to the appeal rights described below. Similarly, if the Contracting Officer fails to issue a decision on a claim over $100,000, within a reasonable time, or within the time the Contracting Officer indicated a decision would be issued, the contractor may also treat that failure as a “deemed denial.”
Contracting Officers may not delay the issuance of a decision merely because they consider the contractor’s data inadequate, and they may not refuse to issue a decision on a properly certified claim. If the Contracting Officer believes that the contractor has not submitted sufficient information on which to base a decision, he should give the contractor an opportunity to supplement the claim and, if additional information is not forthcoming, should issue a decision based on the information presented. Unfortunately, some Contracting Officers seek to “get the monkey off their back” by constantly asking the contractor for additional information when, in fact, sufficient information has been presented on which to decide the claim.
A Contracting Officer’s decision may be appealed within ninety days after receipt to the Board of Contract Appeals having jurisdiction over the contract, or within twelve months to the United States Court of Federal Claims. Once a contractor chooses to go to either the Board of Contract Appeals or the United States Court of Federal Claims, his choice of forum is binding and he may not later change his mind and go to the other legal entity. It has been held that filing an appeal in a second forum is impermissible “judge shopping” and therefore illegal.
It is very important, therefore, for contractors to weigh very carefully the decision as to whether to appeal to the Board of Contract Appeals or the Court of Federal Claims. The factors involved in this consideration vary from case to case and there are no general rules for contractors to follow. It is suggested that the decision be discussed with legal counsel prior to taking an appeal.
An appeal may be taken to the Board of Contract Appeals by filing a Notice of Appeal within the required ninety day time period. This notice must be in writing, signed by a person of authority, (the contractor, an officer if the contractor is a corporation, or its attorney) and should identify the contract by number, the final decision which is being appealed, and the agency issuing that final decision. Although express mail services are sufficient if you are certain that the Notice will be delivered prior to the expiration of the ninety days, it is safer to send the Notice by registered mail which provides irrefutable proof of mailing within the ninety-day time period.
If you elect to proceed before the United States Court of Federal Claims, a complaint must be filed with the Court within twelve months of the receipt of the Contracting Officer’s decision. Corporations may only be represented before the Court by an attorney-at-law, and it is therefore important for you to give counsel sufficient time to prepare the papers necessary to start an action in the United States Claims Court. It must be recognized, moreover, that in both Board of Contract Appeals and Claims Court practice, the failure to file within the required statutes of limitations will cause you to lose your appeal rights.
If you file a Notice of Appeals to a Board of Contract Appeals, the government is required to prepare an administrative report, commonly referred to as the “Rule 4 File,” within thirty days. This file contains a copy of the Contracting Officer’s decision, the claim, pertinent contract provisions, drawings, and correspondence which will assist the Board in reviewing the issues pertinent to the appeal. You have the right to supplement the Rule 4 File and it is advisable that you do so at the earliest opportunity to be certain that the government has included all documents which are necessary for an understanding of the case. At the trial, the Rule 4 File is customarily introduced into evidence and is available for both sides, and their witnesses, for ease of reference.
The contractor is also required, within thirty days of filing the Notice of Appeal, to file a complaint before the Board. This is a restatement of the claim and is a formal pleading and request for relief. Although Board practice allows contractors to represent themselves, it is advisable to seek legal assistance. The government will be represented by counsel, and few contractors have the training and expertise to properly present the case for trial, or to argue legal issues. This is not to say, however, that many contractors are not perfectly capable of addressing technical issues in a manner which may exceed the abilities of their attorneys. It is best for the technical expertise of the contractor, and the legal expertise of the attorney, to be combined in a way which presents the case in a clear and persuasive manner.
The government has thirty days following receipt of the contractor’s complaint, to file its answer. The answer responds to each and every allegation in the complaint and sets forth any affirmative defenses that the government may have. In this way, the parties are required to state their respective positions so that the Board may identify and frame the issues which will later be heard at the trial.
The Court of Federal Claims practice is similar in that after the contractor has filed his initial complaint, the government files its answer. Although the government is usually represented by agency counsel in a matter before a Board of Contract Appeals, the Justice Department typically provides representation on matters that go to the United States Court of Federal Claims. The pre-trial procedures which follow the filing of the complaint and answer are virtually the same in both Board and Court practice.
One advantage in proceeding with an appeal before the Board, rather than the Court, is that you may elect an accelerated procedure before the Board. If your claim involves $100,000 or less, you may elect the optional accelerated procedure which requires that a Board decision to be issued within 180 days following your Notice of Appeal. Similarly, if your appeal involves $50,000 or less, you may elect the expedited procedure which provides for a Board decision within 120 days after filing of the Notice of Appeal.
In order to prepare adequately for trial, it is important for the contractor to engage in discovery of the opposition’s case. “Discovery” is the process of obtaining evidence from the opposing party which tends to support your case, or which provides information concerning your opponent’s case. Typically, discovery takes the following forms:
- Interrogatories – written questions about pertinent and relevant matters which the other side must answer within thirty days.
- Production of Documents – this is a request for the right to review and copy documents pertaining to the case in the possession of the opposition.
- Depositions – an interview of the opposition’s witnesses before a court reporter to determine what they know about the case, and what they are prepared to testify about should the case go to trial.
- Request for Admissions – written statements submitted to the other side which, unless objected to, will admit pertinent facts.
It is particularly important to recognize that the judges often need assistance in deciding technical matters. One way to provide this assistance is through the use of expert testimony in the form of a witness who has sufficient experience and educational background to be qualified as an “expert witness.” It is also important, however, that the witness not only qualifies on “paper,” but that the individual selected be articulate and capable of testifying in a persuasive manner. In other words, you want someone on the witness stand who has credibility and who can think on his or her feet.
It is important to obtain the services of an expert witness early in the case. If possible, allow your expert witness to become involved while the project is underway so that the witness can visit the project site and later testify as to his observations. You will find that a properly prepared and qualified expert will often make a favorable impression upon the judge and will help support your case.
Updated: June 25, 2018