CONTRACT CLAIMS PROCESS

GET YOUR CLAIM HEARD

By Henry E. Steck

Occasional disagreements between parties to a contract are an unavoidable part of doing business. When this occurs on a federal government contract, the contractor must know and understand the unique procedure for adjudicating federal contract disputes, or risk suffering needless delays, expense and exasperation in obtaining justice.

This issue discusses the requirements and procedures for submitting a claim the Contracting Officer cannot ignore. The next issue will discuss appealing an unfavorable decision on your claim.

Claims Process – General Overview

The Contract Disputes Act of 1978 ("CDA") establishes the general procedures and requirements for: (i) submitting claims to the Contracting Officer, and (ii) prosecuting appeals from unfavorable Contracting Officer decisions. The CDA is "fleshed out" by Section 33, Part 2 of the Federal Acquisition Regulation (FAR) and the "Disputes" provision of your contract. The claims and disputes process is "fine tuned" by decisions of courts and Agency Boards of Contract Appeals interpreting the statute, regulations, and contract provisions.

This article discusses the first phase of this process – submitting claims to the Contracting Officer. The second phase of the process – appealing an unfavorable decision - will be covered in the next issue of our newsletter.

The Claim

The first step in this process is to present a claim to the Contracting Officer. The concept of what is and is not a properly presented claim probably takes up more space in decisions of Courts and Boards of Appeals than any other single issue. For a time the idea of actually resolving the parties’ dispute took a back seat in the process to litigating technicalities respecting the form of the claim. Years and small fortunes could be spent just deciding that a proper claim existed, without ever addressing its merit. Fortunately, this is no longer true, as regulations recently redefined the term "claim" in a more common sense fashion, permitting the process to focus more on resolving disputes and less on senseless technicalities.

The CDA requires your claim to be in writing and submitted to the contracting officer for a decision, but does not define the term "claim". provides the following definition of "Claim":

Claim, as used in this subpart, 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 and 33.207. 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.

Submit Your Claim to the Right Person.

Sending your claim to the wrong person can result in needless delays and expense. Your claim should be presented to the Contracting Officer, not the Resident Engineer, TCO, Inspector, Program Manager or other technical representative, even though your claim may relate to a decision or interpretation by that technical representative. Address your claim to the procuring contracting officer ("PCO") that signed your contract.

Call Your Claim a Claim – Not a Request for Adjustment

If the Contracting Officer considers your claim to be a routine request for payment or request for adjustment that is not then in dispute, he or she may just ignore it, which can delay resolution for many months. Meanwhile, you are required to perform under the terms of your contract, you’re not getting paid, and you’re not accruing interest on the money you are owed.

To avoid this, your claim should clearly state that it is a "claim" made pursuant to the Disputes provision of the contract and the "Contract Disputes Act of 1978." If you previously submitted a "Request for Adjustment," your claim should state why you consider the amount to be disputed. Additionally, your claim should specifically request a "final decision by the Contracting Officer" and that it be made within 60 days or the time frame allowed in the CDA. Finally, your claim should specifically ask for interest as allowed under the CDA.

Certify Your Claims Over $100,000

Claims requesting a total adjustment exceeding $100,000 must include the certification found in the "Disputes" clause (FAR 52.233-1(d)(2)(iii)). The aggregate amount of both increased and decreased costs are used in determining when the $100,000 threshold is met.

If your claim is $100,000 or less, the Contracting Officer is required to issue a final decision within 60 days from receiving your claim. If your claim exceeds $100,000, the Contractor Officer is required within the 60 day period to either: (i) issue a decision, or (ii) notify you of the time within which a decision will be issued. The decision on your claim over $100,000 must be issued within a reasonable time, taking into account such factors as the size and complexity of the claim and the adequacy of the information in support of the claim.

If the Contracting Officer fails to issue a decision or take other required action within these time frames, you have two choices: (i) the Contracting Officer’s failure to answer may be considered a "deemed denial" of the claim which you may appeal, or (ii) you may make an application to the Agency Board of Contract Appeals for an order directing the Contracting Officer to answer the claim. The second alternative is typically better because, in the case of a "deemed denial," the agency attorney will usually request that the appeal be stayed (delayed) until the Contracting Officer issues a decision, and these requests are typically granted.

Press for Payment of the Undisputed Amount

Sometimes a Contracting Officer who agrees with part of your claim may threaten you with denying it entirely to force concessions on your part. This is contrary to governing regulations. FAR 33.211(h) directs the Contracting Officer in the following manner:

The amount determined payable under the decision, less any portion already paid, should be paid, if otherwise proper, without awaiting contractor action concerning appeal.

You should not be shy about pointing this out and requesting a unilateral decision and payment of the value determined by the Contracting Officer.If you disagree with the final decision rendered by the Contracting Officer, you may file and prosecute an appeal of that decision. This appeal process will be covered in our next issue of the newsletter.