Contractor anticipates filing a claim against their customer, the government,
when they are awarded a new contract.
Unfortunately, disagreements between the parties will occur. When such disputes relate to government
contracts, except for maritime contracts, the resolution process is described
in the Contract Disputes Act of 1978 ("CDA”). At the Federal Aviation Administration,
disputes are covered by a separate statute at the Office of Dispute Resolution
and Appeals ("ODRA”). The CDA applies to
express or implied contracts with executive agencies that are for the
procurement of property (except real property), services, construction, or
disposal of personal property. Generally,
the CDA is applicable only to contracts that arise from standard government
procurement and expenditure of appropriated funds. The substance of a claim will determine
whether the CDA applies.
right to file an appeal to an adverse decision is limited to "a party to a
government contract” on a claim "related to a contract.” A "contractor” is a party to a government
contract whether an express or implied contract.
CDA requires that a pre-existing dispute exist except for routine requests for
payment. There must be a dispute before
a CDA action can be invoked; otherwise there is no basis for a claim.
claim must be submitted to the Contracting Officer in writing asserting, as a
matter of right, a sum certain or an adjustment or interpretation of contract
terms, or other relief. The claim must be submitted to the
Contracting Officer within six (6) years of the "trigger” event.
these general rules, there are some defining requirements that claimants should
be attentive to. A claim under $100,000
is not required to be certified; all claims over $100,000 must be
certified. A claimant is entitled to
interest on successful claims. The
claims must request a final decision from the Contracting Officer, and it must
include sufficient documentation to permit a decision without additional
investigation. Of course, any fraud will
be held against the claimant.
decisions recently discussed claims and provide useful information.
1. In the Appeal of Sygnetics, Inc. before the Armed Service Board of Contract
Appeals ("ASBCA”), ASBCA No. 56806, dated October 12, 2010, Appellant appeals
the final decision by a Contracting Officer denying a claim of
$246,382.16. Sygnetics submitted an
uncertified claim by certified mail.
Sygentics also sent an e-mail with an unexecuted claim to the
government. Appellant produced a receipt
from the USPS but it was not date stamped.
The government was unable to produce any copy of the certified claim as
required by regulation. Furthermore, Sygentics was unable to produce
any signed receipt of the claim by the Army.
Absent a stamped receipt by the U.S. Postal Service, or the receipt by
the Army of a certified claim, the ASBCA denied the Appellant appeal.
All claims must
be in writing and submitted to the CO for a decision. If the claim exceeds $100,000, then it must
be certified. Therefore, evidentiary proof of these
requirements is essential. Always obtain
the stamped receipt or other evidence from the carrier, and obtain a receipt by
In the case of System Planning Corporation ("SPC”) v.
United States in the United States Court of Federal Claims, No. 07-678c decided
on October 6, 2010, SPC had filed a claim under the CDA with the Air Force
Contracting Officer on or about October 9, 2000. After waiting for a decision for nearly seven
(7) years, SPC appealed a deemed denial on September 18, 2007, to
the Court of Federal Claims. A
contractor can request or obtain "relief only when the appeal or action is
based on a qualifying claim filed by the contractor and a final decision by the
The contracting officer is required by law to issue a
decision within sixty days of receipt of a certified claim over $100,000 or
notify the contractor when a decision will be issued. Any failure by the contracting officer to
issue a decision on a contract claim within the period required will be deemed
to be a decision by the contracting officer denying the claim and will
authorize commencement of the appeal or suit on the claim. The claimant has six (6) years to file a claim
under the CDA from the date the adverse action occurred. Once the claim is filed, the claimant has
strict time limitations to file an appeal.
Under a "deemed denial,” however, when the CO fails to issue a decision,
the six year time limitation is not applicable to contractors under the CDA for
waiting to appeal or not to appeal.
Furthermore, the six year statute of limitations in the Tucker Act is not applicable to CDA actions and appeals.
While SPC waited nearly seven years to file their appeal
Contracts Unlimited strongly urges readers to file an appeal of a deemed denial
within 90 days of the final date the CO must issue a decision.
In the case of L.A. Ruiz Associates, Inc. v. The United
States, Case No. 09-211C, filed on September 23, 2010, Ruiz built an annex to a
USPS Carrier facility in Revere, Mass.
Occupancy commenced on April 7, 2001.
Seven (7) years later, on April 8, 2008, the Contracting Officer at the
USPS filed a claim against Ruiz for $1,131,166.
One year later, on April 7-8, 2009, Ruiz counterclaimed for breach of
contract and unpaid costs by sending a claim letter to the Contracting Officer.
The CDA requires "all claims by a contractor against the
government relating to a contract shall be in writing and submitted to the
contracting officer for a decision.” The Court stated that "the CDA requires a
clear and unequivocal statement that gives the contracting officer notice of
the loses and amount of the claim.” The Court explained that the letter from Ruiz
(1) was not addressed to the contracting officer; (2) did not ask for a final
decision; (3) was not submitted to, or received by, the contracting officer
because there was no evidence of receipt; (4) failed to state a sum certain or
establish any entitlement to relief (and
general statements reserving rights to file claims in the future, are not
acceptable); and (5) Ruiz failed to prove that the contracting officer issued a
final decision regarding its claims; before the claimant can argue its claim is
"deemed denied” it must prove it was physically received by the contracting
Hence, the Court denied the claim and
potentially cost Ruiz a substantial amount of money long after the profits from
the job with the USPS had been spent.
The moral of the stories is that you must
follow the rules, regarding preparing and submitting claims exactly as they are
listed in the CDA and the FAR. Failing
to follow the rules will probably result in rejection of the claim by the
Contracting Officer and the courts and incur additional costs needlessly.
The rules for proper claims are strictly
enforced by the agencies and the Courts.
There is very little opportunity for error and still obtain a valid
claim response. Take the time to prepare
and submit the claim correctly and properly.
A little extra caution when developing the claim may save you
significant extra expenses later.
Contracts Unlimited, Inc.
The foregoing is not a legal
opinion or legal advice. Consult your
attorney for legal assistance.