The Contract Disputes Act (CDA) governs monetary and non-monetary disputes arising out of contracts or implied-in-fact contracts between the federal government and contractors. Because the CDA is an exclusive remedy, it is important that contractors be wary of the many pitfalls that may be encountered by a contractor seeking to assert a claim against the government under the CDA.
The pitfalls faced by a contractor under the CDA can arise before a contractor becomes aware of a potential claim. Pursuant to the Federal Acquisition Regulation (FAR) § 43.204(c), a contracting officer should include in any supplemental agreement, including any change order, a Contractor’s Statement of Release, which requires a contractor to execute a broad release of the government from any and all liability under the contract. As a result of this FAR provision, in executing a routine change order, a contractor may inadvertently release its right to pursue a potential claim under the CDA. A contractor should always review any release language prior to executing a supplemental agreement or change order with the government.
Once it becomes aware of a potential claim, a contractor may become ensnared by the specific criteria necessary to make a claim under the CDA. To qualify as a claim under the CDA, the claim must be in writing. Verbal demands made by a contractor upon a contracting officer do not constitute a claim under the CDA. Furthermore, a contractor’s written claim must include a demand or assertion. A mere notification by a contractor notifying a contracting officer of an issue or an amount the contractor believes it is entitled to does constitute a claim under the CDA. All claims must be directed to the contracting officer. Field representatives and technical representatives do not have authority to respond to claims.
Under the CDA, a contractor’s written demand or assertion must seek the payment of money in a sum certain, the adjustment or interpretation of contract terms, or other relief arising under or relating to a contract between the government and the contractor. Whether a contractor’s claim is “sum certain” will be dispositive of whether the claim may be asserted under the CDA. A contractor’s claim must be either sum certain, i.e., a fixed or specific amount of money, or capable of determination by a simple mathematical formula. A contractor’s assertion for payment “approximately” or “in excess of” an amount will not constitute a claim under the CDA.
Additionally, in order to constitute a claim under the CDA, the claim by the contractor must include a specific request for a final decision, or otherwise set forth a clear indication that the contractor would like the contracting officer to issue a final decision. As a matter of good practice, a contractor should explicitly request a final decision from the contracting officer in its claim.
A contractor must also be cognizant of any time limitations in bringing a claim under the CDA. Claims by federal contractors are subject to a six year statute of limitations, which means that claims under the CDA must be submitted within six years of the time when all events establishing alleged liability for an injury were known or should have been known. However, a contractor’s claim may be subject to additional time or notice requirements under the FAR, particularly if the claims relate to changes, differing site conditions, or suspension of work.
Another specific requirement that must be satisfied to assert a claim under the CDA is a contractor’s certification of any claim in excess of $100,000.00. For claims exceeding $100,000.00, a contractor must certify that (i) the claim is being asserted in good faith, (ii) the supporting data are accurate and complete to the best of the contractor’s knowledge, (iii) the amount requested is accurate, and (iv) the person asserting the claim is duly authorized to certify the claim. Importantly, the omission of this certification cannot be cured by a retroactive submission of the certification. Furthermore, a contractor cannot avoid this certification requirement by separating a single claim into multiple claims in amounts less than $100,000.00. It should also be noted that a contractor’s certification is required to be signed and that, according to the ASBCA, a typewritten name intended to be a signature does not meet this requirement.
A contractor’s certification of a claim can be particularly troublesome for pass-through claims submitted against the government by the contractor on behalf of a subcontractor. Although a contractor may and should obtain a certification from a subcontractor for any pass-through claims, the contractor is required to provide a certification for the claim as well. However, a contractor does not have to agree with every aspect of a pass-through claim and must only certify that the pass-through claim is brought in good faith.
Once a contractor asserts a claim under the CDA, a contracting officer is required to issue a final decision on the claim. After receipt of a final decision by a contracting officer, a contractor may choose to engage in alternate dispute resolution (ADR) with the government regarding its claim. However, if a contractor decides to pursue ADR prior to, or instead of, appealing the contracting officer’s final decision, the contractor should be aware of the expiration of the statute of limitations and any notice requirements because participating in ADR with the government does not toll or extend these deadlines.
If the contractor chooses to appeal the final decision to the United States Court of Federal Claims or one of the agency boards of contract appeals (BCA), additional pitfalls are presented under the CDA, beginning with the contractor’s choice of forum for filing its appeal. A contractor must file a BCA appeal within 90 days of receipt of a final decision. Alternatively, a contractor has 12 months from receipt of a final decision to file with the Court of Federal Claims. Once a contractor elects the forum for its appeal, it can no longer bring its claim in the other forum.
In filing its appeal, a contractor could become ensnared by a seemingly simple decision regarding which carrier to use to deliver its appeal of the contracting officer’s final decision to a BCA. For example, pursuant to the Armed Services Board of Contract Appeals rules, the date of the filing of an appeal is the date of transfer of a properly addressed, postage paid package to the United States Postal Service. Conversely, an appeal delivered by a commercial carrier, such as Fed Ex or UPS, is deemed filed on the actual date it is received by the Board. Although appeals may now be submitted via email, it is best practice for a contractor to submit its appeal in sufficient time to permit the contractor to correct any issue with the transmission of the appeal.
One pitfall that often arises while a contractor is in the process of litigating its claim, either before the Court of Federal Claims or a BCA, is the issue of whether the contractor is attempting to appeal a claim that was not subject to a final decision by a contracting officer. It is a jurisdictional prerequisite that all claims asserted under the CDA must first be subject to a final decision by a contracting officer. If the contracting officer fails to issue a final decision within the time limits prescribed by the CDA, the contractor can file a “deemed denied” appeal. This typically results in an order requiring the contracting officer to issue a decision.
After an appeal is filed, the contractor may want to assert a claim that has not been subject to a contracting officer’s final decision. If the claim asserted is an entirely new claim, it cannot be addressed on appeal. However, a claim derived from the same operative facts and seeking the same relief but merely asserting a new legal theory for a claim that has been properly appealed is generally permitted and is not considered a new claim.
From the beginning of a contractor’s work on a government project through a contractor’s appeal of a contracting officer’s final decision, the Contract Disputes Act presents pitfalls that every government contractor should know and seek to avoid. For an overview of basic information any federal government contractor should know when faced with the necessity of making a claim against the federal government under the Contract Disputes Act see The Contact Disputes Act: What Every Federal Government Contractor Should Know.