In an ideal world, government contractors will perform exactly as expected under a government contract, and receive prompt, full payment from the government. Unfortunately, things do not always go that smoothly, and contractors may find themselves in a dispute with the government over the amount of money owed under a contract. In these cases, it is important for contractors to understand the claims process. Claims against the government are covered by the Contracts Disputes Act (CDA), which has specific procedures that must be followed for a claim to be legitimate. 41 U.S.C. § 601 et seq.
Below are ten key things to know about the process of filing a claim against the government:
- The Beginning, It’s a Good Place to Start
Every claim has to start somewhere, and that is typically with the submission of some request for payment from the government. This can be something as simple as an invoice, or something more substantial such as a Request for Equitable Adjustment. If the government agrees to pay the full amount of the request, then all is well and a claim will likely not be necessary. However, if the government declines to make the full payment, or delays the payment, the contractor can seek redress by filing a claim.
- You Haven’t Been Paid—Now What?
The requirements for what must be submitted, and to whom, in order to constitute a “claim” under the CDA has been refined through the years by federal statutes, regulations, and case law. Failure to submit a claim according to the very specific requirements can have significant consequences, costing the claimant both time and money. The claimant loses time because it will need to begin the process over, which may be an issue if the statute of limitations on the claim has lapsed. The claimant may also lose money, as interest on the claimed amount does not begin to run until a proper claim is filed.
A proper CDA claim has to be:
a.) A demand for payment;
b.) That is in writing;
c.) Submitted to the Contracting Officer;
d.) Seeking as a matter of right;
e.) The payment of money in a sum certain;
f.) And requesting a final decision.
In addition to the procedural formalities listed above, a claim to the government must also include sufficient detail to allow the contracting officer to know what is being claimed and why.
- Certification of Claims over $100,000
The CDA also requires that claimants certify any claim demanding payment in excess of $100,000. The claimant must certify that the claim is submitted in good faith and there is sufficient data in support. Failure to provide a proper certification can lead to the dismissal of a claim.
- How Much Time Do You Have To File a Claim?
Contractors have 6 years from when they knew, or should have known, of the government’s liability.
- Negotiated Settlements are Possible
Contracting Officers are generally encouraged to avoid litigating disputes with contractors. The claims process can be time-consuming and costly, for both the claimant and the government. Thus, when possible, it may be beneficial for the claimant to attempt to negotiate a settlement with the contracting officer. This can be done at virtually any point in the claims process, even before the claim is filed at all.
- The Decision
Contracting officers are required by statute to issue a final decision on every CDA claim he or she receives. For claims of $100,000 or less, the Contracting Officer’s Final Decision (COFD) must be issued within 60 days of the contracting officer’s receipt of the claim. For claims over $100,000, the contracting officer must, within 60 days, either issue a COFD or inform the claimant of the time frame in which the COFD will be issued. The COFD must be issued within a reasonable amount of time.
- The Indecision
While there are statutory deadlines set for the issuance of a COFD, it is not uncommon for deadlines to pass with no word from the contracting officer. Claimants do have the option file a request with either the United States Court of Federal Claims or one of the boards of contract appeals, to direct the contracting officer to issue a COFD within a specified period of time. However, when the COFD is not issued by the required deadline, the claim is “deemed denied,” and can be appealed by the claimant.
- Denial Does Not Mean Final
If the contracting officer denies the claim, in full or in part, or if the claim was “deemed denied,” the claimant can appeal the COFD in either the Court of Federal Claims or one of the boards of contract appeals (Typically, the Civilian Board for civilian agencies or the Armed Services Board for defense agencies). The choice of forum is an important decision, as once the appeal is filed in one forum, it generally cannot be filed later in a different forum. Both forums follow general litigation procedures (pleadings, discovery, hearing, etc.), however the boards have accelerated and smalls claims procedures for low valued claims.
- How Long Do You Have To File an Appeal?
To appeal the COFD to one of the boards of contract appeals, the claimant must file within 90 days of receiving the COFD. To file an appeal with the Court of Federal Claims, the claimant must file within 1 year of receipt of the COFD.
- Appealing the Appeal Decision
If the appeal is denied, the contractor still has appeal rights. The United States Federal Circuit has jurisdiction to hear appeals of decisions by the boards of contract appeals that are filed within 120 days of the board’s decision. The Federal Circuit can also hear an appeal of a Court of Federal Claims decision, as long as the appeal is filed within 60 days of the Court’s decision.