Thursday, October 20, 2011

Contract Disputes Overview - Part III

Today we conclude our short overview on contract disputes. It is not our intent here to go into a lot of detail on  the processes and procedures available to contractors or the Government when disputes arise. Rather, we are simply informing readers of the methods available to resolve contract disputes. One piece of advice that we can offer based on experience on both sides of disputes is to try and settle disputes quickly and as efficiently as possible, even if it nets results that are less than desired. Protracting the resolution process is very costly in terms of time and resources.

Usually when contract disputes are discussed, it is the contractor disputing a Government position. However, the Government also makes affirmative claims against contractors. These claims include unallowable costs charged to contracts (either directly or indirectly), defective pricing allegations, defective parts, CAS (Cost Accounting Standards) noncompliances, etc. When the Government is making the claim, the demand must be in writing and

  1. state an amount certain
  2. make a demand for payment,
  3. provide an address for payment,
  4. notify the contractor of any deferment processes available to it.

The Government's claim is typically made as soon as the contracting officer has (i) determined that an actual debt is due the Government and (ii) has determined the amount or refund or payment. Often it is not a simple matter to calculate the amount so the contracting officer seeks assistance and advice from auditors and other technical experts. Regardless, the "sum certain" requirement demands that the Government's claim be fairly precise.

Finally, contractors should be aware of the statute of limitations. There is a six-year statute of limitations upon claims by either party for contracts awarded after October 1, 1995 (that should be just about all contracts by now). However, determinations of when a claim accrues can be a very complicated issue of law and we recommend consultation with legal counsel if it appears that a claim is outside the statute of limitations.

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