Wednesday, July 6, 2016

In a Certified Claim, a "Sum Certain" can be Based on Estimates

In 2013, DLA (Defense Logistics Agency) awarded a contract to Government Services Corp (GSC) for fuel deliveries. Evidently, GSC did something to displease DLA because in 2015, GSC received a negative rating in CPARS (Contractor Performance Assessment Report System. Every Government contractor is or should be familiar with the CPARS.

Later that year (2015), GSC submitted a certified claim to the contracting officer in the amount of $100,000 alleging that the negative rating constituted bad faith and a breach of the duty of good faith and fair dealing owed to it by the Government. GSC requested a final decision with respect to its claim.

DLA asked the contractor to provide detailed substantiating records to support the $100,000. GSC responded that the $100,000 was an estimate of the future administrative and legal expenses expected to be incurred to counter the negative CPARS rating.

DLA didn't respond so GSC filed a notice of appeal from the "deemed denial" of the claim. DLA argued that GSC did not file a proper claim because its submission to the contracting officer did not include a sum certain. According to DLA, GSC's failure to include a mathematical basis for any portion of its $100,000 claim or assign a specific dollar value to any component thereof meant that the claim did not meet the sum certain requirement.

The ASBCA (Armed Services Board of Contract Appeals) ruled that DLA's assertion was incorrect. The ASBCA stated that is is well-settled that neither the CDA (Contract Disputes Act) nor its implementing regulations require "submission of a detailed cost breakdown or other specific cost-related documentation with the claim. Instead, the contract need only submit in writing to the contracting officer a clear and unequivocal statement that gives the contracting officer adequate notice of the basis and amount of the claim.

The ASBCA has repeatedly held that use of estimated or approximate costs in determining the value of a claim is permissible so long as the total overall demand is for a sum certain.

The Government's motion to throw the case out because it lacked a sum certain was not sustained by the Board.

You can read the entire ASBCA decision here.

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