Thursday, May 17, 2018

Contract Disputes - Briefly

It is the Government's policy to try to resolve all contractual issues by mutual agreement at the contracting officer's level without litigation. Often times, it does not seem like this is the Government's policy at all. There are a few contracting officers out there that fancy themselves as the supreme authority on contractual matters and rebuff any attempts at compromise or resolution. Likewise, there are contractors out there that view any questions or queries from Government officials as personal attacks on their character and integrity. When these two meet, there is little hope of resolution so contracting officers issue their final decision and contractors submit claims.

The Contract Disputes Act of 1078 (41, USC 7013) requires that claims exceeding $100,000 be accompanied by a certification. The certification has three elements:

  1. The claim is made in good faith
  2. Supporting data are accurate and complete, and
  3. The amount requested accurately reflects the contract adjustment for which the contractor believes the Government is liable (sometimes referred to as a "sum certain".

The certification must be signed by a person authorized to bind the Contractor with respect to the claim. Usually this is an officer of the company.

The contracting officer has 60 days to decide the claim or 60 days in which to notify the contractor of the date by which the decision will be made. On complex issues, it usually takes much longer than 60 days for the contracting officer to render a final decision.

The contractor is entitled to interest from the date of the certified claim, should the dispute ultimately be decided in the contractor's favor.

Contractors still have a duty to proceed with contract performance while a claim is pending.

The Government estimates that contractors submit 13,500 claims requiring certification (i.e. those exceeding $100 thousand) per year. Only a tiny fraction of those are appealed to the ASBCA (Armed Services Board of Contract Appeals) or Federal Court. The ASBCA encourages the use of ADR (alternative disputes resolution) methods to settle prior to litigation.

See FAR 52.233-1, Disputes, for more information on filing claims against a contracting officer's final decision.

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