When a "Claim" is Not a "Claim"

In 2014, the Army Corps of Engineers issued a fixed price task order to HCJ (a joint venture) to repair the roofs of two buildings. We don't know what happened in the meantime but two and a half years later, HCJ filed a REA (Request for Equitable Adjustment) for $225 thousand because it also had to remove, dispose, and replace rain gutters on the building.

The Corp of Engineers denied the contractor's REA and informed it of its right to submit a claim requesting a contracting officer final decision. Sometime after that, the contractor contacted the contracting officer by phone stating that it wished the REA to be treated as a claim. The contracting officer, citing the telephone conversation, proceeded to deny the claim and informed the contractor of its appeal rights.

The contractor appealed to the ASBCA (Armed Services Board of Contract Appeals). The result was surprising.

The Contract Disputes Act (CDA) provides that each claim shall be submitted to the contract officer for a decision. FAR defines a claim as a written demand or written assertion by one of the contracting parties seeking, as a matter of right, the payment of money in a sum certain, the adjustment or interpretation of contract terms, or other relief arising under or relating to the contract. Moreover, a claim exceeding $100,000 must be certified.

For the ASBCA to have jurisdiction under the CDA, the contractor must submit a proper claim, an element of which is a request for a contracting officer's final decision. The request for a final decision however, must be in writing and the contracting officer cannon waive this requirement by issuing a final decision.

The contracting officer's "final decision" was not issued in response to a written claim by the contractor and thus, there is no contracting officer decision from which an appeal could be take to the ASBCA.

The appeal was dismissed, not because the claim lacked merit, but because there was no written request for a contracting officer final decision.

You can read the full ASBCA decision here.

Court Orders Contracting Officer to Make a Decision

In 2011, The Navy awarded a contract to Fluor Federal Solutions (Fluor) to provide base operations support services at four Navy installations in Florida. In 2015, Fluor submitted an REA (Request for Equitable Adjustment) proposal (actually a consolidated REA of previously submitted REAs). In 2016 (seven months later), the Navy denied Fluor's REA stating that the submission was insufficient to reverse the Navy's position on previously submitted REAs. Fluor then submitted the consolidated REA as a certified claim.

The Navy then requested DCAA (Defense Contract Audit Agency) to audit the claim but told Fluor that a final decision would be issued on or before April 28th, 2017. In April however, the Navy informed Fluor that it was still waiting on the results of the DCAA audit and expected it to be completed by July 31, 2017 and a contracting officer final decision by December 1, 2017.

In September 2017, DCAA repeated requests for information that Fluor had already responded in writing the previous January and March - that it did not maintain certain records in the manner DCAA requested but expressed its willingness to answer specific questions regarding the data used to price the claim and provide DCAA an additional walk-through of the data.

Without responding to Fluor's September request, DCAA slapped a "denial of access to records" charge against Fluor on October 23, 2017. Eight days later, Fluor again repeated its assertion that it had responded to all DCAA requests and offered once again to meet with DCAA representatives. DCAA never responded to Fluor's letter.

In November 2017, the Navy notified Fluor that it was still waiting on the DCAA audit and established a new COFD (contracting officer final decision) by March 2018. Later that month, DCAA notified Fluor that it was cancelling its audit.

Fluor appealed this lack of progress to the ASBCA (Armed Services Board of Contract Appeals).

The Board noted that the Contracts Disputes Act (CDA) requires that a contracting officer issue a decision within a reasonable time taking into account such factors as the size and complexity of the claim and the adequacy of the information in support of the claim provided by the contractor. In this case, Fluor's claim is large and complex however the Navy had the information regarding the consolidated REA and claim for over two years. Given the history and number of promised COFDs and the present situation where it is unclear when the Contracting Officer will be issuing a final decision, it seems the parties have reached a stalemate which most likely will not be broken by agreement.

Accordingly, the Board directed the contracting officer issue a decision on Fluor's claim by January 31, 2018.

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.