Government Must Specify a "Sum Certain" When Issuing Final Decisions

A "claim" according to FAR (Federal Acquisition Regulation) 2.101 is a written demand or written assertion by one of the contracting parties (could be the contractor or the Government) 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. Further, a written demand or written assertion by the contractor seeking payment of money exceeding $100 thousand is not a claim unless certified.

Its easy to think that term "sum certain" applies only to contractors because disputes that are thrown out are thrown out because the contractor did not specify a "sum certain". But the Government must also specify a "sum certain" if it is seeking remuneration from a contractor.

A recently published ASBCA decision illustrates this point.

In June 2018, DCMA (Defense Contract Management Agency) issued a COFD (Contracting Officer Final Decision) and demanded payment from L-3 Communications. In January 2019, DCMA withdrew its COFD and in February 2019 requested the ASBCA to dismiss L-3's appeal.

The ASBCA noticed a problem with the COFD. The COFD presented three distinct amounts demanded by DCMA; $292,634, $297,677, and $572,318. The question became, was this a "sum certain" (the COFD must have been a real cobbled together mess) .

The Board found that there was no way to reconcile the three amounts stated in the COFD through simple mathematical analysis or any other analysis. Therefore the Board ruled that DCMA's COFD failed to state a sum certain and dismissed the case.

The Use of Estimates in Calculating a "Sum Certain" Does Not Automatically Disqualify a Claim

"Sum certain" is a legal term that refers to a fixed or specific amount of money, without any room for ambiguity. In the context of a claim against the Government, the claim must contain facts sufficient to permit the Government to understand the basis upon which liability is claimed. The claim shall also contain a specific amount for which the claim can be settled (i.e. sum certain) and the facts supporting the amount.

The ASBCA (Armed Services Board of Contract Appeals) has, over the years, listed a  number of qualifications that defeat the "sum certain" requirement. These include nomenclatures such as:

• approximately
• at least
• no less than
• well over
• in excess of

Finding these qualifiers will render a claim null and void because there is no sum certain indicated.

Where does "estimated" fall within the sum certain

Estimated is not among the fatal qualifications listed above. The Board (i.e. ASBCA) has frequently accepted estimates in support of a sum certain. The Board has repeatedly held that the 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.

Recently, in a case brought by Fluor Federal Solutions, LLC (see ASBCA No. 61353), the Board ruled that Fluor's use of estimates that included a detailed explanation of how the estimate was calculated was an "unequivocal sum certain". This reiterates a previous decision by the Board in ASBCA No. 60367, Government Services Corp, where they also ruled that the use of estimated or approximate costs in determining the value of a claim was permissible as long as the total overall demand is for a sum certain.

Estimates are fine so long as they are supported and the resulting claim is for a sum certain.

Read the recent ASBCA decision concerning Fluor Federal Solutions here.

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.