Does the following scenario sound familiar? The government adds work, changes the scope of work, or changes the conditions you face during performance. You dutifully and diligently perform, but you don’t get paid for the extra work. You submit various requests to get paid, but nothing seems to happen. Perhaps the agency responds that you are not entitled to a price adjustment. If you want to end the run-around, you have a powerful mechanism that will do so: filing a claim pursuant to the Contract Disputes Act (41 U.S.C. § 601 et seq.) and the “Claims and Disputes” clause of your contract. Here’s how.
When to file a claim
Before you file a claim, you should first give the agency a reasonable opportunity to address your concerns. That means sending an invoice or payment request to the contracting officer, along with information showing how you have calculated the amount being sought. In most cases, you are entitled to recover not only your direct costs, but also indirect costs, overhead, G&A, and profit. You are entitled to a reasonable profit for performing extra or changed work even if you were not making a profit on performance of the base contract.
If no action has been taken on your invoice or payment request for 60 days or more, it’s time to file a claim. There’s usually no reason to wait longer. Under the Prompt Payment Act, agencies are required to pay most invoices within 30 days, and late payments must automatically include interest. So if you have not been paid within 60 days after submitting an invoice, it’s unlikely you are going to be paid any time soon. In addition, once you file a claim, you start the running of interest on what you are owed.
Requirements of a CDA claim
Call it a claim. Your claim must be in writing and sent to the contracting officer, not to the administrative official who handles other matters relating to your contract. While there are no magic words that must be invoked, your claim letter should state that you are filing a “claim.” For example:
This is a claim pursuant to the contract’s Claims and Disputes clause in the amount of $__________ for the cost impact of the below described changes.
Your letter should state the time period covered by the claim and describe in detail why you are entitled to a contract price adjustment.
Request an exact amount and support it. Your claim must set out a “sum certain,” which means an exact dollar amount. An exact amount means an exact amount – not a range, or a stab in the dark, or some exact amount plus some undetermined amount. You must also explain how you calculated the amount, and you should provide copies of the supporting data that you used to calculate the amount due.
While your claim must seek an exact amount, that amount may incorporate estimates. If any part of your claim relies on estimates, then say so. Explain what part of the claim is based on estimates and how you arrived at the estimates. Estimates, however, still must be exact amounts in order to end up with a sum certain.
Ask for a contracting officer’s final decision. Within 60 days after you file a claim, you are entitled to receive a contracting officer’s final decision. While there is no requirement to mention this in your claim letter, it is good practice to do so. So the last line of your claim letter should read:
A contracting officer’s final decision on this claim is requested within 60 days of your receipt of this letter.
This will remind the contracting officer of the time limit that applies to responding to a claim. For claims that would reasonably require more than 60 days to review, the contracting officer can take a longer period of time. In such cases, the contracting officer must still reply within 60 days and state when a final decision will be issued.
Certify the claim. If the amount of your claim exceeds $100,000, you will need to file a certification as to the accuracy of your claim and supporting materials. Consult the “Claims and Disputes” clause for the exact terms of the certification.
Filing a claim requires the contracting officer to take some action on your claim within 60 days of receipt. The agency is now “on the clock,” and can no longer indefinitely put off resolution of the matter. If the contracting officer believes your claim has merit, he or she will usually try to resolve it before the 60-day deadline for issuing a final decision. Sometimes, however, even meritorious claims are denied outright.
Once you receive the contracting officer’s final decision it is only “final” if you do nothing about it. You have the right to have your claim heard by either an agency Board of Contract Appeals (BCA) or the U.S. Court of Federal Claims. The contracting officer’s final decision letter should apprise you of these appeal rights. To have your claim heard by the BCA, you must file your appeal within 90 days of receipt. To have your claim heard by the Court of Federal Claims, you must file within one year after receipt. While this is called an “appeal,” the action will be heard on a clean slate, without giving any particular weight to the contracting officer’s final decision.