If a dispute arises on a federal contract, the Contract Disputes Act requires a contractor to submit a written demand seeking as a matter of right a “sum certain” to the contracting officer as part of the claims process. What exactly is a “sum certain”? It is what it sounds like—contractors must provide an exact dollar amount of the overall damages they are claiming in their CDA claims. In other words, whatever damages the contractor is claiming cannot be qualified in any way. Contractors should never use the words “at least,” “approximately,” “no less than,” or “well over” with their damage figure. Instead, the contractor must provide an exact amount a set damage figure that represents the overall amount being demanded. It is okay if the damage figure is an estimate—even a flat calculation of $100,000—as long as an overall demand is made without any qualifying language.
The sum certain requirement is more than just avoiding the use of qualifying language with the damage figure, though. Contractors should also be mindful of how they convey the sum certain to the CO as well. The recent opinion in Sage Acquisitions LLC v. Department of Housing & Urban Development, CBCA 6631, helps illustrate this point. Sage submitted a 69-page termination for convenience settlement proposal setting forth itemized lists of costs and narratives in connection with the termination of three asset manager contracts at HUD. While two separate sections identified the “net proposed settlement” and/or “Total Termination for Convenience Settlement Proposal” was $3,149,926, another section stated the “Estimated REA Total Cumulative Impact” was $2,934,597. The $2,934,597 figure also contained an explanatory note saying “Certain Costs May be Duplicative of the Termination for Convenience Costs.” Sage’s narrative also stated “Sage does not seek the cumulative amount of all the REA proposals. Sage further expressly reserves the right to supplement or revise these calculations as necessary.” After HUD denied Sage’s settlement proposal, Sage appealed the denial to the Board.
On HUD’s motion to dismiss, the Board found that it lacked jurisdiction because the claim did not contain a sum certain. The claim as written was unclear whether just the $3,149,926 settlement figure was being asserted or if the $2,934,597 REA figure was also being demanded. Furthermore, the claim qualified the $2,934,597 REA figure by stating it may be duplicative of some of the costs incorporated in the $3,149,926 settlement figure and reserved the right to supplement this figure later. This meant Sage’s demand contained an “unfixed variable” and was not a sum certain.
The opinion in Sage Acquisitions also demonstrates the importance of getting the sum certain correct the first time. Both the Court of Federal Claims and the various boards of contract appeals will not have jurisdiction to hear an appeal if there is no sum certain stated because the claim is not a valid CDA claim. Although a CO may issue a final decision for a claim that does not contain a sum certain, this does not guarantee the Court or board will do the same, and a dismissal will force the contractor to restart the entire claims process at a time when costs are likely mounting. To avoid this outcome, contractors should be careful not to qualify whatever final amount is being demanded or make it seem the overall sum certain is not a fixed value capable of being determined from the claim.