It is a common misconception among construction companies that, when it comes to asserting claims against the government on federal projects, a claim is a claim and claims can be handled in the same ordinary fashion as such matters are resolved in any commercial setting. But nothing could be further from the truth.

Successful claimants in this area must surrender any preconceived notions about how construction claims are resolved in the commercial context and embrace the nuanced statutory and regulatory system to resolve disputes with the federal government. Companies that actually understand this system, rather than approaching a matter as just another construction dispute, can leverage the system to reach the successful resolution more readily than approaching the same facts and circumstances as if they were part of a typical commercial dispute.

Critical to the successful resolution of any dispute in the government contracting arena is starting the claim off right. Despite clear guidance on this issue, contractor after contractor fails to get the process right, resulting in disputes getting off on the wrong foot and substantially lessening the opportunity for a successful resolution. What makes a “right” claim and which tools can contractors employ when compiling and presenting claims?

The Definition of Claims

The Contract Disputes Act is the statutory grounding that provides the pathway for contractors to submit claims against the government. The CDA allows contractors to submit a “claim” against the government for contracts for the “procurement of construction, alteration, repair, or maintenance of real property,” and a “claim” is defined by federal regulations 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.” 48 C.F.R. § 2.101. Additionally, “a written demand or written assertion by the contractor seeking the payment of money exceeding $100,000 is not a claim . . . until certified” by the contracting officer. Therefore, at least in theory, the CDA sets forth a pretty clear path for contractors to submit claims against the government.

Experience demonstrates that the formulation and submission of a claim is nevertheless fraught with traps for the unwary. Therefore, contractors should adhere to a number of guidelines when preparing claims:

1. Always submit the claim in writing. Phone calls or conversations with the government’s contracting officer will not do. Although there is no specific format for a claim, the contractor must include all the above elements in the written claim. Referencing the proper statutory basis for the claim and stating that it is a “claim” further bolsters this requirement.
2. Explain “as a matter of right” why the contractor is entitled to the compensation or relief. Be sure to provide the contracting officer with details on why the contractor is entitled to payment. Reference to appropriate legal entitlement bases is a key element in meeting this requirement.
3. In the case of a monetary claim, assert a clear “demand” for the amount at issue. Ensure that the contracting officer understands the contractor is making a claim and the claim is for the government to pay the contractor money.
4. Most critical in the case of monetary claims, ensure that the demand is for a “sum certain” – an exact amount – meaning the contractor must provide an exact dollar amount the contractor claims that the government owes it. If the contractor uses words such as “approximately” or “not less than,” the “claim” will not be considered a claim under the CDA and will fail as such. Failing to assert a “sum certain” is one of the more common mistakes that contractors make in this area, and it is critical to state the amount properly to meet the CDA’s requirement.
5. Make sure to send the claim to the contracting officer. Claims submitted to contracting officer representatives or even to contracting officers with no authority under the relevant contract are not “claims” under the CDA and will most likely fail as such. Sending the claim to anyone other than the relevant contracting officer will likely derail the claim.
6. Make sure to request the contracting officer’s “final decision” on the claim. Use that exact language. Failing to request a final decision will likely derail the claim. Moreover, without a final decision, a contractor cannot appeal a contracting officer’s denial of the claim.
7. For claims over $100,000, an individual “authorized to certify the claim on behalf of the contractor” must certify the claim. Federal law requires a written certification that the claim is “made in good faith”; the “supporting data are accurate and complete to the best of the contractor’s knowledge and belief”; the “amount requested accurately reflects the contract adjustment for which the contractor believes the Federal Government is liable”; and the “certifier is authorized to certify the claim on behalf of the contractor.” Including all these points in the certification is critical. Claims have been dismissed because the certification did not include the statement “made in good faith” or the authority of the certifier to certify the claim on behalf of the contractor.

By following these guidelines, contractors can help ensure that their claims are actually “claims” under the CDA and that the claim is properly submitted before the government for decision.

The Importance of Getting the Claim Right

Properly formulating and submitting a claim to the government is critical for multiple reasons. As an initial matter, a claim that is not properly submitted before the government does not trigger a requirement that the contracting officer provide a response and does not trigger the statutory collection of interest on the claim. More important to the successful resolution of a dispute, a defective claim denies the boards of contract appeals or the Court of Federal Claims – bodies that resolve claims – any jurisdiction over the claim. Too many contractors have learned this fact the hard way, where the boards or court have failed to provide decisions on claims that have been percolating for years because the claims were not properly submitted. Put simply, a defective claim will not be resolved by the ultimate arbiters of government contract disputes, leaving the contractor with no ability to obtain relief.

Moreover, when it comes to resolving disputes short of litigation, the lack of a proper claim has even more significant consequences. A defective claim is not taken seriously by the government. The government knows that it is not required to respond to the claim, that it suffers little litigation risk in the face of a defective claim and that the claim is not incurring interest. Therefore, when it comes to negotiating an informal resolution of a dispute, a defective claim that does not follow the procedures referenced above is little more than any other communication to the government. Getting a claim right is the first and potentially most important step in resolving government contract disputes.

Disputes in the government contracting arena are unique in many respects. While construction companies are often tempted to treat such claims as any other claim that could arise in the commercial arena, as demonstrated above, government contract claims require an attention to detail and experience in the procedures that drive the government’s dispute resolution process. By following the requisite procedures at the start, contractors can take the first of many steps that are uniquely available to government contractors to resolve disputes. These unique mechanisms provide contractors with an advantage in resolving disputes not often considered in the pure construction context.