State and federal governments occasionally require contractors to certify a claim before it is submitted to the government.
As part of claim certification, the contractor generally has to agree that:
- the claim is being submitted in good faith;
- the supporting data and documentation are accurate and complete to the best of the contractor’s knowledge;
- the claim amount requested accurately reflects the adjustments for which the contractor believes the government is liable; and
- confirm that the person certifying the claim is in fact authorized to do so.
Forcing a contractor to do this serves multiple purposes, including forcing the contractor to review the claim (and any of its pass-through claims) in advance, discouraging unwarranted, inflated, overreaching and/or unsupported claims and encouraging settlements.
If the claim is unsupported or improper in some way, it could lead to liability. Before certifying a claim, it is important to make sure and understand the agreement. It could be helpful to consider the questions below.
1. Is the claim made in good faith?
When thinking about if the claim is being made in good faith, there are several questions which are important to consider. For example: Are there good grounds for the claim? Is it consistent with the knowledge and understanding of the dispute? What measures has the contractor taken to ensure that the claim has support and justification? Is there any reason to believe the claim is incorrect or unsupported in anyway?
While reviewing the claim, ensure that there is no intention to either defraud or deceive the government. Contractors must make sure they have taken every measure that could reasonably have been expected under the circumstances to obtain the support and justification for the claim and ensure that their actions demonstrate a conscientious effort to meet ethical, contractual and statutory obligations.
2. Is the supporting data accurate and complete to the best of the contractor’s knowledge?
This sounds simple, but many contractors submit claims that do not provide all the supporting data or documentation to justify their claim. If possible, make sure that the person certifying the claim, the project manager and even an internal accountant go through the claim documents. Is the executive aware of any high level agreements that were signed that were not included? Is the project manager aware of any additional e-mails or field reports that were inadvertently excluded? Does the accountant have any additional invoices that subcontractors or suppliers submitted that confirm any claim amounts? These individuals can help ensure that all the respective invoices, timesheets, job cost data, etc. are provided to support each element of the claim. They can also ensure that the figures requested in the final claim tie-out to the figures that are supported in the invoices and the company’s books and records.
3. Does the amount requested accurately reflect the adjustment for which the contractor believes the government is liable?
Make sure that the amount requested is fair and accurate. Over-inflated claims come with the punishment of liability. For most contractors, this is not a problem. They know and understand their individual business and what their numbers for any specific claim should look like (for example, its overhead costs, a project manager’s time, an assistant’s time, etc). The real problem with this requirement is when a general contractor is submitting a pass-through claim on behalf of subcontractors. As such, before submitting a pass-through claim for a subcontractor, it is important to thoroughly understand its portion of the claim and ensure that the quantification of its claim is accurate.
4. Is the certifier is authorized to certify the claim?
Ensure that whoever certifying the claim has authority from within the organization to do so. This usually excludes secretaries and low-level personnel. This most often includes company executives and project managers familiar with the claim. Confirm whether the government entity (and related regulations) has a requirement that the individual signing it has personal knowledge of the claim or is simply allowed to rely on information gathered internally within the company. That information will help determine which individual is best suited to sign the claim.
