Contractors seeking to recover additional time and/or costs on government contracts typically choose to proceed with either a Request for Equitable Adjustment (REA) or a Claim. These remedies fall under the general umbrella of the Disputes clause (FAR 52.233-1).
Often times, REAs and Claims can be a study in contrasts. From a procedural perspective, submissions to the government are the subject of numerous technical hurdles that require strict compliance. For example, a Claim must be “certified” by the contractor if it includes a demand for a sum certain in excess of $100,000. The proper certification language is set forth at FAR 33.207(c). An REA does not require a corresponding certification unless it submitted to an agency of the Department of Defense, in which case the certification found at DFARS 252.243-7002 is required.
On the other hand, resolving REAs and Claims often involves informal negotiations and compromises. Contractors seeking to resolve disputes with the government are well served by remaining flexible and engaging in the kind of give-and-take usually reserved for the alternative dispute resolution universe.
In order to achieve maximum effectiveness in resolving disputes, government contractors need to be able to excel with a foot in both worlds – that is, maintaining compliance with the applicable rules and regulations while remaining open to outside-the-box solutions. Straying too far in either direction can result in a negative outcome.
For example, a recent Armed Services Board of Contract Appeals (ASBCA) decision highlights the case of a contractor that failed to comply with some hard and fast rules during its settlement negotiations with the government. As a result, the Board denied its appeal – leaving the contractor empty handed.
The appeal involved an Army contract for the operation of a solid waste burn pit in Afghanistan. The government terminated the contract for convenience and directed the contractor to submit a settlement proposal. In response, the contractor submitted a properly certified claim for $160,000 in costs on October 24, 2013. Just four days later, the contracting officer issued a final decision denying the claim and informing the contractor of its right to appeal (90 days, if filing at the ASBCA).
Even after the contracting officer’s final decision, the parties continued to negotiate. The contractor floated a comprehensive settlement agreement including all labor and leased equipment expenses. The contracting officer responded that the government intended to deny the proposal due to a lack of supporting documentation, but also invited the contractor to supplement the proposal. The contractor responded with a revised settlement proposal. Critically, the contractor did not certify this revised submission, which was also later denied by the government.
About three years later, the contractor filed its Notice of Appeal from the government’s denials with the ASBCA. The government promptly filed a motion seeking to dismiss the appeal as untimely because it was filed well beyond the 90 day deadline included in the contracting officer’s final decision. The Board agreed and dismissed the claim. Tangentially, the Board also commented that it lacks jurisdiction over the contractor’s revised proposal due to the lack of a proper certification.
This decision offers a variety of lessons for contractors pursuing or considering claims against the government. First, the case highlights the substantial latitude for negotiations during the dispute resolution process. While they did not bear fruit here, the government and the contractor exchanged multiple volleys with the opportunity to refine and supplement the original submission. Contractors should endeavor to keep an open line of communication during the REA/Claim process and promptly respond to requests for supplemental information.
The case also provides contractors with some good examples of what not to do. Here, the contractor failed to certify its claim and then made matters worse by waiting an unreasonable amount of time to pursue its appeal. Most claim miscues can be corrected or at least mitigated if they are discovered early in the process. However, in this case, the nearly three year delay was simply impossible to overcome.
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