Welcome to BakerHostetler's "Contract Spotlight," a space we use to highlight fundamental but often overlooked aspects of government contracting law that can give contractors a leg up in the fiercely competitive government contracts space. This quarter, we are highlighting the claim submission requirements of the Contract Disputes Act ("CDA").
The CDA requires that a contractor submit a claim against the Government to the contracting officer for a final decision before that claim may be considered by a tribunal, such as the boards of contract appeals or the U.S. Court of Federal Claims. Yet contractors consistently submit incomplete or inadequate materials, jeopardizing untold dollars in the process. By paying attention to the key requirements of the CDA and its implementing regulations, contractors can ensure they are either paid in full and on time, or are ready to litigate their claims.
A recent decision by the Civilian Board of Contract Appeals ("CBCA") demonstrates the importance of rigorously adhering to the CDA's certification requirements. See McAllen Hospitals LP Dep't of Veterans Affairs, CBCA 2774 (Oct. 2, 2014). In this matter, the contractor entered into a contract with the Department of Veterans Affairs ("VA") to provide medical and hospital services. Roughly two years into the contract, the contractor determined that the VA was improperly calculating reimbursement rates, resulting in both overpayments and underpayments on various services. The contractor then returned the purported overpayments and submitted a "formal claim" to the contracting officer, claiming over $900,000 in alleged underpayments. After the contracting officer denied the claim on the theory that the contract limited the reimbursement rates, an appeal was taken to the CBCA.
Despite the fact that the Government had fully considered the claim, and despite the fact that the Government did not argue before the CBCA that the claim was not certified, the CBCA nevertheless dismissed the claim sua sponte because it found no evidence in the record that the claim was accompanied by the certification required for all claims above $100,000. Therefore, the contractor's failure to submit a proper certified claim denied it the opportunity to even litigate the claimed amounts.
The fundamental attributes of a claim are simple and straightforward. A claim must be submitted to the contracting officer in writing and must demand precise relief, such as a sum certain. Additionally, for claims for more than $100,000, the contractor must expressly certify that: (1) the claim is made in good faith; (2) the data supporting the claim are accurate and complete; (3) the claimed amount accurately reflects the adjusted amount for which the contractor believes the federal government is liable; and (4) the certifier is authorized to certify the claim on behalf of the contractor. By following these simple requirements, contractors can avoid the pain of foregoing amounts due to the strict requirements of the CDA.
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