While the Contract Disputes Act provides no definition of a claim, the Federal Acquisition Regulation (FAR) § 2.101 defines a claim as a written demand or assertion by one of the contracting parties seeking, as a matter of right, the payment of a sum certain arising under or relating to the contract. The FAR further provides that a routine request for payment that is not in dispute when submitted is not a claim. However, such submissions may be converted to a claim by written notice to the contracting officer as provided in FAR § 33.206(a) if it is disputed as to the liability or amount or is not acted upon in a reasonable time. Finally, the FAR requires claims over $100,000 to be certified. To assess whether a submission is a CDA claim rather than a request for equitable adjustment (REA), contractors may typically look to three objective criteria:
- The submission meets the definition of a “claim”
- The submission includes a CDA certification
- The contractor must request a final decision from the contracting officer
Despite these objective criteria, it may not always be clear when an REA is converted into a “claim,” the denial or deemed denial of which can be appealed to a Board of Contract Appeals or the Court of Federal Claims (COFC). On August 29, 2024, the Armed Services Board of Contract Appeals (ASBCA) in ASBCA No. 63197 issued a decision on a government’s motion to dismiss for the contractor’s failure to convert an REA into a CDA claim. The underlying contract for medical coding services was issued by the Army in January 2018 using the government-provided browser-based Application Virtualization Hosting Environment (AVHE) for the United States Medical Command. Almost two years later, on November 18, 2019, the contractor submitted a “Request for Price Modification” seeking various cost adjustments. The pertinent portion of the request sought costs for lost production due to the government-imposed downtime for the AVHE system. In February 2021, the contractor provided supporting material to validate downtime costs in response to a government request for additional information. In July 2021, the contractor submitted a revised request for price modification labeled “Request for Equitable Adjustment,” seeking payment for downtime costs in the amount of $615,199 categorized as an unexpected loss.
In response to a November 2020 request for a status update regarding the request, the Army contract specialist responded that he was hopeful that a resolution could be achieved within the next 60 days. On December 9, 2020, the contract specialist made a minor adjustment to the contractor’s proposed downtime loss amount and asked that the contractor include a certification on a revised letter mirroring the certification language in the Disputes clause of the contract. The same day, the contractor’s president provided a revised invoice titled “request for equitable adjustment,” accepting the Army’s adjustment to the amount of downtime losses and including the following certification consistent with the requirements of a CDA claim.
“I certify that the claim is made in good faith; that the supporting data are accurate and complete to the best of my knowledge and belief that the amount requested accurately reflects the contract adjustment for which the contractor believes the Government is liable; and I am duly authorized to certify the claim on behalf of the contractor.”
In August 2021, the Army contract specialist again requested that the contractor submit a revised “document” including the costs of downtime losses from December 2020. The following day, the contractor submitted a revised document updating the amount of its downtime losses to $924,384. The contractor still referred to the document as a “Request for Equitable Adjustment” and again included the certification language consistent with a CDA claim. In November 2021, a different contracting officer (CO) assumed the responsibilities of the contract. Meanwhile, the contractor regularly requested status updates regarding the “outstanding REA” in the months following its revised August 2021 submission. In January 2022, the CO advised the contractor that there was no firm deadline associated with the REA and that this would change if the REA was converted to a claim. However, on January 24, 2022, the CO issued a decision denying the contractor’s August 2021 submission – stating that the language, tenor, and other contemporaneous communications indicated that the revised submission was a “REA” rather than a “claim” under the contract’s Disputes clause. On February 16, 2022, the contractor filed its appeal with the ASBCA. In response, the Army filed a motion to dismiss, asserting that the Board lacked jurisdiction because the contractor had failed to convert its REA into a CDA claim.
In ruling on the Army’s motion to dismiss, the Board first reiterated that as the proponent of the Board’s jurisdiction, it was the contractor’s burden to establish the Board’s jurisdiction through a preponderance of the evidence. The Board also noted that the contract incorporated both the Disputes clause and the Requests for Equitable Adjustment clause, and that the certification language requested by the Army contract specialist matched the language for certification of a claim under the contract’s Disputes clause. The Board then discussed the applicability of the three objective criteria to assess whether a contractor’s submission was a CDA claim rather than an REA.
(1) The submission met the definition of a “claim”
The Board began its analysis of whether the contractor’s submission was a claim instead of an REA by restating the FAR definition of a claim. The Board then cited the Federal Circuit for the proposition that a CDA claim need not take any particular form or use any specific wording so long as it has a “clear and unequivocal statement that gives the contracting officer adequate notice of the basis and amount of the claim.” The contractor can meet this requirement for a written demand by providing a sufficiently detailed factual basis for its alleged losses. Finally, the request may be a CDA claim even if it is labeled an “REA” and is subjectively treated by the parties as an REA.
Here, the contractor’s submissions included a clear and unequivocal statement explaining the basis of the contractor’s downtime losses for each month. The contractor even provided additional documentation substantiating and supporting its downtime losses. Furthermore, the contractor’s submissions met the “sum certain” requirement as the downtime portion of the contractor’s claim clearly asserted increasing losses with the passing of additional months, from $615,199 in July 2021 to $924,384 in August 2022. The Board noted that the Army understood the “sum certain” so thoroughly that it even corrected a calculation error in the contractor’s amount of downtime losses. Therefore, the ASBCA concluded that the contractor’s downtime loss submissions met the FAR definition of a “claim.”
(2) The submission included a CDA certification
The Board next determined that starting with its December 7, 2020 submission, the contractor had properly certified its claim under the CDA. Specifically, the contractor’s December 7, 2020, and later submissions included a certification statement containing the necessary elements of a CDA certification. The contractor’s president, as the signatory, had certified that the claim was made in good faith and that the supporting data was accurate and complete to the best of his knowledge. Additionally, the statement clearly provided that the requested amount accurately reflected the contract adjustment for which the contractor believed the Government was liable and that the signatory was duly authorized to certify the claim on behalf of the contractor. Thus, the Board concluded that the contractor properly certified its claim per CDA requirements.
(3) The contractor requested a final decision from the CO
For the third objective criteria, the ASBCA began its analysis by clarifying that the requirement concerning the contractor’s request for a final decision from the CO focused on whether the content and context of the submission put the CO on notice that the document is a claim requesting a final decision. The Board reminded the parties that the contractor’s submission need not use any “magic words” to request a CO’s final decision. In this case, the contractor’s submissions had started as an REA but then changed to a CDA claim when the contractor certified its December 7, 2020 submission. Additionally, when the contracting specialist asked the contractor to certify its December 2020 submission, the government essentially put itself on notice that the contractor had converted its REA to a claim.
The Board also pointed out that in one of the responses to the contractor’s requests for status updates, the contracting specialist indicated that the downtime losses issue would be resolved in 60 days, which is the same amount of time a CO is afforded under the CDA to issue a final decision. Here, the contractor even remedied any lingering ambiguity regarding its request for a final decision by explicitly requesting a decision in its correspondence with the Army. Specifically, after its August 2021 submission, the contractor sought a status update regarding the “Contracting Officer’s Decision Document.” Later, the contractor also requested the contract specialist to nudge the CO to have the agency counsel “render a timely decision.” Given this content and the context of the correspondence between the parties, the Board determined that the contractor had satisfactorily requested a final decision from the CO. The Board also reminded the government that it may not unilaterally designate when an REA or a submission becomes a CDA claim. Ultimately, based on this analysis, the Board denied the Army’s motion to dismiss the downtime losses portion of the contractor claim by ruling that the contractor had successfully converted its REA into a CDA claim.
While the CDA does not define a “claim,” the FAR definition of a “claim” requires contractors to provide a written demand or assertion seeking as a matter of right a sum certain arising under or relating to a federal contract. Since a routine request that is not in dispute when submitted is not a CDA claim, it may not always be clear whether a submission requesting payment is an REA or a CDA claim. In such situations, contractors should be mindful that the inclusion of a certification mirroring the language in FAR 33.207(c) may be the critical fact that indicates to adjudicative forums that the submission is a CDA claim rather than an REA. Therefore, when converting an REA into a CDA claim, contractors should ensure that they include a certification that mirrors the language of FAR 33.207(c) and any applicable Disputes clause of the contract. Additionally, when submitting a claim that meets the FAR’s definition of a claim, contractors should also make sure they request a final decision to put the CO on notice that the submission at issue is a CDA claim. By meeting these objective criteria, contractors can successfully convert their REAs into CDA claims. Finally, contractors should remember that once an REA is converted into a CDA claim, the government may not then turn it back into an REA regardless of the parties’ subjective treatment of the submission.
This Federal Contract Claims Insight is provided as a general summary of the applicable law in the practice area and does not constitute legal advice. Contractors wishing to learn more are encouraged to consult the TILLIT LAW PLLC Client Portal or Contact Us to determine how the law would apply in a specific situation.
