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:

1. The submission meets the definition of a “claim”
2. The submission includes a CDA certification
3. 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.

Firm-fixed-price contracts place maximum risk and full responsibility upon the contractor for all costs and resulting profit or loss incurred in performing a government contract. Fixed price contracts provide for a price that is not subject to any adjustment based on the contractor’s cost experience. Meanwhile, fixed-price contracts with economic price adjustments provide for upward or downward revisions of the stated contract price upon the occurrence of specified contingencies. There are three general types of price adjustments. First, price adjustments based on established prices provide for increases or decreases from an agreed-upon level in published prices of specific items. Second, adjustments based on actual costs of labor or materials contemplate increases or decreases in the specified costs of labor or materials actually experienced by the contractor during contract performance. Finally, adjustments based on labor or material cost indexes provide for increases or decreases in labor or material cost standards or indexes identified explicitly in the contract. In fixed-price contracts that do not provide for economic price adjustments, the contractor assumes the risk of unexpected costs not attributable to the government.

Contractors may sometimes encounter unforeseen conditions that make a government contract commercially impracticable because performance would cause extreme and unreasonable difficulty, expense, injury, or loss. Unless the contractor has assumed the risk of the unforeseen condition, a finding of commercial impracticability excuses the contractor from performing. In other situations, commercial impracticability may be treated as a constructive change, warranting an equitable adjustment due to the substantial, unforeseen costs imposed upon the contractor. Whether the performance of a contract would be commercially impracticable is a question of fact to be resolved on a case-by-case basis. Therefore, adjudicative forums have consistently declined to adopt a bright-line rule providing that a certain percentage of cost overrun automatically constitutes commercial impracticability. However, due to the potential for abuse, the standard for establishing commercial impracticability is challenging to meet, and contractors are not entitled to relief merely because they are unable to sustain their profit margins.

In Armed Services Board of Contract Appeals (ASBCA) No. 63615, a decision issued on May 19, 2025, the Board granted the agency summary judgment on the issue of commercial impracticability when the contractor suffered a 37% cost overrun on a construction contract. The U.S. Army Corps of Engineers (USACE) issued the underlying contract for construction work at Placement Area No. 10 in the Corpus Christi Ship Channel. The total adjusted contract price following all modifications was $11,046,369.04. During performance, the contractor encountered excessive erosion on the south side of the placement area. Subsequently, the work to address the erosion was added to the contract via two bilateral contract modifications addressing the inland and shoreline sides of the placement area, totaling $909,332.04. However, even after the modifications, the contractor continued to incur costs and expend additional resources. A year after the contract was deemed substantially complete, the contractor submitted certified claims asserting entitlement to roughly $3,560,723.65 in cost overruns for work associated with the first modification and $447,522.64 in cost overruns for the second modification. These claims were denied by the contracting officer (CO) in their entirety.

Under the Spearin doctrine, when the government furnishes design specifications directing the contractor on how to undertake performance on a contract, it provides an implied warranty that the contractor will be able to perform the contract satisfactorily if it adheres to the government’s specifications. The doctrine allows contractors to transfer to the government the risk of increased costs resulting from defective specifications. Notably, however, the Spearin doctrine only applies when the defective specifications are design specifications as opposed to performance specifications. Design specifications expressly describe how contract performance must be undertaken and do not permit the contractor to make any deviations. Meanwhile, performance specifications state the overall objectives that must be achieved but leave the decisions on how to achieve those objectives at the discretion of the contractor. Since design specifications do not allow deviations or grant the contractor discretion in achieving contractual objectives, the government implicitly warrants that design specifications are free from defects. Consequently, when the government’s design specifications are defective or result in unsatisfactory performance the government is deemed to have breached its implied warranty of specifications under the Spearin doctrine. In such cases, the contractor may recover all proximate costs stemming from the government’s breach.