The Contract Disputes Act (CDA) requires that a contractor present its claim to the contracting officer (CO) before an appeal or suit may be properly filed on that claim. This presentment requirement can be characterized as the linchpin of the contract appeals process under the CDA and is also the last clear chance for the government and the contractor to avoid appeals litigation. Once the contractor submits its claim to the CO, the CDA requires the CO to issue his final decision within 60 days of receiving the claim if the claimed amount is less than $100,000. For certified claims over $100,000, the CO must either issue his final decision within 60 days or notify the contractor within 60 days of the time within which a final decision will be issued. The CDA also requires that the CO issue the final decision within a reasonable time, accounting for factors such as the size and complexity of the claim and the adequacy of information provided by the contractor in support of its claim. In the event of an undue delay by the CO in issuing a final decision, the contractor may request the appeals adjudicative forum to exercise its discretion and direct the CO to issue a decision within a specified period. If the CO fails to issue a decision within that period, the contractor’s claim may be “deemed denied” and considered appealable under the CDA.

In ASBCA 63325, the Armed Services Board of Contract Appeals (ASBCA) issued an order on August 19, 2022, directing the CO to issue a decision within a specified time. The commercial-item indefinite-delivery, indefinite-quantity contract underlying that appeal was issued to a subsistence contractor in Afghanistan on a fixed-price basis. The Defense Logistics Agency (DLA) initially issued the contract in 2012, the term of which was later extended in 2020 through April 2025. After the withdrawal of U.S. forces from Afghanistan was announced in April 2021, the DLA and the contractor attempted to re-negotiate the continued performance under the contract but ultimately failed to reach an agreement. Subsequently, the contractor requested that the government terminate the contract for convenience, which the government refused to do. On March 21, 2022, the contractor submitted a duly certified claim for approximately $34 M in damages arising from the government’s alleged failure to acknowledge that the contract was constructively terminated. Notably, a constructive termination for convenience is a legal fiction that imposes the termination on the contractor even when the CO never specifically ordered a termination. On May 20, 2022, DLA notified the contractor that it intended to issue a final decision by April 20, 2023, due to the size and complexity of the contractor’s claim. The government also cited the CO’s workload issues, her vacation schedule, and concurrent matters that the contractor had in litigation at the time. However, the government acknowledged that the contractor’s claim was only 20 pages long, with 17 accompanying exhibits.

The contractor filed a request with the ASBCA pursuant to ASBCA Rule(1)(a)(5) for an order directing the CO to render a final decision on the claim by August 8, 2022. The ASBCA began its analysis by noting that the Board determines, on a case-by-case basis, whether the time a CO states he will issue a final decision in is reasonable. The Board pointed to its previous decisions for the proposition that while the size and complexity of the claim were considered factors in determining a reasonable time for the final decision, the government’s internal staffing matters were not a factor. ASBCA explained that the scarcity of attorneys to assist with the review of a CO’s final decision is a matter wholly and exclusively within the government’s control. Therefore, DLA was not justified in citing the CO’s workload and vacation schedule as issues contributing to the reasonableness of the time for the final decision. The Board reviewed the contractor’s claim and determined that while the contractor’s claim was somewhat complex, it did not appear, on its face, to be so extraordinarily complex that it would justify the government requiring additional time to assess. Thus, the ASBCA concluded that the DLA’s requested date for the issuance of the CO’s final decision nearly 13 months after the submission of the contractor’s initial claim was unreasonable. The Board directed the CO to issue a decision on the claim by December 16, 2022, failing which the contractor could file an appeal based on a deemed denial.

The CO’s final decision on a claim is a good indicator of the government’s position and basis for denial. It is also the parties’ last chance to avoid appeals litigation. Therefore, contractors facing undue delays from the CO after submitting their claims should be mindful that they may request the appropriate appeals tribunal to direct the CO to issue a final decision on their claim within a specified period. While what constitutes a reasonable time to issue a final decision will depend on the facts of a particular claim, contractors can compare the size, complexity, and issues of their claim to past similar cases to ascertain an approximate timeframe. For instance, the ASBCA gave the DLA CO nearly nine months after the contractor’s initial claim to issue a final decision in the above case. Similarly, nine months was reasonable when the contractor’s claimed amount exceeded $71 M, and the claim’s narrative section exceeded 160 pages. In another case, eight months was found reasonable where there were a significant number of issues, voluminous records, and a lengthy period was required to gather information due to the relocation of personnel. Meanwhile, the ASBCA has found 14-16 months unreasonable for a small construction claim, where the impact of the claim had already been extensively analyzed and audited. When faced with unreasonable delays by the CO in the issuance of a final decision, contractors should familiarize themselves with this framework to assess whether it is appropriate to request the appeals adjudicative forum to direct the CO to issue a final decision within a specified period.

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.