Breach of Contract Claims Against the Government

As a contractor doing business with the federal government, there is often the question of whether there is a breach of contract claims against the government. Whether the answer is yes or no is left to the court. However, before you reach this phase you must first understand the basics of how to file an agency breach of contract.  Sometimes the federal government does breach its contract.

When you do not carefully assess your claims against the government or the required statutory process for filing, you can end up spending tens of thousands of dollars in unnecessary litigation. 

Both claims for services contracts and federal construction projects are common. Yet, none of them are pleasant experiences when the government does not rule in your favor.  When your company has some level of challenge to the government’s inaction or action, you must first turn to the Contract Disputes Act (CDA) to see if there is a legal remedy. 

Is Your Federal Breach of Contract Claim Covered Under the CDA?

Not all federal contract claims and disputes are regulated by the Contract Disputes Act. You want to have your attorney first assess whether or not your claim is covered because you can spend tens of thousands of dollars if it is not.  Submitting the claim first to the contracting officer is critical to getting the result you seek. Failure to follow the agency’s administrative process can lead to disastrous results and costly litigation.

Types of federal contract claims that are covered under the CDA statute include:

• Contract post-award monetary claims
• Breach of Contract and Claims
• Justified claims for additional performance
• Non- Monetary Claims (Compliance with contract terms, contract interpretation, duty of good faith and fair dealing) 
• Contract claims arising out of an implied-in-fact contract 

What Types of CDA Contract Claims Against the Government Not Covered?

Not all claims against the federal government are covered under the Contract Disputes Act. Small businesses and other DOD contractors can spend tens of thousands or even hundreds of thousands of dollars only to find out that their claims are not covered under the CDA. This can be a very painful experience. Tje following are but a few types of government contract claims not covered by the statute.

• Government tort claims
• Davis Bacon Act and prevailing wage disputes
• Pre-award contract disputes

However, when and how you pursue the breach claim can be tricky and costly when the Contract Disputes Act process is not followed.  

Avoiding costly mistakes in litigating contract claims against the federal government is always the ultimate goal of any contractor.

Breach Due to an Oral Contract? Beware

Common situations that must be avoided include oral statements and agreements made by the agency. This can occur through the contracting officer or the contracting officer representative (COR). The first suggestion is that contractors should not act on oral statements by the contracting officer (there are exceptions to this rule).

When you submit a breach of contract claim to the contracting officer ( this rule also applies to when filing an appeal of the contracting officer’s final decision), you must allege

sufficient plausible facts to state a claim for breach by the government.  Stating the minor details and who said what is essential. Courts have ruled that  agreement must meet four basic elements in order to bind the government:

(1) mutuality of intent to contract;

(2) lack of ambiguity in offer and acceptance;

(3) consideration; and

(4) a government representative having actual authority to bind the United States in

contract.

See Anderson v. United States, 344 F.3d 1343, 1353 (Fed. Cir. 2003) Anderson, 344 F.3d at 1353. Also, courts are well aware that there are some situations where oral agreements can be binding. See, e.g., Tiburzi v. Dep’t of Justice, 269 F.3d 1346 (Fed. Cir. 2001) (finding an oral settlement agreement between a Drug Enforcement Agency employee and the Agency to be binding).

When you submit your claim for breach of contract against the government, you must also meet the basic requirements of the Contract Disputes Act.

What are the Contents of Your Breach Claim to the Contracting Officer?

When you file a federal breach of contract claims to the government, it must contain at least the following: 

1. A written demand or assertion or payment or some other relief under the contract. This must allow the contracting officer to have enough notice of what you are seeking
2. The claim must be for a sum certain, adjustment or interpretation of contract terms, or other relief arising under or relating to a contract between the government and the contractor. For breach claims, you want to specify the details and a relation between the government’s actions, or inactions, the specific contract clauses or PWS requirements in question and linking them to your damages.
3. Federal contract claims exceeding $100,000.00 must be certified by the contractor. You must certify that
   1. the claim is being asserted in good faith,
   2. the supporting data is accurate and complete to the best of the contractor’s knowledge,
   3. the amount requested is accurate, and
   4. the person asserting the claim is duly authorized to certify the claim.
4. Request for a contracting officer’s final decision

Sample Court Decision

The Court of Federal Claims in the case of TPL, Inc. v. United States, No. 11-482 C (Sep. 16, 2014) ruled that a contractor’s failure to file their breach of contract claims with Contracting Officer precluded it from alleging government breach of contract as a defense to Government’s own breach claim.

After receiving the contracting officer’s final decision under a facilities use contract with Army, TPL, the plaintiff’s government contract attorney on appeal tried to counterclaim the Army’s demand for reimbursement for $11,958,046.72 for certain expenses.

The demand came with the contracting officer’s final decision. After the contract claims appeal was filed, the federal government filed a counterclaim for breach of contract, requesting damages for the above amount.

Untimely Federal Breach of Contract Claims Against the Federal Government Thrown Out By Court On Appeal

Contractors can lose millions of dollars if a breach of contract claims against the federal government are not filed on time. In TPL, the Court of Federal Claims simply lacked jurisdiction because the contractor had not first raised its breach claims at the contracting officer level.

• The Contract Disputes Act sets the timeliness for filing your claims.
• Preparation and documentation are essential when submitting your package to the government.
• Consider potential counterclaims by the Agency while assessing your case.
• Part of filing federal breach of contract claims against the government is to keep your right to appeal at the initial stages.
• You cannot raise new claims on appeal.

In TPL, the government filed a motion for summary judgment because the Court lacked jurisdiction to consider TPL’s defenses. TPL did not file a contract claim or otherwise raise the affirmative defenses before the contracting officer.

Defending Breach of Contract Claims Against Contractors by the Government

If the government requests damages from you, the contractor, you must at least show that the government failed to reasonably mitigate its damages. This contract defense is available so long as you put forth facts to support your affirmative defense.

• Just like any government breach of contract claims case, any defense to the agency’s claim for damages must also have supporting evidence.

Breach claims must be brought under the Contract Disputes Act, 41 U.S.C. §§ 7101–7109 (2012). Under that Act, presentation of a breach claim to a contracting officer is a prerequisite to the Court of Federal Claim’s jurisdiction to hear the case on appeal.

All claims by a contractor against the government shall be in writing, submitted to the contracting officer for a decision, and certified if more than $100,000). See more about board jurisdiction.

Read more about government contract affirmative defenses and government contract claims certification language.

Contract Claim Deadlines

Pursuant to the Tucker Act, you must file claims against the government within six years after the claim first accrues. There is much litigation about the deadline occurred.  Courts look at when all of the events occurred that would then fix liability on the Government.

Sovereign Immunity

The Government has argued several times that it can invoke sovereign immunity. However, the general rule is that there is no waiver of sovereign immunity. When the government consents to be sued, then you file a  lawsuit. By entering into a contract under the Contract Disputes Act, the courts find that the Government has waived its immunity.

Court Jurisdiction

When you file cases concerning contract claims against the federal government, the Contract Disputes Act allows the Court of Federal Claims and the various boards of contract appeals to head cases and contract appeals of claims between you, the contractor, and the U.S. Government. Contracts can be expressed or implied

To avoid costly mistakes in federal breach of contract claims against the government, call our claims and disputes attorneys at 1-866-601-5518 for a free initial consultation.

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