Contract Disputes Act of 1978 and Claims Against the Government

Contractors often face harsh consequences when filing federal government Contract Disputes Act (CDA) claims against the government. Despite getting the benefit of your work, the contracting officer (CO) will often deny your claim just because the claim itself did not meet the CDA requirements or you did not provide the proper notice. This result can cost a company thousands or even millions of dollars. 

Understanding the pitfalls and dangerous landmines that lay in wait should be every contractor’s priority. Every company should be aware of landmines that await uninformed corporations when preparing and submitting a notice of claim. The initial process for submitting a contract claim against the government is critical and is also often the subject of litigation. The initial claims process, if done correctly, preserves any jurisdictional rights for the appellate court to hear your case. 

What Is the Contract Disputes Act of 1978?

The Contract Disputes Act of 1978 (CDA or Act) is a congressionally mandated regulation that allows the contractor to resolve contract claims and disputes against the federal government. It also allows the contracting officer to bring a claim against the contractor.   When the contracting officer issues an adverse decision, the contractor can appeal the decision to the U.S Court of Federal Claims or to an administrative board of contract appeals. Specifically, the Armed Services Board of Contract Appeals (ASBCA) or the Civilian Board of Contract Appeals (CBCA). 

What Types of Claims Does the CDA Cover? The CDA governs government contracts post-award monetary claims. This includes breach of contract, either for a clause or statutory violation or common law duty of good faith and fair dealing. The Act also covers non-monetary claims, such as a claim for time or contract interpretation. The Contract Disputes Act also covers contractual claims arising out of an implied-in-fact contract between the government contracting and a contractor.

What Types of Claims Are NOT Covered by the CDA? Contractors should be mindful that all claims and disputes are not necessarily governed by the Contract Disputes Act.  For example, a prevailing wage claim under the Davis Bacon Act is not covered by the CDA because claims or disputes which another federal agency is specifically authorized to handle are not subject to the government contract disputes process under the CDA. The Act also does not over tort claim that does not arise under or relate to a contract.  One other common mistake made by contractors is to submit a contract claim for pre-award matters such as bid protest actions or bid proposal fees that are not governed by the Act.

Government Contract Disputes Act Process

Under the federal government contract disputes process, all claims and disputes must first be presented to the contracting officer.  The claim must see the CDA requirements as listed below. The contracting officer is generally required to issue a final decision within 60 days or the claims can be deemed as denied.

Who Can Bring a Contract Disputes Act Claim? The Act is in place so that either the government or the contractor can bring a claim against each other.  Typically claims under the Act might include claims for liquidated damages, termination for default, differing site conditions, delays and more.  Subject to the statute of limitations, either party may bring a claim under the contract. It is important to know that subcontractors cannot bring a claim under the Contract Disputes Act because there is no privity of contract with the agency. Prime contractors, however, can sponsor pass-through claims on behalf of the subcontractor under the Act.

Contract Disputes Act of 1978 Statute of Limitations – Notice of Claim Procedural Requirements: The agency’s denial must be appealed to the Court of Federal Claims or Board of Contract Appeals only after the CO’s final decision. You must be aware, however, that there is a statute of limitations of six years to file your claim. You can appeal the contracting officer’s denial of the claim to the respective board of contract appeals within 90 days. Meanwhile, you can appeal to the US Court of Federal Claims within one year of the CO’s final decision. 

• Your notice of claim must be specific and demand a specified amount
• With enough detail to let the CO understand the basis of the claim
• Must have the requisite certification language

However, even if you are within the statute of limitations, the longer you wait to file your notice of claim to the government, the harder it becomes to resolve disputes because government employees retire or rotate. The Contract Disputes Act of 1978 has certain procedural prerequisites that can make or break the chances of getting approval from the government.

As a contractor, you must be aware that under FAR 52.233-1 many contractor claims cases are lost only because the company did not follow the procedural rules. 

Government Claims must legally relate to contract controversies or disputes between you and the federal government. You have to be a party to the contract (subs cannot bring claims directly against the government).  See information on  Filing a Government Contract Claim Appeal.

• CDA claims and disputes must be directly related to the project.
• Facts become critical when submitting government claims or payments for invoices.

Each CDA Claim Requires a Sum Certain: You do not have to submit every receipt for every nail that you are asking for payment.  The sum certain requirement on requires a presentation that the contracting officer can reasonably determine the amount of the claim. You must try to be as detailed as possible. The agency can use a simple mathematical formula for the ‘sum certain’ requirements. Do not use “approximate amounts” or include statements that the amount will be determined at another date.

Avoid Releasing Claims When Executing Contract Modifications: One of the dangerous pitfalls that occur when submitting claims to the federal government is to sign a release of claims on previous contract modifications. Is this fair to the contractor? Probably not. However, agencies use the release of claims defense all the time.  When you sign contract modifications you should always use a reservation of claims clause.

CDA Claims Certification Required For Contracting Officer Final Decision

The Act has a very strict application to DOD contracts. When filing Contract Dispute Act claims against the federal government, those that exceed $100,000 must include a certification statement under FAR 33.207.

• For claims more than $100,000, the Contracting Officer is required, within 60 days, either to issue a decision or tell you when a decision will be issued.
• If the CO does not issue a decision within 60 days, you can deem the claim as denied and proceed to the appeals level.

However, when claims against the federal government are less than $100,000, the Contracting Officer is required to issue a decision within 60 days of receipt of the claim provided you request a decision within that period.

Under the Contract Dispute Act of 1978, all CO decisions should be issued within a reasonable time, taking into account the nature of the claim.

• If they are not, you may either ask the Contracting Officer to issue a decision within a specified time or treat the failure to issue a decision as a “deemed” denial of the claim.
• It is essential that DOD contractors understand the necessary legal requirements under the Contract Disputes Statute.

FAR 52.233-1 Remedies For CDA Claims Against the Government

Under FAR 52.233-1, your remedy for claims against the government can include payment of money in a sum certain, adjustment or interpretation of contract terms, or other relief arising under or relating to the contract. It is important to know that certification should still be included even if you are not asking for money. See information about CPARS claims.

You can still submit a claim for non-monetary relief on Claims under the Act. BLR Group of America, Inc. v. U.S., 84 Fed. Cl. 634 (2008). The court ruled it had jurisdiction over non-monetary claims under the Tucker Act and the Contract Dispute Act of 1978 and reviewed the contractor’s claim that it had been unfairly evaluated in a Contractor Performance Assessment Report.

When considering civil litigation, other items that can become a contract claim include:

• Cost of your work being changed as a result of an order that may not have been identified as a change,
• The government’s direction to amend the method of how to do the work,
• The agency’s rejection of your previously approved instruction inspection plan,
• Submissions based on defective specifications, and
• Facts that show acceleration.

Government Contract Disputes – Construction Disruption and Delay Claims

Under the Act and under FAR 52.233-1 if the government’s action cause delays or disruption, you may be able to file construction claims against the federal government. The agency has a duty of good faith and fair dealing. Therefore, you can file an appeal to the Court of Federal Claims for a denial of equitable adjustment.

How to Appeal the Contracting Officer’s Final Decision?

After you receive the contracting officer’s final decision on a Contract Disputes Act claim,  you may be able to appeal the decision to various appellate courts. For example, you can appeal the decision a final decision to the Court of Federal Claims or the respective agency Board of Contract Appeals. Contractors must e careful to legal assess whether the appellate court has subject matter jurisdiction to hear the case. Many companies run into this confusing issue. 

• You must file your appeal with the  ASBCA, CBCA within ninety (90) days of receipt of the contracting officer’s final decision.
• As a government contractor you may also file an appeal with the United States Court of Federal Claims within twelve (12) months of receipt of the contracting officer’s final decision.

Are Attorneys’ Fees Recoverable for a Claim under the Contract Disputes Act?

Generally, a contractor may not recover its attorneys’ fees incurred pursuing a claim under the CDA. However, the Equal Access to Justice Act (EAJA)  allows some individuals and small businesses to recover attorneys’ fees up to $125 per hour if it is determined that the claimant is the prevailing party and the government’s position was not substantially justified. The claimant must also comply with the size standards set forth in the Act. As you can see, there are many nuances when filing contract claims against the federal government. When a lot of money is at stake, you want to consider getting legal advice from a government contract claims lawyer. 

Contact a government Contract Disputes Act claims lawyer at 1-866-601-5518 for a FREE INITIAL CONSULTATION.