This is the third in an eight-part series discussing state-of-the-art strategies for claims certified under the Contract Dispute Act (CDA). Certified claims are the primary means for government contractors to recover damages from changes, delays, inefficiencies, and other government-caused issues – an especially important point for contractors looking to maintain a flow of cash positive while facing the prospect of an economic downturn or recession.
As I said, CDA claims are the contractor’s direct route to recovering additional time and costs on federal contracts. In an ideal world, the contracting officer will use their settlement authority to resolve the claim through a negotiated settlement agreement. In fact, it is official government policy under FAR 33.204.
However, the contracting officer also has the authority to issue a contracting officer final decision (COFD) dismissing a claim. A denial (or even a partial denial) triggers important decisions for the contractor that will dictate how the claim will be argued and resolved in the future.
The decision to appeal – Commission or tribunal
Once the contractor receives the COFD, all subsequent steps are a matter of dispute. Entrepreneurs should carefully consider factors such as likelihood of success, cost, and business interruption before moving forward.
Contractors have two options in terms of where to appeal a COFD: (1) file a lawsuit with the United States Federal Claims Court (COFC) or (2) appeal with the Appeal Board appropriate contracts. The choice of forum has far-reaching effects on the appeal – including the degree of procedural formality, the ability to recover attorneys’ fees, and the availability of expedited procedures (discussed in more detail below).
The call time frame for each forum is also very different. An appeal to the appropriate board must be filed within 90 days of receipt of the COFD. Contractors have one year from the same trigger to submit a request to the COFC.
Election of binding forum
The choice between the COFC and the Boards takes on even greater importance because of electoral doctrine.
The electoral doctrine provides that entrepreneurs cannot move Between both forums available. For example, suppose a contractor chooses to file a timely appeal with the Armed Services Contracts Appeal Board, but later decides that the COFC is the best or most beneficial venue. The Board would dismiss the filed appeal (with prejudice), but the Court would dismiss the new filing for lack of jurisdiction (because the appeal was originally filed with the Board). A true worst-case scenario leaving the contractor with a valid claim, but no forum for recovery.
The key considerations for any call are recovery time and cost. For small claims, the Commissions offer expedited procedures that streamline the litigation process.
Contractors can use these procedures strategically to minimize costs and maximize recovery, including submitting and appealing multiple independent claims under the same contract.
ADR and current negotiation
Where the contracting officer issues a COFD dismissing a claim in its entirety, the contractor’s sole remedy to continue to claim damages is to file a remedy. However, this does not mean that a full trial on the merits is inevitable.
The issuance of a COFD and the filing of an appeal does not deprive the contracting agent of the authority to negotiate the law and execute a settlement agreement. Keeping the lines of communication open during the process is essential.
Entrepreneurs should also consider the availability of Alternative Dispute Resolution (ADR) after filing an appeal. Both the Boards and the COFC have specific ADR provisions if there is an opportunity to find common ground. ADR is often an attractive option, as it enables faster and more cost-effective resolution on the contractor side, while reducing risk and burden on the government.
Check back next Tuesday (November 22) when we go over different strategies for using CDA claims and Requests for Equitable Adjustments (REA).