ASBCA: Claim Must Include Request for “Final Decision”

As readers of this blog might know, the government contracts claims process is set by statute and includes a number of requirements, such as being certified if the dollar amount is over $100,000.

But a possibly lesser-known requirement is that, in order to be valid, a claim must request that the contracting officer issue a “final decision” on the claim. In a recent decision, the Armed Services Board of Contract Appeals opined on this requirement.

The ASBCA reviewed the claim requirement in Hejran Hejrat Co. Ltd, ASBCA No. 61234, 18-1 B.C.A. (CCH) ¶ 37039 (Apr. 23, 2018). The Army Corps of Engineers awarded Hejran Hejrat Co. LTD (HHL) a contract to lease armored utility vehicles for use in Afghanistan. After a bid protest, corrective action, and a modification, the contract price was decreased from $9,364,707 to $8,787,800.

In July 2012, USACE indicated it would not exercise an option. HHL then informed USACE that it was due additional payments and some vehicles were missing and submitted three invoices requesting $4,137,964 of additional compensation. The contracting officer responded:

This letter is in response to your three (3) invoices HHL-USACE/015, HHL-USACE/016 and HHL-USACE/016 submitted for contract W5J9JE-l 1-C-0I l5 on 22 August 2013. Although you used the word “claim” and “compensation” in your email and invoices, I have treated this as a request for equitable adjustment (REA) because it is not clear that you were seeking a contracting officer’s final decision.

The CO also asked if HHL “intended to submit a claim or sought a contracting officer’s final decision.”

In a January 2014 email, HHL responded that it had not intended the earlier email with the three invoices (from July 2012) to be considered an REA. But, the January 2014 email further explained that “We therefore ask you to treat this email together with the supporting documents as a REA. In the event that you decide to treat this email as REA and still reject our request for the adjustment of payments, we would then proceed with issuing a certified claim.” The email included justification for why it was owed additional money, such as missing vehicles, and asked again that “this email . . . be treated as a REA.”

In March 2015, an officer of HHL sent an email to the agency requesting payment, giving reasons why it was owed money, and stating that the “clauses and points reflected in REA (Request for Equitable Adjustment) in reference to contract# W5J9JE-11-C-0115, to the best of my knowledge are true.” In May 2015, the CO sent a “Response to REA” document back to HHL. This document contained no indication that it should be treated as the CO’s “final decision” and the CO noted that HHL “may have a claim on the things discussed in our decision.”

The new USACE CO found no merit to the REA in March 2017 and advised HHL to follow the procedure in the contract’s disputes clause. But the CO did not issue a contracting officer’s final decision.

The ASBCA, in reviewing this matter on appeal,  started with the basic requirements of a claim. The four requirements are (1) the amount of the claim,  (2) the basis of the claim, (3) a request for final decision by the CO, and (4) a certification if the amount is over $100,000. Here, while HHL included the amount and basis of the claim (and could have remedied the certification issue before final judgment), it never  requested a contracting officer’s final decision in six years of communication. HHL “declined to ask for a final decision or identify the invoices, or any of its submissions, as a claim. HHL demonstrated that it understood the significance of the contracting officer’s inquiry.”

HHL tried to argue that USACE had treated its communications as a claim. But ASBCA did not accept this argument, holding that the “contracting officer’s characterization of a submission by a contractor cannot establish that a CDA claim has been submitted.” Therefore, ASBCA dismissed the appeal.

This case is a stark reminder that, generally speaking, all elements of a claim must be in place for it to be treated as a claim under the FAR and applicable statutes. One of those four requirements is the request for a final decision. If the contractor does not make such a request, the claim may well fail.