COFC Dismisses Claim for Failure to State Dollar Amount, Despite Claimant’s Attempt to Camouflage Claim

A government contractor must include certain details in a certified claim, including a sum certain, signature, and a request for a final decision. With regards to the “sum certain,” a contractor cannot avoid this requirement by attempting to portray its claim as one not for monetary relief, when the contractor is really just asking for money.

In Northrop Grumman Systems Corp. v. United States, 140 Fed. Cl. 249 (2018), the court considered a claim by Northrop against the Postal Service. The claim arose under a contract for Northrop to produce and deliver mail-processing machines for a fixed price of approximately $874 million. After performing the contract, Northrop claimed the Postal Service breached the contract and the Postal Service counter-claimed.

From 2007 through 2009, the parties negotiated over the scope of work and there were a series of equitable adjustments resulting in modifications to the production contract. After some delays and disagreements, the machines were installed by August 2011.

Northrop then filed a series of claims, including two for approximately $63 million each and one for around $71 million. The Postal Service counterclaimed, saying it was owed approximately $410 million. The contracting officer issued his final decision, deducting certain amounts Northrop claimed from the Postal Service claim, and determined Northrop owed it $341 million.

Northrop then took its case to the Court of Federal Claims. As part of its complaint, Northrop alleged “that the Postal Service affected a cardinal change to the contract and, as a remedy, seeks reformation of the contract so that the parties may determine the amount that the Postal Service should reimburse Northrop for costs incurred.” The Postal Service argued that this part of the claim was improper and the court lacked jurisdiction “because its claim is a monetary one for which Northrop did not seek payment in a sum certain.”

The court noted that a claimant “may not circumvent the requirement to state a sum certain in its claim by camouflaging a monetary claim as one seeking only declaratory relief.”

Northrop’s first claim stated that the “Postal Service’s actions constituted a cardinal change” asked the contracting officer “to reform the contract to a cost-plus-fixed-fee structure, pursuant to which [Northrop] shall be reimbursed for all allowable and reasonable costs allocable to this Contract . . . plus a reasonable fee thereon.”

A cardinal change is ” a substantial deviation from the original scope of work that changes the nature of the bargain between the parties.” “It is such a fundamental change that the parties cannot redress the change under the contract. Demanding performance thus, places the government in breach of the contract.”

Northrop argued that the Postal Service “fundamentally altered the nature of the contract by wresting design control from the contractor.” However, the court did not buy this argument, as Northrop itself stated that ” “[t]he remedy for a cardinal change is breach damages.”

The court wrote:

Because Northrop’s claim is clearly a monetary one Northrop had the obligation to include in its claim submitted to the contracting officer its best effort to state a sum certain, albeit one that could have been modified later to fit the proof. Because Northrop did not submit a valid claim to the contracting officer, count one is outside of this court’s CDA jurisdiction.

A claim must include a “sum certain,” requesting a specific dollar amount, whenever the contractor thinks it is entitled to money from the government, or the claim may be invalid.