5 Things You Should Know: Contract Claims (The Basics)

As a contractor, you strive to do the best job for the fairest price and to develop a good working relationship with the government. But in government contracts—like in any other—disputes sometimes arise. So what’s the best way to protect your interests under the contract?

Here are five things you should know about the basics of claims:

  1. What is a claim?

A claim is a written demand to the agency requesting some type of relief under a contract. Unlike other means of resolving disputes, the Contract Disputes Act requires a contracting officer to respond, in writing, to a claim. If the Contracting Officer fails to do so, you can take your case directly to a judge under a theory called “deemed denial.” Under this process, the contractor and the government basically litigate their dispute before a judge with jurisdiction to consider the matter.

  1. A claim can help define your rights and obligations under a contract.

If you have a dispute under your contract, a claim is generally the formal, legal way to get it resolved. Sometimes, a contracting officer might interpret a contractual provision differently or request that work be performed in a manner that differs from the solicitation. Other times, the agency might cause delays that increase your cost of performance. Whenever a dispute arises under a contract, you may wish to consider a claim—otherwise, you could risk losing money and adverse performance ratings (or even termination).

  1. File your claim with the contracting officer, not GAO or a Board of Contract Appeals.

Perhaps because their bid protest decisions are so common, some contractors think that claims must be filed at the Government Accountability Office. Nope—disputes as to contract administration (in other words, claims) fall outside GAO’s jurisdiction. Other contractors hope to file a claim directly with a Board of Contract Appeals, like the Armed Services Board of Contract Appeals. Boards do get involved in claims but only at the appellate level after the Contracting Officer issues a decision (or a deemed denial).

Claims are, instead, filed directly with the contracting officer for resolution. Each claim should be in writing and explain the factual and legal reasons why you’re entitled to the relief sought. This relief, moreover, could be money or some type of contract modification.

  1. The claim process is set by statute.

The Contract Disputes Act governs the claim resolution process. In a nutshell, contractors generally have six years to file a claim (but try to avoid waiting this long—and make sure that a shorter period doesn’t apply in your case). You must do so, as mentioned, by sending your written claim to the contracting officer. Claims valued at greater than $100,000 have to be certified by the contractor.

Once the contracting officer receives the claim, she has a soft 60-day response deadline. Her response should be in writing and give the reasons why a claim was accepted or denied. If the claim is denied, the contractor can appeal to appropriate Board of Contract Appeals or federal court.

  1. A claim doesn’t have to harm your relationship with the agency.

One of the most common questions I hear from contractors considering a claim is whether it will hurt their relationship with the contracting officer. My response is simple: it doesn’t have to.

The vast majority of contracting officers understand that claims are part of the cost of doing business. If a contractor presents a claim in a professional and civil manner, contracting officers usually reciprocate. And if a valid dispute exists, most contracting officers would rather resolve it through an early claim than have it blow up into something larger (and harder to fix). A claim simply doesn’t have to ruin a relationship.

But if you still have concerns, consider a less-formal option. The FAR, for example, encourages contracting officers to use alternative dispute resolution proceedings if requested by a contractor. You can also request that your contract be equitably adjusted—though similar to claims, requests for equitable adjustment are usually less formal and might be viewed as less adversarial. Sometimes these approaches can also save time and money. No matter which option you choose, don’t let fear of ruining a relationship stop you from protecting your rights under a contract.

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So that’s it: five things you should know about the basics of claims. If you have a dispute with an agency under a contract and are considering a claim, call me to discuss your options.