Ordinary, Undisputed Invoices Are Not “Claims”

For an invoice to be considered a claim under the Contract Disputes Act, thereby giving the U.S. Court of Federal Claims jurisdiction to consider an appeal of the government’s failure to pay, the contractor must establish that the invoice was in dispute at the time it was submitted to the government.

As demonstrated in a recent Court decision, ordinary, undisputed invoices are not “claims” under the Contract Disputes Act.

In Comprehensive Community Health & Psychological Services, LLC, No. 14-222C (Mar. 12, 2015), the Court Services and Offender Supervision Agency (“CSOSA”) awarded a contract to Comprehensive Community Health & Psychological Services (“CCHPS”) for the psychiatric counseling services at the Re-Entry and Sanctions Center located in Washington, D.C.  A year into the period of performance, problems arose.

The contracting officer directed CCHPS to cure what CSOSA perceived to be several violations and matters of noncompliance under the contract, including alleged overbilling of the government.  Specifically, the cure notice stated that a review of CCHPS’s invoices revealed that CCHPS had misrepresented the amount of time spent by its personnel under the contract.

CCHPS disagreed and responded to the cure notice in July 2012.  After several additional communications failed to produce an agreed-upon resolution, the the contracting officer issued a final decision terminating the contract for cause in November 2012.  The termination notice stated that CCHPS had materially misrepresented the services performed for billings.  The decision further stated that four invoices, submitted in May, June, July, and August 2012 were disputed by the government.  The unpaid amounts totaled $70,620.00.

In March 2013, the the contracting officer sent a letter to CCHPS stating that a government analysis of its outstanding invoices found that CCHPS had overbilled the government.  Accounting for the alleged overbillings, the CSOSA believed that it owed CCHPS a mere $9,434.50.  CSOSA subsequently made payment of this amount, withholding the remainder billed during the four months in question.

CCHPS filed a complaint with the Court of Federal Claims seeking “reconciliation of outstanding payments” that it believed it was due for work performed under the contract.  The government filed a motion to dismiss CCHPS’s complaint for lack of subject-matter jurisdiction.

The Court wrote that it is a “court of limited jurisdiction.”  With respect to claims, the Court’s authority extends to the review of a contracting officer’s decision on “any claim against the United States founded either upon the Constitution, or any Act of Congress or any regulation of an executive department, or upon any express or implied contract with the United States.”  More specifically, the statute provides that the Court “shall have jurisdiction to render judgment upon any claim by or against, or dispute with, a contractor arising under section 7104(b)(1) of title 41 [the Contracts Disputes Act], . . . on which a decision of the contracting officer has been issued under section 6 of that Act.” A prerequisite to the Court’s jurisdiction is that “all claims by a contractor against the government relating to a contract shall be in writing and shall be submitted to the contracting officer for a decision.”  The statute further requires that the contracting officer render a final decision on the claim before a contractor can file suit in the Court.

Although the Contract Disputes Act does not define the term “claim,” the FAR defines a claim as a “written demand or written assertion by one of the contracting parties seeking, as a matter of right, the payment of money in a sum certain, the adjustment or interpretation of contract terms, or other relief arising under or related to the contract.”  The FAR also states that “[a] voucher, invoice, or other routine request for payment that is not in dispute when submitted is not a claim.”

The Court held that CCHPS’s invoices were not “claims”:

Here, CCHPS fails to show that it submitted a claim under the CDA for the monetary relief that it seeks in the complaint.  There is no evidence that CCHPS’s invoices were in dispute at the time they were submitted to the government.  To the contrary, the letters cited by CCHPS show that the dispute over the invoices arose many months after the invoices were submitted to the government–in November 2012 and March 2013.  And CCHPS points to no other document or correspondence to show that the invoices were in dispute at the time submitted.

The Court dismissed CCHPS’s complaint for lack of subject-matter jurisdiction.

It is well-known that a “claim” against the government may stem from a demand for money “in a sum certain.”  While an ordinary invoice might appear to meet that test, the FAR exempts ordinary invoices from the definition of a “claim.”  And, as the Court’s decision in CCHPS demonstrates, when there is no “claim,” the Court lacks jurisdiction to adjudicate a complaint.

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