Contractor Request for Additional Funding

I have a contractor that submitted a request for modification for an additional $13k. The contractor did not get all required permits before starting, which was outlined in the SOW and contract and is now claiming delay costs associated with having to stop work until one additional permit was received. I am making the decision to deny it, but am wondering if I needed to provide appeal rights? The letter was not addressed as a formal claim and am thinking that I would deny it and then if they re-submit it as an actual claim, requesting a decision, I would give it at that time. Appreciate thoughts.