Definition of "Claim"

The definition of "claim" at FAR 2.101 states:

Question: If a contractor submits a request for a price adjustment exceeding $100,000 pursuant to the Changes clause, does it have to be certified to meet the definition of a "claim"? The communication does not request payment of money--it requests adjustment of a contract term (i.e., the price).

Don, is there a difference for purpose of the definition of a claim between requesting immediate payment and what is essentially a request for a future payment of money? In other words, the Contractor would be entitled to payment of more money, right? I sense that this is a loaded question, based upon some case law.

According to "Administration of Government Contracts", 4th Edition, on page 1278, "The certification requirement cannot be avoided, however, by failing to seek a determination of quantum when the claim is essentially a monetary claim" and cites several cases.

The definition of "claim" at FAR 2.101 states:

Question: If a contractor submits a request for a price adjustment exceeding $100,000 pursuant to the Changes clause, does it have to be certified to meet the definition of a "claim"? The communication does not request payment of money--it requests adjustment of a contract term (i.e., the price).

Normally, a "request for a price adjustment exceeding $100,000 pursuant to the Changes clause," is "not in dispute when submitted," and so would not be a "claim," whether certified or not, but if it is in dispute, then yes, it would have to be certified to meet the definition of a "claim."

Also, the definition of claim includes not just a demand for payment of money, but also a demand for "the adjustment or interpretation of contract terms, or other relief arising under or relating to the contract," so I don't understand the implication in your question that a request for payment of money might be a claim, but a request for adjustment of a contract term might not.

Normally, a "request for a price adjustment exceeding $100,000 pursuant to the Changes clause," is "not in dispute when submitted," and so would not be a "claim," whether certified or not... .

That's dead wrong.

That's dead wrong.

Please explain.

Sorry for the delay. I'm teaching.

See the definition of claim at FAR 2.101. The same definition appears in the Disputes clause at FAR 52.233-1.

The third sentence of the definition states the dispute requirement.

The only thing that has to be in dispute in order to be a claim is a "routine request for payment."

In Reflectone v. Dalton, 60 F.3d 1572 (1995), an en banc decision overruling its own Dawco v. U.S., 90 F.2d 872 (1991), the Federal Circuit held that requests for equitable adjustment are "anything but" routine.

[A]n REA is anything but a ?routine request for payment.? It is a remedy payable only when unforeseen or unintended circumstances, such as government modification of the contract, differing site conditions, defective or late-delivered government property or issuance of a stop work order, cause an increase in contract performance costs. P_acific Architects and Eng'rs Inc. v. United States_, 491 F.2d 734, 739, 203 Ct.Cl. 499 (1974). A demand for compensation for unforeseen or unintended circumstances cannot be characterized as ?routine.? The Supreme Court has confirmed the non-routine nature of an REA by equating it with assertion of a breach of contract. Crown Coat Front Co. v. United States, 386 U.S. 503, 511, 87 S.Ct. 1177, 1181, 18 L.Ed.2d 256 (1967[.]

The Court then says:

Thus, an REA provides an example of a written demand for payment as a matter of right which is not ?a routine request for payment? and, therefore, it satisfies the FAR definition of ?claim? whether or not the government's liability for or the amount of the REA was already disputed before submission of the REA to the CO.

See Cibinic, Nasn, and Nagle, in Administration of Government Contracts, 4th ed., i which the authors point out that requests for equitable adjustment under a contract clause are not routine requests for payment. I don't have my copy with me, so I can't give you a page number, but the discussions is in the chapter on claims and disputes.

By the way, I am not answering Don's question. I am only replying to your statement that:

a "request for a price adjustment exceeding $100,000 pursuant to the Changes clause," is "not in dispute when submitted," and so would not be a "claim,"

That statement is wrong.

In the Fourth Edition, see coverage beginning 1253, under heading, "Nonroutine Requests for Price Adjustment."

Reflectone remains good law. Don't be confused by M. Maropakis Carpentry, Inc. v. U.S., 84 Fed. Cl. 182 (2008). It seems to attempt to resurrect a broad reading of Sun Eagle regarding the need for impasse, which was overruled by Reflectone. The Federal Circuit's decision on the appeal of Maropakis in no way relies on the impasse language in that COFC decision. For a discussion of impasse in the context of terminations, see Fourth Edition, at 1087f.

Don, is there a difference for purpose of the definition of a claim between requesting immediate payment and what is essentially a request for a future payment of money? In other words, the Contractor would be entitled to payment of more money, right? I sense that this is a loaded question, based upon some case law.

According to "Administration of Government Contracts", 4th Edition, on page 1278, "The certification requirement cannot be avoided, however, by failing to seek a determination of quantum when the claim is essentially a monetary claim" and cites several cases.

joel,

It's not a loaded question, just something about the definition that I had not noticed before.

I think there is a difference between a demand for "the payment of money in a sum certain" and a demand for a price adjustment that does not seek payment. The latter may subsequently result in a request for payment, but that does not imply that the earlier submission is a request for payment. These would be two different communications.

I know that the request for price adjustment would have to be certified pursuant to the Disputes clause. However, if it were not certified, would it still meet the definition of "claim."

joel,

It's not a loaded question, just something about the definition that I had not noticed before.

I think there is a difference between a demand for "the payment of money in a sum certain" and a demand for a price adjustment that does not seek payment. The latter may subsequently result in a request for payment, but that does not imply that the earlier submission is a request for payment. These would be two different communications.

I know that the request for price adjustment would have to be certified pursuant to the Disputes clause. However, if it were not certified, would it still meet the definition of "claim."

Don are you referring to a definite amount of the price adjustment, but for something that will be performed and billed for later, versus something that has already occurred, for which one is seeking payment?? Otherwise, I don't understand what you mean by a price adjustment.

joel,

It's not a loaded question, just something about the definition that I had not noticed before.

I think there is a difference between a demand for "the payment of money in a sum certain" and a demand for a price adjustment that does not seek payment. The latter may subsequently result in a request for payment, but that does not imply that the earlier submission is a request for payment. These would be two different communications.

I know that the request for price adjustment would have to be certified pursuant to the Disputes clause. However, if it were not certified, would it still meet the definition of "claim."

Don, If you said that a request for a price adjustment must be certified pursuant to the Disputes clause, but hasn't been certified, then it isn't a "claim" until it meets the requirements of a claim, including certification.

Paragraph (d) of the Disputes clause (52.233.-1) requires that a claim that exceeds $100,000 must be certified.

"(1) A claim by the Contractor shall be made in writing and, unless otherwise stated in this contract, submitted within 6 years after accrual of the claim to the Contracting Officer for a written decision. A claim by the Government against the Contractor shall be subject to a written decision by the Contracting Officer.

(2)

(i) The contractor shall provide the certification specified in paragraph (d)(2)(iii) of this clause when submitting any claim exceeding $100,000.

(ii) The certification requirement does not apply to issues in controversy that have not been submitted as all or part of a claim.

(iii) The certification shall state as follows: ?I certify that the claim is made in good faith; that the supporting data are accurate and complete to the best of my knowledge and belief; that the amount requested accurately reflects the contract adjustment for which the Contractor believes the Government is liable; and that I am duly authorized to certify the claim on behalf of the Contractor.?

(3) The certification may be executed by any person duly authorized to bind the Contractor with respect to the claim."

There is discussion in the aforementioned Administration of Government Contracts , in chapter 13, "DISPUTES", see page 1270 and beyond in the 4th Edition.

Sorry for the delay. I'm teaching.

See the definition of claim at FAR 2.101. The same definition appears in the Disputes clause at FAR 52.233-1.

The third sentence of the definition states the dispute requirement.

The only thing that has to be in dispute in order to be a claim is a "routine request for payment."

In Reflectone v. Dalton, 60 F.3d 1572 (1995), an en banc decision overruling its own Dawco v. U.S., 90 F.2d 872 (1991), the Federal Circuit held that requests for equitable adjustment are "anything but" routine.

The Court then says:

See Cibinic, Nasn, and Nagle, in Administration of Government Contracts, 4th ed., i which the authors point out that requests for equitable adjustment under a contract clause are not routine requests for payment. I don't have my copy with me, so I can't give you a page number, but the discussions is in the chapter on claims and disputes.

By the way, I am not answering Don's question. I am only replying to your statement that:

That statement is wrong.

Vern,

Thanks for the explanation. I conclude from this that a request for a price adjustment exceeding $100,000 pursuant to the Changes clause, would not be a "claim," unless and until certified. Would that be corrrect?

Navy,

I'm in a tough spot on your question. Don and I talked about it last night and I promised that I would not give an answer until others have had a chance to respond. I don't want to kill the topic for him. He wants an exchange of views. I can tell you that the answer to his question does not turn on case law, but on a plain language reading of the FAR.

Do you want me to contact you through the Wifcon message board?

Vern

joel,

It's not a loaded question, just something about the definition that I had not noticed before.

I think there is a difference between a demand for "the payment of money in a sum certain" and a demand for a price adjustment that does not seek payment. The latter may subsequently result in a request for payment, but that does not imply that the earlier submission is a request for payment. These would be two different communications.

I know that the request for price adjustment would have to be certified pursuant to the Disputes clause. However, if it were not certified, would it still meet the definition of "claim."

Don, there shouldn't be any real difference between the requirement to certify a claim involving a "request for payment" vs. a claim that requests a price adjustment, assuming that the amount of the price adjustment is stated. The difference between the two situations would probably be when interest begins to accrue, assuming that the request for price adjustment involves something that hasn't occurred yet or isn't billable yet.

See paragraph (h) of the Disputes clause:

"(h) The Government shall pay interest on the amount found due and unpaid from

(1) the date that the Contracting Officer receives the claim (certified, if required); or

(2) the date that payment otherwise would be due, if that date is later, until the date of payment.

With regard to claims having defective certifications, as defined in FAR 33.201, interest shall be paid from the date that the Contracting Officer initially receives the claim. Simple interest on claims shall be paid at the rate, fixed by the Secretary of the Treasury as provided in the Act, which is applicable to the period during which the Contracting Officer receives the claim and then at the rate applicable for each 6-month period as fixed by the Treasury Secretary during the pendency of the claim."

There is a difference between a defective certification and no certification.

Paragraph (h), item (2), of the Disputes clause is not binding and is unenforceable.

Navy,

I'm in a tough spot on your question. Don and I talked about it last night and I promised that I would not give an answer until others have had a chance to respond. I don't want to kill the topic for him. He wants an exchange of views. I can tell you that the answer to his question does not turn on case law, but on a plain language reading of the FAR.

Do you want me to contact you through the Wifcon message board?

Vern

Vern,

I don't mind if you answer Navy.

joel,

Don are you referring to a definite amount of the price adjustment, but for something that will be performed and billed for later, versus something that has already occurred, for which one is seeking payment?? Otherwise, I don't understand what you mean by a price adjustment.

The request for price adjustment would be for a definite amount. For argument's sake, assume that the work ordered by the change order had not yet been completed.

Don, If you said that a request for a price adjustment must be certified pursuant to the Disputes clause, but hasn't been certified, then it isn't a "claim" until it meets the requirements of a claim, including certification.

I agree that the Disputes clause requires any claim over $100K to be certified. However, that doesn't mean that an uncertified claim does not meet the definition of "claim." The only mention of certification in the definition applies to requests for payment of money in excess of $100K.

Don, there shouldn't be any real difference between the requirement to certify a claim involving a "request for payment" vs. a claim that requests a price adjustment, assuming that the amount of the price adjustment is stated. The difference between the two situations would probably be when interest begins to accrue, assuming that the request for price adjustment involves something that hasn't occurred yet or isn't billable yet.

The requirement to certify applies to both. However, only an uncertified request for payment would fail to meet the definition of "claim."

Paragraph (h), item (2), of the Disputes clause is not binding and is unenforceable.

Yes, I remember some of the litigation over that. But why does the current (2002) version of the FAR clause and Subpart 33.208 still indicate that interest on future costs will start upon date that payment would otherwise be due? The case of Louis Caldera v. J.S. Alberici Constr. Co., 153 F.3d 1381 (Fed. Cir. 1998) predates the current version of the clause.

"33.208 -- Interest on Claims.

(a) The Government shall pay interest on a contractor?s claim on the amount found due and unpaid from the date that --

(1) The contracting officer receives the claim (certified if required by 33.207(a)); or

(2) Payment otherwise would be due, if that date is later, until the date of payment."

Yes, I remember some of the litigation over that. But why does the current (2002) version of the FAR clause and Subpart 33.208 still indicate that interest on future costs will start upon date that payment would otherwise be due? The case of Louis Caldera v. J.S. Alberici Constr. Co., 153 F.3d 1381 (Fed. Cir. 1998) predates the current version of the clause.

"33.208 -- Interest on Claims.

(a) The Government shall pay interest on a contractor?s claim on the amount found due and unpaid from the date that --

(1) The contracting officer receives the claim (certified if required by 33.207(a)); or

(2) Payment otherwise would be due, if that date is later, until the date of payment."

Hmm, it looks "the plain reading of the FAR" may get one into trouble concerning the Disputes clause, now doesn't it?.

Hmm, it looks "the plain reading of the FAR" may get one into trouble concerning the Disputes clause, now doesn't it?.

Approximately 2 years ago, I ate lunch with a member of the DAR Council during a DoD Conference. I pointed out the contradiction between the court decisions and the FAR coverage of interest on claims. She seemed very interested, and she requested that I send the details. I did.

Perhaps the next FAC will correct the FAR coverage.

Approximately 2 years ago, I ate lunch with a member of the DAR Council during a DoD Conference. I pointed out the contradiction between the court decisions and the FAR coverage of interest on claims. She seemed very interested, and she requested that I send the details. I did.

Perhaps the next FAC will correct the FAR coverage.

I searched WIFCON for a FAR Case that would revise FAR 33.2 and the clause to correct the interest computation date but didn't find one. That's not to say that there isn't one. I did find a 2005 or 2006 proposal by someone to Congress to revise the Statute to compute interest on future costs similar to that in paragraph (h), item (2) of the clause.

The interest accrual date issue has not been addressed by the FAR councils. I wrote an article for The Nash & Cibinic Report about a year ago analyzing that problem. The current FAR is in conflict with three decisions of the U.S. Court of Appeals for the Federal Circuit: Servidone v. U.S., 931 F.2d 860 (1991); Caldera v. J.S. Alberici, 153 F.3d 1581; and Richlin v. U.S.. 437 F.3d 1296. The best analysis of the issue by a federal tribunal is J.S. Alberici Construction Co., ENGBCA No. 6179, 97-1 BCA ? 28639, in which the board suggests that FAR 33.208(a)(2) might not mean what it appears to say.

As of Nov. 5, there was no FAR case pertaining to the issue.

Enough about interest. That was not the question raised by Don.

Enough about interest. That was not the question raised by Don.

True, enough.

However, you stated: QUOTE (Vern Edwards @ Nov 9 2010, 12:45 PM) "I can tell you that the answer to his question does not turn on case law, but on a plain language reading of the FAR."

I'm saying that a plain reading of the FAR with respect to the Disputes clause might not get you very far (no pun intended). There is case law on the subject that expands on or contradicts the plain language reading of the clause.

Don. I believe that you agreed above that a request for a contract price adjustment for future work exceeding 100k must be certified. Your next question was if the required certification is missing is the matter still a claim anyway. This is in response to that question.

According to the discussion in Chapter 13 of the aforementioned Administration of Government Contracts , if a claim must be certified and isn't certified, it apparently isn't a "claim" under the Contract Disputes Act. The book discusses cases where contractors submitted claims that were missing a required certification, KO's issued Decisions denying the "claims", the Contractors appealed. In the cases where a required certification was missing, the boards or courts stated that they had no jurisdiction, because they weren't claims under the CDA.

I suppose one might say that if the KO issued a COD on such an issue, it was some type of "claim", according to the definition in 2.101. However, it apparently wouldn't be a claim under the CDA, any COD would not be subject to appeal and any interest payment is only authorized pursuant to the CDA.

Joel:

The term "uncertified claim" appears in 315 decisions of the courts and boards. Somewhat paradoxical in light of your way of thinking. Failure to certify does not necessarily mean that a demand or assertion is not a "claim"; it simply means that the claim is not actionable.

Don's question was based on the plain language of the FAR. He was not looking for a case law analysis, just a discussion of how the plain words of the FAR could be interpreted. It's just a discussion starter, Joel, intended to show how goofy FAR language can be. Please don't come back with quotes from case law for my sake.

By the way--you don't have to quote a prior post in every post that you make. And you don't have to quote a prior post in its entirety. It makes reading your posts more tedious than it needs to be. Some of the quotes are longer than your posts. Give us a break.

Since it has been made very clear that this is Don's thread, my discussion is with him.

Don, you didn't lay out the criteria for responding to your questions. Since certain individuals are known to constantly criticize others for not having creditable references for their opinions, I felt that I ought to cite the N and C discussion for back up. Sorry, if that is unacceptable here.

It is apparent to me that the plain language of the FAR is not what it always appears to be concerning claims. The FAR clause is in direct conflict with case law regarding start date for interest on future work. And

I read the discussion in N and C to mean that if you ask for a price adjustment for future work that it is related to requesting payment, thus requiring certification if over $100k.

If a claim isn't not certified where applicable, then it seems to say that it isn't a claim under the CDA.

If it isn't a CDA claim, then the Boards and Courts don't have jurisdiction. If it isn'tt a claim under the CDA, then there is no authorization to pay CDA interest, correct?

That's the gist of my opinion.

joel,

I don't know the answer to your question. You may be correct. I just wanted to see if others read the FAR definition of "claim" the way I was reading it. I think that an uncertified request for a price adjustment over $100,000 that does not seek payment is a "claim" under the FAR definition. There may or may not be any practical implications to this--I haven't thought that through yet.

Don,

One practical implication is that a Contracting Officer may be sitting on a "claim" and not know it. For example, a contractor may submit a request for price adjustment that is certified. The Contracting Officer may take a quick look and come to the conclusion that they probably agree. Since it's for future work, he/she assign a low priority to the analysis and processing and it sits.

joel,

I don't know the answer to your question. You may be correct. I just wanted to see if others read the FAR definition of "claim" the way I was reading it. I think that an uncertified request for a price adjustment over $100,000 that does not seek payment is a "claim" under the FAR definition. There may or may not be any practical implications to this--I haven't thought that through yet.

Don, please see the Appeal of Sygnetics, Inc. under Contract No. W74V8H-04-D-0066, ASBCA No. 56806, dated: 12 October 2010

See it at: http://docs.law.gwu.edu/asbca/decision/pdf2010/56806.pdf

(From the WIFCON Forum Terms of Use: "RESPONDING TO POSTS: The goal of this forum is to enhance the contracting community by improving the competence of its individual users. To do that best, please post citations to laws, regulations, and decisions in your posts.")

The Decision discusses the definition of a claim under FAR 2.101 and the requirement for a signed certification of any claim over $100,000. In the instant case, the company's secretary erroneously filed the original request for equitable adjustment (including request for payment) that had a stamped signature on it and e-mailed unsigned copies to the Government. The KO rescinded her COD after discovering that there was no signed version of the REA.

The decision says, in part: "...We conclude that Sygnetics did not submit a signed CDA certification to the CO.

"The absence of a signature on a CDA certification renders it ineffective for any purpose. Teknocraft Inc., ASBCA No. 55438, 08-1 BCA ? 33,846 at 167,504-05; Hawaii CyberSpace, ASBCA No. 54065, 04-1 BCA ? 32,455 at 160,535; AT&T Communications v. G.S.A., GSBCA No. 14932, 99-2 BCA ? 30,415 at 150,363; R.W. Electronics Corp., ASBCA Nos. 46592, 46662, 95-1 BCA ? 27,327 at 136,211; Land Movers, Inc. & O.S. Johnson, Dirt Contractor (JV), ENG BCA No. 5656, 92-1 BCA ? 24,473 at 122,102. Thus, ASBCA No. 56806 must be dismissed for lack of jurisdiction."

The Government conceded that various other claims under $100k were valid for jurisdiction by the ASBCA. This Decision related to the one that was over $100k.

I will look later for specific examples of claims for future work. Going sailing this afternoon. The crew is restless.

This is from the cited decision:

2. On 16 May 2008, Sygnetics submitted an uncertified request for payment of five previously disputed invoices relating to TO No. 0006 to LTC Gregory C. Franks, Contracting Officer, CCE, Department of the Army, Contracting Center for Excellence, Army Contracting Agency, 5200 Army Pentagon, Washington, DC 20310-5200 (app. supp. R4, tab BB).

3. On 12 June 2008, LTC Franks, the former CO, met with Mr. Tony Tarkowski, Sygnetics? president and chief executive officer (CEO), to discuss Sygnetics? request for an equitable adjustment (Tarkowski decl. ? 5). According to LTC Franks? declaration, he informed Mr. Tarkowski that the request had to be certified and showed him FAR 33.207 (Franks decl. ? 2(c.))...

Section 605(a) of the CDA requires that all claims be in writing and submitted to the CO for a decision...

The absence of a signature on a CDA certification renders it ineffective for any purpose.

The contractor's claim was for payment of disputed and unpaid invoices. Either Judge Tunks of the ASBCA does not know the difference between a request for equitable adjustment and a request for payment of disputed invoices, or the contractor did not know and used the term inappropriately in his declaration. Despite the sloppy use of terminology, the judge properly decided that the absence of a signature on a claim certification made the certification ineffective. I see nothing in the decision that we have not already discussed, and I don't see what bearing the decision has on Don's question, which was about requests for equitable adjustment that are not requests for payment of money.

Don, you said in post #25 that you you think "an uncertified request for a price adjustment over $100,000 that does not seek payment is a 'claim' under the FAR definition".

The Contract Disputes Act and FAR 33.207 (a) both state that it must be certified in order to be a claim.

Paragraph ( c) of the Contract Disputes Act requires that all claims exceeding $100,000 must be certified. See: http://federalconstruction.phslegal.com/Co...isputes_Act.pdf

"( c) Amount of claim; certification; notification; time of issuance; presumption; authorization of certifier (1)... For claims of more than $100,000, the contractor shall certify that the claim is made in good faith...." (Emphasis added)

This is stated in FAR 33.207 (a) as follows:

"33.207 -- Contractor Certification.

"(a) Contractors shall provide the certification specified in paragraph ( c) of this section when submitting any claim exceeding $100,000." (Emphasis added)

In Post 27, it was earlier established that lack of a certification "renders the claim ineffective for any purpose".