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Contract Claims

DAU GLOSSARY DEFINITION

Alternate Definition
A claim is a written demand or assertion by one of the contracting parties seeking (i) payment of a specific sum of money, (ii) adjustment or interpretation of contract terms, or (iii) other relief arising under or relating to the contract. A written demand or assertion by the contractor seeking payment over $100,000 is not considered a claim under the Contract Disputes statute until certified in accordance with the Act. A voucher, invoice, or other routine request for payment that is not in dispute when submitted is not a claim. The submission may eventually be converted to a claim if it is disputed or is not acted upon in a reasonable time. A request for an equitable adjustment is a type of claim. A contract dispute exists when a claim remains unresolved following preliminary discussion between authorized representatives of the contracting parties.
General Information

The Contract Disputes statute governs the payment of contract claims. Government policy is to attempt to resolve claims by mutual agreement at the contracting officer’s level. Contractor claims generally must be submitted in writing to the contracting officer for a decision within six years after the claim is realized. The contracting officer must document the contract file with evidence of the date he/she received any submission from the contractor determined to be a claim.

 

When a claim exceeds $100,000, contractors must provide the following written certification (FAR 33.207):

 

  • "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."

The aggregate amount of both the increased and decreased costs is used for determining when the dollar threshold requiring certification is met. For example, a net $50,000 claim resulting from a reduction of $75,000 and an increase of $125,000 is a total adjustment of $200,000, which exceeds the $100,000 threshold for claims certification.

 

If the claim is approved by the Government contracting officer and designated for payment, the contractor is entitled to interest at the current Treasury rate. If the contractor is unable to support any part of the claim and there is evidence of misrepresentation of fact or fraud, the contracting officer must refer the matter to the agency official responsible for investigating fraud. Contractors convicted of submitting fraudulent claims are subject to penalties under the False Claims Act.

 

Contracting officers are generally authorized (within the limitations of their warrants) to decide or resolve claims. They are also authorized to use Alternative Dispute Resolution procedures (FAR 33.214) to resolve claims. However, contracting officers are not authorized to settle, pay, or adjust any claim involving fraud.

 

When a claim by or against a contractor cannot be settled by mutual agreement, the contracting officer is responsible for--

 

  • Reviewing the facts pertinent to the claim;
  • Obtaining assistance from legal and other advisors;
  • Coordinating with the contract administration office, as appropriate; and
  • Preparing a written decision that includes the elements at FAR 33.211(a)(4).

 

If the contracting officer decides against the contractor, the contractor is entitled to appeal the decision to the Armed Services Board of Contract Appeals or the U.S. Court of Federal Claims. The contractor must initiate the appeal with 90 days or 12 months, respectively, of receiving the contracting officer’s decision.