Claims and the Contract Disputes Act
In Government contracts, a formal claim filed pursuant to the Contract Disputes Act of 1978 is defined 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 relating to the contract.” Federal Acquisition Regulation (FAR) 2.101.
Unless negotiated and settled, a claim forms the basis of adversarial litigation in a federal court of law. A claim for more than $100,000 is subject to the certification requirements of 41 U.S.C. § 7103 and FAR 33.207: “the claim is made in good faith; the supporting data are accurate and complete to the best of the contractor’s knowledge and belief; the amount requested accurately reflects the contract adjustment for which the contractor believes the Federal Government is liable; and the certifier is authorized to certify the claim on behalf of the contractor.” A claim is considered litigation under the Contract Disputes Act, while a Request for Equitable Adjustment (REA) is considered contract administration.
To encourage settlement, all claims must first be presented to the Contracting Officer, who issues a Contracting Officer’s Final Decision, which is a decision on the merits. To challenge that decision, the contractor must appeal to the Board of Contract Appeals or to the United States Court of Federal Claims. Decisions by either forum must be appealed to the United States Court of Appeals for the Federal Circuit, the intermediate appellate authority. The final appellate authority is the Supreme Court of the United States.