This is the third of an eight-part series addressing cutting-edge strategies for Certified Claims under the Contract Disputes Act (CDA). Certified Claims are the primary avenue available to government contractors to recover damages due to changes, delays, inefficiencies, and other government-caused issues – a particularly important point for contractors seeking to maintain positive cashflow while facing the prospect of an economic slowdown or recession.
As I’ve been discussing, CDA Claims are the contractor’s direct avenue to recover additional time and costs on federal contracts. In an ideal world, the Contracting Officer will use his or her settlement authority to resolve the Claim through a negotiated settlement agreement. In fact, this is the government’s official policy under FAR 33.204.
However, the Contracting Officer also has the authority to issue a Contracting Officer’s Final Decision (COFD) denying a Claim. A denial (or even partial denial) triggers important decisions for the contractor that will dictate how the Claim will be litigated and resolved moving forward.
The Decision to Appeal – Board or Court
Once the contractor receives the COFD, any next steps are a matter of litigation. Contractors should carefully consider factors like the probability of success, cost, and business disruption before moving forward.
Contractors have two options in terms of venue for appealing a COFD: (1) file suit in the United States Court of Federal Claims (COFC) or (2) appeal to the appropriate Board of Contract Appeals. The choice of forum has wide-ranging effects on the appeal — including the degree of procedural formality, the opportunity to recover attorneys’ fees, and the availability of accelerated procedures (discussed in more detail below).
The time to appeal for each forum is also very different. An appeal to the appropriate Board must be taken within 90 days after receipt of the COFD. Contractors have one year from that same trigger to file at the COFC.
Binding Forum Election
Choosing between the COFC and the Boards takes on an even higher importance due to the Election Doctrine.
The Election Doctrine provides that contractors may not move between the two available forums. For example, let’s say a contractor elects to file a timely appeal at the Armed Services Board of Contract Appeals, but later decides the COFC is the better or more advantageous venue. The Board would dismiss the filed appeal (with prejudice), but the Court would reject the new filing for lack of jurisdiction (because the appeal was originally brought at the Board). A true worst-case scenario leaving the contractor with a valid Claim, but no forum for recovery.
Key considerations for any appeal are the time and cost of recovery. For smaller claims, the Boards offer expedited and accelerated procedures that streamline the litigation process.
Contractors can use these procedures strategically to minimize costs and maximize recovery – including submitting and appealing multiple independent claims under the same contract.
ADR and On-Going Negotiation
When the Contracting Officer issues a COFD denying a claim in full, the contractor’s only recourse for continuing to pursue damages is to file an appeal. However, that does not mean that a full trial on the merits is inevitable.
The issuance of a COFD and the filing of an appeal do not deprive the Contracting Officer of the authority to negotiate entitlement and execute a settlement agreement. Keeping the lines of communication open during the process is key.
Contractors should also consider the availability of Alternative Dispute Resolution (ADR) after filing an appeal. Both the Boards and COFC have specific ADR provisions available if the possibility of finding a middle ground is there. ADR is often an attractive option, as it provides faster and more cost-effective resolution on the contractor side, while reducing risk and workload for the government.
Come back next Tuesday (November 22) when we’ll walk through the different strategies for employing CDA Claims and Requests for Equitable Adjustments (REA).
Nick Solosky is a Partner in Fox Rothschild’s Government Contracts Practice Group. You can reach Nick directly at NSolosky@FoxRothschild.com or 202-696-1460.