on Tuesday, October 24, 2000 - 06:19 pm:
You are right, of course. I seem to have been guilty of speed
reading or very bad grammar or wishful thinking or something.
Let’s allow that you are correct in stating, “I say that a
contractor can write a letter asking for money, cite the Changes
clause as the basis for entitlement, demand a contract
modification, never mention the Disputes clause, and, if the
amount requested is below $100,000, never use the word "claim,"
and still have submitted a "claim" as defined in FAR 33.201. I
say that the interest clock will start to run the moment that
the contracting officer gets that letter.“
The contractor’s written request may be worded ambiguously
(intentionally or unintentionally) with the result that the
Contracting Officer doesn’t know whether he/she has a claim
“under the Disputes Act” or not, and doesn’t know whether the
clock is ticking or not.
FAR 33.206 Initiation of a claim. “The contracting officer shall
document the contract file with evidence of the date of receipt
of any submission from the contractor deemed to be a claim by
the contracting officer.”
It appears to me that the contracting officer is going to have
to “deem” on some basis.
Since Reflectone the contracting officer can’t ask whether there
is a pre-existing dispute. However, the contracting officer
might want to know whether the contractor expects a final
decision. If the contractor explicitly asks for a final
decision, there shouldn’t be a question. If the request is
merely implied, the contracting officer should be able to ask
for a clarification.
Perhaps something like the following--
“It isn’t entirely clear from your letter whether you are
requesting a contracting officer’s final decision. To assure
that there will be no question regarding the allowability of
costs related to this request you are requested to indicate in
writing whether or not you expect a final decision in accordance
with the “Disputes” clause.”
“In accordance with FAR 31.205-47, costs incurred in the
prosecution of claims or appeals against the Federal Government
are not allowable. This includes ‘administrative and clerical
expenses; the costs of legal services, whether performed by
in-house or private counsel; the costs of the services of
accountants, consultants, or others retained by the contractor
to assist it; costs of employees, officers, and directors; and
any similar costs.’”
If the contractor doesn’t intend to start the clock, the
contracting officer shouldn’t have any difficulty getting a
If the contractor requests a final decision, there is clearly a
claim under the Disputes Act.
If the contractor waffles or chooses not to respond, the
contracting officer can assume that the contractor intends a
claim under the Disputes Act but wants to keep both options
Question: If the contractor is cooperative and we reach
agreement, I would probably not wish to penalize the contractor
by disallowing the costs related to the request. Could I allow
the contractor to withdraw a claim and thus retroactively make
the costs allowable? This might make it a lot easier to reach
Vern Edwards on Tuesday, October 24, 2000 - 06:23 pm:
The Disputes clause describes a detailed procedure for the
submission of claims; the Changes clause does not prescribe a
detailed procedure for the submission of REAs. Indeed, the
Changes clause does not even mention REAs. Thus, the procedural
requirements of the two clauses are different. But that
difference has no bearing on our disagreement.
Our disagreement is about your assertion that REA and claim are
"separate concepts." I say that some REAs are claims and some
are not, and that the difference depends entirely on their
An REA is a request for an equitable amount of more money or
more time. The Changes clause does not specify any format or
content for REAs. REAs come in many forms. Some of them are in
writing, and ask an equitable adjustment as a matter of right,
and request that the CO mod the contract. Some that are in
excess of $100,000 include the requisite claims certification.
Thus, some requests for an equitable amount of more money or
more time include all of the elements of a claim. We have the
Federal Circuit saying that an "REA" was a "claim."
Since an REA can come in the form of a claim, it follows that
REAs and claims are not necessarily mutually exclusive. Since
REAs and claims are not necessarily mutually exclusive, it
follows that they cannot be separate concepts.
You are right that there is no requirement for a contractor to
cite any relief granting clause in a claim. However, if a
contractor chooses to cite a relief granting clause, such as the
Changes clause, it does not follow that its REA is not a claim
for that reason. In any event, a contractor must seek a claim as
a "matter of right," and that right must rest on a relief
granting clause or a breach of contract.
It is not true that a contractor must invoke the Disputes clause
in a claim. Neither FAR Subpart 33.2 nor the Disputes clause
impose any such requirement. Not even the claims certification
mentions the Disputes clause. Can you cite a single court
decision holding that a claim must invoke the Disputes clause? I
have already shown that the Federal Circuit has held that a
claim need not even include an explicit request for a CO
John, you and Joel are two guys whom I hold in high regard based
on your submissions to this forum. When I find myself
disagreeing with either of you I automatically question the
rightness of my own position. In this case, you have not proven
your assertion that REA and claim are separate concepts,
although it is clear that you believe that they are. In order to
prove the validity of your assertion you would have to show me
that REA and claim are so defined as to make them mutually
exclusive. Since claim is authoritatively defined, you must find
an authoritative definition of REA that excludes all elements of
a claim. I do not think that you can do that, but I am open to
I have no desire to argue this to the point where it is no
longer informative or interesting either to us or to others. I
am open to accepting your ideas in this regard if you can
demonstrate their validity. Otherwise, I am going to continue to
believe, as does the Federal Circuit, that a while an REA and a
claim are not necessarily the same thing, neither are they
necessarily different things.
With respect and admiration, your colleague,
Vern Edwards on Tuesday, October 24, 2000 - 06:33 pm:
Good points. I think that the procedure that you have proposed
makes sense. I would add one thing to the letter--I would ask if
the contractor is submitting a claim and asking for a final
decision. If the contractor is unsophisticated, as many are, it
may not understand the relationship between claim and final
I also think that your idea about allowing the contractor to
withdraw the claim makes sense. I think that's a CO option,
although some may disagree. I would explain to the contractor
that if it wants to withdraw its claim and its
entitlement to interest, then I would consider its claims
preparation costs to be allowable, otherwise I would not.
One caveat about that, however. Claims prep costs may be
included in an overhead account, in which case allowability may
be a matter for DCAA and an ACO, rather than a PCO.
on Tuesday, October 24, 2000 - 11:05 pm:
Vern, I agree it is not productive to debate this issue with
you. My primary point is that the FAR definition of a claim and
the Disputes Clause both require a matter to be submitted to the
KO (PCO or TCO, depending upon the circumstances - perhaps an
ACO with authority to deny claims or issue CODs?) for a written
decision (I agree there are exceptions, on a case by case
In order for the KO to know it must decide a matter, our
contractors must (usually)imply or directly request that the PCO
become involved, because our ACO's not the PCO's, are the
authorities contractors deal with on contract administration
Obviously, in some other organizations, the contractor is
dealing directly with the KO, without an intermediary. Happy
on Wednesday, October 25, 2000 - 08:09 am:
I am curious as to the origin and background of the
requirement for certifications of requests for equitable
adjustments, separate from that for a claim under the Contract
Disputes Act. The requirement has been around for years but was
apparently moved from DFARS 233 to DFARS 243. As you can see,
this 1998 requirement is post "Reflectone" (Jul 95). Apparently
the DOD feels that there is a distinction between "REA's" and
From DAC 91-13 ([Federal Register: March 9, 1998 (Volume 63,
Number 45)]) Item XXVIII-Certification of Requests for Equitable
Adjustment (DFARS Case 97-D302):
" The interim rule issued by Departmental Letter 97-014 on July
11, 1997, is revised and finalized. The rule implements 10 U.S.C.
2410(a), as amended by Section 2301 of the Federal Acquisition
Streamlining Act of 1994 (Public Law 103-355). 10 U.S.C. 2410(a)
requires contractors to certify that requests for equitable
adjustment that exceed the simplified acquisition threshold are
made in good faith and that the supporting data are accurate and
complete. The final rule differs from the interim rule in that
it amends DFARS 243.204-70 to clarify that the certification
required by 10 U.S.C. 2410(a) is different from the
certification of a claim under the Contract Disputes Act; and
amends 252.243-7002 to clarify requirements for contractor
disclosure of facts to support a certification of a request for
Can anyone help? Thanks. Happy Sails! Joel
John Ford on
Wednesday, October 25, 2000 - 10:44 am:
Joel, as the quoted language indicates, the requirement for
certification of REAs (and other requests for contract
adjustments other than claims under the CDA) comes from
Congress. This is part of the antifraud measures Congress
believes is necessary to deter defense procurement fraud. It is
a follow-on to the requirment for contractors to certify their
indirect cost submissions. DoJ also like the idea of a
certification as it gives them a real live body to go after for
Vern Edwards on Wednesday, October 25, 2000 - 12:03 pm:
Joel and John:
Allow me to say that I think that best practice for contractors
is to make it clear when they are submitting a claim. They
should call it a claim, cite the Disputes clause, and conform to
the requirements of the clause.
But as a practical matter, many contractors are not intimately
familiar with the Dispute rules. A CO should not assume that a
request is not a claim because it is labeled "request for
equitable adjustment," because it does not cite the Disputes
clause, or because it does not explicitly request a CO decision.
That could be a mistake, as we know from the case law.
Thanks for an interesting discussion.
on Wednesday, October 25, 2000 - 12:39 pm:
Since my 10-20 posting, I have followed the discssion with great
interest. In the responses I see reminders of the training that
I have received over the years about claims. For lack of any
better name, I will call it the gestation theory of claims. It
is the idea that a claim is what you have after you go through a
series of prescribed stages. The stages include (others may have
more or less) 1. some kind of contract action by the government,
2. selection of an adjustment clause, 3. negotiations with the
contractor about time and or money, 4. failure to agree, 5.
dispute, 6. claim (request, sum, certification, etc). In reality
this was not a straight line. Thus, all the twists and turns
about adjustment, dispute, and claim. The benefit of Reflectone
is that it does away with the gestation theory. Now, an REA
meets the definition of a claim under the CDA.
Once we accept the new reality, the question then becomes "What
is the practical effect of Reflectone at the project site?" My
experience tells me that on most projects the government will
continue to make changes, the contractor will continue to
propose its adjustments, a change will be made, and the work
will continue. Neither the word nor the idea of "claim" will
occur to either party. Will the opposite happen, yes.
The difference is not the legal doctrine of claims, but the
nature of the relationship of the parties, and the context of
the events. The Court says that, "Refleltone's REA is a claim as
defined in the FAR". It does not say that the parties have to
behave like every REA is a "claim".
on Wednesday, October 25, 2000 - 01:21 pm:
1. I think we are agreed that there is no requirement for a
final decision if the final decision in never explicit or at
least clearly implied (i.e. the certification for a claim is
2. If there is nothing in the submission to distinguish the
“claim” from an REA, why should the Government pay interest?
What is the worst that could happen to this CO who assumes that
a request is not a claim?
If the request is over the threshold, the wording of the
certification should answer the question immediately (or the CO
should request that the defective certification be corrected
If the request is under the threshold, it would be a very stupid
businessman who would choose to recover the interest, given a
choice between a couple of months of interest on a sum less than
$100,000 and the administrative cost to prepare the request.
Unless I am missing something, this seems to be a very
Quoting the CON 210 course in the Deskbook—
“Submissions that are considered or identified as REAs may later
ripen into a CDA claim when negotiations reach an impasse or
when the contractor specifically or impliedly requests a final
There you have it. A claim is an overripe REA.
John Ford on
Wednesday, October 25, 2000 - 01:58 pm:
Eric, I am going to have to disagree with your last
assertion. A claim is not an overripe REA. Claims can come from
events that do not give rise to an equitable adjustment, such as
pure delay. However, I do agree that an REA may ripen into a
claim if it is disputed, is not acted on in a reasonable amount
of time, or if for any other reason the contractor decides its
time to change directions from an REA to a CDA claim. Also, for
adjustments under the Changes clauses and other non routine
requests for payment, the contractor can go the claims route
under the Disputes clause immediately without using the Changes
Vern Edwards on Wednesday, October 25, 2000 - 02:12 pm:
You are right that the issue is somewhat hypothetical. Remember
that I was taking issue with John's assertion that an REA and a
claim are "separate concepts."
I have not said that there is no difference between an REA
and a claim. What I have said is that some REAs are claims
and some are not, depending on their content.
REA is not a clearly defined concept. FAR does not define that
term. I don't know of any court decision that makes a clear
distinction between REAs and claims. It is clear from the court
decisions that some REAs are claims and some are not, depending
on how they are worded.
The words REA and claim mean different things to different
people. Look up "claim" in a law dictionary. It often means
nothing more than a demand for money. I know contractors who say
that they submitted a claim whenever they asked for more money
or time, but don't mean a claim as that term is used in the
However, common usage does not necessarily make the law. When
the Federal Circuit said, in Reflectone, "[W]e hold that
Reflectone's REA was a CDA 'claim'," that does not come across
as endorsing the notion that REA and claim are separate
If the readers of this forum understand that a claim need not
label itself as such, make an explicit request for a CO
decision, or cite the Disputes clause, then I have made my
What's the worst that could happen if a CO does not recognize
that something labeled "REA" is a claim? Well, if a CO takes too
long to negotiate a setlement he may get an unwanted notice that
the contractor has appealed to a board or court saying that the
contracting officer's failure to resolve the issue in a timely
matter amounted to a final decision to deny the claim. This has
happened. In some of these cases the government has argued that
the board or court had no jurisdiction because the REA was not a
claim. If the board or court decides that the REA was, in fact,
a claim, then the Government may be facing a trial and the
payment of interest if the contractor wins. (However, they can
still try to settle.)
How often has this happened? I don't know. Probably not very
often. But no CO should be ignorant of his or her contractual
obligation under the Disputes clause to render a timely decision
or of the government's prospective liability for interest.
That's why I took issue with John's assertion. I worry that it
could mislead some COs.
COs must know that a letter labeled "Request for Equitable
Adjustment" may, in fact, meet all of the criteria for a claim,
even though it does not include the word claim, make an explicit
request for a final decision, or cite the Disputes clause. The
legal record shows that the point is not entirely academic.
I feel that COs, as professionals, should understand that
different people may use the terms REA and claim in different
ways, intending them to refer to different things, but that an
REA may, in fact, be a claim, depending on its content.
That's all I've been trying to say. At this point, I haven't got
anything else to say about the issue. Everyone reading this can
consider what John has said and what I have said and make up
their own minds about how to use our ideas, if at all.
on Wednesday, October 25, 2000 - 02:26 pm:
Not that I want to suggest that this forum is humor-impaired--
But why is it that when I make a clearly facetious comment,
there is usually somebody who insists on taking exception.
Clearly the CON 210 authors see the process as relatively
seamless. The banana has turned an ugly color but it is still
the same banana.
John, if I said that a claim is something that starts to smell
when it has been sitting around too long, would that make you
Pending further clarification, I think the practical
significance of this argument for practical 1102’s is very
The interesting question is whether the parties can reverse this
ripening process by mutual agreement. If the supplemental
agreement looks like an equitable adjustment, what happens to
the claim. My guess is that it becomes a nullity. The contractor
shouldn’t get interest and the contractor’s administrative costs
should be recoverable.
Pending further clarification—
on Wednesday, October 25, 2000 - 09:24 pm:
Eric, I disagree. Once the Contractor submits a claim, it
can't unilaterally "reverse it", calling it an "REA" upon
successful settlement negotiations, in an attempt to trade
Contract Disputes Act interest for claims preparation costs,
otherwise unallowable in connection with prosecuting a claim.
The KO can and does often respond to the claim with other than a
KO "decision". If, upon review of the claim, the KO responds to
the Contractor's claim with a partial or full merit
determination, I believe that it is too late to "withdraw" the
claim and "substitute it" with an REA, unless the KO determines
that it is in the Government's best interest (pardon the
pun).(-: Happy Sails! Joel
on Thursday, October 26, 2000 - 09:05 am:
I don’t think we disagree on anything. I wouldn’t suggest this
course of action unless it was in the best interest of both
However, I am unsure regarding the legalities. Would it be
sufficient just to draft the modification without any mention of
the claim and without the interest (and document the file, etc.)
or would something more be required?
John Ford on
Thursday, October 26, 2000 - 09:32 am:
Eric, you may have an audit problem with this approach. Claim
and REA prep costs are usually accounted for by contractors as
indirect costs. If you do not address the allowability of prep
costs or the nature of the contractor's submission, the auditor
reviewing the contractor's (certified upon pain of perjury and
potential false claims act liabilities) indirect cost proposal
may question the cost as expresly unallowable under FAR
31.205-47. The KO may then have to explain why (s)he allowed an
expressly unallowable cost and what authority existed for such
action. In this regard, see FAR 31.109.
on Thursday, October 26, 2000 - 09:42 am:
I don’t think we disagree on anything. I wouldn’t suggest this
course of action unless it was in the best interest of both
However, I am unsure regarding the legalities. Would it be
sufficient just to draft the modification without any mention of
the claim and without the interest (and document the file, etc.)
or would something more be required?
Vern Edwards on Thursday, October 26, 2000 - 10:08 am:
I apologize for not responding to your 10/25 post sooner.
Somehow I missed it.
I like your "gestation theory" analysis. I think that's
right--many people think that all claims began as something
else, e.g., an REA, and became claims in the course of time when
the parties could not reach an agreement. That is often true,
maybe even usually true, but it is not always true.
I also agree with you that the reality probably is that in most
cases during performance the parties do not think very clearly
about whether a request is a claim or not, at least not until
they get to the point where they can't agree and start thinking
about final decisions and appeals.
Finally, I agree that the parties do not have to treat every REA
as a claim. But I hope that every CO understands that a request
may meet all of the tests of a claim even though it is labeled
on Thursday, October 26, 2000 - 10:18 am:
For the benefit of those who may find this dialogue confusing--
DCAA auditors do not have contracting officer warrants and ACOs
(who are contracting officers not accountants) normally
negotiate final indirect rates. However, there are occasions
when the final indirect rates are “audit determined.”
There are two questions. First, what do we need to do to make
this legal so that it will stand up in court.
Second, what do we need to do to document this so that other
participants like the auditor and ACO don’t become confused or
If it is legal and the PCO has the authority (not acting
contrary to statute or regulation), the ACO and the auditor will
defer to the PCO (assuming that the documentation is adequate so
that they don’t become confused.)
Presumably the answer is to clearly indicate what the parties
intend in the Supplemental Agreement.
Pending better advice-- The ACO determines whether the indirect
cost is allowable by asking whether the cost should be
categories as cost related to the claim. The PCO normally
determines whether a claim exists.
I am speculating that the parties (the PCO and the contractor)
can by mutual agreement allow the contractor to withdraw the
claim (giving up the interest) and, at the same time, legitimize
the costs, even if the costs were segregated and treated as
claim related costs up to that point.
on Thursday, October 26, 2000 - 05:16 pm:
I found this while I was researching another issue. It should
keep John and Vern entertained for awhile.
Cubic Corporation v. The United States, (June 06, 1990) United
States Claims Court, No. 604-88C, June 6, 1990 20 ClCt 610, as
corrected June 12, 1990.
Contract Disputes, Interest--Claim--Request v. Claim.
“Despite government allegations that there was no dispute at the
time the contractor filed a request for equitable adjustment, a
contractor’s claim for interest was not dismissed, because the
government did not treat the request as a routine request for
payment. Under a contract to furnish a training device developed
from government-furnished lesson plans, the contractor, alleging
that the lesson plans were defective, submitted a document
entitled “Certified Request for Equitable Adjustment” to the
contracting officer, accompanied by a letter asserting a claim
under the Changes clause and attachments that contained details
of the claim. Subsequent to receiving a settlement on this
claim, the contractor filed a claim for interest. The government
contended that the request for an equitable adjustment was a
routine request for payment that was in pre-dispute negotiation
when it settled. However, the correspondence showed that the
government did not retreat from its denial that there were
defects in government-furnished property. Moreover, in calling
the claim “a request for equitable adjustment,” the contractor
used the same terms that appear in the definition of a claim.”
“Despite the government’s allegation that a certification was
made only to comply with requirements of the Appropriation
Authorization Act and not the Contract Disputes Act, a claim was
properly certified for purposes of the Contract Disputes Act
because the contract contained a provision that certification
for one Act would be deemed to comply with both statutes.”
“Plaintiff’s REA was based upon its claim that the price
adjustment was due to the deleterious impact of defective
Government-furnished property (GFP) and Government-imposed
changes. The REA cited the Changes, Government Property, and
Government Delay of Work clauses of the contract. The claim
letter was accompanied by a CDA certification, a standard from
(SF) 1411 “contract pricing proposal cover sheet” and a large
volume which discussed the claim in detail. …”
“The parties continued to negotiate and by August 19, 1988 had
resolved all issues except plaintiff’s claim for interest on the
equitable adjustment claim. The settlement resulted in payment
to plaintiff of an additional $7,200,000 ($437,000 in
termination expenses and $6,763,000 on the equitable adjustment
claim exclusive of interest).”
“It is abundantly clear to the court that plaintiff’s REA was
not a voucher, invoice, or other routine request for payment
because the premise upon which the REA was based was clearly in
dispute when the REA was submitted. Although plaintiff had made
routine requests for payment prior to March 28, 1986, its REA
was submitted under the changes clause because the contract’s
GFP clause required the procedures of that clause to be used as
the avenue of administrative relief.”
“’Cubic Corporation certifies that its claim for equitable
adjustment, Cubic No. 380-2 dated March 28, 1986, is made in
good faith, that the supporting data is accurate and complete to
the best of Cubic’s knowledge and belief and the amount
requested accurately reflects the contract adjustment for which
Cubic Corporation believes the Government is liable.’
Plaintiff’s use of these words of art evinces its intent to file
a properly certified claim under the CDA, applicable
regulations, and the Disputes Clause of the contract in
submitting its request to the CO for an adjustment.”
joel hoffman on Thursday, October 26, 2000 - 05:47 pm:
Fellas, I've been working claims for about 17 years but don't
know all the answers. I think it would be highly irregular for a
KO to allow a claim to be converted to an REA at the settlement
stage, in order to allow "preparation costs", which, up to that
point were expressly unallowable. The record would show that the
matter was a claim, unless somebody buries the file.
There are all sorts of ways to "settle" and write it up. Bottom
line can be used, with a good pre-negotiation objective and
Government Estimate to cover your offer or settlement. I've seen
lump sum with no interest, with interest, whatever.
As to how you can identify proposal prep costs, it isn't that
difficult but depends on how the contractor accounts for such
costs. Are they directly or indirectly charged? Direct charges
for outside help are pretty straightforward.
If included in overhead, the methodology depends on which fiscal
year's direct cost base and overhead pools are used to detrmine
the applicable overhead rates used. Of primary importance is to
identify, segregate and remove all such costs and similar costs
in determining the applicable overhead rates being used (if the
previous accounting year's cost data re being used to determine
OH rates, remove similar costs and you are good to go).
joel hoffman on Thursday, October 26, 2000 - 06:01 pm:
Eric, the Court Case you cited (Cubic Corporation v. The
United States, (June 06, 1990) United States Claims Court, No.
604-88C, June 6, 1990 20 ClCt 610, as corrected June 12, 1990)
was decided on the basis that there was clear a dispute between
the parties on a non-routine matter. That pretty well sealed it
as a claim.
Of course, as of 1995 (Reflectone), even if the matter were not
in dispute, it could well be classified as a CDA claim, for
other reasons - especially if the "claim" word was mentioned
anywhere by the Contractor. It's not clear from your quotes but
appears that the term "claim" was used in the correspondence.
Thanks for the input. Happy Sails! Joel
Vern Edwards on Friday, October 27, 2000 - 09:47 am:
Thank for the info.
I did a search this morning on West for "REA /s claim" and found
several court and board cases in which the term REA appeared in
the same sentence with the word claim. I think that these
provide further support for my assertion that REA and claim are
not separate concepts. Here are a few examples:
"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." Reflectone, Inc. v. Dalton, 60 F.3d 1572, July 26,
"Plaintiff set out its claim in a
107-page Request for Equitable Adjustment
('REA') dated July 31, 1995." Northrup Grumman Corp.
v. U.S., 42 Fed.Cl. 1, Sept. 24, 1998.
"On July 18, 1991, ThermoCor submitted a
Request for Equitable Adjustment (the 'REA') to the Corps
for claims including differing site
conditions, delays and disruptions, and variations in estimated
quantities." ThermoCor, Inc. v. U.S., 35 Fed.Cl. 480, May
"For example, Line Item 15 of the REA,
referred to as 'REA 15,' was entitled 'Incomplete ECP/ECN Work
Scope' and encompassed a claim for
"financial harm caused by Class I ECNs being received either
late to the schedule cited by the respective ECP or in addition
to those contemplated by the ECP." Bath Iron Works Corp. v.
U.S., 27 Fed.Cl. 114, Nov. 12, 1992.
"Under the analyses of Cubic Corp. and Dawco, the
court concludes that the REA of
March 16, 1988, in conjunction with Isles' May 9, 1988 request
for a final decision of the contracting officer,
constituted a valid claim."
Isles Engineering and Const., Inc. v. U.S., 26 Ct.Cl. 240,
May 13, 1992.
Similar quotes may be found in board decisions:
"On 24 November 1985, SECO submitted a
claim, designated as REA No. 27,
in the amount of $8,375." Service Engineering Co., ASBCA
No. 42146, 96-2 BCA ¶ 28376, May 28, 1996.
"The part of the Navy's motion which contends the
REA claim is not 'the subject of a
[final] decision by the Contracting Officer as required by
Section 6(a) of the [CDA],' is also based upon a faulty
premise." Atlantis Cont. Corp., ASBCA No. 44044, 96-1 BCA
¶ 28045, Nov. 21, 1995.
"On 5 May 1993, GTE submitted its REA as a
certified claim with a revised amount ($587,997) for
claim preparation costs." GTE Government Systems Corp.,
ASBCA No. 47646, 96-1 BCA ¶ 28056, Nov. 6, 1995.
I provide these quotes only to show that agencies, contractors,
courts, and boards use the terms "REA" and "claim" in ways that
are inconsistent with the notion that they are separate
on Friday, October 27, 2000 - 10:05 am:
In Cubic, “REA”, “claim,” and “dispute under the Disputes Act”
were all used synonymously. However, Cubic never tipped its hand
by using the word “dispute.”
The Court expected the PCO to infer the “dispute” from the
circumstances (i.e. the PCO was stonewalling and the
certification touched more bases than would be required for a
mere REA certification.)
on Friday, October 27, 2000 - 10:30 am:
I am not going to argue with 17 years of experience. I think you
However, just for a little mental exercise, let’s say in
alternate universe, Cubic had submitted its REA, the parties had
quickly negotiated a supplemental agreement fair to both
parties, Cubic had decided that its double purpose certification
didn’t really make a claim under the Disputes Act, and Cubic had
vouchered for the request preparation costs as the routine
allowable cost of contract administration. Would DCAA and the
ACO notice? Would the ACO wish to disallow the cost? What would
happen in Court?
I have no idea.
I would note that after this Court had dealt with the
formalities, it put a lot of emphasis on the behavior of the
parties. If both parties had been cooperative and had reached a
negotiated settlement without any more than the usual
difficulty, I think the Court would have reached a different
conclusion regarding the nature of the request.
John Ford on
Friday, October 27, 2000 - 10:59 am:
As a good portion of the preceding discussion shows, the real
question we are talking about here is how to tell whether a
contractor's submission is a claim or not. Although we may be
able to define the prerequisites for a claim, some contractors
file submissions that are so convoluted that it is practically
impossible to tell what they are after other than to get paid
more money. In many cases, I believe the contractor does not
know what it has submitted or could submit and is only
interested in getting paid. Therefore, I go back to some advice
that Eric gave several posts ago and that is when in doubt as to
what the contractor has done, ask. You may not always get a
responsive answer, but it cannot do you much harm and may do you
a lot of good.
Vern Edwards on Friday, October 27, 2000 - 11:22 am:
I agree with your last post. I would add this: Many contractors
do not understand the Disputes clause, FAR Subpart 33.2, or the
case law. They may use the word "claim" in a very general sense,
and not in the specific sense in which it is defined in the
Disputes clause. Thus, a contractor might answer, "Yes," when
asked if it had meant to submit a claim, but intending only that
it had meant to ask for money, and not understanding the legal
consequences of that answer in the world of government
So when asking a contractor what it intended, keep in mind that
it may not understand the legal consequences of its answer.
While it is the contractor's responsibility to know, a good CO
will not take advantage of a firm's obvious ignorance.
Also, COs must be conscious of the limits of their own
knowledge. COs are obligated to explain the government's
interpretation of a contract clause and must be careful not to
misinform a contractor. When in doubt about his or her own
knowledge of the rules, a wise CO would consult a
knowledgeable government contracts attorney before
interpreting the Disputes clause for a contractor. Ask the
attorney specific questions in writing and ask for his or her
answers in writing. (I realize that this might delay the
process.) Give your interpretation of the clause to the
contractor in writing, after the government attorney has
reviewed your letter.
If the matter at hand is potentially serious, it might be wise
(and kind) for a CO to suggest that the contractor seek the
advice of an attorney who specializes in government contract
law. It might make the CO's job a little easier.
on Friday, October 27, 2000 - 11:59 am:
In Cubic, the Court considered REA, claim and claim under the
Disputes clause to be equally correct names for the same
Vern and John,
If I were Anon, and I received a “claim” out of the blue, I
would assume that we are all entitled to the presumption that we
are willing to negotiate in good faith until proven otherwise. I
would admit that it opens the door to a certain amount of
gamesmanship regarding the legal and administrative costs if the
contractor submits an REA first, then submits a claim under the
Disputes clause subsequently.
However, it defies common sense to say that we should have a
dispute when the PCO doesn’t even know that the parties have had
If the request is unambiguously a claim under the Disputes
clause, I would ask the contractor to withdraw it until it was
clear that we had actually reached an impasse.
Otherwise, I would ask the contractor to clarify the request and
establish that the request is merely an REA and not a claim
under the Disputes clause.
I can’t imagine that any contractor with the sense that God gave
geese, an offer to negotiate in good faith, and the opportunity
to recover several months of legal and administrative costs as
allowable costs, would not prefer to hold off for a couple of
months before transforming a routine request into an ugly
Vern Edwards on Friday, October 27, 2000 - 01:40 pm:
A couple of points:
1. The submission of a claim does not necessarily indicate that
the contractor thinks that the parties are in dispute. Remember
that the key holding in Reflectone was that a dispute is
not a prerequisite to a valid claim, except in the case of
routine invoices and vouchers. A contractor may submit an REA in
the form of a claim merely in order to set some groundrules for
settlement negotiations. A contractor can always waive the
decision deadline if it thinks that negotiations are going well.
"Claim" is a hotbutton word to some COs, who react adversely to
a "claim" because they think that it represents an adversarial
posture on the part of the contractor. But that may not be the
case at all.
Remember that the Contract Disputes Act of 1978 was, in part, a
Congressional response to industry complaints that COs were
dilatory when negotiating settlements. See: Peacock and Ting,
Contract Disputes Act Annotated, p. 6-17. By submitting an
REA as a claim at the very outset, the contractor sets timelines
for settlement. If the claim is for $100,000 or less, the
contractor can request a settlement decision within 60 days or
can allow the CO to make a decision in a "reasonable time." If
the claim is in excess of $100,000, the CO must either issue a
decision in 60 days or tell the contractor when he or she will
issue a decision.
The existence of a deadline should not preclude good faith
2. Do not assume that claims are always costly to prepare. If a
contractor is well-organized, well-managed and knowledgeable, it
will routinely collect and organize the data necessary to
support a claim as part of daily contract administration, before
deciding to submit a claim, segregating those costs from the
costs of subsequent claim preparation. For such contractors the
cost of the preparation of the claim itself may be quite small.
Such a contractor may not be giving up much by submitting a
claim and losing the allowability of claims prosecution costs.
I don't know why the receipt of a claim should upset a CO. Two
months ought to be enough time for any competent CO to settle or
deny a claim of $100,000 or less. And if the claim is more than
$100,000 and is very complex, a CO can pretty much take as much
time as he or she needs. There have been cases in which a board
or court has allowed a CO to take more than a year to settle
large, complex claims. All a CO has to do when setting the
deadline for final decision about a claim in excess of $100,000
is to be reasonable.
on Friday, October 27, 2000 - 02:03 pm:
But it strikes me that the more $ that the contractor drops into
the sunk cost unallowable cost pit, the stronger the motivation
to go ahead into litigation rather than compromise and settle.
If the Government is stonewalling or dragging its feet, the
contractor should put in a claim.