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Don, please define the word "seeking" as you used it in the phrase "written demand by the contractor seeking, as a matter of right, an adjustment of the contract price exceeding $100,000 (but not seeking payment)". Thanks.

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The FAR definition of claim is a mess. While the FAR definition requires certification of demands or assertions "for the payment of money," the Contract Disputes Act, 41 U.S.C. 7102(B), requires certification of any monetary claim in excess of $100,000, including claims for monetary adjustment:

(B) Certification of claims.--

(1) Requirement generally.--For claims of more than $100,000 made by a contractor, the contractor shall certify that--

(A) the claim is made in good faith;

( B) the supporting data are accurate and complete to the best of the contractor's knowledge and belief;

( C) the amount requested accurately reflects the contract adjustment for which the contractor believes the Federal Government is liable; and

(D) the certifier is authorized to certify the claim on behalf of the contractor.

It is well established that monetary claims in excess of $100,000 must be certified, including demands for adjustment, not just demands for payment.

Note that the statute does not say that a demand or assertion is not a claim until certified. It says that certain "claims" must be certified. The FAR councils and the boards and courts have screwed it up by saying that a demand or assertion is not a claim until certified, when what they should have said is that the right to a CO final decision and the right to appeal a CO final decision are not in effect until the claim has been certified. That is the important point.

A claim can be for payment, for adjustment, or for payment and adjustment. In any case, if it exceeds $100,000, then it must be certified. Thus, under FAR and the case law, the correct answer to Don's question is NO.

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Note that the statute does not say that a demand or assertion is not a claim until certified. It says that certain "claims" must be certified. The FAR councils and the boards and courts have screwed it up by saying that a demand or assertion is not a claim until certified, when what they should have said is that the right to a CO final decision and the right to appeal a CO final decision are not in effect until the claim has been certified. That is the important point.

Just to clarify, the FAR councils say that a demand or assertion for payment exceeding $100,000 is not a claim until certified. Are you saying that the boards and courts have said that a demand or assertion for payment, adjustment, or other relief exceeding $100,000 is not a claim until certified?

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The FAR definition of claim is a mess. While the FAR definition requires certification of demands or assertions "for the payment of money," the Contract Disputes Act, 41 U.S.C. 7102( B), requires certification of any monetary claim in excess of $100,000, including claims for monetary adjustment:

It is well established that monetary claims in excess of $100,000 must be certified, including demands for adjustment, not just demands for payment.

Note that the statute does not say that a demand or assertion is not a claim until certified. It says that certain "claims" must be certified. The FAR councils and the boards and courts have screwed it up by saying that a demand or assertion is not a claim until certified, when what they should have said is that the right to a CO final decision and the right to appeal a CO final decision are not in effect until the claim has been certified. That is the important point.

A claim can be for payment, for adjustment, or for payment and adjustment. In any case, if it exceeds $100,000, then it must be certified. Thus, under FAR and the case law, the correct answer to Don's question is NO.

Thank you for the insight. The question appears to require significant analysis "outside the box" to get a final answer. Based solely on what I've read here, it seems:

Whether or not a particular request constitutes the type of "claim" requiring certification is determined by an analysis of the CDA, since the CDA is the statutory authority requiring certification of certain claims. If the CDA's definition of the type of "claim" that is subject is certification requirements is, itself, subject to more than one reasonable interpretation, a court must determine which interpretation shall prevail, using the "canons" of statutory construction.

While agency rulemaking and regulations that attempt to make such interpretations are accorded significant weight under the "Chevron rule," they are not finally determinative. A court may choose an interpretation that departs from what is prescribed in regulations where the court finds that its interpretation is superior to the agency's, in light of the other canons of statutory constructions, which usually begin with the plain meaning of the words, but may also include a consideration of legislative intent, the use of similar language in other laws, equity among affected parties, administrative and judicial efficiency, etc.

So my final answer is: whether an un-certified request for an adjustment valued at over $100,000 could be a "claim" under the CDA depends on how the courts would construe the word "claim" as it is used within the CDA, which requires a more thorough analysis than is allowed in this exercise.

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joel,

I think the most relevant dictionary entry at m-w.com is: "to try to acquire or gain." I'll go with that.

Don, your scenario appears to be an oxymoron. If the contractor seeks, as a matter of right, an adjustment of the contract price exceeding $100,000, then payment - as a matter of right - would naturally follow the entitlement that is asserted or demanded.

In order to "seek payment", I don't think that a contractor is required to even mention the word "payment" in the written demand or assertion for an adjustment in the contract price. To me, it is a 'given' that one is seeking payment at some point for a price increase that they are demanding or asserting the right to. Only a fool would not try to be paid for the price increase it has successfully "tried to acquire or gain".

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deleted. Wrong button...

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Joel, consider the situation where a contractor submits a claim to forward price a change order. That claim is based upon costs the contractor estimates it will incur. The contractor receives the adjustment it claimed but the contractor does not incur all the costs it estimated it would. Thus, it does not recover the full amount of the claim. There are many reported cases where this factual scenario was presented, usually in the context of when interest starts and on what amount it is calculated. The point being that the amount of a claim does not necessarily translate into an amount the contractor will be paid. Therefore, to me, an amount asserted in a claim for a price adjustment is not in and of itself a request for payment of the same amount of money.

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Vern seems to have this locked down. It seems like the very simple solution is for the FAR council to remove the entire sentence: "However, a written demand or written assertion by the contractor seeking the payment of money exceeding $100,000 is not a claim under the Contract Disputes Act of 1978 until certified as required by the Act."

It's a useless sentence, because the consequences of not certifying a claim of more than $100,000 are already described in 41 USC 7103(b(3) -- i.e., there's no need for a regulatory definition that attempts to reiterate these consequences in a way that only creates confusion and uncertainty.

Moreover, this sentence is contrary to the plain language of 7103(b(3), which specifically contemplates the possibility that some claims of more than $100,000 may be un-certified. Where an agency rule conflicts with the plain meaning of the statute it is interpreting, the rule is generally invalid. If not invalid, the "However" sentence is either meaningless or must be interpreted as Vern suggested -- that when a claim of more than $100,000 is not certified, it is subject to the limitations described in 41 USC 7103(b(3).

EDIT:

Vern,

You suggested the answer to the question should be "No" -- did you mean "Yes"?

Don asked:

"Is a written demand by the contractor seeking, as a matter of right, an adjustment of the contract price exceeding $100,000 (but not seeking payment) a "claim" if it is not certified? Yes or no?"

Then you stated:

"A claim can be for payment, for adjustment, or for payment and adjustment."

It seems to me that the demand Don described is a claim, albeit an un-certified claim, so wouldn't the answer be "Yes"?

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Gee whiz. I thought I was perfectly clear. The CDA states that any "claim" in excess of $100,000 must be certified. It does not say any claim for the payment of money. In short, any monetary request over $100,000 must be certified. That is not new. See, e.g., Appeal of Hundley, ASBCA 26689, 82-1 BCA 15691:

By letter to the ROICC dated 17 August 1981, appellant requested a contract price adjustment in the amount of $68,470.15 for this allegedly extra work and concurrently transmitted to the ROICC ‘various supportive documents'...

In none of appellant's correspondence to either the ROICC or the contracting officer does there appear any certification of appellant's claim in accordance with Section 6( c)(1) of the Act, 41 U.S.C. § 605( c)(1) [Now 41 U.S.C. § 7103(B)(1).] Nor has appellant ever otherwise certified its claim in writing...

nder the express language of Section 6( c)(2) of the Act, a contractor who fails to certify a claim for a monetary adjustment over $50,000 is entitled to neither a decision on its claim by the contracting officer nor to notification of when a decision will be issued.

(The certification threshold was $50,000 at that time.) See also, FAR 33.207(a):

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

The boards and courts have enforced the Act. However, the Act does not define claim and does not say that a demand that must be certified is not a claim if it is not. That statement comes with the FAR definition. The FAR councils, the boards, and the courts have created a muddle, because they have followed the Act AND adopted the FAR definition. Thus, they have said that a demand that must be certified, but that is not, is not a claim. Here are some quotes and cites:

The court may not exercise jurisdiction over DMS's claim for damages because plaintiff has not submitted a valid claim to the contracting officer demanding such monies. The court further notes that the January 2010 letter was not certified, as required for all claims seeking more than $100,000. 41 U.S.C.A. § 7103(B)(1); 48 C.F.R. § 2.101 (noting that “a written demand or written assertion by the contractor seeking the payment of money exceeding $100,000 is not a claim under the Contract Disputes Act of 1978 until certified as required by the Act”).

Diversified Maintenance Systems, Inc. v U.S., 103 Fed. Cl. 431 (2012)

Thus, we find that the August 8, 1983 claim, as allegedly filed, was in the amount of $169,556, was not certified, as required, and, therefore, not a valid claim.

Youngdale & Sons Const. Co., Inc. v. U.S., 27 Fed. Cl. 516 (1993)

It is well established that the requirements of the CDA are strictly construed by this court. RSH Constructors, 14 Cl.Ct. at 659. A contractor's omission of even a single statutory element is fatal to the court's jurisdiction. In the instant case, plaintiff has failed to submit a properly certified claim to the CO. Accordingly, the court concludes that plaintiff's January 26, 1989 letter is not a “claim” cognizable under the CDA since the letter did not comply with the Act's certification requirements.

Robin Industries, Inc.; Tadcol Government Services Div. v. U.S., 22 Cl. Ct. 448 (1991)

ERKA's 8 April 2010 letter to respondent did not constitute a CDA claim, because it did not request a CO's decision, expressly or impliedly, and the $294,000 it mentioned was not certified.

ERKA Const. Co. LTD, ASBCA 57618, 12-2 BCA 35129

[A] claim requiring certification under the CDA is not a claim for either FAR cost purposes or CDA purposes until it is properly certified. Federal Insurance Co., 96-2 BCA at 141,929.

Ball, Ball, and Brosamer, Inc., IBCA 2841, 97-2 BCA para. 29072

Without proper certification, an over–$50,000 “claim” is not a claim for the purposes of the CDA. This defect cannot be cured through the issuance, by a Contracting Officer, of a final decision on an uncertified claim, for a Contracting Officer has no authority to waive the statutory requirement. Paul E. Lehman, Inc. v. United States, 230 Ct.Cl. 11, 673 F.2d 352 (1982).

Schwartz, Mosko, Marks, VABCA 2856, 89-2 BCA 21681 (The certification threshold was $50,000 at that time.)

Thus, as I said (not "suggested"), outside of Don's box, a claim for a monetary adjustment that is not certified as required by the Act is not a claim. The answer to Don's second question is NO.

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In order to "seek payment", I don't think that a contractor is required to even mention the word "payment" in the written demand or assertion for an adjustment in the contract price. To me, it is a 'given' that one is seeking payment at some point for a price increase that they are demanding or asserting the right to. Only a fool would not try to be paid for the price increase it has successfully "tried to acquire or gain".

This is what happens when people don't pay attention to words. The definition makes distinctions between demands for payment, for adjustment or interpretation, and for other relief. Payment is payment -- transfer of money due to one person from another. Adjustment is adjustment -- a change in the words, numbers, drawings, etc. that make up the contract terms. A contractor may be entitled to an adjustment without being entitled to a payment.

Contractors must make claims "as a matter of right." That is, they must believe that they are presently entitled to what they demand, based on some act or omission by the government or some other event or condition. Thus, a contractor may seek an adjustment based on a change order so that they can be paid at some time in the future as a matter of course. If they get the adjustment they won't have to submit a claim for payment, just a routine invoice, which is not a claim. See the definition. On the other hand, the contractor may believe it has the right to immediate payment, in which case it should demand payment, with or without an adjustment.

As for demanding payment without using the word payment, I guess you can do that by using other words that express a demand for payment, such as "Compensate me!" or "Give me compensation!" or "Give me money!" But a contractor has to ask for what it is entitled to and what it wants. If it is not clear about what it wants, it may not have submitted a claim at all.

So yes, a contractor demands an upward equitable adjustment so that it will ultimately be entitled to a payment of the increased price. Ultimately. But if it is not entitled to the payment now, it cannot submit a claim for payment now. And if the contractor isn't entitled to payment now, it cannot demand payment now, and the demand is not a claim for payment.

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Vern, thank you for the research. I'm sorry that I misrepresented that you "suggested" the answer was "No," when, indeed, you declared it was "No" (I didn't hear you "say" anything). Sorry for the semantic confusion.

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