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Subcontractor Claim Certification - 'substantial compliance"

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Second tier sub has a claim on fed. procurement project. His subcontract requires that he provide a certification per 52.233-1. Subcontractor provides certification per the FAR, but changes “government is liable” to read “subcontractor X is liable.” Sub X is second tier sub's contractual party.

Any thoughts on whether this is sufficient?

Couldn’t the prime simply issue their own certification stating that the Government was liable? Isnt the purpose and intent not to assess blame or liability, but rather to assure that the subcontractor/contractor is presenting valid, accurate costs in support of their claim?

Any practical, real-world experience on this issue?

Thanks in advance.

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...Any thoughts on whether this is sufficient?
...Couldn’t the prime simply issue their own certification stating that the Government was liable?

Sufficient for what? Sufficient for the Prime Contractor to directly submit a claim by a subcontractor or lower tier sub to the Government? The answer is No.

The Prime Contractor, not a sub or lower tier sub, Must certify certain claims to the Government under the Disputes clause. The lower tier sub is submitting a claim to the sub. The sub will presumably submit a claim to the Prime. If the Prime feels that the Government is liable and it is a claim under the Disputes clause, the Prime must certify the claim.

If you are asking if this is sufficient for certification of claims between the parties, I believe that this is an issue between the parties.

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Thanks, Joel.

For those interested, and for posterity, review:

US. v. GE, 727 F.2d 1567 (Fed. Cir. 1984) et al.

Supra, I reviewed the case found at: https://www.casetext.com/case/us-v-general-elec-corp/

Supra, what is your specific point? My point is that the Prime Contractor must certify certain claims to the Government (see FAR 33.207), not a subcontractor, let alone a second tier subcontractor. Just because some requirement isn't covered in a subcontract or lower tier subcontract doesn't mean that the Government is liable to the sub for providing it. The lower tier sub's contract is with a subcontractor to the Prime.

For example, a Prime Contractor is responsible to the Government for integrating the overall contract requirements through self performance and/or subcontract(s). Just because a requirement didn't get included in a certain subcontract or lower tier subcontract doesn't necessarily mean that the Government is liable to that sub for having to do something that it feels wasn't in its contract. The Prime must convince the Government that the work wasn't required by the contract, that it is liable to its subcontractor and that the Government is liable for the additional work and thus the cost.***

I didn't mention the form or the specific wording of a sub's certification or that of the Prime to the Government. You asked about the wording of a claim by a second tier sub in its contract with a sub. If you are asking whether that certification can simply be passed through to the Government, my answer is no.

The case above doesn't state that a subcontractor can submit or certify a claim to the Government. The case partly concerned whether or not the Prime Contractor's certification of its claim had to completely quote the (then current) statutory language for a claim exceeding a certain amount.

The Government argued that GE's certification statement of November 13, 1979, failed to state the amount of its claim and failed to include the words "the amount requested accurately reflects the contract adjustment for which the contractor believes the government is liable.", particularly the belief in the government's liability. GE argued "that the government's position is formalistic and that when the November 13, 1979 statement is read in its entirety, including referenced documents, the statutory requirements are satisfied". The Court agreed. "The government's view that the certification statement requires a claimant to swear to a belief in a legal theory of recovery is meritless."

Apparently, the Court decided that the claim met the intent of the quoted wording. I don't know because they didn't go into a detailed explanation of what the Prime's claim stated.

*** I've seen many instances where primes failed to integrate the contract work and merely passed claims by subs along to the Government that were the Prime's responsibility.

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Joel: I agree with your reading of the GE decision.

I was not trying to necessarily make a point, but rather seek advice from others who have dealt with this issue from a real-world perspective .. beyond the black letter of the cases and FAR clauses.

I’m dealing with a subcontractor on a fed govt project who received a claim from its sub-sub. The subcontract required that the sub-sub “comply” with the FAR’s claim certification language. The sub-sub tracked the FAR claim language verbatim with one exception: it changed “Government is liable” to “ is liable”. Again, the rest of the claim certification tracks the FAR certification provision precisely.

The sub believes it is not liable for the sub-sub's claim, but that the government is ultimately liable. Question: does the sub-sub’s certification using “ is liable” instead of “government is liable” preclude the sub from passing that claim up to its prime, who presumably would then pass it up to the government?

Presuming the sub believes the claim has some merit and is appropriately supported, doesn’t the sub have an obligation to the sub-sub to pass the claim up even if the sub-sub’s certification uses “the sub is liable” language in its certification? I personally don’t think the sub-sub’s modification is a material deviation. The sub-sub, after all, is still on the hook for a FCA violation whether it thinks the government or anyone else is liable.

Thoughts? And, thanks for your time.

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Supra, since the Prime must directly certify the claim to the Government, I think that the sub-sub's certification is a matter between it and the sub. I would agree with you in that, at least, the sub-sub would be subject to an FCA (and/or FSA) violation.

As for the Government rejecting the claim based upon the specific wording of the sub-sub's certification to a higher tier, the Government doesn't have a copy of the sub-sub's contract, so why would it reject the claim - assuming that the Prime properly certifies the claim and justifies why the GOVERNMENT, not the Prime is ultimately liable for any additional cost.

I personally like the wording that the sub-sub used. [EDITED: Why should the sub-sub have to determine if the Government is liable to the sub-sub? It probably doesn't have a copy of the prime contract and probably isn't aware of all pending changes or direct dealings between the Prime and the Government. I think that is stupid to require a subcontractor to certify that the Government is liable for the subcontractor's additional costs.]

[EDITED: As to my dealings with this on real world issues, I worked construction changes, claims and requests for equitable adjustment as a contract administrator for many years, in coordination with our legal staff and KO (subject to the final decision of the KO). I always paid attention to whether or not the prime was liable to the sub and whether the sub was liable to a sub-sub, supplier, etc.for any additional cost or time - all the way down to the bottom. We rejected claims where the liability trail disappeared. Many, many claims were the result of lack of integration of the full contract requirements by the prime or by a sub, not an additional or changed contract requirement.]

Now I'll defer to others for their views/thoughts.

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I think Joel has covered it pretty well. While admittedly limited experience on my part I did happen to have this lying around. Speed reading through the document to Page 31 and "Discussion" and the first couple of paragraphs, while not spot on, may be helpful to your situation, along with a good lawyer.

http://www.cbca.gsa.gov/2007app/A118.pdf

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I was not trying to necessarily make a point, but rather seek advice from others who have dealt with this issue from a real-world perspective .. beyond the black letter of the cases and FAR clauses... The subcontract required that the sub-sub “comply” with the FAR’s claim certification language... Question: does the sub-sub’s certification using “ is liable” instead of “government is liable” preclude the sub from passing that claim up to its prime, who presumably would then pass it up to the government?

Who knows? There is no universally true answer to your question.

The only way to answer is to read and interpret the language of the subcontract and the sub-subcontract. The sub undoubtedly wants the sub-sub's certification as protection from a fraud allegation. The prime probably asked the sub to certify any claims, and the sub requires the sub-sub to certify. The sub may not even know what it needs or wants. The language of the certification is not dictated by the Contract Disputes Act or the FAR, for the reasons Joel has stated. It is dictated by the sub-subcontract. Thus, the question is: What does the sub want the sub-sub's certification to say, and what is the sub-sub contractually required to give to the sub? Every sub-subcontract stands on its own terms.

Here is some advice to the sub-sub based on "real world" experience: (1) give the sub whatever it wants so it will move the claim, but (2) don't lie.

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