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chaudhryu

Should I ask for an REA to be certified as a claim?

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I've received an REA for an amount greater than $100K, but it does not have the claim certification verbiage. (Contractor either forgot or is not familiar with FAR guidance on claims and didn't include it.) Should I ask the contractor to include the appropriate verbiage so it fully meets a claim definition and can be properly treated as one?

With the exception of the certification not being included, the REA meets all other requirements of a claim, and I am inclined to treat it as one.

Any input would be appreciated!

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The Contract Disputes Act, 41 U.S.C. 7101 does not define claim and argument can be made that an REA by title can in fact be a claim. Definitions likely to apply to your case are in FAR 2.101 and 52.233-1[c]. By those definitions you do not have a claim (because it's not certified and greater than $100K).

If you believe it's a claim, and should be certified as a result, inform the contractor (see 41 U.S.C. 7103[3]). Let the contractor decide and clarify if they intended on submitting a claim or REA.

DFARS 243.204-71 has additional guidance for REAs if it applies to your situation.

Depending on what happened and why the contractor is demanding relief will help you decide REA or claim. Under what clause is equitable adjustment being considered? The contractor may prefer an REA because of additional allowable costs as compared to a claim under the disputes clause.

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I'm interested in what advantage the government obtains from treating a REA, that is not in dispute, as if it were a claim. I understand why the contractor would want it treated as if it were a claim -- CDA interest starts to be applied. But what's the advantage for the government?

Thanks for the help.

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H2H:

I don't believe legal fees, for example, are allowable under a Contract Disputes Act claim (FAR 31.205-33[c][4] and 31.205-47) yet are payable under an REA. Not sure which would cost more to the government in this scenario, interest or legal fees.

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Since the contractor is asking for an adjustment in excess of $100,000, and since the REA is not certified as a claim, then it is not a claim. Period. See the definition of claim at FAR 2.101 and 52.233-1. You don't treat a non-claim as a claim. Where did you get the idea that you could?

The REA might not be certified because the contractor does not want to submit a claim at this time and thinks you and he can settle without a claim. See FAR 33.204.

You can:

1. treat it as an REA that is not a claim or

2. call the contractor and ask if the intent was to submit a claim.

If the contractor intended to submit a claim, then tell them you need a certification and will not treat it as a claim until you receive the certification. Alternatively, you can let the contractor look out for itself, remain silent about the matter, and treat is as a non-claim REA. That's what I would do, unless I knew that the contractor had intended to submit the thing as a claim and didn't know about the certification requirement.

Your decision.

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Depending on what happened and why the contractor is demanding relief will help you decide REA or claim. Under what clause is equitable adjustment being considered? The contractor may prefer an REA because of additional allowable costs as compared to a claim under the disputes clause.

I'm interested in what advantage the government obtains from treating a REA, that is not in dispute, as if it were a claim. I understand why the contractor would want it treated as if it were a claim -- CDA interest starts to be applied. But what's the advantage for the government?

Thanks for the help.

I'm wanting to treat this as a claim because the agency is disputing the contractor's submitted request for payment. Contractor claims that he had to expend far more hours than anticipated (under a FFP contract) to deliver the final deliverable due to numerous changes he claims the agency informally requested along the way (not in writing), and has submitted an invoice (with justificaiton/documentation) for the correspnding amount (well over the contract price). If this were a request for payment for additions the agency had requested procedurally, then I would treat it is a normal request for equitable adjustment under the Changes clause or 52.212-4©.

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Since the contractor is asking for an adjustment in excess of $100,000, and since the REA is not certified as a claim, then it is not a claim. Period. See the definition of claim at FAR 2.101 and 52.233-1. You don't treat a non-claim as a claim. Where did you get the idea that you could?

The REA might not be certified because the contractor does not want to submit a claim at this time and thinks you and he can settle without a claim. See FAR 33.204.

You can:

1. treat is as an REA that is not a claim or

2. call the contractor and ask if the intent was to submit a claim.

If the contractor intended to submit a claim, then tell them you need a certification and will not treat it as a claim until you receive the certification. Alternatively, you can let the contractor look out for itself, remain silent about the matter, and treat is as a non-claim REA. That's what I would do, unless I knew that the contractor had intended to submit the thing as a claim and didn't know about the certification requirement.

Your decision.

Thanks. I'm almost positive that the contractor failed to include the certification due to not being aware of it rather than anything. I would not treat it as a claim until and unless the certification is submitted.

Is there a particular reference/part that would provide guidance on how to handle a non-claim REA (in detail perhaps similar to that as the FAR provides on claims)?

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Absolutely do not tell the contractor to submit the REA as a claim. What, do you want to pay interest? Do you want a deadline for making a final decision?

You should read up on claims and disputes before you say or do anything more.

There is no detailed procedure in FAR for handling a non-claim REA. Treat it as a matter of contract admin. Evaluate the request and either:

1. deny it entirely,

2. deny it in part and grant it in part, or

3. grant it entirely.

You can also try to negotiate a different amount.

As for pricing an REA, see the Contract Pricing Reference Guides, Vol. 4, Ch. 6.

If you need more info than the above, see Government Contract Changes, 3d ed. by Nash and Feldman, or Administration of Government Contracts, 4th ed., by Cibinic, Nash, and Nagle.

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I'm wanting to treat this as a claim because the agency is disputing the contractor's submitted request for payment. Contractor claims that he had to expend far more hours than anticipated (under a FFP contract) to deliver the final deliverable due to numerous changes he claims the agency informally requested along the way (not in writing), and has submitted an invoice (with justificaiton/documentation) for the correspnding amount (well over the contract price). If this were a request for payment for additions the agency had requested procedurally, then I would treat it is a normal request for equitable adjustment under the Changes clause or 52.212-4©.

You just offered up a lot to digest. Any information is only a as good on the facts or assumptions it's based upon. Without the details, it'll be difficult if not impossible for me to provide a responsible opinion. Your original question was simple enough to provide a definitive answer.

Given this new information I recommend finding out what your legal counsel suggest.

If you simply disagree on the amount, negotiate it.

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