Construction Law

Federal Construction Contract Claims Must be Evaluated Fairly

By Michael Payne

By: Michael H. Payne

The growth of contracting by negotiation or 'best value' procurement, has had a chilling effect on the submission of claims by construction contractors. There seems to be a growing fear that claims are frowned upon by contracting officers and that they will be counted against a contractor during future proposal evaluations. This fear, in my opinion, is misplaced provided that the claims are not frivolous and are technically and legally supported.

The Contract Disputes Act of 1978, 41 U.S.C. § 601 et. seq., requires contractors to certify that claims in excess of $100,000 are 'made in good faith,' that all 'supporting data are accurate and complete to the best of [the contractor's] knowledge and belief,' and that the amount requested 'accurately reflects the contract adjustment for which the contractor believes the government is liable.' 41 U.S.C. § 605(c)(1). A contractor who is willing to make that certification should not be denied the opportunity to recover the additional costs, or time, that the contract and the law specifically allow. There are a number of clauses in federal construction contracts, including 'Changes' (FAR 52.243-4), 'Differing Site Conditions' (FAR 52.236-2) 'Suspension of Work' (FAR 52.242-14) 'Termination for Convenience' (FAR 52.249-2), etc., that afford contractors with the right to seek an equitable adjustment to the contract. These clauses apply to sealed bidding and negotiated procurements alike, and the fear of retribution on proposal evaluations should not be used to deny contractors the very rights that the contract and the law provide.

It is also important to note that contracting officer's are required to deal with claims fairly, and there is a duty of good faith and fair dealing in government contracting. As the U.S. Court of Federal Claim noted in Lavezzo v. United States, a contracting officer is obligated to 'put his own mind to the problems and render his own decisions.' Such decisions must be 'personal [and] independent,' and 'even the appearance of coercion [must] be avoided.' 74 Fed.Cl. 502, 509 (2006). In addition, a Contracting Officer's outright denial of meritorious contractor claims to gain some advantage over the contractor will not be condoned by the Court. In other words, a contracting officer's review of certified claims submitted in good faith is not intended to be a negotiating game where the agency may deny meritorious claims to gain leverage over the contractor. Moreland Corp. v. U.S., 76 Fed.Cl. 268 (2007). Contractors are legally entitled to submit claims, to have those claims fairly and impartially reviewed, and contractors are entitled to do so without fear of the impact on future source selections.

Michael H. Payne is the Chairman of the firm's Federal Practice Group and, together with other experienced members of the group, frequently advises contractors on federal contracting matters, including teaming arrangements, negotiated procurements, bid protests, claims, and appeals.

Full post as published by Federal Construction Contracting Blog on March 23, 2011 (boomark / email).