If a construction contractor working on a federal government project is impacted by a government-caused change, the contractor must take steps to preserve its right to obtain additional compensation or time to complete the project. In particular, a contractor must comply with the contract’s claim process. (Click here for the six most common contractor claims.)
Generally, there are three steps to obtaining additional money or time on a federal government project:
1. Submit a request for equitable adjustment: If the government causes a change to the project, the contractor should submit an REA that explains the change, how that change has impacted the contractor’s work, the amount of additional money and/or time to which the contractor is entitled, and backup for the amounts claimed.
Although a contractor is not required to submit an REA before submitting a formal claim, contractors frequently submit the REA first, because it can serve as a starting point for the contractor and the contracting officer to negotiate. The main downside to submitting an REA rather than a claim is that interest will not to start running until a claim is submitted. Also, there is no deadline for the contracting officer to make a decision on an REA.
2. Submit a claim: If the contractor and the contracting officer cannot come to an agreement after the submission of an REA, the contractor should submit a formal claim. The claim must be in writing, specify the relief sought (e.g., money and/or time), and request a final decision from the contracting officer. If the claim is over $100,000, it must be certified.
Also, if the contractor is facing the potential assessment of liquidated damages, the contractor should consider asserting its defenses in the claim. Otherwise, the government might argue that the contractor failed to preserve its right to assert any applicable defenses.
If the claim is in excess of $100,000, the contracting officer must make a final decision on the claim within 60 days or inform the contractor when a final decision will be made within 60 days. Either way, a final decision must be made within a reasonable time. If the contracting officer denies the claim or fails to make a decision within a reasonable time, the contractor can then appeal that decision.
3. Appeal the final decision: If the contractor does not agree with the contracting officer’s final decision, the contractor can either file an appeal with the appropriate Board of Contract Appeals or file a lawsuit in the United States Court of Federal Claims. There are perceived differences between the BCA and the COFC, including different evidentiary rules, timelines, and subject-matter expertise.
Regardless, if the contractor wants to file its appeal with the BCA, the contractor must do so within 90 days after receiving the contracting officer’s final decision. In contrast, if the contractor wants to appeal the contracting officer’s final decision in the COFC, the contractor has one year to file a complaint with the COFC.
There are many deadlines and potential pitfalls to the claims process for obtaining additional money or time on federal government construction projects. If you are a contractor that has been impacted by a government-caused change, it is critical that you carefully review the claim rules and comply with all applicable requirements. Otherwise, you may lose your right to additional compensation or time.
If you have any questions about the claims process on federal government contracts, please send me an e-mail.