Most government contractors are familiar with the disputes process for pursuing claims against the Federal Government. Generally speaking, the contractor submits a claim (certified if necessary) to the Contracting Officer who issues a final decision on the claim. The contractor can then appeal that final decision to either the appropriate board of contract appeals or the Court of Federal Claims (COFC).
Under the Contract Disputes Act (CDA), contractor claims must be submitted to the Contracting Officer within six years of when the claim accrues. Recently, the Court of Federal Claims ruled that a request for equitable adjustment (REA) was not a claim such that the submission of the REA did not toll the CDA six year statute of limitations in Zafer Construction Co. v. United States, No. 19-673C (Fed. Cl. Dec. 30, 2020).
Zafer Construction Co. v. United States
In that case, Zafer was awarded a contract to design and build a base-wide public work utilities system. After the work was completed, Zafer submitted an REA in 2013 and an amended REA in 2014 seeking additional payments. Four years later, in 2018, Zafer filed a certified claim with the Contracting Officer. The Contracting Officer denied the claim, finding that it was time barred because it was submitted more than six years after accrual. Zafer then appealed to the COFC and the Government moved to dismiss the Complaint.
The COFC ultimately dismissed the Complaint. As the COFC noted, to qualify as a claim under the CDA, there must be a nonroutine written demand or written assertion by one of the contracting parties seeking, as a matter of right, the payment of money in a sum certain (i.e., a specific amount of money) , the adjustment or interpretation of contract terms, or other relief arising under or relating to the contract. Although a contractor is not required to explicitly request a final decision, the contractor must show that what the contractor desires by its submissions is a final decision.
The COFC concluded that Zafer’s REA was not a CDA claim. Although the REA included a specified amount , a sworn statement, and a factual basis for its loss, the REA did not contain any indication that Zafer was expecting a final decision. The COFC found that the wording of the REA asking to negotiate and the parties’ subsequent conduct concerning negotiation was inconsistent with treating the REA as a final demand for a decision and payment. Since the REA was not a CDA claim and the CDA claim was filed more than six years after the claim accrued, the COFC dismissed the Complaint.
Request for Equitable Adjustment
REAs can be valuable tools for assisting government contractors with negotiating change orders and other requests for contract adjustments with the Government. However, REAs often do not meet all the requirements necessary to have a CDA claim, and only the filing of a CDA claim can toll the CDA statute of limitations. Therefore, contractors who file REAs should be sure to keep the CDA statute of limitation in mind and file a CDA claim prior to the running of the six year statute of limitations if the contractor is unable to resolve the REA.