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1 Second level Third level

2 Click No Fighting: to edit Master an title style Overview of Claims, Equitable Adjustments, and Click Disputes to edit Master text styles Second level Breakout Third Session level # E06 Adam R. Goldstein, CFCM, CPCM Chief of Contracting, USDA/ARS/EBSC Date: Tuesday, July 28, 2015 Time: 2:30pm 3:45pm 1

3 Click Agenda to edit Master title style Overview Click to edit Master text styles Understanding Second level REAs Third level Pricing REAs Funding REAs Claims and CO Decisions Appeals Alternative Dispute Resolution Conclusion 2

4 Understanding REAs Definitions Second level No FAR or DFARS definition Third level Webster s defines equitable as: Characterized by equity...fair to all concerned without prejudice, favor, or rigor entailing undue hardship that can be sustained or made effective in a court of equity of upon principles of equity jurisprudence Courts and BCA have relied upon such concepts as fair and reasonable and legal precedent to define equitable 3

5 Understanding REAs Equitable adjustments are necessitated by a change Second to level the contract effort Third level Addition / Deletion of work Substitution of one item for another Changes in contract effort may result from Overt change in government requirements Change in conditions surrounding the contract 4

6 Understanding REAs Clauses Allowing Equitable Adjustments FAR , Government Property FAR Second , level Suspension of Work Third level FAR , Stop Work Order FAR , Government Delay of Work FAR /2/3/4, Changes FAR , Changes and Changed Conditions 5

7 Understanding REAs FAR , Stop-Work Order The contractor may be due an equitable adjustment Second if: level The Third stop-work level order results in an increase in the time Fourth required level for performance of the contract;» and Fifth level The contractor asks for an adjustment within 30 days after the end of the work stoppage 6

8 Understanding REAs There is no FAR-specified format for an REA, Second but it needs level to be submitted in writing Third level An REA needs to address the clause authorizing the adjustment, the facts arising to the adjustment, and the requested type and quantum (amount) of the adjustment 7

9 Understanding REAs Within DoD, DFARS requires that Second REAs exceeding level the SAT be certified by the Third contractor level as follows: I certify that the request is made in good faith, and that the supporting data are accurate and complete to the best of my knowledge and belief. FAR does not impose certification requirements for REAs 8

10 Pricing REAs Objectives The contractor should not be in a better or worse Second profit position level on the unchanged work after the change was made than before the change Third level Price adjustments should include: Direct cost» of Fifth added level work; Estimated direct cost of deleted work not performed; Indirect costs affected by the change; and Profit / fee affected by the change 9

11 Pricing REAs Cost Approaches Reasonable Cost Second level Most favored approach for pricing an REA Use when accurate information exists concerning contractor s Third level costs affected by the change Net change Fourth to level contract value is calculated as:» Fifth N level = A - D + C N = Net change in contract value A = Current estimate to complete added work D = Current estimate to complete deleted work C = Actual cost of deleted work already performed 10

12 Pricing REAs Cost Approaches Jury Verdict Second level Use this approach when costs cannot be segregated Third level and identified for reasonable cost analysis Not a formal court room, but useful when: Clear evidence that an adjustment is appropriate Not enough information to use reasonable cost approach Lack of cost information is not unreasonable Convincing evidence of costs affected Reasonable basis for judgement 11

13 Funding REAs Review of Bona Fide Need Rule Second level 31 U.S.C. 1502(a) an appropriation Third level... limited for obligation to a definite Fourth period level is available only for payment of expenses properly incurred during the period of availability.... However, the appropriation... is not available for expenditure for a period beyond the period otherwise authorized by law. 12

14 Funding REAs REAs are generally an antecedent liability: Presumably, if an agency, acting under authority to charge Second a 12-month level severable services contract that crosses fiscal years... the agency should charge the costs Third of the level modification to that same appropriation For contracts spanning lengthy periods of time, funding of within scope Fourth modifications level involves the use of expired appropriations. Bottom line:» REAs Fifth level generally need to be funded with funds from the same year that funded the initial obligation REAs are ultimately resolved either through bilateral modification or by the contractor pursuing a claim and/or appeal 13

15 Claims FAR defines claim as: Second level a 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, the adjustment Third level or interpretation of contract terms, or Fourth other level relief arising under or relating to the contract. However, a written demand or written assertion by» Fifth the level contractor seeking the payment of money exceeding $100,000 is not a claim under 41 U. S. C. chapter 71, Contract Disputes until certified as required by the statute. A voucher, invoice, or other routine request for payment that is not in dispute when submitted is not a claim Claims are governed by FAR 33.2 and the Contract Disputes Act of

16 Claims Must be filed in writing to the CO. There is no required Second level format, but it must state the issue in Third controversy level and desired relief Contractor has 6 years from the issue in question to file a claim CO must render a decision within 60 days. For claims exceeding $100K, the CO may give themselves additional time by notifying the contractor Failure to issue a timely decision is considered a deemed denial 15

17 Claims Claims exceeding $100K must contain the following Second certification: level I certify Third that level the claim is made in good faith; that the Fourth supporting level data are accurate and complete» to Fifth the level best of my knowledge and belief; that the amount requested accurately reflects the contract adjustment for which the contractor believes the Government is liable; and that I am duly authorized to certify the claim on behalf of the contractor. Interest accrues from the date the CO receives the claim 16

18 Claims Claims are ideally settled by mutual agreement, Second level via contract modification If agreement Third level is not possible, the CO issues a decision to unilaterally settle the claim, consisting of (FAR ): Description of the dispute Reference to pertinent contract terms Statement of the factual areas of agreement or disagreement Statement of the CO s decision, with supporting rational Appeal instructions 17

19 Claims Required appeal instructions: Second level This is the final decision of the Contracting Officer. You may appeal this decision to the agency board of contract appeals. If you decide to appeal, you must, Third within 90 level days from the date you receive this decision, mail or otherwise furnish written notice to the agency board of contract appeals and provide a copy to the Contracting Officer from whose decision this appeal is taken. The» Fifth notice level shall indicate that an appeal is intended, reference this decision, and identify the contract by number. With regard to appeals to the agency board of contract appeals, you may, solely at your election, proceed under the board s (1) Small claim procedure for claims of $50,000 or less or, in the case of a small business concern (as defined in the Small Business Act and regulations under that Act), $150,000 or less; or (2) Accelerated procedure for claims of $100,000 or less. Instead of appealing to the agency board of contract appeals, you may bring an action directly in the United States Court of Federal Claims (except as provided in 41 U.S.C. 7102(d), regarding Maritime Contracts) within 12 months of the date you receive this decision 18

20 Claims FAR requires the contractor to continue Second performance level pending the resolution Third of level any claim If agreement is not possible, the CO issues a decision to unilaterally settle the claim, consisting of (FAR ): 19

21 Second level Third level Claims Claims vs. REAs Claims REAs Certification > $100K DoD requires > SAT Accrues Interest Yes No Time to File Up to 6 years Varies Time to Render Decision 60 days (may extend if claim is >$100K) None specified 20

22 Appeals Judicial/Quasi-Judicial Review Once a final decision is issued the matter is resolved unless contractor appeals Second level If final decision is unduly delayed, contractor may appeal Third based level upon a deemed denial Contractor may appeal to 1 of 2 venues: Court of Federal Claims Appeal must be filed within 1 year of final decision Board of Contract Appeals Civilian Board handles contracts issued by nondefense agencies Armed Services Board handles contracts issues by defense agencies Notice of appeal must be submitted within 90 days of final decision 21

23 Appeals Differences between venues: Boards of contract appeals are administrative boards staffed by administrative law judges Second level Boards intended to be expedient alternative to court Third level Loosely follow federal rules of evidence and civil procedure Court of Federal Claims is an Article I court Follows Rules of the Court of Federal Claims and federal rules of evidence Generally more extensive, rigorous discovery Decisions from either may generally be appealed to the Court of Appeals for the Federal Circuit 22

24 Appeals Second level Third level 23

25 Click Appeal to Statistics edit Master (ASBCA title style Only) 800 Click 700 to edit Master text styles 600 Second 500 level 400 Third 300 level # Appeals Docketed FY 12 FY 13 FY 14 Appeal Disposition FY 12 FY 13 FY 14 % Sustained % Denied % Dismissed 24

26 Click Alternative to edit Dispute Master Resolution title style Types of ADR: Mediation Mini-trial Second level Third level Non-Binding Advisory Opinion Summary Binding Decision Benefits of ADR: More expeditious resolution Save on litigation expenses 25

27 Click Alternative to edit Dispute Master Resolution title style Parties Click to may edit Master voluntarily text elect styles to utilize Second ADR level procedures at anytime a matter Third is level still before the Contracting Officer. Parties may also elect to utilize ADR procedures once a case has been docketed at BCA. FAR establishes a preference for use of ADR 26

28 Click Contact to edit Information Master title style Adam Goldstein USDA/Agricultural Research Service Second level Third level 27