When your federal contract has overruns that are not your fault, a CDA Claim might be your best option.
Essentially, there is only one way to obtain relief from the U.S. government when things go wrong on your awarded federal contracts – using the tools and rights provided to contractors under the Contract Disputes Act of 1978 (CDA).
The CDA is the primary statute that gives contractors the right to pursue the United States for failure to pay for directed and constructive contract changes. It gives you recourse to a neutral judge when the agency does not agree to your claims for payment.
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The CDA covers almost everything related to a contract: price increases, delivery date adjustments, labor, overhead, materials, subcontractor cost, liquidated damages, etc. – for both cost reimbursement and fixed-price type contracts.
What Are the Most Common Disputes Covered by the CDA?
These are the most common dispute types that we see, and key reasons to seek an increase in your price post-award:
Failure to pay for work performed, including changes;
Incorrect rejections of work;
Demands for extra work, without payment;
Delays during performance caused by the government;
Acceleration and disruption costs; and
Wrongful assessment of liquidated damages.
If no negotiated settlement can be made with the federal government agency, turning these routine situations into a certified CDA claim is critical to making sure you get paid all of the costs you are entitled to, and preserving the value of your contract.
Remember, if you don’t press for fair payments on your contract as you go forward with the work, you’re most likely going to suffer a loss on the contract. That’s not what you signed up for and agreed to. Congress put the CDA in place to ensure that contractors were paid fairly for their work – so use it.
What is a CDA Claim?
A CDA claim allows you to get a decision on virtually anything that involves your contract:
You file a certified claim with the agency. That is a very simple document that states why you are entitled to payment and the precise amount of payment due.
You ask for a contracting officer’s final decision.
You must wait 60 days for a final decision from the agency.
If you get no agency answer, or you do not like their answer, then you have the right to appeal to a judge who will definitely give you an answer.
This appeal creates a lawsuit between you and the United States, and the judge will conduct a new review of the claim just like any civil lawsuit. You can present additional evidence and new legal theories for the costs in your claim, and you can conduct discovery against the agency.
This appeal/lawsuit will be filed in the U.S. Court of Federal Claims, the Armed Services Board of Contract Appeals, or the Civilian Board of Contract Appeals, all three located in Washington, D.C.
CDA Claim v. Request for Equitable Adjustment
You have probably heard of contractors submitting Requests for Equitable Adjustment (REAs) to the agency to request additional payment. This is certainly a customary practice that is done all over the country, but you must understand that an REA is just an informal request for payment:
There is no statute or regulation that defines an REA as a legal mechanism for resolving disputes.
It does not compel agency action or trigger any legal rights for the contractor.
Unlike the REA, a certified CDA claim compels agency action and triggers legal rights for the contractor.
“if you don’t press for fair payments on your contract as you go forward with the work, you’re most likely going to suffer a loss on the contract. That’s not what you signed up for and agreed to. Congress put the CDA in place to ensure that contractors were paid fairly for their work – so use it.”
Do You Really Need a CDA Claim?
It depends. Most contract disputes are settled without a CDA claim. They are resolved via routine contract administration actions – the ongoing business negotiation and contract amendment actions of the government and contractor that occur everyday. Here are some points
You must use your business judgment to decide whether to submit a CDA claim or to continue working informally with the agency.
Many contractors in retrospect will say that they waited too long to submit a CDA claim when the agency was effectively refusing to pay and disputing their right to pay.
People often say that filing REAs or CDA claims with the agency that you do business with will ruin your relationship with that agency and cause you to lose future contracts.That is completely incorrect. Contracting officers get claims every day from contractors who are performing work for the agency. So long as the claim is prepared in a fair and non-inflammatory fashion, it’s just one more business as usual item to the CO.
CDA Claims as Effective Remediation Tools
There is only one effective way to proceed when the government agency administering your contract refuses to accept your performance or pay you the money you are owed under the contract. You must put pressure on the government for a fair resolution by invoking your claim rights under the Contract Disputes Act, to force the government to act.
Using this important CDA tool, contractors are able to get paid what they are owed by the government, get appropriate time extensions, and preserve the value of their federal contracts they worked hard to get in the bidding phase.
Is a CDA Claim the Best Course of Action When You See Overruns on Your Federal Contract?
The foregoing is a very brief summary of your rights to be paid under the CDA. It also contrasts the complete unenforceability of REAs to get you paid.
You should consult your company’s lawyer when you start seeing overruns on a government contract that are not your fault. You may be entitled to recover on a change order basis for them.