Ch.14 - FAR Contract Claims

Claims are distinct from protests in that they pertain to contract performance rather than award, and they may be filed by either the agency or the contractor.  Contractor disputes regarding contract performance and demands for payment are most often initially filed with the contracting officer as a request for equitable adjustment (REA), although this initial step is not mandatory.  If the contractor skips this step, or the REA is denied, the contractor files a claim with the contracting officer.  Upon an adverse decision, or in the absence of a decision, the contractor may either appeal the claim to the appropriate board of contract appeals within 90 days or to the U.S. Court of Federal Claims within one year.

FAR Subpart 33.2 lays out the claim process and strongly encourages the use of ADR.  Consider:

  • FAR 33.201 - Defines ADR
  • FAR 33.204 - Sets forth the government's policy and encourages agencies to use ADR procedures "to the maximum extent possible."  
  • FAR 33.210 - Authorizes Contracting Officers to use ADR
  • FAR 33.214 - Explains in great detail the use of ADR in the claims context, and includes:
    • Procedures requiring written explanations when ADR is rejected
    • Provisions allowing the use of a neutral
    • Guidance on confidentiality
    • Guidance on arbitration 
  • FAR 33.215 - Prescribes using FAR 52.233-1, Disputes, as a clause in contracts, and in turn, this clause echoes the FAR policy regarding the use of ADR.

Parties and practitioners should also investigate whether the contracting agency has more specific regulations in the form of a FAR Supplement or published as an agency order.  NASA, for example, does both.  Section 1833.210 of the NASA FAR Supplement directs the reader to NASA Directive 2010.2, which encourages the use of voluntary ADR.

Using ADR at the claim stage--before performance is complete, before a COFD, and before an appeal--has several advantages.  First, the parties might still have a positive working relationship that will benefit the ADR process.  Second, time related expenses (interest, attorneys fees, etc.) will be mitigated, meaning available funds can be applied to fixing the real problem at hand.  Third, as explained in Chapter 28, creative win-win resolutions are more readily available the earlier the parties engage in problem solving.

ADR at the claim stage will not be a waste of time even if no resolution is achieved.  At the end of the process, both parties will have more information about the dispute.  This information will allow them to make informed business decisions about pursuing an appeal.  It will likely streamline the issues and narrow the need for discovery.  It also may foster a good working relationship between the representatives so they can work well together on the administrative side of the appeal, while nevertheless zealously representing their party's legal rights.

Both the Armed Services Board of Contract Appeals (ASBCA) and Civilian Board of Contract Appeals (CBCA) offer the services of available judges to serve as neutrals before the claim stage.