Contract Disputes Act

• Author: William Funk - Jeffrey S. Lubbers
• Pages: 439-469

439

CONTRACT DISPUTES ACT

7

Contract

Disputes

Act

439

Citations:

41 U.S.C. §§ 601–613 (2012); 28 U.S.C. §§ 1346(a)(2), 1491(a)(2),

2401(a), 2414, 2510, 2517 (2012); 31 U.S.C. § 1304(a)(3)(C)(2012); en-

acted Nov. 1, 1978, by Pub. L. No. 95-563, 92 Stat. 2383; significantly

amended April 2, 1982, by Pub. L. No. 97-164, title I, §§ 156–157, 161, 96

Stat. 25, 47–49, Nov. 5, 1990, by Pub. L. No. 101-509, § 104, 104 Stat.

1447, and Nov. 15, 1990, by Pub. L. No. 101-552, 104 Stat. 273; Oct. 29,

1992, by Pub. L. No. 102-572, title IX, Sec. 907(a)(1),106 Stat. 4518; Oct.

13, 1994, by Pub. L. No. 103-355, title II, Sec. 2351(a)((1)), (b), (e), 2352,

108 Stat. 3322; Feb. 10, 1996, by Pub. L. No. 104-106, div. D, title XLIII,

Sec. 4321(a)(6), (7), 4322(b)(6), 110 Stat. 671, 677; Oct. 19, 1996, by Pub.

L. No. 104-320, Sec. 6, 110 Stat. 3871; Nov. 18, 1997, by Pub. L. No. 105-

85, div. A, title X, Sec. 1073(g)(3), 111 Stat. 1906; Jan. 6, 2006, by Pub. L.

No. 109-163, div A, title VIII, subtitle E, § 847(d)(1) –(4), 119 Stat. 3393;

Oct. 17, 2006, by Pub. L. No. 109-364, div. A, title VIII, subtitle E, § 857,

120 Stat. 2394; Pub. L. No. 111-350, § 3, Jan. 4, 2011, 124 Stat. 3816.

Lead Agency:

Office of Federal Procurement Policy, Office of Management and Bud-

get, Washington, DC 20503, (202) 395-5802.

Overview:

Background. The Contract Disputes Act of 1978 was intended to bring

greater consistency, fairness, and efficiency to the resolution of disputes arising

440 CONTRACT DISPUTES ACT

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out of government contracts. Before the Act’s passage, this process was gov-

erned by various contract clauses, agency regulations, judicial decisions, and

statutory provisions; procedures varied depending on the nature of the dispute

and the agency involved. The legislation reflected in large part the recommen-

dations of the Commission on Government Procurement, created by Congress

in 1969 to recommend improvements in the procurement process.

Coverage. The Act and its procedures apply to claims arising under or

relating to express or implied contracts made by executive branch agencies

for the procurement of property other than real property; services, construc-

tion, alteration, repair, or maintenance of real property; or for the disposal of

personal property. The Act does not reach bid protests or proceedings for the

debarment or suspension of government contractors.

The term “claim” is not defined by the Act; however, the Federal Acquisi-

tion Regulation (FAR), a detailed regulation establishing uniform procedures

and policies for procurement by federal executive agencies, defines it as:

Claim, as used in this clause, means 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 or

interpretation of contract terms, or other relief arising under or re-

lating to this contract. . . . A voucher, invoice, or other routine re-

quest for payment that is not in dispute when submitted is not a

claim under the Act.1

Cognizable claims include disputes arising under specific contract clauses

(for example, when the parties cannot agree on an amount of compensation

owed under clauses authorizing equitable adjustment for contract changes or

for site conditions different from those anticipated when the contract was

formed) as well as claims for breach of contract. Terminations for default are

considered claims by the government under the Act.

Notwithstanding these examples, the elements of a claim, particularly

the relationship between the “dispute” and “routine” clauses, continue to gen-

erate frequent litigation. The Federal Circuit resolved some of the uncer-

tainty in 1995, when it articulated, en banc, what has come to be known as

the Reflectone test: a non-routine request for payment can constitute a claim

under the CDA—even if it is not in dispute—if it is a written demand seeking

a sum certain (or other contract relief) as a matter of right; a “routine request

for payment,” on the other hand, must be in dispute. In 2012, however, a

148 C.F.R. § 52.233-1(c) (2012).