Pitfalls abound in Contract Disputes Act claims.

• Author: D'Agostino, L. James
• Position: Ethics Corner

Preparing and filing a certified claim under the Contract Disputes Act for payment from the government for performance of a contract generally is straightforward work for contractors and their legal counsel. Yet certified claims are not without ethical pitfalls. Moreover, failing to adhere to the rules concerning such claims can expose contractors to government counterclaims and allegations of a fraudulent claim.

Typically, a claim is filed when some dispute has arisen as to the money owed to a contractor for work performed. For example, following a termination for convenience, a contracting officer may invite a contractor claim as a starting point for determining what is owed.

A proper money claim must be supported by detailed legal and factual support. The act, among other things, requires a certification that: the claim is made in good faith; the supporting data are current, accurate and complete to the best of the contractor's knowledge and belief; and the amount claimed represents the contract adjustment for which the contractor believes the government is liable.

Based on these requirements, the Court of Federal Claims routinely has rejected claims, or worse, penalized the claimant, when the filed claim is: frivolous or filed for an impermissible purpose; contains false or careless representations of fact; or is based on unreasonable legal positions.

Filing a claim as a negotiating ploy or to capture the government's attention is forbidden. In private sector commercial disputes, a party may initiate a lawsuit with a large damage calculation--based on speculative theories of future expected profit--as a way of getting the defendant's attention or in order to bargain for a favorable settlement. In the government contacts arena, such tactics are not tolerated. A certified claim submitted to the government must be based on the amount that the contractor honestly believes that the government owes it when it certified the claim. Thus, inflation of claims based on speculative estimates of future costs or profits with an eye to settling at a much lower amount is not permitted. Rather, the claim must be based on clearly articulated facts supporting the amounts presently owed, as of the date the claim is submitted.

Additionally, contractors must be scrupulous with the facts on which they rely in supporting their claims to ensure that they are carefully and accurately represented. The Court of Federal Claims has held that, at a minimum, a...