Last month, PilieroMazza’s REAs, Claims, and Appeals Group published the first blog in its “Contract Claims 101” series, introducing federal contractors to the basics of requests for equitable adjustment (REAs), claims, and appeals. This month, we’re analyzing the broad categories of contract administration disputes we expect to form the basis of federal contractors’ REAs, claims and appeals in 2026. In this second blog, we introduce federal contractors to disputes regarding stop work orders, terminations, and Contractor Performance Assessment Reports (CPARs), and how best to prepare at the outset for an appeal of an adverse decision from a contracting officer.
Background
As a quick reminder of where we left off in the first blog in this series, a contractor may seek, for example, an REA following a government-issued modification of the contract, or a government-caused delay impacting contract performance, and the process to do so is largely informal. A Contract Disputes Act (CDA) claim, on the other hand, has basic requirements that a contractor must follow in its submission. For instance, a contractor must request in its claim a written final decision from the contracting officer (COFD), and if the claim exceeds $100,000, it must be certified. We noted in the first blog that there are numerous general factors that will impact a contractor’s decision to first submit an REA or to skip that step in the process and submit a claim. In this blog, we analyze the specific considerations behind whether contractors can and should first submit an REA for each of the common disputes listed below, as well as tips to set yourself up early for a chance at a successful appeal.
Stop Work Orders
Attempts to recover costs incurred during stop work orders were common disputes in 2025, both due to the federal government shutdown and the mass terminations for convenience issued by the Trump Administration, some of which were preceded by stop work orders. Stop work orders are also commonly issued to stay performance as required under the Competition in Contracting Act (CICA). This CICA stay requires an agency to issue a stop work order to a recent awardee of a contract due to a protest filed with the Government Accountability Office (GAO). An agency may agree to stay performance of a contract during the litigation of a protest filed with the Court of Federal Claims (COFC), but it is not required under CICA.
If FAR 52.242-15, Stop-Work Order, is in your contract, you are entitled to an equitable adjustment for increased costs as a result of the work stoppage. The Changes FAR clause, to the extent incorporated into your contract, may also provide a vehicle for recovering your costs. However, the ability to recover will be affected by advance preparation, the level of reasonable mitigation, and the documentation of your costs. These are the three key considerations for a stop work order REA:
- Mitigation: Your cost mitigation efforts will be a key consideration for the government in determining whether to grant your equitable adjustment for increased costs resulting from a period of stopped work. You can mitigate costs by developing an alternative work plan for employees, such as reassigning them to other contracts, encouraging them to take vacation time, or having them work on non-billable matters such as training. As a last resort, you may need to furlough or lay off employees.
- Documentation: When attempting to recover costs incurred during stop work orders, extensive documentation and communication are key. Document all costs incurred in connection with the stop work order, including wind-down, ramp-up, or acceleration of work, labor costs, and attorneys’ fees. You should also document all communications with contracting officers, employees, teaming partners, and vendors, as well as all stop work order-related actions. Generally, expenses incurred because of a stop work order should be recoverable, with the exception of backpay and consequential damages, which are not generally recoverable.
- Notice: Contractors also need to be mindful of the notice requirements built into a stop work order, as a contractor commonly must assert its right to an adjustment within 30 days after the end of the period of the work stoppage. Because of the quick, 30-day timeline typically built into stop work orders, we often recommend submitting an REA first rather than elevating it to a claim.
Terminations
As many contractors unfortunately experienced during 2025, your contract can be terminated for convenience by the government at any time, provided it was done in good faith. With the Department of War’s (“DOW”) 8(a) and set-aside audit’s inherent termination threat, among other Trump Administration priorities for FY26 on the horizon, this is likely to continue into 2026. Just as the name suggests, because the contract is terminated for the government’s convenience, it is not viewed as a negative comment on a contractor’s performance. As such, it is virtually impossible to succeed in a dispute against the termination itself because a contractor must prove that the government acted in bad faith. However, disputes can arise regarding the type of costs that are recoverable following a contractor’s termination for convenience.
There are four steps every contractor can take to maximize its chance at recovery on a termination for convenience:
- Review: Review the termination notice carefully to ensure the termination was effected under the same termination for convenience FAR clause as incorporated in your contract. Different FAR clauses establish different cost recovery requirements, and it is best to resolve any confusion regarding the appropriate applicable termination for convenience FAR clause as soon as possible. FAR 49.206-1 also provides contractors with one year from the effective date of termination to submit a final termination settlement proposal, but the termination notice itself may establish a shorter submission timeline.
- Stop and Safeguard: Stop all terminated work as instructed and safeguard all records—including costs incurred, inventory, labor hours, subcontracts, and any correspondence.
- Flow Down: If applicable, flow down the termination notice and ensure that your subcontractors stop working and preserve documentation for potential settlement costs.
- Termination Settlement Proposal: Gather your costs and your subcontractor’s costs in order to prepare a termination settlement proposal. Your entitlement to costs will largely depend on your ability to show reasonableness, allocability, and allowability of your submitted costs, as well as the type of contract and termination clause cited in your termination. Notably, you are entitled to seek the recovery of costs associated with the termination, which can include cost accounting consulting and legal fees for the preparation of your termination settlement proposal. As such, there’s further incentive to engage counsel immediately upon receipt of your termination notice—trusted counsel can advise on each of the steps outlined above, assist in preparing the termination settlement proposal, and the legal fees associated with this effort can be included as a requested cost to be recovered in the termination settlement proposal. Submission of a termination settlement proposal, much like an REA, is meant to kick off negotiations between the government and the contractor. However, if you reach an impasse in negotiations, you may need to convert the settlement proposal to a claim.
A termination for default, on the other hand, is much different. The dispute itself is generally not solely focused on cost recovery (as compared to a dispute resulting from a termination for convenience), although that can be an element. The dispute’s main challenge will be to the termination itself, making the dispute process much different (and, often, trickier) than the process for a termination for convenience.
A termination for default is technically considered a COFD, which may then be appealed. However, certain relevant defenses to termination may need to be preserved in a claim in advance of an appeal to the Boards of Contract Appeal or COFC. For example, an appeal challenging a termination for default and raising affirmative defenses of excusable delay and constructive change to the contract cannot first be brought on appeal at either of the Boards or COFC because these defenses seek to change the terms of the contract. If a contractor does not first raise certain affirmative defenses that seek to change the terms of the contract itself in a claim, the Boards and COFC will lack the jurisdiction to decide the merits of these claims. As with each of the previous disputes we have discussed, we recommend engaging trusted counsel early in this process to ensure you preserve all of your relevant affirmative defenses.
CPARs
The process to appeal a negative CPAR differs from the other common disputes we have discussed in this blog, as the CPAR System has its own unique dispute procedural requirements that must be followed before a claim can be submitted. From the date a contracting officer provides a CPAR in the CPAR System, a contractor has fourteen days to dispute the ratings and associated narrative before the CPAR will go live. On the fifteenth day, the CPAR will “go live” in the CPAR System, meaning other contracting officers will be able to view the CPAR. If a contractor submits its non-concurrence and rebuttals to the issued CPAR, this will trigger the Reviewing Official’s review of the CPAR.
We recommend engaging counsel upon immediate receipt of a negative CPAR so that your rebuttal in the CPAR System includes information that may result in the Reviewing Official revising the Assessing Official’s ratings and/or narratives, and that would ultimately be necessary to succeed in a claim or appeal. For example, FAR 42.1503, Table 42-1, requires contracting officers to identify a significant event in each CPAR category that the contractor had trouble overcoming and state how it impacted the government in order to justify a Marginal rating in said CPAR category. Counsel can assist in analyzing the CPAR narrative against your contract’s requirements in order to determine whether the contracting officer sufficiently justified a Marginal rating. Moreover, the Guidance for the CPAR System outlines requirements for the Reviewing Official title based upon the agency, contract value, and type of contract. Counsel can assist in requesting that the appropriate Reviewing Official be assigned in accordance with these established guidelines.
If the Reviewing Official does not revise the narratives or ratings, the next step would be to file a claim, as receiving a COFD is a prerequisite to filing an appeal with the Boards of Contract Appeal (ASBCA, CBCA, etc.) or COFC. Notably, the Reviewing Official’s review and determination regarding the accuracy and sufficiency of a CPAR does not constitute a COFD. If you engage counsel at the outset, the process to file a claim will be relatively smooth, as the rebuttals submitted in the CPAR System will only need to be slightly revised to incorporate any responses to the Reviewing Official’s changes to the CPAR, if any, as well as to include the CDA claim requirements, such as the written request for a COFD.
If the COFD is unfavorable, counsel can then assist in the pursuit of an appeal at the applicable Board or COFC. The different considerations relevant to pursuing an appeal at the Boards or COFC, as well as the procedures to do so, are discussed in detail in the first blog in this series. It is important to remember that not every unfair CPAR will result in a winning legal claim or appeal because contracting officers are given considerable deference when issuing CPARs. However, a negative CPAR can have a lasting impact on a contractor’s competitive standing in future procurements, the cost of which may be unknown as you are considering whether to appeal a negative CPAR. Trusted counsel can assist in this cost/benefit analysis.
Maximizing Recovery
In December 2025, PilieroMazza analyzed the annual reports published by both the CBCA and the ASBCA, recapping the contract dispute trends each forum saw in FY25. Both Boards saw an increase in cases docketed in FY25, indicating that contractors are increasingly interested in challenging their COFDs and attempting to recover at the Boards. Outcomes at both Boards rely heavily on claim quality, strategy, and execution—contractors are advised to consult with an attorney as early as possible in the process to best prepare for a possible appeal, or ideally, to illustrate clear entitlement at the REA or claim stage such that a contracting officer issues a favorable decision, making an appeal unnecessary. As discussed in detail throughout this blog, there are specific factual and legal considerations for each type of dispute that will impact what kind of information should be submitted at the REA or claim stage in order to maximize your chance of recovery.
Come back next month for our next blog in this series, which will examine financial basics—the Cost Accounting Standards, the Judgment Fund, and CDA interest—relevant to REAs, claims, and appeals. Should you have questions regarding REAs, claims, appeals, or any other government contract dispute, please contact Lauren Brier, Abigail “Abby” Finan, Kelly Kirchgasser, Josie Farinelli, or another member of PilieroMazza’s REAs, Claims, and Appeals or Government Contracts practice groups.
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