By Julia Di Vito
Under the Contract Disputes Act (“CDA”), a contractor must submit a claim within six years of accrual of the claim. A claim is simply a written demand for payment directed to the contracting officer (“CO”) that indicates that it is requesting a final decision. Although six years seems like more than enough time to submit a claim, it is best to not take that time period for granted.
Determining when a claim actually accrues can pose a challenge. Under FAR 33.201, a claim accrues when the events fixing liability were known or should have been known. Put another way, if something is causing you to incur extra costs, the claim for those costs accrued when you knew the extra costs had incurred or when you should have known that those costs had incurred.
This “should have known” standard means that contractors must be vigilant and note when anything giving rise to a claim has occurred. The courts and Boards of Contract Appeals will look at the situation objectively and determine when you, as the contractor, should have known about the claim. This rule means that a contractor cannot extend the time in which it may submit a claim by deliberately ignoring the facts giving rise to the claim. Due to the informality of CDA claims, there is no need to wait until six years after discovering the claims; in fact, six years may already be too late.
On the other hand, you should not prematurely submit a CDA claim. A claim must be “ripe,” or a dispute must exist at the time of the claim submission. For example, if you have not incurred any costs yet, you would have no basis to form your claim. The Boards of Contract Appeals disfavors making decisions that are contingent on future events and costs; they only want to rule on a claim once.
It may seem like common sense to submit a claim to the CO when you start incurring costs. It may also seem logical to wait until the contract ends to determine all of the costs you want to claim. If the contract includes option years that continue to get exercised, a claim about something that happened during the first year would accrue that first year. Even if you would have similar claims for the following option years, the clock on each claim starts ticking when it accrues, and waiting until all of the claims have accrued may mean your claim about the first year could have already lapsed. Remember, the timing of the claim depends on when the “injury” occurs–that is, anything that causes you to lose money or incur costs.
In sum, waiting to submit a claim for a known financial injury opens you up to the risk that your claim will not be timely. Once you know of the facts supporting the existence of a claim, it is best to submit it to the CO. Six years may not be as long as you think.
About the Author: Julia Di Vito practices in the areas of government contracts, litigation, employment, and labor. She may be reached at [email protected].