The dispute process in public contracts begins with the submission of a formal written claim.
An issue that sometimes arises in public contract litigation is whether the matters raised in the complaint filed with the court were properly raised in the contractor’s claim. If not, all or part of the complaint will be dismissed just as if no claim had ever been presented. The case below illustrates how close a complaint filed with the court must mirror the claim the contractor presented to the contracting officer.
M.A. DeAtley Construction, Inc. v. United States, 75 Fed.Cl. 575 (2007) involved a roadway reconstruction contract between the Federal Highway Administration (FHWA) and a contractor in which the aggregate for sub-base was to come from a source the FHWA designated. Relying upon the FHWA’s assurances that the source was suitable, the contractor utilized it and completed the rock crushing in the fall of the first year.
In the following spring, when the contractor began placing the sub-base, it discovered that the aggregate had degraded to such an extent that it failed to satisfy contract standards.
The contractor informed the FHWA of the aggregate’s deficiency and offered to provide a credit of $21,425, or 25% of the contract price, rather than replacing the deficient aggregate. The FHWA refused and ordered the contractor to remove and replace the aggregate. After completing the replacement, the contractor filed a certified claim seeking $277,833.55 for the costs associated with the added work. The FHWA rejected the claim in its entirety.
The contractor’s complaint included five counts, two of which were differing site conditions and economic waste. The FHWA sought dismissal of all but the differing site conditions count because the contractor’s claim had asserted differing site conditions as its sole basis for recovery.
The contractor countered that while its claim to the contracting officer did not articulate specific legal theories, “the essence of the claim” was the same as the claims presented in the complaint.
The court noted that a contractor cannot make a claim in court that was not previously presented to the contracting officer for decision.
However, it noted that “a contractor’s claim to the CO need not be in any particular form or use particular wording.” Rather, “it must provide a clear and unequivocal statement that gives the contracting officer adequate notice of the basis and amount of the claim.”
The court thus ruled that where the contractor has not presented its claims to the CO in the exact terms of the complaint, the complaint is nevertheless acceptable when its claims “arise from the same operative facts” and seek the same relief as that sought in the original claim. The court then set out to determine whether the contractor’s claim recited facts or arguments necessary to support an economic waste doctrine claim.
The court held that while not specifically asserting “economic waste” in the claim, the contractor had placed the FHWA on notice of the basis for such claim.
The contractor in this case received a favorable result. However, the case illustrates how important it is for contractors preparing their own claims to consult with legal counsel and understand the various possible legal bases upon which a lawsuit might later be crafted in the event the claim is not settled.
The law in some states is not as lenient, and therefore, contractors must understand the requirements of the states in which they work.