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Oles Morrison

Contractor Escapes Total Dismissal For Failure To Certify $500,000 “Severable” Claim

By on May 8, 2018 | Posted in Claims and Disputes

Often times the most difficult part of the government contract claims process is checking all the procedural “boxes” of a certified claim.  Failure to file a claim within six years of accrual, request a contracting officer’s final decision, or include a wet ink signature are just a few of the procedural technicalities required by the Contract Disputes Act (“CDA”) that can get a claim kicked out before the Board ever has a chance to get to the merits.  Another significant procedural requirement under the CDA is that, for claims of more than $100,000, the claimant must provide a certification that certifies (among other things) that the claim is supported by accurate and complete data and the amount requested accurately reflects the contract adjustment for which the claimant believes the government is liable.

In Mayberry Enterprises, LLC v. Department of Energy, CBCA 5961 (March 13, 2018), the contractor appealed the denial of its uncertified claim seeking costs and excusable delay related to late payments, contract modifications and government-caused delays for a total of $529,895.59.  The contractor submitted three invoices to the government, each requesting a “category” of damages:

  • $87,990 – for suspension of work and late payment issues.
  • $41,000 – retained funds.
  • $400,905 – mobilization, prepatory, surfacing, design and other miscellaneous costs for extra work.

The CO denied such amounts were owed, and the contractor appealed the decision seeking to recover the total amount requested ($529,895.59).  On appeal, the government moved to dismiss, arguing the contractor’s aggregated claims exceeded the $100,000 threshold requiring certification.

“It is also well-established that, ‘if the amount of a [monetary] claim exceeds $100,000, the contractor must have certified the claim in the form required by 41 U.S.C. § 7103(b)(1), and [that] any uncertified request for payment in excess of $100,000 is not a claim under [the CDA] until certified as required by the statute.’”

The Board framed the issue as whether the contractor’s claims were “severable” such that the Board could retain jurisdiction over those non-certified claims under $100,000.  In considering whether such claims were severable, the Board explained that when “areas of dispute under a single contract involve different substantive matters, there is no requirement that the contractor combine those substantive matters into a single claim letter.”  Conversely, the Board warned, “a contractor cannot divide, fragment or ‘split’ a single unitary claim in separate claim letters, each below the certification threshold, to avoid certification requirements.”  Whether a claim is severable depends on whether the claims were based on a “common or related set of operative facts.”

Ultimately the Board determined that the contractor’s claims were different claims that arose from different and unrelated problems during the project:

“Although [the contractor] elected to include all of these claims. . . in a single letter, there is no reason that the three sets of claims could not have been submitted in separate claim letters.”

The Board found it could consider the three claims separately for purposes of determining whether the contractor met the certification requirements.  The contractor’s $400,905 claim for extra work was dismissed for failure to certify a claim over $100,000, while the Board found it could retain jurisdiction over the separate $87,990 and $41,000 claims as such claims did not require certification.

Mayberry suggests a claimant might not necessarily have to go back to square one based on its failure to provide a certification for a claim over $100,000.  Rather, in the event a claimant has claims that are less than $100,000 and based on different operative facts, such claims may be considered “severable” under Mayberry and the Board may maintain jurisdiction over such separate claims under $100,000.  Claimants and their counsel should consider such an argument before “scrapping” their claims against the government and (if within the time limits) re-filing the claim.  The key lesson for contractors is to always certify claim that exceeds $100,000.