Contract Disputes Act

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41 U.S.C. §§ 7101–7109 (2012); 28 U.S.C. §§ 1346(a)(2), 1491(a)(2), 2401(a), 2414, 2510, 2517 (2012); 31 U.S.C. § 1304(a)(3)(C) (2012); enacted by Pub. L. No. 95-563, 92 Stat. 2383, Nov. 1, 1978; significantly amended by Pub. L. No. 97-164, title I, §§ 156–157, 161, 96 Stat. 25, 47–49, Apr. 2, 1982, by Pub. L. No. 101-509, § 104, 104 Stat. 1447, Nov. 5, 1990, and by Pub. L. No. 101-552, 104 Stat. 273, Nov. 15, 1990; by Pub. L. No. 102-572, title IX, Sec. 907(a)(1),106 Stat. 4518, Oct. 29, 1992; by Pub. L. No. 103-355, title II, Sec. 2351(a)((1)), (b), (e), 2352, 108 Stat. 3322, Oct. 13, 1994; by Pub. L. No. 104-106, div. D, title XLIII, Sec. 4321(a)(6), (7), 4322(b)(6), 110 Stat. 671, 677, Feb. 10, 1996; by Pub. L. No. 104-320, Sec. 6, 110 Stat. 3871, Oct. 19, 1996; by Pub. L. No. 105-85, div. A, title X, Sec. 1073(g)(3), 111 Stat. 1906, Nov. 18, 1997; by Pub. L. No. 109-163, div A, title VIII, subtitle E, § 847(d)(1) –(4), 119 Stat. 3393, Jan. 6, 2006; by Pub. L. No. 109-364, div. A, title VIII, subtitle E, § 857, 120 Stat. 2394, Oct. 17, 2006; by Pub. L. No. 111-350, § 3, 124 Stat. 3816, Jan. 4, 2011.

Lead Agency:

Office of Management and Budget, Office of Federal Procurement Policy

Overview

Background

The Contract Disputes Act (CDA) of 1978 was intended to bring greater consistency, fairness, and efficiency to the resolution of disputes arising out of government contracts. Before the CDA’s passage, this process was governed by various contract clauses, agency regulations, judicial decisions, and statutory provisions; procedures varied depending on the nature of the dispute and the agency involved.

Historically, the Federal government's self-management of government contracts has been a matter of considerable scrutiny and debate. Since the Founding Era, the principle of sovereign immunity allowed the Federal Government to escape legal accountability in many instances, resulting in infrequent judicial intervention in disputes related to government contracts. This broad immunity and leaving decision-making of contract administration to the government became increasingly recognized as problematic during the 19th Century, leading, among other things, for Congress to grant the Court of Claims the authority to issue final judgments on contract matters. In 1969, Congress sought to tackle this issue comprehensively, establishing the Commission on Government Procurement. The Commission's recommendations for improving the procurement process laid the groundwork for the CDA.

Coverage

The CDA and its procedures apply to claims arising under or relating to express or implied contracts made by executive branch agencies for the procurement of property other than real property; services, construction, alteration, repair, or maintenance of real property; or for the disposal of personal property. The CDA does not reach bid protests or proceedings for the debarment or suspension of government contractors.

The term “claim” is not defined by the CDA; however, the Federal Acquisition Regulation (FAR), a detailed regulation establishing uniform procedures and policies for procurement by federal executive agencies, defines it as:

Claim means a written demand or written assertion by one of the contracting parties seeking, as a matter of right, the payment of money in a sum certain, the adjustment or interpretation of contract terms, or other relief arising under or relating to this contract. . . . A voucher, invoice, or other routine request for payment that is not in dispute when submitted is not a claim under [the CDA].

Cognizable claims include disputes arising under specific contract clauses (for example, when the parties cannot agree on an amount of compensation owed under clauses authorizing equitable adjustment for contract changes or for site conditions different from those anticipated when the contract was formed) as well as claims for breach of contract. Terminations for default are considered claims by the government under the CDA.

Notwithstanding these examples, the elements of a claim, particularly the relationship between the “dispute” and “routine” clauses, continue to generate frequent litigation. The Federal Circuit resolved some of the uncertainty in 1995, when it articulated, en banc, what has come to be known as the Reflectone test: a non-routine request for payment can constitute a claim under the CDA—even if it is not in dispute—if it is a written demand seeking a sum certain (or other contract relief) as a matter of right. On the other hand, a “routine request for payment” must be in dispute. Reflectone, Inc. v. Dalton, 60 F.3d 1572 (Fed. Cir. 1995). In 2012, however, a single panel of the Federal Circuit complicated this calculus by holding that a jurisdictional predicate to a non-routine contractor claim is its derivation from “additional or unforeseen work at the government’s behest.” Parsons Global Servs., Inc. v. McHugh, 677 F.3d 1166, 1171 (Fed. Cir. 2012). Absent this “unforeseen” element, the claim is routine and must be in dispute.

Agency Procedures

The CDA established a system that begins with the contracting officer, an agency official authorized to enter into, administer, and terminate contracts on behalf of the government. The contracting officer plays a dual role in the disputes process, both representing the government as a party to the contract and rendering decisions on claims arising out of disputes between the parties. If a dispute arises during contract performance that cannot be amicably resolved (e.g., through exchange of correspondence or negotiation), the contractor can invoke the procedures of the CDA by presenting a claim to the contracting officer. The claim must be in writing, provide adequate notice to the government of the basis for the demand and the relief sought, and clearly indicate the contractor’s intent to seek a decision from the contracting officer.

If the essence of the dispute is money (for example, a claim for increased costs or for payment of the contract balance), the contractor must quantify the claim. In addition, for any claim over $100,000, the contractor must certify that “the claim is made in good faith, that the supporting data are accurate and complete to the best of the contractor’s knowledge and belief, [and] that the amount requested accurately reflects the contract adjustment for which the contractor believes the Federal Government is liable.” The certification also must state that the person who is certifying is “authorized to certify the claim on behalf of the contractor.”

The certification provision, incorporated into the CDA to discourage inflated contractor claims, has proven to be one of the more controversial aspects of the law. Much of this controversy was reduced by a recent change in the CDA stating that a defective certification does not deprive a court or an agency board of contract appeals of jurisdiction over the claim. 41 U.S.C. § 7103(b)(3). Prior to entry of a final judgment by a court or decision by a board of contract appeals, though, the court or board must obtain correction of a defective certification. A contracting officer has no duty to render a final decision on any claim over $100,000 that is not certified in accordance with § 7103(b)(1) if, within 60 days after receipt of the claim, the contracting officer notifies the contractor in writing of the reasons why an attempted certification was found to be defective.

If a claim cannot be settled by mutual agreement, the contracting officer must issue a written decision on the claim, stating the reasons for the decision and informing the contractor of available appeal rights. The CDA requires the contracting officer to issue this decision within 60 days of receipt of a claim for $100,000 or less, and within a reasonable time after receipt of a larger claim (in which case the contracting officer must notify the contractor within 60 days as to when the decision will issue). If these deadlines are not met, the contractor may petition the relevant tribunal to direct the contracting officer to issue a decision. In any event, if the contracting officer fails to issue a timely decision, the claim will be deemed denied under the statute, permitting the contractor to pursue an appeal.

If the contracting officer issues an adverse decision on a contractor’s claim or issues a decision asserting a government claim against the contractor (e.g., terminating the contract for default, asserting a right to excess reprocurement costs, demanding payment to recover the costs, or repairing or replacing defective work), the contractor has two avenues of appeal to choose from. The contractor may file an appeal at the appropriate agency board of contract appeals within 90 days after receiving the contracting officer’s decision. Alternatively, the contractor may file suit directly in the U.S. Court of Federal Claims within 12 months of the date it received the contracting officer’s decision. In either forum, proceedings on the claim will be de novo; any findings of fact made by the contracting officer in his or her final decision will not be binding. Only the contractor has the right to initiate litigation and to select the forum; if the contractor neither appeals nor files suit in the Court of Federal Claims, the contracting officer’s decision becomes final.

The boards of contract appeals are quasi-judicial tribunals within the executive branch composed of administrative judges with at least five years of public contract law experience who are authorized to adjudicate contract disputes on behalf of the heads of their respective agencies. Congress intended the boards to be informal, expeditious, and inexpensive. In spirit, if not always in practice, the procedures of the boards reflect this intention. For example, under uniform rules of procedure developed by the Office of Federal Procurement Policy (OFPP), hearings are to be “as informal as may be reasonable and appropriate under the circumstances.” Contractors may appear pro se—without the aid of counsel. Boards offer accelerated disposition of appeals involving claims of $100,000 or less (providing resolution within 180 days of the contractor’s election) and expedited disposition for disputes of $50,000 or less (with a 120-day resolution period). The boards have taken some steps to encourage parties to consider alternatives to full-scale litigation (alternative dispute resolution, or ADR). For instance, the Armed Services Board of Contract Appeals distributes a notice regarding ADR to its litigants, which describes various alternatives to litigation.

In contrast to the boards, which deal exclusively with government contracting, the Court of Federal Claims’ docket includes a broad range of litigation involving the federal government in addition to government procurement. Its proceedings are somewhat more formalized than those of the boards. For instance, use of the Federal Rules of Evidence is mandatory, and corporations must be represented by attorneys. Despite its formalities, the court has implemented an ADR program featuring settlement judges and minitrials. Although the Court of Federal Claims does not offer accelerated or expedited procedures, it can (unlike the boards) adjudicate disputes alleging fraud and grant injunctive relief.

In contrast to board decisions, which are collegial, Court of Federal Claims decisions are issued by a single judge. The contractor may appeal the decision of either tribunal to the U.S. Court of Appeals for the Federal Circuit. In addition, the CDA permits the government (with the Attorney General’s approval) to appeal adverse decisions; previously, the government could not appeal contract appeals board decisions. The standard of review for findings of fact by contract appeals boards is one of substantial evidence (this standard was retained from preexisting law); for Court of Federal Claims decisions, the Federal Circuit will apply a “clearly erroneous” standard to rulings on questions of fact. Practically speaking, the decision of the Federal Circuit ends the litigation. A party may not seek review by the Supreme Court as a matter of right, and the Supreme Court rarely agrees to consider government contract cases.

Consolidation of Boards of Contract Appeals

Section 847 of the National Defense Authorization Act for Fiscal Year 2006, Pub. L. No. 109-163, established the Civilian Board of Contract Appeals (CBCA) within the General Services Administration (GSA) to hear contract disputes under the CDA. The CBCA hears and decides contract disputes involving most non-defense executive agencies. Most of the previously existing boards of contract appeals (e.g., those at the GSA and the departments of Agriculture, Energy, Housing and Urban Development, Interior, Labor, Transportation, and Veterans Affairs) no longer exist, and board judges and other personnel at those entities were transferred to the CBCA.

Appeals on contract decisions involving the Departments of Defense, Army, Navy, and Air Force, as well as NASA, will continue to be heard at the Armed Services Board of Contract Appeals. Contract disputes from other non-defense federal agencies will be heard by the new CBCA, except that the U.S. Postal Service and Tennessee Valley Authority will continue to operate their own boards.

Alternative Dispute Resolution

A contracting officer is specifically authorized to use ADR under the provisions of the Administrative Dispute Resolution Act for a contract claim at any time that he or she has authority to resolve the issue in controversy. Also, if a contracting officer rejects a small business contractor’s request to use ADR, he or she must provide a written explanation that cites one or more conditions in 5 U.S.C. § 572(b) or other specific reasons why ADR is not appropriate for that dispute. Conversely, a contractor that rejects an agency's offer to use ADR must inform the agency in writing of its specific reasons for rejection.

OFPP Guidance

The CDA directed the OFPP to issue guidelines for the establishment and procedures of contract appeals boards. In addition, the OFPP issued, and subsequently rescinded, a policy directive (OFPP Policy Letter 80-3) setting forth procedures for handling claims by agency contracting officers and the text of a disputes clause to be included in government contracts.

Other Provisions

In addition to establishing a single comprehensive law covering the contract disputes process for almost all government contracts (some, such as procurements by the Tennessee Valley Authority, remain outside the scope of the law), the CDA made several other important changes to existing law. The CDA strengthened contract appeals boards, giving them subpoena power and authorizing them to grant any relief within the authority of the Court of Federal Claims. Moreover, appeals boards can now hear breach of contract claims as well as those “arising under” a contract. The law also added new requirements for selecting appeals board members that are intended to enhance quality and independence.

Legislative History

Efforts to pass contract disputes legislation began after the Commission on Government Procurement issued its final report and recommendations in 1973 and reached fruition in October 1978. H.R. 11002 was introduced by Representatives Herbert Harris and Tom Kindness on February 20, 1978, and reported favorably by the House Judiciary Committee without hearings. (The Commission had held hearings on similar legislation the previous year.) The House passed the bill on September 26, 1978. A similar bill, S. 3178, was introduced by Senators Lawton Chiles, Bob Packwood, John Heinz, and Dennis DeConcini on June 7, 1978, and favorably reported, with amendments, by the committees on Government Affairs and the Judiciary. The Senate took up floor consideration of the bill on October 12, 1978, agreeing to amendments that exempted the Tennessee Valley Authority from certain requirements of the CDA, added the certification requirement, deleted a requirement that an informal settlement conference be afforded contractors, and changed the standard of judicial review of contract appeals board decisions from “clearly erroneous” to “substantial evidence,” among other things. The Senate then passed H.R. 11002, amended to contain the amended provisions of S. 3178, and the House agreed to the Senate-passed version the next day.

Perhaps because it was passed quickly, at the end of the legislative session, the CDA (including the Senate amendments to it) was not the subject of extensive debate. However, the Congressional Record for October 12, 1978, does include a brief explanation of the amendments agreed to on the floor. 95 Cong. Rec. 36,261-68.

In January 2011, Congress passed bill H.R. 1107, which became Public Law No. 111-350, to simply “restate the existing law” without having any substantive effect. In so doing, Congress “remove[d] contradictions, ambiguities, and other imperfections” by “reorganizing various provisions of the existing law, harmonizing style and terminology, modernizing obsolete language, and correcting drafting errors.”

Source Note

There are considerable materials available on federal contract law, generally, and on contract claims and the CDA, specifically. Most of these materials are aimed at practicing attorneys specializing in government contract law. The items listed here are representative of the types of materials available; the list is by no means complete. Of these materials, the services published by CCH, a subsidiary of Wolters Kluwer (Government Contracts Reporter and Contract Appeals Board Decisions), are comprehensive and frequently updated. The Government Contractor (Thomson Rueters) also provides up-to-date information and analysis.

Crowell and Pou’s Appealing Government Contract Decisions (1990) examines agency experience with, and gives advice on, using ADR in contract claims.

Note that pre-1983 publications do not reflect amendments to the CDA made by the Federal Courts Improvement Act of 1982, which (among other things) created the Court of Appeals for the Federal Circuit and gave it jurisdiction over appeals from decisions of contract appeals boards and decisions of the Court of Federal Claims.

Bibliography

Legislative History and Congressional Documents

  • Hearings on H.R. 664 and Related Bills, Before the Subcomm. on Admin. Law and Gov’t Relations of the H. Comm. on the Judiciary, 95th Cong. (1977).
  • H.R. Rep. 95-1556 (1978).
  • J. Hearings on S. 3178 and S. 2787, Before the Subcomm. on Fed. Spending Practices and Open Gov’t of the S. Comm. on Gov'tal Affairs & Subcomm. on Citizens and Shareholders Rights and Remedies of the S. Comm. on Judiciary, 95th Cong. (1978).
  • S. Rep. No. 95-1118 (1978).
  • H.R. Rep. No. 111-42 (2009).

Government Documents

ACUS Recommendations and Other Documents

Office of Federal Procurement Policy Documents

Other Government Documents

Reports and Periodicals

  • Bloomberg BNA, Federal Contracts Report (published weekly; reports major developments in government contracting, including legislation, regulations, administrative policies, court and board decisions).
  • George Washington University Law School, Government Contracts Research Guide
  • National Contract Management Association, Journal of Contract Management (published annually; contains articles on issues of government contract administration and highlights legislative and regulatory developments).
  • ABA Section of Public Contract Law
    • Public Contract Law Journal (published quarterly; a law review with a public contract focus).
    • The Procurement Lawyer (quarterly newsletter).
    • An Ounce of Prevention: Best Practices in Dispute Avoidance for Government Contracting (ABA, 2002).
  • Thomson Reuters
    • Westlaw, Briefing Papers (published periodically; practical, topical papers on government contracting issues—includes an annual Procurement Review, surveying significant developments of the preceding year, and an annual Procurement Bibliography, citing most procurement articles published during the previous year).
    • The Government Contractor (published periodically; reports on and analyzes legal rulings and other significant developments, such as new and proposed laws and regulations).
    • The Nash & Cibinic Report (published monthly; provides opinion and advice on current government contract issues).
  • Wolters Kluwer CCH Government Contracts Reporter (published periodically; includes current information and new developments related to statutes, regulations, cases, and legislation, as well as the Federal Acquisition Regulation and agency supplements; current edition available only in electronic format). (Also available through Thomson Reuters Westlaw)

Books and Articles

  • Adam Angelo Bartolanzo, Note, Pleading Requirements for Claims by Contractors Against the Government: Applying Twombly and Iqbal after the Federal Circuit’s Decision in Todd Construction, L.P., 42 Pub. Cont. L. J. 203 (2012).
  • Arnavas & Ferrell, Motions Before Contract Appeals Boards, Briefing Papers No. 86-9 (Fed. Pubs., 1986).
  • D. Arnavas & W. Ruberry, Government Contract Guidebook (Fed. Pubs., 1992 with supplements).
  • Richard J. Bednar, Government Contracting Officers Should Make Greater Use of ADR Techniques in Resolving Contract Disputes (1989) (report to ACUS).
  • Matthew C. Blum, Government Contract Guidebook Workbook (Fed. Pubs., 4th ed. 1991).
  • Aaron Broaddus et al., CCH Federal Acquisition Regulation (2013) (reproduces the FAR and all amendments to the regulations issued prior to this January 1, 2013 edition, along with an easy-to-use topical index).
  • Nathaniel E. Castellano, After Arbaugh: Neither Claim Submission, Certification, Nor Timely Appeal Are Jurisdictional Prerequisites to Contract Disputes Act Litigation, 47 Pub. Cont. L.J. 35 (2017).
  • John Cibinic & Ralph C. Nash, Administration of Government Contracts (Gov’t Contracts Program, Geo. Wash. U., 4th ed. 2006).
  • John Cibinic & Ralph C. Nash, Government Contract Claims (Gov’t Contracts Program, Geo. Wash. U., 1981).
  • Eldon H. Crowell & Charles Pou, Appealing Government Contract Decisions: Reducing the Cost and Delay of Procurement Litigation with Alternative Dispute Resolution Techniques (1988) (report to ACUS).
  • Dover & Polack, Invoking the Contract Disputes Act—Potential Pitfalls, Briefing Papers No. 90-8 (Fed. Pubs., 1990).
  • Vernon J. Edwards, Not Subject to the “Disputes” Clause? (Has Anyone Heard of Burnside-Ott?), 27 No. 1 N&CR ¶ 2 (2013).
  • John L. Fugh & James F. Nagle, The Disputes Process—A Management Tool: Advice for Contracting Personnel, Army Law., at 4 (Oct. 1989).
  • James S. Ganther, Representing the Federal Government Contractor, 70 Fla. B. J. 58 (1996).
  • Daniel P. Graham et al., Federal Circuit Year-In-Review 2012: Guarding the Gates of Government Contracts Litigation, 42 Pub. Cont. L. J. 695 (2013).
  • Stan Hinton, Post-Contract Disputes Act Jurisdiction over Nonmonetary Contract Disputes: A Critique of Malone v. United States, 19 Pub. Cont. L. J. 174 (1989).
  • John A. Howell, The Role of the Office of Federal Procurement Policy in the Management of the Boards of Contract Appeals: From Great Expectations to Paradise Lost?, 28 Pub. Cont. L. J. 559 (1999).
  • Michael T. Janik & Margaret C. Rhodes, Contractor Claims for Relief under Illegal Contracts with the Government, 45 Am. U. L. Rev. 1949 (1996).
  • Richard C. Johnson, Beyond Judicial Activism: Federal Circuit Decisions Legislating New Contract Requirements, 42 Pub. Cont. L. J. 69 (2012).
  • W. Keyes & Steven Feldman, Government Contracts in a Nutshell (Thomson West, 5th ed. 2011).
  • Thomas Madden, Certification Requirements under the Contract Disputes Act (1983) (report to ACUS).
  • John McBride & Thomas Touhey, Government Contracts: Cyclopedic Guide to Law Administration and Procedure (Matthew Bender, 1996, with periodic updates).
  • James F. Nagle, A History of Government Contracting (Geo. Wash. Univ., 1999).
  • Ralph C. Nash, Litigating Contract Disputes: Expediting Appeals Board Cases, 4 N&CR ¶ 39 (Keiser Pubs., 1990).
  • Ralph C. Nash, The Contract Disputes Act: A Prescription for Wheelspinning, 4 N&CR ¶ 29 (Keiser Pubs., 1990).
  • Ralph C. Nash, Steven L. Schooner & Karen R. O’Brien, The Government Contracts Reference Book: A Comprehensive Guide to the Language of Procurement (Gov’t Contracts Program, Geo. Wash. U., 4th ed. 2013).
  • Stuart B. Nibley & Jade Totman, Let the Government Contract: The Sovereign has the Right, and Good Reason, to Shed Its Sovereignty when It Contracts, 42 Pub. Cont. L.J. 1 (2012).
  • Robert T. Peacock, Discovery Before Boards of Contracts Appeals, 13 Pub. Cont. L.J. 1 (1982).
  • Walter Pettit et al., Contract Disputes Act of 1978: Explanation and Analysis, Briefing Papers No. 79-2 (Fed. Pubs., 1979).
  • Walter Pettit, Carl Vacketta & David Anthony, Government Contract Default Termination (Fed. Pubs. 1993).
  • Charles M. Reifel & Adrian L. Bastianelli, Contracting Officer Authority, Briefing Papers No. 86-4 (Fed. Pubs., 1986).
  • Dennis J. Riley, Federal Contracts Grants & Assistance (McGrawHill, 1983 & supplements).
  • Michael J. Schaengold & Robert S. Brams, Choice of Forum for Government Contract Claims: Court of Federal Claims vs. Board of Contract Appeals, 17 Fed. Circuit B.J. 279 (2008).
  • Steven L. Schooner, A Random Walk: The Federal Circuit’s 2010 Contract Decisions, 60 Am. U. L. Rev. 1067 (2011).
  • Steven L. Schooner & Pamela J. Kovacs, Affirmatively Inefficient Jurisprudence?: Confusing Contractors’ Rights to Raise Affirmative Defenses with Sovereign Immunity, 21 Fed. Cir. B.J. 685 (2012).
  • ABA Section of Pub. Contract Law, An Ounce of Prevention: Best Practices in Dispute Avoidance for Government Contracting (2002).
  • ABA Section of Pub. Contract Law, Alternative Dispute Resolution: A Practical Guide for Resolving Government Contract Controversies (2d ed. 2006).
  • Michael J. Shea & Michael J. Shaengold, A Guide to the Court of Appeals for the Federal Circuit, Briefing Papers No. 90-13 (Fed. Pubs., 1990).
  • Matthew H. Solomsom et al., 2012 Government Contract Law Decisions of the Federal Circuit, 62 Am. U. L. Rev. 907 (2013).
  • Jeri Kaylene Somers, The Modernization of Government Contract Appeals and the Federal Circuit, 69(4) Am. U. L. Rev. 1055 (2020)
  • Christopher Yukins, Agency Bid Protest Report - FINAL.pdf Stepping Stones to Reform: Making Agency-Level Bid Protests Effective for Agencies and Bidders by Building on Best Practices from Across the Federal Government (2020) (report to ACUS).
  • Richard J. Webber, Litigating Claims and Protests Against the Federal Government: Strategies to Follow—and Pitfalls to Avoid—to Increase the Client’s Chances for Success, 2013 WL 5758846 (Aspatore ed., 2013).

Agency Regulations

Statutory Provisions

Contract Disputes Act of 1978

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