We're back with our 10th biannual Contract Disputes Act (CDA) case law update, following up on our summary of noteworthy decisions from the first half of 2024 that was published in a two-part Feature Comment in THE GOVERNMENT CONTRACTOR.1 Because we subscribe to Henry David Thoreau's view that "[o]ne must maintain a little bit of summer, even in the middle of winter," we have filled this proverbial beach bag of developments in Contract Disputes Act (CDA) case law from the second half of 2024 with some sunny, tropical getaway themes to beat the winter blues away. Surf's Up!
Is It A Pina Colada (Claim) Or Just A Coconut (REA)? The Boards Apply Zafer's Objective Test
The second half of 2024 brought two different applications of the U.S. Court of Appeals for Federal Circuit's splashy Zafer Construction Co. v. United States precedent2 to find that a contractor had submitted a claim under the CDA. First, in Mindseeker, Inc.,3 the Armed Services Board of Contract Appeals (ASBCA) considered a contract for medical coding services using a government-provided platform that failed repeatedly during performance, harming the contractor's productivity. The contractor submitted a "Request for Price Modification" seeking four buckets of damages, including compensation for lost production value ("the first claim") as well as a "price increase per coded record" for future work ("the second claim"). Several months later, the contractor submitted a revised document titled "Request for Equitable Adjustment" (REA) limited to only the first and second category of damages and proceeded to negotiate with the Army for nearly two years, ultimately submitting a CDA certification in response to an Army request. At the end of each REA communication, the contractor included language thanking the government for considering its request and expressing a willingness to discuss matters further. The Army eventually issued a decision denying the REA and asserting that despite including the CDA certification language, "the language and tenor of that document, as well as other contemporaneous communications between Mindseeker and the Government at the time that the updated/revised REA was submitted, indicate" it remained an REA and not a claim.4 Mindseeker appealed, and the Army moved to dismiss, alleging Mindseeker failed to convert its REA to an appealable claim.
The board granted the motion to dismiss as regards the "second claim," but denied the motion as to the "first claim." In doing so, the board applied the Federal Circuit's Zafer precedent to determine whether the contractor made a written demand, included a CDA certification, and requested a final decision from the contracting officer. Despite the contractor's inclusion of "continued negotiation" language at the end of each submission, the board found that "nearly every filing (whether labeled a 'request for price modification' or an 'REA') included a clear and unequivocal statement explaining the basis of" the claim. This satisfied the first, "written demand" requirement.5 However, while Mindseeker requested a sum certain from the Army for its first claim, it failed to do so for its second claim both because it contained no demand for money "as a matter of right," as it pertained to future downtime, and because Mindseeker failed to quantify the number of units the future price change would implicate. Absent a sum certain, the second claim was not a valid CDA claim and was dismissed by the board without prejudice.6
The board retained jurisdiction over the "first claim" after observing both that the Army requested that Mind seeker use the CDA certification in its REA, which goes beyond the Defense Federal Acquisition Regulation Supplement (DFARS) REA certification,7 and Mindseeker requested a final decision from the Army. Citing Zafer, the board reasoned that objectively, "the content and context of the correspondence between the Army and Mindseeker show that . . . Mindseeker's submissions started as an REA, but that changed when Mindseeker certified its submission."8 The board reasoned that the Army "placed itself on notice that Mindseeker was converting its REA to a CDA claim by requesting that Mindseeker certify its REA using the CDA certification."9 The board also rejected the Army's argument that Mindseeker failed to explicitly request a final decision, citing precedent that "[w]hether explicit or implicit, a submission need not use any 'magic words' to make a request for a contracting officer's final decision."10 Instead, the requirement "focuses on whether, objectively, the document's content and the context surrounding the document's submission put the contracting officer on notice that the document is a claim requesting a final decision."11 Here, the Army could not fairly claim it was not on notice, given the contractor's repeated communications and the Army's own request that Mindseeker replace the REA certification with the CDA certification.12
The Civilian Board of Contract Appeals (CBCA) similarly applied Zafer to the contractor's benefit in ELA Group, Inc. v. Department of Labor. 13 In this case, the contractor submitted a payment demand to the contracting officer in October 2023, which the contracting officer denied by email and not by formal decision in November 2023. The contractor appealed the deemed denial of its claim in October 2024. The government moved to dismiss the appeal, asserting that the October 2023 submission was an REA, that contractor had filed a "more formal claim" on September 12, 2024, rendering the appeal premature. The CBCA observed that the appeal did not reference the September 2024 claim and applied Zafer to find that, reviewed objectively and without consideration of subjective intent, the October 2023 submission constituted a claim rather than a REA and therefore the board had jurisdiction to entertain the appeal of the deemed denial of that claim. The contractor "submitted its demand to the [Department of Labor] contracting officer for payment of a specific sum of money," "identified the basis of its payment demand," and "implicit[ly]" requested a final decision by asserting it is '' 'entitled to receive[]' the requested money and its attachment of its change order form detailing the incurred costs that it wanted to be reimbursed."14 The CBCA considered that the contractor identified its October 2023 submission as a "proposal," which mirrors terminology used in the contract's equitable adjustment clause. But the CBCA concluded that the proposal in that clause referred to future work not yet performed, whereas the contractor had submitted a demand for work already completed.15
The CBCA explained that absent Zafer's instruction to ignore the parties' subjective intent, the fact that the contractor submitted a formal CDA claim, labeled as such, in September 2024 would indicate it did not consider its October 2023 submission to be a claim, but the Federal Circuit was clear that such analysis was inappropriate. Reviewed objectively, the October 2023 submission was a claim and appealable. The CBCA dismissed aspects of the appeal only raised in the September 2024 submission and not the October 2023 submission.16
Additionally, on the beach it may be "No Shoes, No Shirt, No Problem," but with the CDA, it's "No Claim, No Final Decision, No Jurisdiction." In The Povolny Group, Inc. v. Department of Veterans Affairs, 17 a contractor submitted a request for information (RFI) to request that the government approve a different size stud than listed in a project's specifications. The government denied the request, and the contractor installed the different sized studs anyway. The government then issued a...
