Disputes and Claims for State Contracts in the DMV (D.C., Maryland, and Virginia) Part 2 of 3 – D.C.
This is the second part of our three-part discussion of state government contract claims and dispute processes in D.C., Maryland, and Virginia (see part 1 discussing the claims and disputes process in Maryland).
This second post focuses on contract claims and disputes in the District of Columbia. As a takeaway from this series, there are noticeable differences between the claims processes in the three jurisdictions. For example, whereas in Maryland the strictly enforced 30-day notice requirement to start the claims process prompts a contractor to be attentive and swift, D.C. generally does not have a time limit for starting the claims process. On the other hand, after a proper claim is submitted in D.C., the Contracting Officer must render a decision within 120 days or the claim is deemed denied. However, in Maryland, there generally is no deemed denial time period for a non-construction claim. But unlike Virginia, both D.C. and Maryland have centralized Boards of Contract Appeals. These examples are just some of the differences between the jurisdictions.
Below is a survey of the District’s statutes and regulations related to the claims and disputes process.
Chapter 3A of Title 2 of the D.C. Code (a.k.a. the Procurement Practices Reform Act of 2010 (“PPRA”), D.C. Law 18-371) generally governs procurement contract administration and dispute resolution. The corresponding regulations are found in Title 27 of the D.C. Municipal Regulations. However, a handful of agencies are exempt from the PPRA, in which case, agency specific regulations will inform the contractor as to the handling of disputes and claims.
AUTHORITY TO FORM, EXERCISE OPTIONS, MODIFY, AND TERMINATE A CONTRACT
The official with the authority to form and administer a contract on behalf of an agency is called a Contracting Officer. See D.C. Code § 2-351.04(16); D.C. Mun. Regs. Tit. 27, § 1004. The regulations also expressly contemplate a Contract Administrator, to whom the Contracting Officer can delegate many of the contract administration functions. See D.C. Mun. Regs. Tit. 27 at § 1209. Additionally, each contracting agency is supposed to have an Ombudsman who can assist the contractor in resolving contract administration issues and performance disputes with the agency. See D.C. Code § 2-352.07.
DEFINITION OF A CLAIM
Under the PPRA, a claim is “a written demand or written assertion by the District or a contractor 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 the contract.” D.C. Mun. Regs. Tit. 27, § 3899.1. An unpaid invoice can constitute a claim if it includes the legal prerequisites of a claim. See, e.g., Friends of Carter Barron Found. of the Performing Arts, DCCAB No. D-1421 (Nov. 15, 2011). Unless a subcontractor can show that it acted as a de facto agent of the D.C. Government, a subcontractor cannot bring a claim against the Government except through its sponsorship and prosecution by the prime contractor. See Teresa M. Suter, DCCAB No. D-881 (Sept. 30, 1991).
The D.C. Quick Payment Act also provides for separate contractor claims for interest on unpaid invoices (typically outstanding for more than 30 days) that were properly submitted and not subject to a dispute. See DC Code § 2-221.04(a)(1); see also Curtis Chevrolet, DCCAB No. D-1116 (Jan. 25, 2001) (“DCHA was obligated to pay Quick Payment Act interest by the terms of the Quick Payment Act notwithstanding the presence or absence of a clause in the contract authorizing interest penalties for late payment.”); but see JH Linen, LLC, DCCAB No. D-1366 (Nov. 14, 2014) (“Interest penalties are not required for invoices not paid by reason of a dispute between the District agency and the contractor over the amount of that payment, or other allegations concerning compliance with the contract.”).
CONTRACTOR CLAIM SUBMISSION
The PPRA does not state a time period in which a contractor must present a claim, although the longer a contractor delays, the more the contractor risks its claim being barred by a waiver or laches defense (an equitable defense alleging unreasonable delay). See, e.g., Adrian L. Merton, Inc., DCCAB No. D-1025 (Feb. 13, 1998) (although the agency unsuccessfully made a laches defense to the contractor’s claims that were based on work performed 2-4 years earlier, the Board considered it as a legitimate claim defense); D.C. Code § 2-351.02 (principles of equity can apply to a D.C. government contract).
The written claim must be sent to the Contracting Officer in person or via certified mail, state the basis of entitlement and include supporting information, describe the contractor’s previous efforts to resolve the matter, and request particular relief from the Contracting Officer (such as payment of a sum certain, if applicable). See D.C. Mun. Regs. Tit. 27, §§ 3803.2 and 3899.1.
If the contractor’s claim is seeking an equitable adjustment under a contract’s changes clause, there may be a specific notice requirement before submitting the claim. However, failure to provide timely notice likely will not bar the claim if the agency’s position was not prejudiced by the lack of notice. See, e.g., Civil Constr., Inc., DCCAB No. D-1413 (Mar. 14, 2013) (“It is well settled in government contract law that notice provisions are read liberally and will not bar a contractor’s claim unless the government is prejudiced by the late notice.”).
Finally, if dealing with an agency that is exempt from some or all of the PPRA, the agency may have a different process for claim submission, which should be detailed in the contract and the agency’s regulations.
GOVERNMENT CONSIDERATION OF THE CLAIM
Upon receipt of the contractor’s claim that meets the prerequisites of a claim and was properly submitted, the Contracting Officer must render a final decision within 120 days. See D.C. Code § 2-359.08(b); D.C. Mun. Regs. Tit. 27, § 3803.4; see also D.C. Code § 2-221.04(a)(2) (contracting officer must issue a decision within 30 days for a claim submitted under the D.C. Quick Payment Act). During that time, the Contracting Officer may seek the advice of counsel, or attempt to negotiate with the contractor. If the Contracting Officer issues a final decision, it is supposed to be in the form of a writing that describes the factual circumstances, refers to the relevant contract terms, states the rationale supporting the decision, unequivocally states that it is a final decision, and notifies the contractor of its appeal rights. See D.C. Mun. Regs. Tit. 27 at § 3803.5. Further, the Contracting Officer’s final decision is supposed to be presented to the contractor in-person or via certified mail. See id. at § 3803.6. Under the PPRA, interest is available from the date of contractor claim submission (not to be confused with Quick Payment Act interest, which is a different statutory basis for the contractor to obtain interest). Compare D.C. Code § 2-359.09 with D.C. Code § 2-221.02.
APPEAL OF THE CLAIM DECISION
If the Contracting Officer issues a final decision on the claim, the contractor must file an appeal with the D.C. Contract Appeals Board (“DCCAB”) no later than 90 days from receipt of the Contracting Officer’s final decision, assuming that the DCCAB has jurisdiction. See D.C. Code § 2-360.04(a). Alternatively, if the Contracting Officer fails to issue a final decision within the 120-day timeframe, the claim is deemed denied and the contractor may proceed to file its appeal. See D.C. Mun. Regs. Tit. 27, § 3803.7. However, when the claim is deemed denied, the 90-day window for the contractor to file a DCCAB appeal does not apply. See, e.g., A.S. McGaughan Co., Inc., DCCAB No. D-926 (Dec. 10, 1992). Rather, the contractor may file a DCCAB appeal when the contractor sees fit, keeping in mind that sooner is better than later to avoid potential waiver or laches.
CONDUCT OF THE APPEAL
After the contractor has filed its appeal, the DCCAB will docket the appeal and send acknowledgement to the contractor, the contracting officer, and the D.C. Attorney General or the relevant agency counsel. See D.C. Mun. Regs. Tit. 27, § 202. No later than 30 days after the DCCAB dockets the appeal, the contractor must file its complaint (assuming that it has not already done so), and the agency must turn over the documents comprising the appeal file. See id. at §§ 203 and 204. No later than 30 days after the complaint is filed, the procuring agency must file its answer. See id. at § 205. Also, no later than 30 days after receipt of the agency appeal file, the contractor must supplement the file with its own document submissions. See id. at § 203.3. The appeal process includes, as necessary, the filing of motions, discovery (including depositions), evidentiary objections, and the filing of briefs. The dispute will be decided by a panel of three administrative judges, and may be decided with or without a hearing. Upon the issuance of a formal decision by the panel, either party has 30 days to file a motion for reconsideration. See id. at § 117.2. Otherwise, the decision shall be deemed final. See id. at § 101.6.
If the contractor prevails, it may obtain contract damages or an equitable adjustment, typically quantified as increased costs incurred, reasonable profit on the increased costs, and applicable interest. The DCCAB may also provide non-monetary relief in certain circumstances, such as ruling that the agency’s default termination of the contractor was improper, a determination on the merits of a contractor’s claim without a decision on the value of any damages, or voiding a contract pursuant to the Improper Contracts Statute at D.C. Code § 2-359.02. Generally, attorney’s fees for appealing a Contracting Officer’s final decision are not recoverable. See Civil Constr., LLC, DCCAB Nos. D-1294, D-1413, and D-1417 (Mar. 14, 2013) (“Professional fees incurred in prosecuting an appeal from a contracting officer’s final decision are not allowable costs.”); MCI Constr., Inc., DCCAB No. D-924 (June 4, 1996).
GOING TO COURT
A final decision of the DCCAB for a contract claim/performance dispute can be directly appealed to the D.C. Court of Appeals. See D.C. Code § 2-360.05; D.C. Mun. Regs. Tit. 27, § 214.4(a). Such an appeal must be filed at the D.C. Court of Appeals within 120 days from the contractor’s receipt of the DCCAB decision. See id.
Click here to read Part 1 of 3 - Maryland
Click here to read Part 3 of 3 - Virginia
This blog was written by Christopher Denny and Jason Blindauer at Miles & Stockbridge. Alfred Wurglitz supervised the creation of this blog series.
Opinions and conclusions in this post are solely those of the author unless otherwise indicated. The information contained in this blog is general in nature and is not offered and cannot be considered as legal advice for any particular situation. The author has provided the links referenced above for information purposes only and by doing so, does not adopt or incorporate the contents. Any federal tax advice provided in this communication is not intended or written by the author to be used, and cannot be used by the recipient, for the purpose of avoiding penalties which may be imposed on the recipient by the IRS. Please contact the author if you would like to receive written advice in a format which complies with IRS rules and may be relied upon to avoid penalties.