Government Contracts Monitor

What Is A Claim?

March 12, 2013

Under the Contract Disputes Act, what is necessary to make a “claim”?  The statute has three simple requirements, but the U.S. Court of Federal Claims tried to add additional requirements.  In Northrop Grumman Computing Systems, Inc. v. United States, No. 2011-5124 (Fed. Cir. Feb. 19, 2013), the Federal Circuit made it clear that there are only three requirements for stating a claim, no matter how complicated the underlying facts of the case may be.

Northrop Grumman Computing Systems, Inc. (“Northrop”) had a commercial items contract with U.S. Immigrations and Customs Enforcement (“ICE”) for the delivery of computer-network monitoring software.  ICE specifically wanted Northrop to provide software produced by Oakley Networks (“Oakley”).  In order to obtain the Oakley software, Northrop entered into a private financing agreement with ESCgov, Inc.  Under the terms of the financing agreement, ESCgov, Inc. paid Northrop a fixed price in exchange for Northrop’s assignment to ESCgov, Inc. of all payments received under Northrop’s Delivery Order for the Oakley software.  ESCgov, Inc. subsequently assigned its rights to payment to Citizens Leasing Corp.  Neither Northrop, ESCgov, Inc., nor Citizens Leasing Corp. notified the federal government of the assignments, causing potential problems under the Anti-Assignment Act.

Later, ICE notified Northrop of its decision not to exercise its first option year.  In response Northrop filed a “claim” with the Contracting Officer (“CO”).  The “claim” asserted that the Government had breached the contract modifications and that Northrop was seeking $2,697,558.00 in damages.  The “claim” also contained a certification and a request for a final decision from the CO.  However, it did not make any mention of the assignments.     Seizing upon the assignments and related issues, the Court of Federal Claims dismissed Northrop’s lawsuit on the ground that its  “claim” did not give the contracting officer adequate notice of the potential applicability of the Anti-Assignment Act, the Severin doctrine,[1] or “a host of other issues that have been associated with sponsored or ‘pass-through’ claims.”  Northrop, No. 2011-5124, slip op. at 5.     

The Federal Circuit reversed, ruling that Northrop had made a proper claim.  The Court explained that the Contract Disputes Act (“CDA”) requires only that “a claim by a contractor be submitted to the contracting officer for decision, that the claim be in writing, and that the contractor certify claims over $100,000.”  Id., slip op. at 8.  While there are some FAR and judicial glosses on the CDA requirements, the three statutory requirements control.  While Northrop’s failure to disclose the assignment in its claim raised potential issues under the Anti-Assignment Act and the Severin doctrine, that omission had no effect on whether Northrop had properly stated a claim under the CDA.  In fact, in this case, the Anti-Assignment Act voided the assignments and properly vested the claim with Northrop.

So, what is a claim?  A claim is defined by 41 U.S.C. § 7103(a)-(b), FAR 52.233-1, and the Federal Circuit.  Nothing more, nothing less.

 

Michael J. Schrier is the attorney responsible for the content of this article.