Indeed, any government contract executed by any contractor can expose the contractor to certain monetary risks of the government claim against the contractor. This paper outlines five ways one can face a government claim and risky measures to avoid them as a government contractor.

1. Overpayment

One of the most frequent reasons for a government claim being made may be asserted by the government on the basis of an alleged overpayment made by it. For instance, an agency might have made a payment for an invoice, under which the contractor appropriately utilizes the wrong contract line-item number to describe the services being charged. Or an agency could have apparently ‘paid an invoice before discovering, for instance, that a contractor had not met the agency’s requirement in terms of staffing certain positions for certain hours per week; even though the contractor did not breach any contract but was forced by the agency’s directive.

When this arises, an agency is able to write to the contractor requesting that they make a refund of the amount in question within a certain date. That the demand letter contains a statement that it constitutes the contracting officer’s final decision and the contractor ’s notice of appeal rights to the Court of Federal Claims (COFC) or a board of contract appeals (BCA) makes it to be considered as a final decision under the CDA. Following receipt of a decision from the contracting officer, the contractor is allowed by the law to appeal within 90 days to BCA and one year to the COFC. It is also constructive to note that at the COFC or BCA, the government may bear the onus of proving any of the claims stated above. Hence, according to the nature of dispute, either the COFC or the BCA has to rule on the merits of the agency’s claim.

2. Termination for Default

A contract may be declared fraudulent for the reasons that the contractor has been or is likely to fail in the performance of the contract. Termination for default is considered as a final decision and the contracting agency may make a subsequent final decision that a contractor has to refund the agency for the cost incurred in procurement. The government holds the authority to prevent a contractor from obtaining future business opportunities while working with the government. Contractors should consider negotiating with agencies in advance to obtain a convenience termination instead of default termination because it will protect their business reputation at both present and future stages of their government partnerships.

3. Delay

Under contract terms agencies are authorized to collect specified monetary awards as compensation for delayed work that the contractor fails to rectify. The current supply chain challenges require manufacturers to have this measure in place since they face difficulties finding necessary parts to complete projects on time. Contractors should ask for contract completion extension requests after noticing non-completion dates are at risk because of excusable and government-caused delays. The implementation of extensions prevents the government from seeking liquidated damages. The contractor needs to examine the contractual terms that specify delay notification procedures as well as the approved conditions for excusable delays.

4. Breach of Warranty

The warranty provisions embedded in numerous government contracts enable the government to obtain rights following service or product acceptance from contractors who will then assume specific responsibilities. The contractual warranty conditions determine what action an agency may take to remediate defective items within the delivery agreement.

The government possesses several possible responses to cover such situations which include:

The contractor must undertake necessary work either through repair or replacement and correction or re-performance at their expense. When defects occur the curing agency can either fix the issue by itself or appoint a different firm to conduct the work and charge those expenses back to the contractor. The government would accept the performance and request price reduction or demand a contractual price refund from the contractor. The contractor must refund the entire price value stated in the agreement to the government.

5. Fraud

In contractor appeals brought to COFC or BCA the agency may assess its potential to file counterclaims with the False Claims Act against contractor false statements present in their claims or billing or other representations made to government. Employers must thoroughly check contractor statements and requested monetary damages throughout their claims since any assertions might result in False Claims Act counterclaims. Contact Williamson Law Group for help with any issues about noncompliance or ask questions regarding these matters here (301)788-8198.