• R.D. Lieberman,Consultant

Claim May Use Estimates to Arrive at "Sum Certain"

This blog recently discussed a Federal Circuit decision which held that a contractor’s claim does not accrue until the exact amount (“sum certain”) of the claim is known to the contractor. Kellogg Brown & Root Serv. Inc. v. Murphy, 823 F.3d 622 (Fed. Cir. 2016). The blog was titled “Claim Does Not Accrue Until ‘Sum Certain’ is Known by Contractor.” Without contradicting this basic requirement for a sum certain in claims under the Contract Disputes Act (“CDA”), the Armed Services Board of Contract Appeals (“ASBCA”) has reiterated that the use of estimated or approximate costs in determining the value of a claim is permissible as long as the total overall demand is for a sum certain. Government Services Corp., ASBCA No. 60367, June 20, 2016.

In Government Services, the appellant submitted a certified claim to the Defense Logistics Agency-Energy (“DLA”) alleging that a negative Contractor Performance Assessment Report System (“CPARS”) rating it had received violated the covenant of good faith and fair dealing. When DLA requested “detailed substantiating records,” the contractor responded by letter as follows:

The “numerical calculation of $100,000.00” was derived by a simple mathematical formula of estimating the future expense, both administrative and legal, that is expected to be required to counter the apparent bad faith libelous actions of the [contracting officials] which are the subject of the claim.

The good faith estimate was reached after considering the number and frequency of bid submittals by [contractor] on solicitations that require consideration of past performance ratings such as those contained within the CPARS. This calculation was then further refined by the applicable life of the subject CPAR (discounting the 15 month remaining suspension of GSC) and the cost; both administrative and legal, of addressing the issue with future [contracting officials].

The government sought to have the claim dismissed for lack of jurisdiction because the claim “did not include a sum certain.” The ASBCA rejected this theory, noting that the claim itself used no qualifying language (such as “estimate”), and the Board jurisdiction is determined by the adequacy or sufficiency of the actual claim, not by information outside of that claim, such as information in the notice of appeal or complaint submitted to the Board. The Board held that the use of estimated language in the claim itself would render a claim improper, but the use of estimated or approximate costs in determining the value of a claim is permissible so long as the total overall demand is for a specific sum certain.

The conclusion is clear: contractors must make a claim (i.e. a demand) for an exact sum certain, not an approximate amount. However, in developing that certain sum, the contractor may use a reasonable method to approximate or estimate the supporting elements.

3 views0 comments

Recent Posts

See All

Can A Rubber Stamped Signature Bind A Contractor?

Is a rubber stamped signature of the President of a company on a release of claims valid? The Civilian Board of Contract Appeals, under the facts in Penna Group, LLC v. Dept of Justice, CBCA 6155, Se

The website of Richard Donald Lieberman, a government contracts consultant and retired attorney who is the author of both "The 100 Worst Mistakes in Government Contracting" (with Jason Morgan) and "The 100 Worst Government Mistakes in Government Contracting." Richard Lieberman concentrates on Federal Acquisition Regulation (FAR) consulting and training, including  commercial item contracting (FAR Part 12), compliance with proposal requirements (FAR Part 15 negotiated procurement), sealed bidding (FAR Part 14), compliance with solicitation requirements, contract administration (FAR Part 42), contract modifications and changes (FAR Part 43), subcontracting and flowdown requirements (FAR Part 44), government property (FAR Part 45), quality assurance (FAR Part 46), obtaining invoiced payments owed to contractors,  and other compliance with the FAR. Mr.Lieberman is also involved in numerous community service activities.  See LinkedIn profile at https://www.linkedin.com/in/richard-d-lieberman-3a25257a/.This website and blog are for educational and information purposes only.  Nothing posted on this website constitutes legal advice, which can only be obtained from a qualified attorney. Website Owner/Consultant does not engage in the practice of law and will not provide legal advice or legal services based on competence and standing in the law. Legal filings and other aspects of a legal practice must be performed by an appropriate attorney. Using this website does not establish an attorney-client relationship. Although the author strives to present accurate information, the information provided on this site is not guaranteed to be complete, correct or up-to-date.  The views expressed on this blog are solely those of the author. FAR Consulting & Training, Bethesda, Maryland, Tel. 202-520-5780, rliebermanconsultant@gmail.com

Copyright © 2020 Richard D. Lieberman