More than One Way to Skin a Cat: Contract Claims with Alternate Theories of Entitlement

Government Contract claims for monetary relief under the Contract Disputes Act must demand “the payment of money in a sum certain” in a request for a final decision submitted in writing to the Contracting Officer. If the amount of the claim exceeds $100,000 the claim has to be properly certified. If the Contracting Officer rejects a claim, a contractor has the option of pursuing an appeal to one of the Boards of Contract Appeals with jurisdiction over the relevant contracting agency or to the Court of Federal Claims.

However, jurisdiction for an appeal will not exist if the contractor fails to submit “a clear and unequivocal statement that gives the contracting officer adequate notice of the basis and amount of the claim.” Two recent cases illustrate the complexities that can arise when a claim can be based on more than one theory of entitlement, set of facts seeking more than one amount of damages.

Consider the situation where a series of Government actions came together to hinder contract performance or increase the costs of performance. Perhaps some or all of the Government’s conduct breached the contract in some manner. Alternatively, if the Government didn’t technically breach the contract, then perhaps its actions caused delay or effected an actual or constructive change in contractual requirements. Each is an alternative theory of entitlement that could provide the legal basis for a claim. However, the manner in which damages are measured might vary depending on the basis of entitlement. Or, the facts needed to support the two theories might might not fully overlap each other.

Sage Acquisitions LLC v. Department of Housing and Urban Development, CBCA No. 6631 dismissed an appeal from a contracting officer’s denial of a claim due to the lack of an unequivocal demand for a sum certain. The contractor appealed the rejection of its termination settlement proposal to recover costs occasioned by the Government’s termination of its contract for convenience. In the alternative, the contractor claimed it was entitled to damages based on the alleged breach of contract by the Government. The contractor’s demand for payment was not clear either to the Government or the Board because it was not clear whether the two theories were, in fact, alternative (and not cumulative) claims for damages. For that reason, the Board declined jurisdiction over the appeal because an appeal can only lie for a monetary claim where the amount demanded is a “sum certain.”

In Appeals of Halbert Contraction Co., Inc., the contractor submitted a claim for increased costs and delay that arose out of a unilateral contract modification issued by the Government. The modification was issued unilaterally because the Government and the contractor failed to agree upon a cost for a change required by the Government. The Government rejected the contractor’s claim. On appeal, the contractor’s complaint alleged several legal theories that were not expressly set forth in the contractor’s claim. The Government asked the Board to dismiss the claim for lack of jurisdiction in part because the contractor had not put the alternative legal theories before the contracting officer for consideration. In this case, the Board rejected the Government’s position because the assertion of alternative legal theories to seek the same relief on the same facts does not require a request for a separate contracting officer’s final decision.

Here we have two cases involving alternative theories of liability. In one, the alternate legal theories merely offered varying legal principles to support a single claim of damages derived from the same operative facts. In the other, the contractor sought relief for a sequence of events that caused it to incur increased costs. Quite wisely, the contractor claimed entitlement under alternate theories of liability; however, it seems that the alternate theories relied on overlapping, but distinct, sets of facts. Moreover, the theories gave rise to damages that substantially overlapped but, likewise, were somewhat distinct. The Board faulted the contractor for not being focused on a single sum certain because the claim’s reference to alternative sums along with a catch-all “such greater sums” that might be proven lacked sufficient definiteness to provide “the contracting officer a clear and unequivocal statement with adequate notice of the amount of the claim.”

So what are the takeaways here? Do you put the appealability of your claim at risk if you rely on alternative legal principles and operative facts? I think not because the issue here is a practical one—did your claim properly put the contracting officer on notice of the factual basis for and the amount of your claim? The Sage case quotes an earlier Board decision that observed that a “claim for monetary relief is not clear and unequivocal when a contractor’s ‘qualifying language leaves the door open for the request of more money on the same basis.’“ It seems that the Board couldn’t pin down exactly what relief the contractor was seeking. Had it been able to discern that the contractor sought a single amount for a single set of facts under one theory and that the contractor sought a single amount for a single set of facts in the alternative if the contracting officer didn’t accept the first theory, then the Board might have found that the contractor was seeking a clear sum certain.

Thus, if you have more than one way to skin the cat, then go ahead. Include all the legal theories that justify a recovery from a single set of facts—that’ll likely insulate you from the dismissal of your appeal. If you have multiple theories and multiple collections of facts and damages, be very clear about the ultimate sum you’re seeking and, hopefully, the Board will agree that an appealable claim was presented to the contracting officer.