Reflectone, Inc. v. John H. Dalton, Secretary of the Navy

Court of Appeals for the Federal Circuit
60 F.3d 1572 (1995)

ELI5:

Rule of Law:

Under the Federal Acquisition Regulation (FAR) 33.201, a non-routine written demand by a contractor seeking payment of a sum certain as a matter of right constitutes a 'claim' under the Contract Disputes Act. A pre-existing dispute is only required for 'routine requests for payment,' such as invoices or vouchers, not for non-routine submissions like a Request for Equitable Adjustment (REA).

Facts:

On April 15, 1988, Reflectone, Inc. entered into a fixed-price contract with the Naval Training Systems Center to update helicopter weapon system trainers.
During performance, Reflectone notified the Navy that delivery was being delayed by late, unavailable, or defective government-furnished property.
The Navy denied responsibility for the delay, issued a cure notice, and reserved its right to seek compensation from Reflectone for the delays.
For over a year, Reflectone consistently maintained that the government was the cause of all delays and that it would seek relief once the economic impact was known.
On June 1, 1990, Reflectone submitted a formal Request for Equitable Adjustment (REA) to the contracting officer, demanding $266,840 for costs related to the government-caused delays.

Procedural Posture:

The contracting officer (CO) issued a final decision largely denying Reflectone's Request for Equitable Adjustment (REA).
Reflectone appealed the CO's decision to the Armed Services Board of Contract Appeals (Board).
The Board dismissed the appeal for lack of subject matter jurisdiction, ruling that the REA was not a valid 'claim' because there was no dispute over the specific monetary amount before the REA was submitted.
Reflectone, as appellant, appealed the Board's dismissal to the U.S. Court of Appeals for the Federal Circuit.

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Issue:

Does a contractor's non-routine written demand for payment of a sum certain, submitted as a matter of right, qualify as a 'claim' under the Contract Disputes Act and its implementing Federal Acquisition Regulation, even if there was no pre-existing dispute over the specific amount demanded?

Opinions:

Majority - Michel

Yes. A non-routine written demand seeking payment of a sum certain as a matter of right is a 'claim' under the Contract Disputes Act, and it does not require a pre-existing dispute. The plain language of Federal Acquisition Regulation (FAR) 33.201 establishes the definition of a claim in its first sentence. The subsequent sentence, which requires a pre-existing dispute, creates a specific exception that applies only to 'a voucher, invoice, or other routine request for payment.' Because a Request for Equitable Adjustment (REA) is a non-routine submission for unforeseen costs, it falls under the general definition and is not subject to the pre-existing dispute requirement. This court overrules its prior decision in Dawco Constr., Inc. v. United States to the extent it held that all claims require a pre-existing dispute, as that interpretation was inefficient, unfair, and contrary to the goals of the Contract Disputes Act.

Concurring - Nies

Yes. The Board has jurisdiction. The court should have decided this case on narrower grounds. Because the government had already denied any liability for the underlying delays, there was no need to require a separate, pre-existing dispute over the specific monetary amount of Reflectone's demand for it to constitute a valid claim.

Analysis:

This decision significantly clarifies and simplifies the definition of a 'claim' under the Contract Disputes Act, resolving a major jurisdictional issue in government contract law. By overruling Dawco, the court eliminated a burdensome procedural hurdle that frequently led to the dismissal of contractors' appeals on jurisdictional grounds. This ruling promotes efficiency by allowing non-routine payment demands to be treated as claims upon submission, preventing the wasteful process of having to resubmit a claim merely to manufacture a 'dispute.' The case ensures that future disputes will be resolved on their merits rather than on procedural technicalities about when a disagreement formally crystallized.

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