TIPS ON CLAIM RESOLUTION

Contractors hate to litigate claims.  They have better things to do.  It takes too long and diverts important resources into a speculative, risky enterprise with no hope of a new product or service line.  But some contractors are either forced or choose to treat losses written off as possible profit enhancers in tough times.  There are other reasons to pursue claims particularly when they involve contract interpretation issues which may apply to ongoing contract performance, or defending a termination for default by arguing affirmative relief claims.

So we thought we would provide a list of tips for contractors preparing for the possibility of claim litigation.

1. Prepare a professional request for equitable adjustment (REA) and convert it to a claim only after negotiations with the contracting officer fail.  See www.spriggsconsultingservices.com for a list of 14 tips on how to negotiate a settlement of the REA.  Submit the claim with the proper certification (do not change a word) and ask for a prompt final decision as required by the regulation.  Remind the contracting officer interest is running on the claim.
2. Appeal the failure to issue a decision if it is not rendered either within 60 days or a reasonable time (usually 90 days), whichever is appropriate under the regulation.
3. Make your choice of forum based on sound professional advice.  This usually means going to the Board of Contract Appeals (Board).
4. Always file your complaint with your notice of appeal.  Always.  There is no need to wait the 30 days.
5. Always ask opposing counsel to agree to mediation right away.  Always.  The first step in the litigation should be an attempt to set up a mediation meeting presided over by a Board judge.  In fact, it is possible to engage the services of a Board judge even before commencing the litigation.
6. Consider forgoing discovery and arguing that opposing counsel’s discovery should be limited.  If you have prepared your case properly, you may be able to proceed to trial without discovery or after limited discovery.  Control of the other side is difficult and depends on the judge.  
7. Consider carefully dispositive motions.  Legal issues can be disposed of on motion.  Try to narrow or completely eliminate the factual issues so that the only issues that remain are legal issues susceptible to disposition on motion.
8. If mediation has not worked early on, forget alternative dispute resolution (ADR).  Go ahead and go to trial as fast as you can or file your dispositive motions.
9. There is a reason for the hackneyed “settlement on the court steps.”  It happens. But it most likely happens before the parties have invested too much time in witness preparation and before they come close to the courthouse steps.
10. The Boards like to adjudicate entitlement and leave quantum (damages) to the negotiation of the parties.  Even the slightest headway on entitlement can lead to settlement.

These are just a few suggestions on resolution of claims.  We are a big fan of ADR. However, it should be used early in the process.  It’s an excellent technique for discovering the other side’s position and it is the best opportunity you have to hear a judge (as mediator) point out the strengths and weaknesses of the parties’ positions.