In 2008, Zafer Construction Company entered into a $40 million contract with the United States to design and build water systems at Bagram Air Base in Afghanistan. The project experienced multiple delays and cost increases, which Zafer attributed to government-directed modifications and disruptions. On September 10, 2013, Zafer submitted a request for equitable adjustment (REA) seeking $6.7 million in additional compensation. The request included a 167-page detailed breakdown of the claimed costs, causes of delay, and certifications made under 41 U.S.C. § 7103(b)(1).
After years of negotiation, Zafer converted its REA into a formal claim on February 7, 2018. The contracting officer denied most of the claim, finding it untimely under the Contract Disputes Act’s six-year statute of limitations. The U.S. Court of Federal Claims agreed, ruling that Zafer’s claim accrued no later than August 1, 2011, and therefore was required to be filed by August 1, 2017. The court also held that the 2014 REA was not a valid claim because it lacked an explicit request for a final decision from the contracting officer.
Zafer appealed to the United States Court of Appeals for the Federal Circuit.
The Federal Circuit reviewed whether Zafer’s 2014 REA constituted a claim under the Contract Disputes Act (CDA). Under 48 C.F.R. § 52.233-1(c), a claim is a written demand seeking, as a matter of right, payment of a sum certain, contract interpretation, or other relief. For claims exceeding $100,000, contractors must certify that the claim is made in good faith, that supporting data are accurate and complete, that the amount reflects the contract adjustment sought, and that the certifier is authorized to act for the contractor.
The key issue on appeal was whether Zafer’s REA implicitly requested a final decision, as required by 41 U.S.C. § 7103(a)(1). The court held that a claim need not use specific language or “magic words” to request a decision; the standard is whether the content and context objectively put the contracting officer on notice that a final decision was sought.
The Federal Circuit concluded that Zafer’s 2014 REA met all elements of a valid claim. The document explicitly requested compensation for increased costs, certified compliance under § 7103(b)(1), and provided detailed factual and financial support. The REA described the submission as encompassing “all claims incurred by ZAFER as a result of changes, constructive changes, [and] delay” and referenced the contracting officer’s obligation to “deal with claims fairly.”
The court emphasized that a contractor’s simultaneous willingness to negotiate does not invalidate a claim. Relying on Reflectone, Inc. v. Dalton (Fed. Cir. 1995) and Transamerica Insurance Corp. v. United States (Fed. Cir. 1992), the court reiterated that documents expressing both a request for payment and a desire for amicable resolution can still constitute claims. The court rejected the government’s argument that Zafer’s REA was a mere negotiation proposal, finding that its language and certification demonstrated an intent to obtain a decision.
The Federal Circuit distinguished the case from James M. Ellett Construction Co. v. United States (1996), where the contractor was contractually required to submit a proposal before filing a claim. Because Zafer was not required to negotiate before filing, its REA could serve as a valid claim.
On July 18, 2022, the Federal Circuit reversed the Court of Federal Claims’ dismissal and remanded the case. The court held that Zafer’s December 2014 request for equitable adjustment qualified as a claim under the Contract Disputes Act because it implicitly requested a final decision and met all certification requirements.
If your business is involved in a government contract dispute, Whitcomb, Selinsky PC assists with contract dispute cases. Contact our team to learn how we can help you navigate claims, equitable adjustments, and compliance under the Contract Disputes Act.