Environmental Safety Consultants, Inc. (“ESCI”) had a contract with the Navy to perform services. ESCI submitted to the payment office a routine progress payment request (invoice no. 7) for $138,000 on June 24, 1997. The contracting officer requested a new prompt payment certification on the invoice because she had received information that a surety had paid several subcontractors. ESCI replied, but never stated that Invoice No. 7 was being converted to a claim under the Contract Disputes Act (“CDA”). ESCI’s contract included a payment clause stating that the due dating for making progress payment was 14 days after receipt of the invoice by the designated payment office, therefore, if the invoice had not been disputed by the government, payment was due on July 8, 1997.
ESCI was not paid. Fourteen years later, ESCI submitted to the contracting officer an invoice dated Nov. 29, 2011 for the original amount of invoice no. 7 ($138,000) plus $433,000 in interest on that amount from Jan. 1, 1997 to Dec. 31, 2011, citing the Prompt Payment Act. When it wasn’t paid, ESCI submitted a notice of appeal to the Armed Services Board of Contract Appeals (“ASBCA”). Environmental Safety Consultants, Inc., ASBCA No. 58221, 13 BCA ¶ 35329.
The ASBCA dismissed the appeal for lack of jurisdiction because ESCI had failed to follow the requirements of the Contract Disputes Act (“CDA”), which are:
- Submission of a claim in writing for a contracting officer’s decision, and an appeal of the decision or a “deemed denial” after 60 days is a prerequisite under the CDA for Board jurisdiction. ESCI did not do this.
- ESCI submitted a routine monthly progress payment request that was not in dispute when it was submitted on June 24, 2997, and the CDA says an “invoice or other routine request for payment that is not in dispute when submitted is not a claim.”
- When ESCI responded to the Contracting Officer’s dispute about payment and prompt payment certification, ESCI never informed the contracting officer that ESCI was converting invoice no. 7 to a claim. (ESCI could have done this in its letters to the CO).
- ESCI’s Nov. 29, 2011 submission requesting payment was not presented as a CDA claim and was not certified as required by the CDA for a claim over $100,000. Without the certification, the Board lacked jurisdiction to consider the appeal.
In short, ESCI did not get paid, and got nothing.
How Could ESCI Have Gotten Payment? Simply stated, ESCI could have followed the CDA requirements and moved its demand for payment to the Board under proper jurisdiction. Here’s how:
- When the Contracting Officer disputed its invoice (or simply when its invoice was not paid in 14 days as required by the Prompt Payment clause), ESCI should have written a letter to the CO stating “We are now in dispute over this invoice. You have refused to pay a lawful invoice. We are converting it to a claim and attaching a certified claim for the entire amount”
- ESCI should have prepared a short claim with a proper CDA certification and submitted it to the CO along with the above letter.
- If the CO denied the claim, ESCI could then notice the appeal of non-payment to the ASBCA or alternatively, if the CO made no ruling in 60 days, the claim would be “deemed denied” and ESCI could have immediately noticed the appeal at the ASBCA.
It is essential that a contractor whose valid invoice is not paid raise the issue with its CO, state the invoice is in dispute because the government won’t pay, and file a formal claim of nonpayment. If the invoice or payment request is over $100,000, the claim must be certified. An invoice or progress payment is normally not a claim. Therefore you must file something separate from the invoice and follow the steps in the CDA. That is how you can get paid if your performance complied with the contract requirements. Even if the contracting officer denies your claim, you will still get your day in court or at a Board to prove why you should be paid. ESCI found the courtroom door closed because it failed to follow the CDA requirements.
Suppose a company doing construction jobs under a JOC (Job Order Contract ) is in somewhat the same position except all open and unpaid jobs were intentionally not paid due to a Postal OIG telling the Post Office not to pay the contractor as it was under investigation for wrongdoings, misconduct and illicit dealings, all of which have been unfounded and unsubstantiated A search warrant in 2012 was executed at my place of business and all documents electronic and hard copies had been seized. I recently sent in documentation requesting under the CDA act for payment on one of my largest jobs. I am a small business under the name CableComm Corp CCC located in Connecticut and find it very difficult too understand why I still have not been paid that I have completed in good faith with the Post Office. They continue to ignore even the simplest questions regarding open jobs, payments made and balance remaining. All of this information had been taken during the search warrant. The Lead investigator for this case from the Postal OIG ( Mark Niro ) is no longer involved to my understanding and quite frankly I can see why. His absence from this investigation to me speaks for itself. We have an overzealous agent who did not do his due diligence in looking at the information and was connecting the dots that did not connect. I will continue sending the appropriate paper work under the CDA act requesting payment. It is my understanding I have 6 years from the time of accrual to make these claims which would have started back in 2012. This is obviously a very unique case or at least I hope it is. Do you have any knowledge or aware about something similar to what I am experiencing? Also, do you have any suggestions other then going the CDA act, prompt payment act to rectify this situation that should have never taken in the first place? Any information provide would be of great help and appreciated. Thanks you in advance.
I strongly recommend that you obtain counsel to pursue this. It is quite different from the nonpayment situations I described in the blog.
Richard Lieberman
3 months has gone by and I continue to get the run around from the Gov on a payment owed. I provided all information proving shipment was made and signed for, yet almost zero communication and cooperation.
We have county work that remains unpaid. Government out of control. THIS is why the only accountable government is small government. We haven’t a clue how to fight City Hall and duplicitous engineers without teetering on bankruptcy by hiring lawyers and all the fees that entails.
we fulfilled every specification of a GSA order June 2017
the CO will not return my calls or respond to emails.
i emailed proof of delivery showing who signed for the delivery as well as address, date and time delivery was made.
I’ve spent the last 16 months collaborating with GSA supervisor managers throughout the states of whom have contacted the CO to no avail.
What do I need to do to get paid?
If your invoice meets all the FAR and contractual requirements, you can file a claim. You can also contact Richard Lieberman at rliebermanconsulting@gmail.com for help drafting the claim (at a fee).