Government Contract Claims: When Appeal is Rejection of Settlement

Appealing a Contracting Officer’s Final Decision is a rejection of any offer of payment or settlement included therein.

In a recent example of this, a contractor agreed to renovate a portion of a VA hospital in Fayetteville, Arkansas.  After contract award, the VA notified the contractor of extra asbestos abatement.  The contractor provided a price to perform the extra work but the VA issued a unilateral modification for a lesser amount.  The contractor performed the extra work and submitted a certified claim.

The CO issued a Final Decision agreeing to only a portion of the claim and issued a draft modification.  The contractor countered by proposing a reservation of its rights so that it could accept the partial payment and preserve a future appeal for the balance.  The CO rejected the contractor’s proposal and, effectively, conditioned the partial payment upon the contractor’s waiver of appeal.

Without the reservation of rights, the contractor had only three options:

  1. Accept the partial payment and have no appeal;
  2. Appeal the entire claim; or
  3. Walk away.

BES Design/Build, LLC v. Department of Veterans Affairs, Civilian Board of Contract Appeals 5640 (Aug. 29, 2017)

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