The equitable adjustment and claims processes are constants in federal contracting. Notwithstanding numerous provisions in government contracts that provide for equitable adjustments for changes, scope growth, delays, and other unforeseeable occurrences, contractors often find that government customers resist requests for relief. Wiley Rein attorneys are experienced in guiding contractors through the equitable adjustment and claims processes, and can assist clients in analyzing contract performance as part of that process, including the performance metrics used to track areas of cost growth and schedule performance. We also routinely counsel and represent contractors when the tables are turned, and the Government is pursuing compensation against the contractor.
Wiley Rein attorneys work with management, program, accounting, and engineering personnel to develop strategies for recovery; we work with clients to investigate the facts, formulate optimal legal theories and draft and present requests for equitable adjustment (REAs) or certified claims in a manner that maximizes the contractor's chances of recovery and is sensitive to relationships with government customers. We work with accounting and financial experts (including our own staff accounting experts) to analyze cost data and formulate the most appropriate pricing and damage methodologies. Whatever the controlling legal theory—defective specifications, performance delay or acceleration, late or defective government-furnished property, performance impossibility/impracticability, breach of the Government's duty to cooperate, or excessive testing or inspection—our Government Contracts attorneys know how to formulate strategies based on extensive experience with these theories of recovery as both government and contractor counsel.
When the Government is pursuing its own claims against the contractor, whether based on cost accounting issues or allegations of faulty performance, we routinely provide advice and vigorous defense before the Boards of Contract Appeals and the Court of Federal Claims (COFC) as well as in alternative dispute resolution (ADR). Wiley Rein also has experience working with clients and Government customers to restructure government programs in those cases where the program has evolved to such an extent that a single REA or claim, evaluated on its own terms, will not fully address all program issues. [See Beginner's Guide to Program Metrics and Trouble Down the Tracks: Heed the Warning Signs Before Program Problems Turn Into Crises] In these instances, the program and any underlying contract(s) need to be restructured, in whole or in part, to restore the program's health and permit its sensible completion. We advise contractors in developing proposals to restructure troubled programs and in negotiating those proposals with the Government.
Our attorneys' experience in these areas ranges from efficiently preparing REAs and claims for less than $1 million to developing billion-dollar REAs and claims, including the following recent engagements:
- Pursuing multiple appeals of Government claims related to alleged cost impacts related to changes in accounting practices, asserting defenses with industry-wide implications.
- Prepared claims worth more than $200 million for a major IT contractor, leading to the favorable restructuring of one of the largest Federal Acquisition Regulation (FAR) Part 12 commercial items contracts ever awarded.
- Developed, prepared, and favorably resolved a restructure proposal valued at hundreds of millions of dollars on a multi-billion-dollar classified program.
- Represented a major construction contractor in a multi-million-dollar contract dispute involving power plant construction in Iraq.
- Represented an IT company in connection with contract claims in excess of $40 million and related investigations under a contract worth hundreds of millions of dollars with the U.S. Department of Homeland Security (DHS), resulting in the successful settlement of the company's claims, the related investigations, and the restructuring of the contract.
- Successfully negotiated a global settlement of numerous claims under a military health care contract.
- Represented association of major defense and aerospace contractors in helping to convince the U.S. Court of Appeals for the Federal Circuit to reverse an Armed Services Board of Contract Appeals (ASBCA) decision concerning the proper exchange rate for use in converting depreciation charges from a hyperinflationary foreign currency into U.S. dollars.
- Prepared REAs under Medicare Administrative Contractor (MAC) contracts and advised on the conversion of REAs to certified claims.
- Prosecuting multiple claims before the ASBCA on behalf of information technology contractor worth approximately $1 billion.
If contractor or Government claims cannot be successfully resolved short of litigation, we represent contractors in ADR proceedings or disputes litigation before the ASBCA, the Civilian Board of Contract Appeals (CBCA), and the COFC. Examples of our ADR and negotiation efforts include:
- Successfully represented a contractor in an ADR proceeding at the COFC, resulting in a $20 million payment to the contractor's bankruptcy trustee in connection with the default termination of six U.S. Department of Housing and Urban Development (HUD) contracts.
- Prepared and successfully resolved through ADR before the CBCA a multi-million-dollar claim for extra work and procedures required by agency.
- Resolved multi-million-dollar claim against the National Aeronautics and Space Administration (NASA) with virtually no litigation.
- Convinced the Government in an ASBCA ADR proceeding to withdraw its defective pricing finding and resolved $1.5 million Government defective pricing claim for $35,000.
ISSUE: WINTER 2014