H.R. 11002 (95th): Contract Disputes Act
PUBLIC LAW 95-563—NOV. 1, 1978 92 STAT. 2383 Public Law 95-563 95th Congress An Act To provide for the resolution of claims and disputes relating to Government Nov. 1, 1978 contracts awarded by executive agencies. [H.R. 11002] Be it enacted 'by the Senate and House of Reyresentatives of the United States of America in Congress assembled, That this Act may Contract Disputes be cited as the "Contract Disputes Act of 1978". Act of 1978. 41 use 601 note. DEFINITIONS ;/•. •.<• .^i'-' '.'. ^ SKC. 2. As used in this Act— 41 USC 601. (1) the term "agency head" means the head and any assistant head of an executive agency, and may "upon the designation by" the head of an executive agency include the chief official of any principal division of the agency; (2) the term "executive agency" means an executive department as defined in section 101 of title 5, United States Code, an inde- pendent establishment as defined by section 104 of title 5, United States Code (except that it shall not include the General Account- ing Office) : a military department as defined by section 102 of title 5, United States Code, and a wholly owned Government corporation as defined by section 846 of title 31, United States Code, the United States Postal Service, and the Postal Kate Commission; (3) The term "contracting officer" means any person who, by appointment in accordance with applicable regulations, has the authority to enter into and administer contracts and make deter- minations and findings with respect thereto. The term also includes the authorized representative of the contracting officer, acting within the limits of his authority; (4) the term "contractor" means a party to a Government contract other than the Government; (5) The term "Administrator" means the Administrator for Federal Procurement Policy appointed pursuant to the Office of Federal Procurement Policy Act; (6) The term "agency board" means an agency board of con- tract appeals established under section 8 of this Act; and (7) The term "misrepresentation of fact" means a false state- ment of substantive fact, or any conduct which leads to a belief of a substantive fact material to proper understanding of the matter in hand, made with intent to deceive or mislead. APPLICABILITY OF LAW , SEC. 3. (a) Unless otherwise specifically provided herein, this Act 41 USC 602. applies to any express or implied contract (including those of the nonappropriated fund activities described in sections 1346 and 1491 of title 28, United States Code) entered into by an executive agency for— (1) the procurement of property, other than real property in being;
92 STAT. 2384 PUBLIC LAW 95-563—NOV. 1, 1978 (2) the procurement of services; (3) the procurement of construction, alteration, repair or maintenance of real property; or, (4) the disposal of personal property. Tennessee Valley (b) With respect to contracts of the Tennessee Valley Authority, Authority the provisions of this Act shall apply only to those contracts which contracts. contain a disputes clause requiring that a contract dispute be resolved through an agency administrative process. Notwithstanding any other provision of this Act, contracts of the Tennessee Valley Authority for the sale of fertilizer or electric power or related to the conduct or operation of the electric power system shall be excluded from the Act. (c) This Act does not apply to a contract with a foreign govern- ment, or agency thereof, or international organization, or subsidiary body thereof, if the head of the agency determines that the application of the Act to the contract would not be in the public interest. MARITIME CONTRACTS 41 use 603. SEC. 4. Appeals under paragraph (g) of section 8 and suits under section 10, arising out of maritime contracts, shall be governed by the Act of March 9, 1920, as amended (41 Stat. 525, as amended; 46 U.S.C. 741-752) or the Act of March 3, 1925, as amended (43 Stat. 1112, as amended; 46 U.S.C. 781-790) as applicable, to the extent that those Acts are not inconsistent with this Act. FRAUDULENT CLAIMS 41 use 604. SEC. 5. If a contractor is unable to support any part of his claim and it is determined that such inability is attributable to misrepre- sentation of fact or fraud on the part of the contractor, he shall be liable to the Government for an amount equal to such unsupported part of the claim in addition to all costs to the Government attributable to the cost of reviewing said part of his claim. Liability under this subsection shall be determined within six years of the commission of such misrepresentation of fact or fraud. DECISION BY T H E CONTRACTING OFFICER Contractor SEC. 6. (a) All claims by a contractor against the government relat- claims. ing to a contract shall be in writing and shall be submitted to the con- 41 use 605. tracting officer for a decision. All claims by the government against a contractor relating to a contract shall be the suJbject of a decision by Information to the contracting officer. The contracting officer shall issue his decisions contractor. in writing, and shall mail or otherwise furnish a copy of the decision to the contractor. The decision shall state the reasons for the decision reached, and shall inform the contractor of his rights as provided in this Act. Specific findings of fact are not required, but, if made, shall not be binding in any subsequent proceeding. The authority of this subsection shall not extend to a claim or dispute for penalties or for- feitures prescribed by statute or regulation which another Federal agency is specifically authorized to administer, settle, or determine. This section shall not authorize any agency head to settle, compromise, pay, or otherwise adjust any claim involving fraud. (b) The contracting officer's decision on the claim shall be final and conclusive and not subject to review by any forum, tribunal, or Gov- ernment agency, unless an appeal or suit is timely commenced as
PUBLIC LAW 95-563—NOV. 1, 1978 92 STAT. 2385 authorized by this Act. Nothing in this Act shall prohibit executive agencies from including a clause in government contracts requiring that pending final decision of an appeal, action, or final settlement, a contractor shall proceed diligently with performance of the contract in accordance with the contracting officer's decision. (c) (1) A contracting officer shall issue a decision on any submitted claim of $50,000 or less within sixty days from his receipt of a written request from the contractor that a decision be rendered within that period. For claims of more than $50,000, the contractor shall Certification, certify that the claim is made in good faith, that the supporting data are accurate and complete to the best of his knowledge and belief, and that the amount requested accurately reflects the contract adjustment for which the contractor believes the government is liable. (2) A contracting officer shall, within sixty days of receipt of a sub- mitted certified claim over $50,000— (A) issue a decision; or (B) notify the contractor of the time within which a decision Notification, will be issued. (3) The decision of a contracting officer on submitted claims shall be issued within a reasonable time, in accordance with regulations pro- mulgated by the agency, taking into account such factors as the size and complexity of the claim and the adequacy of the information in support of the claim provided by the contractor. (4) A contractor may request the agency board of contract appeals to direct a contracting officer to issue a decision in a specified period of time, as determined by the board, in the event of undue delay on the part of the contracting officer. (5) Any failure by the contracting officer to issue a decision on a •• contract claim within the period required will be deemed to be a deci- sion by the contracting officer denying the claim and will authorize the commencement of the appeal or suit on the claim as otherwise provided in this Act. However, in the event an appeal or suit is so commenced in the absence of a prior decision by the contracting officer, the tri- bunal concerned may, at its option, stay the proceedings to obtain a decision on the claim by the contracting officer. CONTRACTOR S RIGHT OF APPEAL TO BOARD OF CONTRACT APPEALS SEC. 7. Within ninety days from the date of receipt of a contract- 41 USC 606. ing officer's decision under section 6, the contractor may appeal such decision to an agency board of contract appeals, as provided in section 8. AGENCY BOARDS OF CONTRACT APPEALS SEC. 8. (a)(1) Except as provided in paragraph (2) an agency board Establishment, of contract appeals may be established within an executive agency consultation, when the agency head, after consultation with the Administrator, ^^ ^SC 607. determines from a workload study that the volume of contract claims justifies the establishment of a full-time agency board of at least three members who shall have no other inconsistent duties. Workload studies will be updated at least once every three years and submitted to the Administrator. (2) The Board of Directors of the Tennessee Valley Authority may Membership, establish a board of contract appeals for the Authority of an indeter- minate number of members. (b) (1) Except as provided in paragraph (2), the members of agency boards shall be selected and appointed to serve in the same manner as
92 STAT. 2386 PUBLIC LAW 95-563—NOV. 1, 1978 hearing examiners appointed pursuant to section 3105 of title 5 of the United States Code, with an additional requirement that such members shall have had not fewer than five years' experience in public contract law. Full-time members of agency boards serving as such on the effec- tive date of this Act shall be considered qualified. The chairman and vice chairman of each board shall be designated by the agency head from members so appointed. The chairman of each agency board shall receive compensation at a rate equal to that paid a GS-18 under the 5 u s e 5332 note. General Schedule contained in section 5332, United States Code, the vice chairman shall receive compensation at a rate equal to that paid a GS-17 under such General Schedule, and all other members shall receive compensation at a rate equal to that paid a GS-16 under such General Schedule. Such positions shall be in addition to the number of positions which may be placed in GS-16, GS-17, and GS-18 of such General Schedule under existing law. Appointment (2) The Board of Directors of the Tennessee Valley Authority criteria and shall establish criteria for the appointment of members to its agency chairman. board of contract appeals established in subsection (a) (2), and shall Compensation. designate a chairman of such board. The chairman of such board shall receive compensation at a rate equal to the daily rate paid a GS-18 under the General Schedule contained in section 5332, United States Code for each day he is engaged in the actual performance of his duties as a member of such board. All other members of such board shall receive compensation at a rate equal to the daily rate paid a GS-16 under such General Schedule for each day they are engaged in the actual performance of their duties as members of such board. Appeals, (c) If the volume of contract claims is not sufficient to justify an arrangements. agency board under subsection (a) or if he otherwise considers it appropriate, any agency head shall arrange for appeals from deci- sions by contracting officers of his agency to be decided by a board of contract appeals of another executive agency. In the event an agency head is unable to make such an arrangement with another agency, he shall submit the case to the Administrator for placement with an agency board. The provisions of this subsection shall not apply to the Tennessee Valley Authority. Jurisdiction. (d) Each agency board shall have jurisdiction to decide any appeal from a decision of a contracting officer (1) relative to a con- tract made by its agency, and (2) relative to a contract made by any other agency when such agency or the Administrator has designated the agency board to decide the appeal. In exercising this jurisdiction, the agency board is authorized to grant any relief that would be available to a litigant asserting a contract claim in the Court of Claims. (e) An agency board shall provide to the fullest extent practicable, informal, expeditious, and inexpensive resolution of disputes, and shall issue a decision in writing or take other appropriate action on each appeal submitted, and shall mail or otherwise furnish a copy of the decision to the contractor and the contracting officer. Appeal (f) The rules of each agency board shall include a procedure for disposition the accelerated disposition of any appeal from a decision of a con- acceleration. tracting officer where the amount in dispute is $50,000 or less. The accelerated procedure shall be applicable at the sole election of only the contractor. Appeals under the accelerated procedure shall be resolved, whenever possible, within one hundred and eighty days from the date the contractor elects to utilize such procedure.
PUBLIC LAW 95-563—NOV. 1, 1978 92 STAT. 2387 (g) (1) The decision of an agency board of contract appeals shall Judicial review. be final, except that— (A) a contractor may appeal such a decision to the Court of Claims within one hundred twenty days after the date of receipt of a copy of such decision, or (B) the agency head, if he determines that an appeal should be taken, and with the prior approval of the Attorney General, trans- mits the decision of the board of contract appeals to the L^nited States Court of Claims for judicial review, under section 2510 of title 28, United States Code, as amended herein, within one hun- dred and twenty days from the date of the agency's receipt of a copy of the board's decision. (2) Notwithstanding the provisions of paragraph (1), the decision of the board of contract appeals of the Tennessee Valley Authority shall be final, except that— (A) a contractor may appeal such a decision to a United States district court pursuant to the provisions of section 1337 of title 28, United States Code within one hundred twenty days after the date of receipt of a copy of such decision, or (B) The Tennessee Valley Authority may appeal the decision to a United States district court pursuant to the provisions of section 1337 of title 28, United States Code, within one hundred ' twenty days after the date of the decision in any case. (h) Pursuant to the authority conferred under the Office of Federal Guidelines. Procurement Policy Act, the Administrator is authorized and directed, 41 use 401 as may be necessary or desirable to carry out the provisions of this note. Act, to issue guidelines with respect to criteria for the establishment, functions, and procedures of the agency boards (except for a board established by the Tennessee Valley Authority). (i) Within one hundred and twenty days from the date of enactment Workload of this Act, all agency boards, except that of the Tennessee Valley studies. Authority, of three or more full time members shall develop workload studies for approval by the agency head as specified in section 8(a) (1). SMALL CLAIMS SEC. 9. (a) The rules of each agency board shall include a procedure Procedure rules, for the expedited disposition of any appeal from a decision of a con- provisions. tracting officer Avhere the amount in dispute is $10,000 or less. The small 41 use 608. claims procedure shall be applicable at the sole election of the contractor. (b) The small claims procedure shall provide for simplified rules of procedure to facilitate the decision of any appeal thereunder. Such appeals may be decided by a single member of the agency board with such concurrences as may be provided by rule or regulation. (c) Appeals under the small claims procedure shall be resolved, whenever possible, within one hundred twenty days from the date on which the contractor elects to utilize such procedure. (d) A decision against the Government or the contractor reached under the small claims procedure shall be final and conclusive and shall not be set aside except in cases of fraud. (e) Administrative determinations and final decisions under this section shall have no value as precedent for future cases under this Act. (f) The Administrator is authorized to review at least every three Review, years, beginning with the third year after the enactment of the Act,
92 STAT. 2388 PUBLIC LAW 95-563—NOV. 1, 1978 the dollar amount defined in section 9(a) as a small claim, and based upon economic indexes selected by the Administrator adjust that level accordingly. ACTIONS I N C O U R T : JUDICIAL REVIEW OF BOARD DECISIONS 41 use 609. SEC. 10. (a) (1) Except as provided in paragraph (2), and in lieu of appealing the decision of the contracting officer under section 6 to an agency board, a contractor may bring an action directly on the claim in the United States Court of Claims, notwithstanding any contract provision, regulation, or rule of law to the contrary. (2) In the case of an action against the Tennessee Valley Authority, the contractor may only bring an action directly on the claim in a United States district court pursuant to section 1337 of title 28, United States Code, notwithstanding any contract provision, regulation, or rule of law to the contrary. (3) Any action under paragraph (1) or (2) shall be filed within twelve months from the date of the receipt by the contractor of the decision of the contracting officer concerning the claim, and shall proceed de novo in accordance with the rules of the appropriate court. (b) In the event of an appeal by a contractor or the Government from a decision of any agency board pursuant to section 8, notwith- standing any contract provision, regulation, or rules of law to the contrary, the decision of the agency board on any question of law shall not be final or conclusive, but the decision on any question of fact shall be final and conclusive and shall not be set aside unless the deci- sion is fraudulent, or arbitrary, or capricious, or so grossly erroneous as to necessarily imply bad faith, or if such decision is not supported by substantial evidence. (c) In any appeal by a contractor or the Government from a decision of an agency board pursuant to section 8, the court may render an opinion and judgment and remand the case for further action by the agency board or by the executive agency as appropriate, with such direction as the court considers just and proper, or, in its discre- tion and in lieu of remand it may retain the case and take such addi- tional evidence or action as may be necessary for final disposition i.'i of the case. (d) If two or more suits arising from one contract are filed in the Court of Claims and one or more agency boards, for the convenience of parties or witnesses or in the interest of justice, the Court of Claims may order the consolidation of such suits in that court or transfer any suits to or among the agency boards involved. (e) In any suit filed pursuant to this Act involving two or more claims, counterclaims, cross-claims, or third-party claims, and where a portion of one such claim can be divided for purposes of decision or judgment, and in any such suit where multiple parties are involved, the court, whenever such action is appropriate, may enter a judgment as to one or more but fewer than all of the claims, portions thereof, or parties. SUBPENA, DISCOVERY, AND DEPOSITION 41 use 610. S E C 11. A member of an agency board of contract appeals may administer oaths to witnesses, authorize depositions and discovery proceedings, and require by subpena the attendance of witnesses, and w .!»• production of books and papers, for the taking of testimony or evi- dence by deposition or in the hearing of an appeal by the agency board.
PUBLIC LAW 95-563—NOV. 1, 1978 92 STAT. 2389 In case of contumacy or refusal to obey a subpena by a person who resides, is found, or transacts business within the jurisdiction of a United States district court, the court, upon application of the agency board through the Attorney General; or upon application by the board of contract appeals of the Tennessee Valley Authority, shall have jurisdiction to issue the person an order requiring him to appear before the agency board or a member thereof, to produce evidence or to give testimony, or both. Any failure of any such person to obey the order of the court may be punished by the court as a contempt thereof. INTEREST SEC. 12. Interest on amounts found due contractors on claims shall 41 USC 611. be paid to the contractor from the date the contracting officer receives the claim pursuant to section 6(a) from the contractor until payment thereof. The interest provided for in this section shall be paid at the rate established by the Secretary of the Treasury pursuant to Public Law 92-41 (85 Stat. 97) for the Renegotiation Board. APPROPRIATIONS SEC. 13. (a) Any judgment against the United States on a claim 41 USC 612. , under this Act shall be paid promptly in accordance with the proced- ures provided by section 1302 of the Act of July 27,1956, (70 Stat. 694, as amended; 31 U.S.C. 724a). (b) Any monetary award to a contractor by an agency board of contract appeals shall be paid promptly in accordance with the pro- cedures contained in subsection (a) above. (c) Payments made pursuant to subsections (a) and (b) shall be reimbursed to the fund provided by section 1302 of the Act of July 27, 1956, (70 Stat. 694, as amended; 31 U.S.C. 724a) by the agency whose appropriations were used for the contract out of available funds or by obtaining additional appropriations for such purposes. (d)(1) Notwithstanding the provisions of subsection (a) through (c), any judgment against the Tennessee Valley Authority on a claim under this Act shall be paid promptly in accordance with the provi- sions of section 9(b) of the Tennessee Valley Authority Act of 1933 (16 U.S.C. 831(h)). 16USC831h. (2) Notwithstanding the provisions of subsection (a) through (c), any monetary award to a contractor by the board of contract appeals for the Tennessee Valley Authority snail be paid in accordance with the provisions of section 9(b) of the Tennessee Valley Authority Act of 1933 (16 U.S.C. 831(h)). AMENDMENTS AND REPEALS SEC. 14. (a) The first sentence of section 1346(a)(2) of title 28, United States Code, is amended by inserting before the period a comma and the following: "except that the district courts shall not have jurisdiction of any civil action or claim against the United States founded upon any express or implied contract with the United States or for liquidated or unliquidated damages in cases not sounding in tort which are subject to sections 8(g)(1) and 10(a)(1) of the Contract Disputes Act of 1978". (b) Section 2401(a) of title 28, United States Code, is amended by striking out "Every" at the beginning and inserting in lieu thereof "Except as provided by the Contract Disputes Act of 1978, every".
92 STAT. 2390 PUBLIC LAW 95-563—NOV. 1, 1978 (c) Section 1302 of the Act of July 27, 1956, as amended (70 Stat. 694, as amended; 31 U.S.C. 724a), is amended by adding after "2677 of title 28" the words "and decisions of boards of contract appeals". (d) Section 2414 of title 28, United States Code, is amended by striking out "Payment" at the beginning and inserting in lieu thereof "Except as provided by the Contract Disputes Act of 1978, payment". (e) Section 2517(a) of title 28, United States Code, is amended by striking out "Every" at the beginning and inserting in lieu thereof "Except as provided by the Contract Disputes Act of 1978, every". (f) Section 2517(b) of title 28, United States Code, is amended by inserting after "case or controversy" the following: ", unless the judg- ment is designated a partial judgment, in which event only the matters ' • - • '• described therein shall be discharged,". (g) There shall be added to subsection (c) of section 5108 of title 5, United States Code, a paragraph (17) reading as follows: "(17) the heads of executive departments or agencies in which ^ boards of contract appeals are established pursuant to the Con- tract Disputes Act of 1978, and subject to the standards and procedures prescribed by this chapter, but without regard to sub- section (d) of this section, may place additional positions, not to 5 use 5332 ^ ^ exceed seventy in number, in GS-16, GS-17, and GS-18 for the note. ' ' '^ independent quasi-judicial determination of contract disputes, "'^ with the allocation of such positions among such executive depart- ments and agencies determined by the Administrator for Federal Procurement Policy on the basis of relative case load." Cases, referral. (h) (1) Section 2510 of title 28, United States Code, is amended by— (A) inserting " ( a ) " immediately before such section; and (B) adding the following new subsection at the end thereof: " (b) (1) The head of any executive department or agency may, with the prior approval of the Attorney General, refer to the Court of Claims for judicial review any final decision rendered by a board of contract appeals pursuant to the terms of any contract with the United States awarded by that department or agency which such head of such department or agency has concluded is not entitled to finality pursuant to the review standards specified in section 10(b) of the Contracts Disputes Act of 1978. The head of each executive department or agency .,,. ,, , shall make any referral under this section within one hundred and '' *''"' twenty days of the receipt of a copy of the final appeal decision. " (2) The Court of Claims shall review the matter referred in accord- ance with the standards specified in section 10(b) of the Contracts Disputes Act of 1978. The Court shall proceed with judicial review on the administrative record made before the board of contract appeals on matters so referred as in other cases pending in such court, shall determine the issue of finality of the appeal decision, and shall, as appropriate, render judgment thereon, take additional evidence, or remand the matter pursuant to the authority specified in section 1491 28 use 1491. of this title.". (2) (A) The section heading of such section is amended to read as follows: "§ 2510. Referral of cases by the Comptroller General or the head of an executive department or agency.**. (B) The item relating to section 2510 in the table of sections for chapter 165 of title 28, United States Code, is amended to read as follows: "2510. Referral of cases by the Comptroller General or the head of an executive department or agency.".
PUBLIC LAW 95-563—NOV. 1, 1978 92 STAT. 2391 (i) Section 1491 of title 28, United States Code, is amended by Jurisdiction, adding the following sentence at the end of the first paragraph thereof: "The Court of Claims shall have jurisdiction to render j u d ^ e n t upon any claim by or against, or dispute with, a contractor arismg under the Contract Disputes Act of 1978.". SEVERABILITY CLAUSE SEC. 15. If any provision of this Act, or the application of such 41 USC 613. provision to any persons or circumstances, is held invalid, the remain- der of this Act, or the application of such provision to persons or j,, .j, circumstances other than those to which it is held invalid, shall not be affected thereby. EFFECTIVE DATE OF ACT SEC. 16. This Act shall apply to contracts entered into one hundred 41 USC 601 note, twenty days after the date of enactment. Notwithstanding any pro- vision in a contract made before the effective date of this Act, the contractor may elect to proceed under this Act with respect to any claim pending then before the contracting officer or initiated ^ thereafter. Approved November 1, 1978. *, LEGISLATIVE HISTORY: r HOUSE REPORT No. 95-1556 (Coram, on the Judiciary). SENATE REPORT No. 95-1118, accompanying S. 3178 (Coram, on Governmental Affairs and Coram, on the Judiciary). CONGRESSIONAL RECORD, Vol. 124 (1978): Sept. 26, considered and passed House. t . Oct. 12, considered and passed Senate, araended. Oct. 13, House concurred in Senate araendraents. WEEKLY COMPILATION OF PRESIDENTIAL DOCUMENTS, Vol. 14, No. 44: Nov. 1, Presidential Stateraent.