Establishing Entitlement is Not Enough

A claim or REA seeking monetary relief under a government contract has two basic parts, “Entitlement” and “Quantum.” Simply put, Entitlement relates to the merits of the claim or REA, while Quantum concerns the amount the contractor seeks to recover.

• Is the contractor entitled to recover or not?
• If so, how much is the contractor entitled to recover?

A contractor must establish both Entitlement and Quantum to recover under a claim or REA.

Proving Quantum

Because the amount the contractor seeks to recover may be intensely scrutinized by the government, it is essential the Quantum portion of the claim or REA be compellingly demonstrated and supported by the best evidence available. This is true whether the claim or REA involves one issue or several different issues. For a contractor to fully recover, each component of the Quantum demand or request must be legally permissible and factually supported (a spreadsheet merely summarizing the contractor's backup is seldom sufficient).

When evaluating Quantum, the government typically seeks to understand the facts and identify the root causes underlying the contractor's claim or REA. This involves reviewing and evaluating relevant documents, such as-bid and final bill of materials, as-bid and actual costs, various invoices, and schedules. The government often relies on a team of experts, including contracting personnel, DCAA auditors, program managers, project managers, engineers, and inspectors. In its evaluation, the government may explore several possibilities:

• Was the job underbid?
• Were there increases in performance costs?
• Was the contractor less efficient than it expected?
• Did the contractor experience problems with vendors?
• Did the contractor's subcontractors fail to properly perform?

Following its factual assessment and root cause analysis, the government applies the law concerning the pricing of adjustments. Not all costs are necessarily payable; costs are evaluated for such things as allowability, allocability, and reasonableness. Any amount that lacks a clear legal basis for payment may be rejected.

Conclusion

Establishing Entitlement is the first step to successfully recovering under a claim or REA. After that, the focus shifts to Quantum. Providing the best available evidence is key to proving Quantum. By doing so, a contractor can effectively demonstrate how much it is entitled to recover, maximizing the prospect of a complete recovery.

* This article is provided for information purposes only. It does not constitute legal advice. It is not intended to form an attorney-client relationship. Any legal advice should be sought from an attorney. *