As a government contractor you know the chances are high that you'll incur additional costs for changes, delays, disruptions and terminations as you fulfill your contract obligations. When this happens, how do you persuade the government to give you fair compensation for your additional work?
It seems reasonable that you could just submit an invoice and get paid. After all, isn't that fair?
Unfortunately, that's not the way it works in government contracting.
You must submit elaborate claim documents and then turn to the courts or boards of contract appeals - the Civilian Board of Contract Appeals, the Armed Services Board of Contract Appeals or the Court of Federal Claims.
You can attempt mediation or arbitration.
OR. . .
You can employ a time-tested system that puts you face to face with your customer, makes your case and reaches a fair settlement in a fraction of the time and at much lower expense - most of which can be recouped - allowing you to get back to work doing what you do best - making money.
We've developed this method with companies like yours in mind. Our 40 plus years of experience and scores of successfully resolved claims prove it is effective.
STEP ONE: PUT TOGETHER A FIRST CLASS PRESENTATION OF YOUR CASE*
(* See our guide on How to Write a Winning Request for Equitable Adjustment)
Your first thought might be, "Well, that's obvious."
Most failed claims disputes can be traced to a poorly conceived and written presentation of the case. Even so-called professionals can make a mess of this first step simply because contract administration and claims resolution is not what they do full time.
The presentation should follow a time-honored pattern, not found in any of the government regulations pertaining to contract. (See our short monographs on Changes Claims Investigation Guide and How to Prepare a Request for Equitable Adjustment.)
1. State what the contract requires
2. Describe what changed and what happened
3. Create the critical nexus between what happened and the damage it created
4. Describe how you put together the equitable adjustment calculation
We recommend using professionals who know what they are doing -- who have experience in successfully resolving REA's, claims and disputes. Too many times contractors make the mistake of not presenting the complete factual picture. Some also get carried away with the facts and the story and end up with a diatribe in search of a legal theory of recovery. (See our guide, How to Write a Winning Request for Equitable Adjustment.)
STEP TWO: REQUEST A PROMPT REVIEW BY THE PCO, TCO, ACO AND DCAA
This is essential. You must request that the requisite government officials conduct a meaningful review -- promptly. Persuade, encourage and even pressure them to do so. The burden is on you to get the ball rolling and keep it moving.
The goal of the process is to resolve things outside of litigation so you'll want to use whatever leverage you have to apply the requisite pressure to achieve a thorough review of what you have submitted. Make no mistake. You cannot resolve the matter without thorough government review and audit.
Request DCAA or other government audit action immediately and keep the pressure on to complete the audit. You can't settle without it. Assist the auditors as if they are your best friends. (See our guide How to Deal With DCAA Audits.)
STEP THREE: INSIST ON GETTING COPIES OF GOVERNMENT REVIEWS AND THE DCAA AUDIT
It is impossible -- yes impossible -- to proceed with the effective, efficient and amicable settlement without getting the internal reports from the government reviews and audit of your claim. This can be challenging since unlike litigation, you don't have the right to these reports. The Freedom of Information Act is your only tool. However, we have been successful in every case in getting these reports without resort to that Act.
To have any chance of settlement without litigation, you must get these reports. It's your job to overcome any obstacles the government constructs and walk away with the information you need. Again, your professionals should be able to get the information you need.
STEP FOUR: PREPARE A WRITTEN RESPONSE TO THE GOVERNMENT REPORTS
Once you have the government reports, prepare written responses to them. You must make a record if you hope to settle. The government cannot justify settlement without a complete record. You should address all points raised in the reports and present your side of the case.
STEP FIVE: SET UP A MEETING WITH THE GOVERNMENT AND PREPARE YOUR PRESENTATION
Insist on a meeting to discuss your claim and to explore the possibility of settlement. Judicial tribunals all insist that the parties try to settle. You are not even headed to litigation but you can point to the many procedures used by judicial tribunals to promote settlement. The government should have every incentive to at least listen to you. The first meeting is solely for the purpose of making your oral presentation. You can use power point techniques and present demonstrations, but your primary emphasis should be oral descriptions by key employees who performed the contract. Select the most articulate people who were in the trenches. Prepare them and rehearse them.
STEP SIX: PRESENT YOUR SIDE OF THE CASE
Ask that you be allowed to make your presentation without interruption except for clarifying questions. You do not want to engage in a debate. You just want to present your side of the case -- from contract award to working through the problem to the calculations of damages.
Time is not your main concern. Take all the time you need. Just keep moving through your entire presentation from beginning to end. Treat it as your "day in court". Do not be defensive. This is your opportunity to present all of your affirmative points in the most positive light. Be extremely well prepared. The more professional the presentation, the more likely it will be that you will successfully settle.
STEP SEVEN: TAKE A BREAK AND ENCOURAGE THE GOVERNMENT TO PRESENT ITS RESPONSE
Now that the government has heard your presentation, you should ask, insist on, the government's response. Give the government the time it needs. Be patient. You have given the government your best shot and you should accord the government the same opportunity to respond to every point you have made.
STEP EIGHT: LISTEN AND TAKE CAREFUL NOTES
Listening in today's world is a lost art. You must listen carefully to the government's response and ask clarifying questions. Do not debate. Accord the government the same courtesy its representatives accorded you. Do not interrupt. Take careful notes. (Careful note taking also is a lost art. These sessions should not be recorded unless the government insists on it.) Professional ears often pick up the winning nuances.
STEP NINE: RECESS BRIEFLY AND REPLY. ASK FOR AND INSIST ON AN OFFER OF SETTLEMENT
This is a critical step. Be prepared to respond immediately to all the points the government has made. Take a short break to prepare, if necessary. The back and forth -- the debate -- takes place now. Maintain your professional aplomb. Avoid at all cost the temptation to name calling and personal attacks. Debate the facts and the legal authorities. Just the facts and the law. At the end of the debate ask for and insist on an offer of settlement from the government. This will almost always require a break in the proceedings, often a lengthy one. Never ever bid against yourself.
STEP TEN: WAIT UNTIL THE GOVERNMENT MAKES AN OFFER AND SCHEDULE A MEETING TO DISCUSS IT
You can't proceed until the government makes an offer. Then, you must insist that the government explain the basis of the offer. If you don't get the explanation, state what you think the basis must be and try to get a response. Your goal is to understand how the government values what you've presented. You want to try to understand what the government representatives see as the strengths and weaknesses in your presentation. You can then address the perceptions of weaknesses in your case. There is always a way to address the government's position even if it is based solely on budgetary considerations. Probe how the government arrived at its position.
Negotiating is not simply a skill. It's an art form that is refined over time and with a great deal of practice. Master negotiators have spent thousands of hours studying the good and bad examples and then employ a variety of techniques based on the complexity of the situation and the changing behaviors and expectations of the players. The master negotiator always has the end goal in mind and is able to test and consider alternate routes toward that goal throughout the process. The is neither the time nor place for novices to test their abilities.
Any offer you receive initially is unacceptable. It is out of proportion to your loss and the impact on your business. Point out what the government has overlooked. It bears repeating: point out what the government has overlooked.
STEP ELEVEN: PROMPTLY COUNTEROFFER, EXPLAINING THE BASIS FOR YOUR OFFER
If the government's offer is totally unreasonable, insist that on a better one. Too many impatient contractors immediately counteroffer without considering the ultimate goal and whether the government's initial offer is in the right ballpark to lead to ultimate resolution. There is nothing wrong with insisting the government try again. But if the offer is reasonable, give your counteroffer, explain it and ask for a break. The master negotiator has the right feel for what is reasonable and what is not.
At this point, you are likely to be very far apart. This is not the time to be squeamish or impatient. Let your offer sit.
STEP TWELVE: PLAY YOUR TRUMP CARD
You don't always have a trump card. This is the fact or recent legal authority which clearly tips the balance in your direction. It may be a recent event suggesting you should settle. It may be something you discovered which you have held close to your vest until now. If you have it, play it.
STEP THIRTEEN: EXCHANGE OFFERS
Hopefully, you are now on a roll where the parties are exchanging offers. Again, be patient but persistent. Try to get into the horse trading range. Introduce the principals and then leave them alone. At this point, both sides know it would be a foolish waste if the matter were not resolved. With or without the assistance of a professional negotiator, only the principals can make the deal in the end. And, donít forget, the contracting officer with the requisite warrant is always the principal for the government. He or she must sign off on the deal and actually sign the settlement agreement.
STEP FOURTEEN: SIGN THE SETTLEMENT DOCUMENT, THEN AND THERE
As soon as the deal is struck, prepare the settlement agreement and get the principals to sign. As a contractor, part of your offer of settlement must include the condition that the document signing occur immediately and that all conditions of the settlement be met as soon as reasonably practicable.
This process can take a while. Sometimes several months. You must remain patient but persistent. Our professionals have successfully employed these principles hundreds of times in helping our clients obtain fair and reasonable settlements. Credibility and professionalism are the hallmarks of successful negotiation.