Defective Certifications: Where to Draw the Line?

Somewhat surprisingly, the end of 2019 provided two decisions regarding defective certifications, including one from the Federal Circuit.

The first case, Kirlin Builders, LLC, ASBCA No. 61901, reminds readers that a defective certification, as opposed to no certification at all, is a correctable error so long as it is made before the issuance of a decision.

Kirlin Builders submitted a properly certified request for equitable adjustment (REA) to the U.S. Army for costs associated with repairing a chiller plant under its contract.  In accordance with the REA certification requirements, Kirlin certified that its request was made in good faith and the supporting data were accurate and complete to the best of the signatory’s knowledge.  Kirlin’s request for a contracting officer’s final decision was denied and Kirlin filed a claim with the Armed Services Board of Contract Appeals (ASBCA).  Shortly thereafter, Kirlin submitted a fully compliant Contract Disputes Act (CDA) certification.  The Army filed a motion to dismiss, arguing Kirlin’s request for final decision on its REA did not contain a complete CDA certification and therefore did not qualify as a CDA claim.

The CDA requires any claim exceeding $100,000 contain a certification addressing the following elements:

1. The request is made in good faith;
2. The supporting data are accurate and complete to the best of [his or her] knowledge;
3. The amount requested accurately reflects the contract adjustment for which the contractor believes the government is liable; and
4. The certifier is authorized to certify the claim on behalf of the contractor.

41 U.S.C. §§ 7103(b)(1)(A)-(D).  Kirlin’s initial certification submitted with its REA did not include the final two elements.  The CDA, however, also provides that a “defect in the certification of a claim does not deprive . . . an agency board of jurisdiction over the claim” so long as the defective certification is corrected prior to the entry of a decision.  Id. § 7103(b)(3).

Ignoring ASBCA precedent and the plain language of section 7103(b)(3), the Army incorrectly cited to an earlier Court of Federal Claims case holding that an REA certification may not be corrected to a CDA certification because it is not intended to be a CDA certification.  The ASBCA quickly dismissed this argument as non-precedential and contrary to the CDA and denied its motion to dismiss.

Although contractors should strive to submit compliant certifications, a defective certification does not doom an otherwise properly filed claim.

But what if the contractor intentionally or recklessly disregards the certification requirements?  Is that defiance sufficient to overcome the concept that a defective certification can be corrected?  The Federal Circuit tackled this issue in DAI Global LLC v. Administrator of U.S. Agency for Int’l Dev., Fed. Cir. No. 2019-1330.

In DAI Global, the Federal Circuit reviewed a decision by the Civilian Board of Contract Appeals (CBCA) dismissing DAI Global, LLC’s appeals for its failure to submit a proper CDA certification with its claims.  In the underlying case, DAI subcontracted with a private security company, ERSM (Afghanistan) Limited, d/b/a Edinburgh International (EI) to provide security services under its five U.S. Agency for International Development (USAID) contracts.  In 2011, Afghanistan imposed a $2 million fine on EI, a portion of which EI allocated to each of DAI’s contracts.  DAI submitted a cover letter characterized as a certification and EI’s five claims to USAID for reimbursement.  With each claim, DAI included EI’s certification stating that the claim was made in good faith.  The contracting officer did not issue a final decision, but rather informed DAI that its submission did not contain a contractor certification.  DAI subsequently filed five notices of appeal with the CBCA.  The CBCA dismissed DAI’s claims for its failure to certify explaining that DAI’s non-technical mistakes and reckless disregard for the certification requirements rendered DAI’s certification uncorrectable.

On appeal, DAI argued the CBCA erred in dismissing the appeal for lack of jurisdiction.  The Federal Circuit agreed with DAI concluding that “[c]ontrary to the Board’s statement of the law, there is no statutory requirement that a defect in a certification be merely ‘technical’ to be correctable . . . [n]or is there a statutory basis for finding a defective certification uncorrectable based on ‘intentional, reckless, or negligent disregard for the applicable certification requirements.’”  DAI Global, Fed. Cir. No. 2019-1330 at 4.  As discussed in Kirlin, section 7103(b)(3) simply refers to a “defect” in a certification.  The statute does not distinguish between various categories of errors.  Because DAI’s submission to USAID contained certifications from DAI and EI, both demonstrating an express intent to comply with the CDA, the Court found them sufficient to constitute a defective, but correctable, certification under section 7103(b)(3).

Notably, the Court does not discuss the bases for the CBCA’s determination that DAI’s initial certification was made with “intentional, reckless, or negligent disregard for the applicable certification requirements.”

It appears that under the statute as it is written, virtually any certification defect is a correctable defect, so long as it is made before a decision is issued, and the aforementioned “line” remains to be set in stone.