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8 Pub. Cont. Newsl. 1 (1972-1973)

handle is hein.journals/procurlw8 and id is 1 raw text is: SECTION OF PUBLIC CONTRACT L AMERICAN BAR ASSOCIATION Vol. 8, No. 1, October 1 972 ' FEDERAL STATE & LOCAL GOVERNMENT CONTRACTS Copyright © 1972 American Bar Association Paul Shnitzer, Editor, 1803 Cody Drive, Silver Spring, Md. 20902 Martin J. Harty, Assistant Editor SOME OBSERVATIONS ON THE PROOF OF COSTS BEFORE BOARDS OF CONTRACT APPEALS by Philip M. Risik of the New York Bar The preferred place to resolve cost questions on appeals under the Disputes Clause is at the contracting officer's conference table. Negotiations gone sour sometimes bring unfortunate results. In many cases the party seeking the money has not given the putative payer's representative a fair opportunity to justify payment. This comes about by failure to keep adequate books of account and records which isolate the costs being claimed, and to demonstrate cause and effect. These failures of course, continue into the litigation phase and create similar difficulties for the adjudicator. Assuming entitlement has been proven, this failure usually results in the so-called jury verdict, either patently or subconsciously. A jury verdict seldom results in recovery of the amount claimed or even what the claimant really believed should have been awarded. While the accepted dogma is that a claimant must not be denied a recovery simply because precise amounts cannot be proven, there is a natural reluctance on the part of adjudicators to reward claimants for sloppy proof of costs. Another failure in negotiations is the tactic of piece- meal claim presentation, or holding fire until the eye-whites of the last forum of resort can be seen. This is done in the certain knowledge that a de novo consideration can be had before a board of contract appeals, and in the fond hope that de novoism can be continued through a court proceeding, notwithstanding the ghost of Bianchi, the reality and good sense of Utah, and the fiat of Grace. The name of the game ought to be freeze-out, instead of seven-card stud, hi-low, or baseball, because it is the open cards on the table which always present the best opportuni- ty for the rapid payoff. This comment is applicable also to the folly of resisting production and inspection of books and records, or audit. Quantum and cost cases arrive at a board of contract appeals in one of four postures: (I) simultaneously with the appeal on entitlement; (2) where entitlement is admitted and the dispute is solely over amount; (3) where an appeal is sustained (or, in connection with a Government claim, when it is denied), and the matter is remanded to the parties for negotiation of amount, which is unsuccessful; and (4) upon remand by a court when the board's decision on entitlement is reversed. Many board members take the position that conven- tional pleading with respect to cost and quantum questions is not practical from the standpoint of isolating issues quickly. The parties at that point are in a position equivalent to the accounting phase of a judicial action for an accounting. In some instances, a statement of account has already been furnished to the contracting officer and he has secured an audit. If this has been done satisfactorily, the case is ready for hearing or submission on the record. However, if this previous work has not satisfactorily isolated the specific issues, then a prehearing order is issued for that purpose. I have developed a great respect for the standard p'trial accounting and damages orders developed by the Court of Claims Commissioners. The boards do not have such standard orders. Consequently, I have drafted an adaptation of these ordeis for use in my cases. I know that other board members have similar devices. One of the provisions is that the defending party must specifically object to distinct items, and these become the only issues considered to be in controversy. In cases remanded from the Court of Claims, I actually send to the parties the standard orders of that Court, annotated by a cover lefter to change the designations of plaintiff and defendant to appellant and respon- dent. There are two reasons for this choice. In the first place, the remand orders are actually suspensions of the court proceedings pending either agreement by the parties on the amount due, or a decision of the contracting department where negotiations are not successful. Second- ly, in the event the matter cannot be ended at the board level and tile parties resort to the court again, the subsequent proceeding is greatly expedited since just about all the work necessary for a court decision is already done, and done in the manner expected by the court. In cases which rely on estimates of costs or values, the prehearing and pretrial orders require that the moving party state the basis for his estimates. '[his is an important AW Tlym%2(t TDA2MhT2 nlgW912222M

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