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Without access to the disputes procedures by some means, the subcontractor must rely on the courts in a suit against the prime contractor to settle claims which cannot otherwise be amicably resolved.
It is possible, however, for the subcontractor to have his claim heard within this administrative process. Either the prime contractor can present the claim of the subcontractor or if the prime contractor agrees, the subcontractor may pursue the claim against the Government in the name of the prime contractor. This problem often occurs in cost-reimbursable contracts at the prime and subcontract levels. If a cost incurred by the subcontractor is ultimately disallowed by the Government contracting officer, both the subcontractor and prime contractor may be interested in claiming reimbursement. In the name of the prime contractor, the subcontractor can have his claim considered within the administrative process of the Disputes clause. Because of many practical problems facing the subcontractor in submitting a claim, it is best that the rights of the prime and subcontractor in this contingency be provided for in the contract.
It is hoped that this brief exposition of the claims procedure found in the field of Government contracting will be helpful to the small businessman, particularly one who has not previously had the experience of contracting with the Government. Because it is the policy of Congress to foster Government contracting with the small business24 this document is prepared especially for the small businessman to encourage his participation in Government procurement.
As is evident from the above description, many aspects of the claims process provided in the Government contract are unique to that document. The contractor who signs a Government contract gives up some rights in exchange for others. It behooves the contractor to be fully familiar with the ramifications of the contract provisions.
Burch, J. Thomas, Jr. "Discovery Procedures and Techniques Before Government Boards of Contract Appeals." Public Contract Law Journal, IV, No. 2 (Oct. 1971), 119–190.
U.S. Office of the Comptroller General. Government Contract Principles, Washington, D.C.: Government Printing Office, 1970.
Perlman, Matthew S. "Contract Claims Before the ASBCA," Briefing Papers, The Government Contractor. No. 70-4. (August, 1970). Preston, John E. "The Role of the Comptroller General in Remitting Liquidated Damages," Federal Bar Journal (Spring 1971), 144-154. Sachter, Joseph. "Resolution of Disputes under U.S. Government Contracts, Problems and Proposals." Public Contract Law Journal, II (July, 1969), 363-379.
vom Baur, F. Trowbridge, "Remedies of Contractors with the Government." William and Mary Law Review VIII, No. 4 (Summer 1967), 469-504.
24 Small Business Act, P.L. 85-536, July 18, 1958, 15 U.S.C. 631 (a) (1970) as amended. "It is the declared policy of the Congress that the Government should aid, counsel, assist, and protect, insofar as is possible, the interests of small-business concerns in order to preserve free competitive enterprise, to insure that a fair proportion of the total purchases and contracts or subcontracts for property and services for the Government (including but not limited to contracts or subcontracts for maintenance, repair, and construction) be placed with small-business enterprises, to insure that a fair proportion of the total sales of Government property be made to such enterprises, and to maintain and strengthen the overall economy of the Nation.'
THE DISPUTES CLAUSE
ARMED SERVICES PROCUREMENT REGULATIONS
(a) Except as provided in (b) below, insert the following clause: DISPUTES (1958 JAN)
(a) Except as otherwise provided in this contract, any dispute concerning a question of fact arising under this contract which is not disposed of by agreement shall be decided by the Contracting Officer, who shall reduce his decision to writing and mail or otherwise furnish a copy thereof to the Contractor. The decision of the Contracting Officer shall be final and conclusive unless, within 30 days from the date of receipt of such copy, the Contractor mails or otherwise furnishes to the Contracting Officer a written appeal addressed to the Secretary. The decision of the Secretary or his duly authorized representative for the determination of such appeals shall be final and conclusive unless determined by a court of competent jurisdiction to have been fraudulent, or capricious, or arbitrary, or so grossly erroneous as necessarily to imply bad faith, or not supported by substantial evidence. In connection with any appeal proceeding under this clause, the Contractor shall be afforded an opportunity to be heard and to offer evidence in support of his appeal. Pending final decision of a dispute hereunder, the Contractor shall proceed diligently with the performance of the contract and in accordance with the Contracting Officer's decision.
(b) This "Disputes" clause does not preclude consideration of law questions in connection with decisions provided for in paragraph (a) above: provided, that nothing in this contract shall be construed as making final the decision of any administrative official, representative, or board on a question of law.
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RULES OF THE GOVERNMENT Boards of CONTRACT APPEALS
(a) DEPARTMENT OF AGRICULTURE
CHAPTER XXIV-BOARD OF CONTRACT APPEALS, DEPARTMENT OF AGRICULTURE
PART 2400-ORGANIZATION, FUNCTIONS, AND RULES OF PROCEDURE
Chapter XXIV is added to Title 7, Code of Federal Regulations, containing Part 2400. This part supersedes Part 1400 of this title, the rules of the Contract Disputes Board for Commodity Credit Corporation, as amended.
2400.5 Manner of filing appeals.
2400.6 Procedure on appeal.
2400.7 Discovery: motion for production of documents, written interrogatories and oral examinations.
2400.10 Prehearing arrangements.
2400.13 Extensions of time and stenographic reporting of hearings.
AUTHORITY: The provisions of this Part 2400 issued under 5 U.S.C. 301, 40 U.S.C. 486(c) and under sec. 4, 62 Stat. 1070, as amended; 15 U.S.C. 714b. Interpret or apply secs. 9, 10, 62 Stat. 1072, 1073; 15 U.S.C. 714g, 714h.
§ 2400.1 General.
(a) This part sets forth the organization, functions, and rules of procedure of the Board of Contract Appeals, Department of Agriculture (hereinafter referred to as the Board). Except for appeals pending before a board on which hearings have been held prior to the effective date of these rules, the Board supersedes and replaces (1) the Contract Disputes Board for Commodity Credit Corporation established by the Board of Directors of the Commodity Credit Corporation on April 17, 1946, and (2) Ad Hoc Boards of Contract Appeals designated from time to time by the Director of Plant and Operations under authority of Subpart 4-50.2 of the Agriculture Procurement Regulations.
(b) The provisions of the Administrative Procedure Act (60 Stat. 237, as amended, 5 U.S.C. 551-559) are not applicable to proceedings before the Board except those requirements with respect to publication of description of organization, statements as to channeling and de
termination of functions, substantive rules, statements of general policy, or interpretations, and publication or availability for public inspection of final opinions or orders in the adjudication of cases.
§ 2400.2 Membership and participation.
(a) The Board is composed of eleven members appointed by the Secretary of Agriculture one of whom is designated to act as Chairman and one as Vice Chairman. The Vice Chairman shall act for the Chairman in his absence. The Board has an Executive Secretary designated by the Secretary of Agriculture. The Executive Secretary may, if his appointment so provides, also be a member of the Board.
(b) An appeal to the Board shall be considered and decided by a panel of not less than three members designated by the Chairman to hear and decide the appeal. If the Chairman is not a member of a panel, or is unable to act as "Presiding Officer," he shall name one of the members of the panel to serve as "Presiding Officer," who shall be responsible for the proper disposition of the appeal. The decision of a majority of the panel shall constitute the decision of the panel and of the Board.
(c) Hearings may be conducted by the Chairman, Presiding Officer, or any member of a panel acting alone or with one or more other members of the panel. If a hearing is conducted by less than the full membership of the panel the entire record shall be furnished to the remaining member or members of the panel designated by the Chairman for review and the panel shall consider and determine the appeal upon such record. A majority of the panel shall decide the appeal. (d) A vacancy on the Board or panel shall not impair the powers or affect the duties of the Board. If a member of the panel is unable to serve or participate in a decision, either before or after the hearing, he shall be replaced by another member of the Board designated by the Chairman to serve on that panel. All communications shall be directed to the "Executive Secretary, Board of Contract Appeals, U.S. Department of Agriculture, Washington, D.C. 20250."
§ 2400.3 Authority and jurisdiction.
(a) Commodity Credit Corporation. The Board has jurisdiction and the authority to act for or on behalf of the Commodity Credit Corporation (hereinafter referred to as the Corporation) and its officers in the following cases:
(1) To consider and determine appeals by persons from findings of fact of Contracting Officers of the Corporation within the scope of any contract disputes provision which provides a method for final and conclusive determination of disputed questions of fact.
(2) To consider and determine, upon specific referral by the President or a Vice President of the Corporation, an appeal by any person on a contract claim by or against the Corporation not pending in the Department of Justice or in litigation and involving doubtful or disputed questions of fact or law where claimant has been unable to effect settlement or adjustment satisfactory to him under other established policies and procedures.
(b) Services and agencies of the Department of Agriculture other than Commodity Credit Corporation. The Board has jurisdiction and authority to act on appeals taken from decisions of Contracting Officers of this Department under contracts involving (1) the construction,