GM 12-107

Deadline Approaching for Filing Contract Support Cost Claims

The U.S. Supreme Court’s recent decision in Salazar v. Ramah Navajo Chapter upheld the right of tribes and tribal organizations carrying out Indian Self-Determination and Education Assistance Act agreements to full contract support cost (CSC) funding. In order to recover CSC underpayments in previous years, however, tribes must file claims in accordance with the Contract Disputes Act (CDA). To meet the CDA’s statute of limitations, claims for FY 2006 must be filed by September 30, 2012. For contractors operating under calendar year agreements, the deadline for CY 2006 claims is
December 31, 2012.

The first step to bringing CSC claims is to file a request for a contracting officer’s decision with the Indian Health Service (IHS) or Bureau of Indian Affairs (BIA). We can provide a template claim letter upon request. Claims over $100,000 must be certified as in good faith and based on accurate and complete data to the best of the contractor’s knowledge. A claim must be filed within six years of when it accrues, generally when the fiscal year ends on September 30. Therefore, as noted above, claims going as far back as FY 2006 may still be timely filed, but the deadline for FY 2006 claims is September 30, 2012.

While it is possible the Ramah class action preserves potential claims against BIA even for contractors who do nothing, the Government has argued in other cases that the CDA requires presenting timely individual claims even in the class action context. Therefore, the safest course of action is to file claims against BIA for at least FY 2006 and possibly later years. On the IHS side, there is no class action, and all tribes and tribal organizations that wish to recover past shortfalls must file individual claims. We recommend filing for 2006 through 2011, but the most urgent claims are for 2006, which must be filed by September 30 for fiscal-year contractors or by December 31 for calendar-year contractors.

To get an initial sense of the magnitude of your tribe or tribal organization’s potential claims, we suggest consulting the IHS and BIA shortfall reports, available on the NCAI website at . The BIA only began producing reports in FY 2007, but it is likely your shortfall for FY 2006 was similar to that in FY 2007 if your direct cost base and indirect cost rate were similar, as CSC appropriations were virtually the same in the two years. The shortfall reports, however, do not capture all the claims a particular contractor may have. For example, the IHS shortfall reports (and the 2007 BIA report) do not include in the shortfall indirect costs on unpaid direct CSC. And tribes or tribal health organizations may have lost third-party revenues (from Medicare, Medicaid, or private insurance) by diverting program funding to cover shortfalls in CSC funding by IHS. Therefore, if you decide to pursue CSC claims, you may want to consider consulting an accountant with specific CSC expertise. We can provide names and contact information of a number of such experts.

Please contact us if we may provide further information or assistance regarding potential contract support cost claims.