PASS THROUGH CLAIM CERTIFICATION

Some prime contractors are reluctant to certify subcontractor pass through or sponsorship claims.  These primes are satisfied the subcontractor is acting in good faith and they obtain a proper FAR 33.207 certification from the subcontractor.  (In a pass through claim, the subcontractor must certify the claim using the language in FAR 33.207),  The prime contractor often hesitates to sign its own certification of the subcontractor's claim.  This may be because it has no agreement with the subcontractor containing an indemnification clause.  (Primes should always insist on an indemnification clause in the pass through agreement.)  We have posted a model pass through agreement in this blog.

Primes have tried various ways to avoid the certification but to no avail.  In fact, in a fairly recent Civilian Board of Contract Appeals (CBCA) decision, the Board found it had no jurisdiction over the subcontractor's claim because the prime failed to use the FAR 33.207 certification.  The Board refused to allow correction since it said Congress intended to deny correction of defects where there is fraud, bad faith or reckless or negligent disregard of the certification requirement.  Many other Board cases have allowed correction of defects in certifications where an obvious attempt was made to comply with the FAR 33.207 requirement and the defect was a technical language failure.

The Court of Appeals for the Federal Circuit (CAFC) reversed the CBCA.  The court said there is no statutory requirement that a defect in a certification be merely technical to be correctable.  Indeed, any defect may be corrected.  Nor, said the court, is there a statutory basis for finding a defective certification uncorrectable based on reckless or negligent disregard of FAR 33.207.  The court noted that the language relied on by the CBCA to find Congressional intent was removed from the legislation prior to final vote.  Therefore, the court held that certification defects are not limited to those that are technical in nature nor does the law limit a contractor's right to correct a failure if the initial certification was made with negligent disregard for the certification requirements.

The lesson is that the prime must certify the subcontractor's pass through claim.  That is an absolute requirement.  However, if the prime shows an intend to provide a certification but the certification is defective under FAR 33.207, the contractor may cure that defect regardless of the nature of the defect.  The cure is no longer limited to so-called technical language defects.

bill@spriggsconsultingservices.com               bill@spriggslawgroup.com