Shipbuilders' Claims--Problems and Solutions

PSAD-77-135: Published: Aug 9, 1977. Publicly Released: Aug 9, 1977.

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Navy procedures to ensure that shipbuilders' claims are reasonably settled have generally been adequate.

Claims are usually made when government changes or delays cause a contractor to incur higher costs because the work was different from, or in addition to, that specified in the contract. Contractors also claim increased costs for disruptions when government changes cause unchanged contract work to be inefficient. Contractors must demonstrate a cause and effect relationship between a government act and resulting increased costs. The settlement of claims is aggravated because the exact value is hard to pinpoint. In two of four claims reviewed, contractors overstated their claims, and settlement was delayed due to inadequate documentation.

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