Procedures For Contract Claims

(1) This section applies to: (a) Post-litigation settlements or judgments in contract claims arising from capital projects including: 1. all claims arising from contracts related to capital construction projects funded through bond funds pursuant to M.G.L. c. 29, § 14, including contracts for all phases of project study, design and construction; 2. all claims arising from contracts related to "pool account" capital projects, i.e., bonded projects which include various activities of a certain type, such as asbestos or toxic waste removal; and 3. all claims arising from eminent domain takings in connection with capital projects. (b) Post-litigation settlements and judgments in contract claims arising from agency contracts funded from the agency's annual maintenance appropriation. (2) 815 CMR 5.07 generally does not apply to disputed claims for payment under contracts, whether funded through capital or maintenance appropriations, which are resolved at the administrative level as part of a dispute resolution mechanism of contract management prior to the initiation of litigation. These claims may be paid from funds encumbered for the contract or by the submission of a change order or release or other appropriate encumbering action as appropriate. If such funds are unavailable, payment shall be made pursuant to 815 CMR 5.09 Infra. (3) Notification Procedure When Contract Litigation Instituted. (a) Within 30 days of the institution of litigation on any contract claim, the agency attorney, or other staff person assigned to the matter for the purposes of evaluating the financial risk of the litigation and monitoring its progress, shall submit a report on the claim to the General Counsel of the Comptroller. The report shall be on a form supplied by the Comptroller and include: 1. a description of the claim, including contract and encumbrance identification numbers; 2. the amount of the claim; 3. an evaluation of the potential amount of contingent liability; and 4. an evaluation of the potential for a settlement or likelihood of recovery on the claim. (b) Reports shall be updated once a year by August 1. Where possible, reports shall be prepared in consultation with the Assistant or Special Assistant Attorney General assigned to handle the case. (4) Procedure for payment (a) Contract claims from maintenance appropriations which are settled or ordered to be paid pursuant to litigation in the fiscal year in which funds were encumbered shall be paid from said encumbered funds through the accounts payable period. (b) Any settled pre-litigation claims related to regular maintenance appropriations for which contract funds are unavailable due to the expiration of the accounts payable period, and all post-litigation settlements and judgments in contract matters shall be paid in accordance with the procedures set forth in 815 CMR 5.06 Infra, regarding the payment of settlements and judgments after the initiation of litigation.