Avoid Costly Pitfalls With Your Request for Equitable Adjustment  Under FAR 52.243 in Government Contracts

FAR request for Equitable Adjustment Definition and meaning in Government ContractsIn government contracts, the FAR equitable adjustment refers to an adjustment that pays you for work that is directed by the agency.

It also applies to work that ultimately increases the cost of the original contract.  The Contracting Officer (CO) should be the only person authorizing the work – no one else.

  • Be aware of COR directing you to perform additional work
  • Courts are not sympathetic to contractors who cannot show clear direction from the contracting officer.

The FAR Adjustment definition in government contracts can also mean reduction in the overall contract price. Often times, end users and contracting officer representatives instruct you to do additional work or change the terms and conditions of the Performance Work Statement (PWS). When this occurs you should always seek the permission of the Contracting Officer before proceeding.

Meaning & Definition of Equitable Adjustment

In government contracting, the contracting officer complies with the “equitable definition” and meaning by adjusting the contract requirements or price in accordance with the changes clause. The goal is to make the contractor whole and to compensate it for profit allowances if any.

FAR Change Order Format & Allowances for ProfitUnder the definition of request for equitable adjustment FAR change order clause allows for payments for profit. If it does not, it should not be considered “equitable adjustment.”

There should be an agreement between you and the government. You always want to try to establish your changed cost up front because it can put you in a vicarious position at the end where you then have to negotiate with the contracting officer.

Get buy-in from the contracting officer: By using a “bilateral modification”, both you and the contracting officer should agree to the price up front. 

  • The format  should describe why the new work is different from the original contract;
  • FAR 52.243  the format should also address why the additional work could not have been contemplated;
  • Show a causal connection between the scope of work change and the damages you seek;
  • Provide as much support as you can.

Is Your REA Under FAR 52.243 Formatted as a Claim Under the CDA?

This is a question that many government contractors and even attorneys struggle with. The first line of analysis starts with whether there is a dispute. There is an argument to be made that by asking the agency to adjust the contract up or down, then there the definition of a claim under the Contract Disputes Act is not met.

Submitting an REA does not automatically constitute a claim under the Contract Disputes Act until such time as the parties reach an impasse (firm disagreement). This is a factual basis that a lawyer should be able to help you with.

Formatting your REA. You should make a habit of submitting your FAR 52.243 equitable adjustment format as the same for a traditional CDA claim. This can be done by enclosing the certification language required under the FAR.

Avoid these costly mistakes made by government contractors. You should ensure that you are asking for a specific sum of money and state the factual basis for the equitable adjustment. Lastly, you want to ask for a contracting officer’s final decision.

To Avoid Costly Mistakes, Get My Free Claims Checklist

Need help? If your company needs help with understanding FAR REAs in government contracts, Contact a government contracts attorney for a FREE INITIAL Consultation at 1-866-601-5518.

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