Understanding the Basics of Equitable Adjustment Can Save Substantial Amounts in Unnecessary Litigation
The changes clause under government contracts allows you to submit a Request for Equitable Adjustment (REA) when there are scope changes, delays and other unforeseeable circumstances.
- Adjustments can be either upwards or downwards;
- Proof of claims falls on the contractor
The Court of Claims has redefined equitable adjustment as the goal of keeping the contractor whole when the government modifies the contract.
Oftentimes, a contractor’s request for equitable relief falls on deaf ears or the agency denies equitable relief claims. As a result, expensive litigation arises. All too often, small businesses lose out on verifiable adjustment simply because the underlying legal principles are sometimes confusing.
When Are You Entitled to Equitable Adjustment?
As a government contractor, you are entitled to equitable adjustment whenever a change order decreases or increases the contact’s time or cost.
When the Contracting Officer unilaterally directs a new scope of work, under those circumstances, contractors are entitled to receive an equitable adjustment in contract price for any increase in its costs required to perform.
Although government contracts generally favor bilateral changes, the Agency can still unilaterally change the contract scope. As this occurs, the scope of the change is articulated, you will then account for cost of changes, and then enter discussions with the government.
- The measure of the equitable adjustment is the difference between the reasonable cost of performing without the change and the reasonable cost of performing with the change.
As a practical matter, you should always certify your request for equitable adjustment as though they were traditional CDA claims. At the time of submission, an REA has not yet ripened into a CDA claim.
Change Orders When Are They Initiated?
Change orders can be initiated by either the contractor of the government. Then, the parties or their attorneys discuss the matters and exchange pertinent information. Once discussions with the government procurement officials have taken place, the result is generally equitable adjustments in the cost.
Legal Level of Proof for Request for Equitable Adjustment Appeal
When the CO denies your Request for Equitable Adjustment, you can appeal the decision to either the respective board of contract appeals or U.S, Court of Federal Claims. For example, if there are constructive changes, you must prove:
- That the work performed was beyond the requirements of the contract; and
- Was performed because of an order from the government ( must be the CO); or
- Through the fault of the government.
If you are a construction contractor or other government contract service provider needing help with your Request for Equitable Adjustment and change orders, Contact us for additional information or call1-866-601-5518 for a Free Initial Consultation.