Requests for Equitable Adjustment

July 19, 2017

by Shelley Hall

During the performance of Government contracts, a contractor may encounter many circumstances that lead them to submit a Request for Equitable Adjustment (REA).  Examples include undisclosed site conditions on a construction contract, new requirements for additional levels of certification on a service contract, and requirement changes.  An REA is submitted to obtain additional compensation and/or time on a contract.

However, there are a few things you need to remember before you submit it:

The REA must be based on at least one contract provision. The REA has to be based on a contract or Federal Acquisition Regulation (FAR) provision. FAR 52.243-1 Changes – Fixed-Price; FAR 52.236-2 Differing Site Conditions; 52.222-44 Fair Labor Standards Act and Service Contract Labor Standards – Price Adjustment, are all clauses on which a contractor might base an REA.

I used to tell my trainees, “There’s no such thing as too much documentation in a contract file.”  The same applies to REAs.  You need to include all the details of why you are requesting the adjustment.  An REA that has detailed, prepared facts is going to get approved before one that does not.

Attachments can be crucial.  They should support the rest of the documentation.  E-mails, spreadsheets, timelines, etc., can all be valuable back-up for an REA.  Remember that personnel in contracting offices typically have a high turnover so back-up may be important when you are dealing with new folks who were not involved initially in the situation.

Contractors should submit an REA within 30 days of the change that created the REA. Note that once a contract has been officially closed out, no REA can be submitted.

Contract modifications often contain “release” statement that would prevent you from recovering on an REA. It was standard at every contract office I ever worked that you included a blanket release statement in every modification regardless of what it was for.  So review everything in a modification before signing it.

How long will it take to put the info together?  The time it takes you to prepare an REA may be recoverable as contract administration costs.

If you expect you will have a fight from the government (for whatever reason), obtain legal counsel.  Remember legal fees may be recoverable (reference FAR 31.205-33).

The REA process can be very frustrating for both sides.  The agency may fail to respond.  Requests for information may be issued from both sides and get lost in the process.  What if the REA is denied?

The bottom line is that the government should NEVER derive undue benefit from a contractor!  However, that does not mean that they will just simply give you the equitable adjustment.  Expect negotiations at the very least.  Be prepared.  Fight for what they owe you!

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