What is Equitable Adjustment?

Equitable adjustment (request for equitable adjustment – REA in government contracting parlance) – is a “term of art” used to describe a reasonable and fair contract price and time adjustment to the contract of a government contractor. In government contracting, a formal request for equitable adjustment is distinguishable from a formal contract claim. A contract claim is directed to the government contracting officer. The contracting officer is not required to negotiate with the contractor. In due course, usually months later, she may issue the contractor her formal decision. Amazingly, the contracting officer is not required to issue any decision. In the event of a negative decision (or no decision), the contractor is then faced with making a legal appeal in but one of only two venues; the appropriate Federal Board of Contract Appeals, or the U.S. Court of Federal Claims. In this event, you will not be permitted to include in the claim the fees of your construction claims expert for any of his work connected with the litigation. On the other hand, if the contractor styles its claim for money damages as a REA, and ultimately actually pursues negotiated settlement of the dispute in good faith with the government, the consulting fee of your construction claims expert is a permissible cost, as it is considered to be a legitimate cost of contract administration, and thus to the benefit of the government as well as the contractor. Failing to reach a satisfactory outcome, the contractor may yet still begin the litigation process by submitting the issue as a formal contract claim to the contracting officer. Packaged correctly, little or...