Requests for Equitable Adjustments (REA) and Best Practices
A Request for Equitable Adjustment (“REA”) is one of two ways contractors can seek compensation from the government for the increase costs (and time) of performing a contract due to government changes or unanticipated obstacles to performance. Difference between a REA and a “Claim.”
• REA is more informal, less “adversarial,” and not subject to formal
disputes process (no interest accrues)
• Can include legal and expert costs incurred to prepare the REA
• Can be converted into a claim
• Certifications may apply, depending on the agency
Claims are formal demands for payment pursuant to the Contract
Disputes Act (CDA)
• Once a claim is made, the Contracting Officer
(KO) generally has 60 days to issue a final decision (interest accrues)
• A certified “sum amount” in controversy is required (>$100K)
• If KO denies your claim, you may appeal the final decision to the
Boards of Contract Appeals or the US Court of Federal Claims
REA Overview
Why do we need REAs of claims?
Often arises from the contractor trying to solve the government’s problems:
• Proceeding on perceived changes without receiving a change order, without notifying the KO,
and/or before costs are agreed to
• Failing to track costs for extra work separately
• Wrongly assuming the government is correct about the scope of the contract
• Dealing with problems or delays as they happen without notifying the KO
• Failing to understand what costs contractors are entitled to when changes happen
• Failing to administer changes like a separate job
Purpose of an REA
• The goal of any REA is equity or fairness
• To obtain compensation, the contractor bears the burden of establishing the fundamental facts of
liability, causation, and injury
• In other words, the contractor must show that increased costs:
1. Arose from work materially different than that contemplated by the original contract
2. Were necessary to complete this different or additional work
3. Were appropriately documented
Common Bases for an REA
• Most REAs arise from the government modifying, delaying or suspending performance.
• FAR Provisions that discuss REA compensation for changes by KO include:
1. Changes Clause (FAR 52.243-1): KO unilaterally modifies things like specifications,
shipment methods, or place of delivery For example, are Section 889 Part B requirements
compensable? Maybe
2. Delay of Work Clause (FAR 52.242-17): KO delays work in way not contemplated by the contract
3. Suspension and Stop Work Clauses (FAR 52.242-14, 52.242-15) : KO suspends work
for an unreasonable amount of time or longer than 90 days
Constructive Changes Scenarios
• Misinterpretation by the Government
• Defective specifications
• Government interference and/or failure to cooperate
• Superior knowledge/failure to disclose
• Constructive acceleration