Requests for Equitable Adjustments (“REAs”) and Claims
Washington, DC 20015
Requests for Equitable Adjustments (“REAs”)
A Request for Equitable Adjustment (“REA”) is a request for an adjustment to the contract price under a contract clause providing for such an adjustment. Contractors will often submit an REA before pursuing a Contract Disputes Act (“CDA”) claim. Submitting an REA to the Government is a means to negotiate a settlement without resorting to a CDA claim or litigation.
Attorney’s fees and other costs of preparing and negotiating an REA incident to contract performance are recoverable as part of the REA. Similar costs are not recoverable if for the preparation of a CDA claim. A contractor can maximize recovery of attorney’s fees and other preparation costs by first submitting a request for additional compensation as an REA, and if not satisfied with the Government’s response converting it into a CDA claim by certifying it and requesting a contracting officer final decision. Interest is recoverable on a CDA claim at the Treasury rate. Interest is not allowable on an REA.
Most REAs are submitted under the Changes clause. The Changes clause requires contractors to assert their right to an adjustment within 30 days of receipt of a formal change order. However, the Boards of Contract Appeals have held that failure to submit this notice within 30 days will not bar a claim unless the Government was prejudiced by the lack of notice.
The FAR defines a claim as a “written demand or written assertion by one of the contracting parties seeking, as a matter of right, the payment of money in a sum certain, the adjustment or interpretation of contract terms, or other relief arising under or relating to the contract.” The CDA requires claims over $100,000 to include a contractor certification that: (1) the claim is in good faith; (2) the supporting data are accurate and complete to the best of the contractor’s knowledge and belief; (3) the amount reflects the contract adjustment for which the contractor believes the Government is liable; and, (4) the signer is authorized to certify the claim on behalf of the contractor.
A contractor must notify the contracting officer of a claim prior to final payment to preserve it. A claim must be submitted to the contracting officer within six years after it accrued.
For claims under $100,000, the contracting officer has 60 days to issue a final decision. For claims over $100,000, the contracting officer must, within 60 days, either issue a final decision or notify the contractor of the date by which a final decision will be issued. A claim is deemed to be denied under the CDA if the contracting officer fails to issue a final decision within the prescribed time. Upon such a deemed denial, the contractor may appeal or request the Board of Contract Appeals or Court of Federal Claims to order the contracting officer to issue a final decision.
Our attorneys are experienced at preparing and negotiating REAs and CDA claims. If your company is unable to reach a satisfactory settlement, Seidman & Associates, P.C. will vigorously represent you in litigation or ADR proceedings. We have experience representing contractors before the Boards of Contract Appeals, the U.S. Court of Federal Claims, the U.S. Court of Appeals for the Federal Circuit and in U.S. District Court.
The aforementioned statement of general principles applicable to requests for equitable adjustment and claims is not intended as legal advice. In order to obtain legal advice applicable to specific facts a consultation is required.