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Equitable Price Adjustment

Posted By fedpractice || 22-May-2012

The Contracting Officer may at any time, by written order, and without notice to the sureties, if any, make changes within the general scope of a contract. They include changing the place of delivery, method of shipment or packing, drawings or designs, among others. See generally FAR 52.243-1. Such changes could potentially expose the Contractor to additional costs.

In many cases, the Contractor must assert its right to an adjustment within 30 days from the date of receipt of the written order. Thus, it is essential to properly document any such additional costs and make proper arguments under the Federal Acquisition Regulation.

If the Contractor makes a request for an equitable adjustment, this entitles the Contractor to not only additional costs, but also reasonable profit on those costs. Essentially, the Contractor must show a material change in work or risk; not just ie, the period of performance. The Contractor must show:

1) Any required cost or pricing data;

2) and Actual cost information and information to support any estimated costs, even if cost or pricing data are not required.

On the other hand, if the Contractor makes a request for an adjustment, it entitles the Contractor for additional performance costs, but not profit.

Depending on the amount of the request, certain additional requirements apply as well. In certain cases, the Department of Defense requires a Certification of Requests for Equitable Adjustment for any request exceeding the simplified acquisition threshold. ($150,000.00)

If the Contracting Officer decides to approve the request, the Contracting Officer may receive and act upon a proposal submitted before final payment of the contract and authorize a greater payment to the Contractor. Generally, it is preferable to make a request for an adjustment than to file a claim. Administrative costs for filing a request for an equitable adjustment may be reimburseable, while for a claim they generally are not.

This is not legal advice. This information is intended solely for general public. For specific questions relating to making a request for an equitable adjustment, contract an attorney at The Federal Practice Group for a consultation.

Categories: International Business Law
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