Reminder: Requests For Equitable Adjustment Are Not Claims

A request for equitable adjustment is not a “claim” under the FAR.  Although a REA and a claim can look very similar, there are important legal distinctions.

And as one contractor recently learned, the distinction between a REA and a claim can make all the difference when it comes to a potential appeal.

First things first: what exactly is the difference between a REA and a claim?

FAR 2.101 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 from a contract.”  FAR Subpart 33.2, in turn, provides various rules for claims, including when a claim can be initiated, when certification is required, and so on.  The FAR requires the Contracting Officer to issue a decision on a claim, and allows for appeals if the Contracting Officer denies the claim (or fails to issue a decision within the specified time frame).

Unlike claims, REAs are not expressly defined in the FAR. Instead, REAs spring indirectly from FAR clauses allowing contractors to pursue equitable adjustments, such as the Changes clause in FAR 52.243-4.  Because REAs historically have been considered matters of contract administration, the costs of preparing a REA may be allowable, whereas the government will not reimburse costs for claims, which are considered litigation against the government.  There are no FAR provisions allowing for appeals from denied REAs (although, in a few cases, a document labeled “Request for Equitable Adjustment” has been deemed a claim where the document in question was functionally a claim, notwithstanding its title).

That takes us to the decision of the Civilian Board of Contract Appeals in United Veterans Construction, LLC v. Department of Veteran’s Affairs, CBCA 4829 (July 24, 2015).  The case involved a contract between United Veterans Construction, LLC and the U.S. Department of Veterans Affairs.

UVC filed multiple requests for equitable adjustment with the VA Contracting Officer.  The VA granted some of the requested relief, but denied other portions of UVC’s request.  UVC did not file a claim, either before or after the partial denial of its REAs.

UVC appealed the Contracting Officer’s decision directly to the Civilian Board of Contract Appeals.  The agency subsequently moved to dismiss the case, arguing that the CBCA lacked jurisdiction because no claim had been filed.

UVC apparently realized that the VA was right.  UVC did not oppose the VA’s motion, and the CBCA dismissed the case for lack of jurisdiction.

While REAs and claims might look very similar, there are important legal distinctions between the two.  As demonstrated in the United Veterans Construction case, a claim can be appealed, but a REA typically cannot.

Ian Patterson, a law clerk with Koprince Law LLC, was the primary author of this post. 

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