If you are a government contractor, odds are you have faced a situation where some aspect of the contract you were performing changed outside of your control, or you ran into something that neither you nor the government expected. As a result, your work requirements likely changed, and with that, your costs likely changed as well. When this happens, there are multiple paths to getting reimbursements for those new costs, and one of the most common ones is a request for equitable adjustment. Today, we’re going to explore when you should submit a request for equitable adjustment as opposed to the other routes.
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Release of Claims Can’t Be Undone by Refusing Government Payment
I recall sitting in a mediation one day when the mediator, a judge, told me and my client that we all have lightning in our fingers. He went on to explain that this means, once you sign a contract, it’s like magic in the sense that you can’t get out of the contract and are bound by it, absent certain exceptional circumstances.
I was reminded of this concept while reading a recent opinion from the Armed Services Board of Contract Appeals that dealt with the effect of a contractor signing a release with the government and then trying to back out of that release by refusing payment from the government.
ASBCA Applies Christian Doctrine to Payment and Performance Bonding
Federal construction contracts incorporate the FAR’s payment and performance bonding requirements as a matter of law, even if the solicitation omits these bonding provisions.
In a recent Armed Services Board of Contract Appeals decision, K-Con, Inc., ASBCA Nos. 60686, 60687 (2017), a contractor ran headlong into construction bonding issues when the Army demanded payment and performance bonding for two of its construction contracts despite there being no bonding requirements in either of the contracts. According to the ASBCA, the bonds were required anyway.