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Request for Equitable Adjustment v. Claim (Part 1)
By Anonymous on Thursday, October 19, 2000 - 07:25 pm:

Is a request for an equitable adjustment in response to a change order a "claim" under the disputes clause?

By John Ford on Friday, October 20, 2000 - 09:06 am:

No. An REA and a claim are distinct actions. The cost of pursuing an REA is an allowable contract administration cost while the cost of pursuing a claim is expressly unallowable. Interest accrues on a claim while interest does not accrue on an REA. Finally, there are different time frames within which an REA must be requested and a claim asserted.
Having said all this, a contractor has the choice of filing either a claim or an REA when the government issues a change order. There does not have to be a dispute over the adjustment before the contractor can file its claim.

By Anonymous on Friday, October 20, 2000 - 10:27 am:

My contractor has requested an equitable adjustment in accordance with changes clause and included a claim certification. He says that he has filed a claim. What do I have?

By joel hoffman on Friday, October 20, 2000 - 11:28 am:

Did the Contractor request a Contracting Officer's Decision on this matter?

What is the Contractor's letter and proposal specifically in response to?

Have you discussed this with your attorney?

Is this a DOD construction contract?
- If so, is a DFARS clause 252.233-7000 (rescinded in 98 or 99 version of DFARS)in the contract?
- If so, this clause requires certification using the same language as required for a "claim" under the disputes clause for an REA excedding $100k. Happy Sails! Joel

By Anonymous on Friday, October 20, 2000 - 11:38 am:

The contractor labeled its request a "request for an equitable adjustment in response to Change Order No. P00006." Then it included boilerplate claims certification and request for a KO decision. This is not a construction contract.

I asked our lawyer. He's looking it up.

By joel hoffman on Friday, October 20, 2000 - 11:51 am:

If the Contractor certified it as a claim, it probably is. There are conflicting cases concerning whether a "Dispute" or an unreasonable amount of Gov't time to respond to a Contractor's request for an equitable adjustment is necessary for the matter to be a CDA Claim. Your lawyer will have to look at the specific circumstances. Happy Sails! Joel

By Fred Weatherill on Friday, October 20, 2000 - 12:19 pm:


You may wish to read the Reflecton vs Dalton decision. (93-1373 decided in 1995 by the US Court of Appeals for the Federal Circuit). It has the same features as your situation. The abbreivated summary is that a request for payment on an REA meets the definition of a "Claim" under the CDA. You can access the case through the WIFCON link to the Courts & BCAs.

By Anonymous on Friday, October 20, 2000 - 02:52 pm:

Claim," as used in this part, means 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. A claim arising under a contract, unlike a claim relating to that contract, is a claim that can be resolved under a contract clause that provides for the relief sought by the claimant. However, a written demand or written assertion by the contractor seeking the payment of money exceeding $100,000 is not a claim under the Contract Disputes Act of 1978 until certified as required by the Act and 33.207. A voucher, invoice, or other routine request for payment that is not in dispute when submitted is not a claim. The submission may be converted to a claim, by written notice to the contracting officer as provided in 33.206(a), if it is disputed either as to liability or amount or is not acted upon in a reasonable time.

An REA is a claim if it is presented under the changes clause (or other contract clause). The above is the FAR definition of a claim. I think it speaks for itself.

By Eric Ottinger on Friday, October 20, 2000 - 03:19 pm:


I don't have any particular expertise in this area, but this section out of the DFARS should clarify.


Maybe your contractor doesn't want to be all that adversarial. Maybe some lawyer told him that he has to make this a "claim." You should ask.

DFARS 243.204-70 Certification of requests for equitable adjustment.

(a) "A request for equitable adjustment to contract terms that exceeds the simplified acquisition threshold may not be paid unless the contract certifies the request in accordance with the clause at 252.243-7002.

(b) The aggregate amount of both the increased and decreased costs shall be used in determining when the dollar threshold requiring certification is met (see example in FAR 15.403-4(a)(1)(iii)).

(c) The certification required by 10 U.S.C. 2410(a), as implemented in the clause at 252.243-7002, is different from the certification required by the Contract Disputes Act of 1978 (41 U.S.C. 605(c)). If the contractor has
certified a request for equitable adjustment in accordance with 10 U.S.C. 2410(a), and desires to convert the request to a claim under the Contract Disputes Act, the contractor shall certify the claim in accordance with FAR Subpart 33.2."


By Anonymous on Friday, October 20, 2000 - 03:21 pm:

But we are not in dispute. Not yet, anyhow. Isn't an REA a "routine request for payment"?

By Eric Ottinger on Friday, October 20, 2000 - 03:39 pm:


I am not an expert and not a lawyer. However, I believe that a "claim" is under the "Disputes" Act and the "Disputes" clause.

This determines the procedure you should follow. It doesn't mean that you have to be adversarial.

You may feel that the contractor's request is entirely justified.

I am not sure that I would characterize an REA as "routine."

There is a substantial amount of material on equitable adjustments in the Deskbook and the Pricing Guides which are available on the Web, not forgetting Cibinic and Nash.

Anyway, Good Luck.


By Anonymous on Friday, October 20, 2000 - 03:59 pm:

But don't we have to pay interest on a claim from the date that the claim was received? Doesn't that make it important to determine whether the REA is a claim or not?

By Eric Ottinger on Friday, October 20, 2000 - 04:07 pm:


I agree.

We need to get Joel or somebody with more experience back into this.

My only thought was that if you ask nice, the contractor may be willing to withdraw the claim and simply certify this as an equitable adjustment. He may also be confused or he may be acting on bad advice.


By John Ford on Friday, October 20, 2000 - 04:25 pm:

Anon, Eric has given you some good advice. It would be advisable to get a clarification from the contractor on what it intended when it made this submission.
Going back to some of your other points, an REA is not a claim. As I pointed out earlier, they are seperate concepts. You do not need a dispute before a contractor can file a claim. That was the teaching of Reflectone that was mentioned above. In Reflectone, the Court divided requests for payment into two categories: routine and non-routine. Under the definition of a claim, there must be a dispute before a routine request for payment can be converted into a claim. For a non-routine request for payment, no dispute is needed. The issue in Reflectone was whether a request for an adjustment under the Changes clause could first be asserted as a claim without a dispute. The Court expressly held that a request for an adjustment under the Changes clause was not a routine request for payment of money. Reflectone settled the dispute vs. no dispute issue regarding what could be a claim.
Finally, you are absolutely correct when you say that the interest clock is running if the contractor intended its submission to be a claim. This is consistent with the intent of the Disputes clause and the CDA in that it compensates a contractor for the time value of money the contractor spends in performing a contract mod that has not been priced out before performance begins.

By joel on Friday, October 20, 2000 - 05:12 pm:

Eric - Thankyou! The Chief of Contracts for one of my "super-contractors" (no. 4 or so DOD) told me just this week that the DFARS REA certification requirement had been rescinded. I told her that I didn't really care, since the Clause is in her contract. However, when I looked for it in the 98 and 99 versions of the DFARS, I couldn't find it - I assumed she was right but never saw any rescission come out.

As it turns out, the prescription for the clause was simply moved from Part 233 (Claims and Disputes) to 243 (Modifications) and the clause has been renumbered from 252.233-7000 to 252.243-7002.

Anyway, ANON: Your attorney needs to advise you because each situation is unique. However, if I were you, if the Contractor certified the matter and requested a "Contracting Officer's Decision", I'd assume for now that the matter is a "Certified Claim" under the contract's Disputes Clause (yep, interest bearing from the date of receipt).

If your attorney has access to the Federal Publications' "BRIEFING PAPERS - SECOND SERIES", there was a briefing a couple of years ago (After "Reflectone") over this very issue. It discusses whether or not it is advantageous for the Contractor to certify a claim in response to various actions by the Government, whether or not the matter must be in Dispute, what constitutes a "routine request for payment", etc.

I believe "Nash and Cibinic Reports" has also addressed the issue.

Sorry, I don't have time to research for the dates of the published articles, right now.

ANON, if you know that the Contractor is due an equitable adjustment for whatever matter it is "claiming" for, you don't need to issue a COD. Simply advise the contractor when you can negotiate, obtain necessary info to analyze the proposal and settle it. If your attorney says it is a valid claim, you will owe interest until paid.
Happy Sails1 Joel

By Anonymous on Friday, October 20, 2000 - 05:43 pm:

Thank you all.

By Vern Edwards on Friday, October 20, 2000 - 07:19 pm:


You have said that an REA is not a claim and that they are "separate concepts." But the holding in Reflectone was that Reflectone's REA was a claim. I don't understand the basis on which you say that REA and claim are seperate concepts.

I don't know of any standard format or content for an REA. Neither the changes clause nor FAR Part 43 specify any standard format or content. REA's come in all shapes and sizes. I would say that all REAs of $100,000 or less are claims as long as they are in writing and request a specific amount of money as a matter of right. If the REA is in excess of $100,000, then all it needs to be a claim is the certification required by FAR 33.207(c). When I was a CO, many contractors routinely certified every REA in excess of $100,000. The contractor usually dropped any demand for interest during the negotiation, as long as we settled promptly and for a reasonable amount, since interest was usually a small amount and the only way he would get me to admit to having given it to him would be to go to the board or to court. (Joel--Don't you often find that to be the case?)

Thus, as long as an REA is (a) in writing and (b) seeks as a matter of right the payment of a specific amount of money (a "sum certain"), and (c) if it is properly certified if over $100,000, then an REA is a claim. In fact, the only time that an REA would not be a claim would be when it is over $100,000 and the contractor did not certify it.

What am I missing?


Based on what you've said, yes, you have a claim. No big deal.

You say that the contractor certified it, so I assume that it's over $100,000. That being the case, you have 60 days to settle, issue a final decision, or tell the contractor when you will issue a final decision. See FAR 33.211(c)(2).

Since you say that you're not in dispute, negotiate the REA as you normally would. If the contractor doesn't ask for interest then don't mention it. If he asks for it, calculate how much it would be. It probably won't be much. One way to dispose of the interest issue is to negotiate the settlement at the bottom line. Don't negotiate the interest issue separately if you can avoid it. If he wants to think that the amount that you agree on includes interest, then let him be happy.

If you think that you will need more than 60 days to settle, then tell him how long you'll need. If you can't settle, then issue a final decision and let the lawyers do their thing.

By joel hoffman on Friday, October 20, 2000 - 07:42 pm:

In order to be a "Claim", subject to the Disputes Contract Disputes Act procedures described in the "Disputes" Clause and accrue interest, the Contractor must specifically request a Contracting Officer's Decision. It must also certify the claim, if over the amount described in the specific contract's Disputes Clause (currently $100,000, formerly $50k).

An REA can be a "claim", according to some recent decisions, merely due to the fact that it meets the definition of a "claim," as described above. However, no COD is necessary, the 60 day decision period is inapplicable and no interest accrues, unless the claim meets the "CDA" requirements I described above.

Unfortunately, I'm home and the descisions are on my desk - we've been researching whether or not legal fees and proposal preparation costs are allowable on REA's which aren't formal CDA Claims. According to the decisions on my desk, they may or may not be allowable, depending upon the circumstances, too involved to describe here.

Vern, I've handled interest within the bottom line agreement and also as a unit priced line item, based on the estimated number of days between receipt and projected payment. On occasion, the Contractor agreed to forego interest, when it was small.

It is imperative that an agreement be framed on how to handle interest during the settlement, because contractors have successfully come back after interest, when the matter was "kept quiet" by the KO. I've even seen a case where the judge found that the payment to the contractor first applied to the outstanding interest, then to the principal, when interest wasn't separately
addressed! Happy Sails!

By Vern Edwards on Friday, October 20, 2000 - 09:20 pm:


Please tell me where in FAR Subpart 33.2 or in the Disputes clause it says that the contractor must specifically request a contracting officer decision. I can't find that requirement in either of those places.

The Disputes clause says that if a claim is for $100,000 or less, the CO must render his or her decision within 60 days if requested to do so, but it does not require the contractor to make any such request.

According to R.T. Peacock and R. D. Ting, in Contract Disputes Act Annotated (Washington, DC: Federal Publications, Inc., 1998), p. 4-7: "[T]he contractor need not formally demand or request expressly that the CO issue a decision." They cite as their authority a long list of cases, including Transamerica Ins. Corp. v U.S., 973 F.2d 1572 (Fed. Cir. 1992). In that case the Court said:

"As a general proposition, this court clearly stated in Contract Cleaning, '[w]e know of no requirement in the Disputes Act that a "claim" must be submitted in any particular form or use any particular wording. All that is required is that the contractor submit in writing to the contracting officer adequate notice of the basis and amount of the claim." Id. at 592. This view is obviously consonant with the CDA itself which, besides the direction given in section 605(a) as set out herein, does not address the specific requirements which a claim must contain. In Contract Cleaning, one of the appealed issues was whether certain letters submitted by the contractor requesting payment for contract amounts constituted CDA claims. The letters requested the payment of monies allegedly owed under the contract and indicated the contractor's willingness to work with the contracting officer to "finalize and conclude this matter," suggesting that the parties sit down, discuss, and resolve the matter through negotiation. Id. at 588-89. The Government in that case disputed whether any of the letters constituted CDA claims, but this court stated that '[t]he letters the appellant wrote to the government ... constituted a claim under the Disputes Act--as GSA itself explicitly recognized with respect to at least one of those letters.'"

Transamerica was a Corps of Engineers case.

Cibinic and Nash say that there is no requirement in statute or in FAR that the contractor request a decision, but that it derives from case law. However, they also say that the request can be "either explicit or implied." See Administration of Government Contracts, 3d ed., p. 1267. (There is no indication in their book that they were aware of the Transamerica decision cited and quoted above.) All the same, it is true that some lawyers advise their clients to make an express request for a decision.

In my opinion, the following sentence requesting an equitable adjustment would constitute a claim:

"Pursuant to the Changes clause of this contract, we assert our right to an equitable adjustment in the amount of $100,000 for the increase in cost caused by Change Order No. 4, and request that you modify the contract to make that equitable adjustment."

Since the sentence does not request a decision in 60 days, FAR 33/211(c)(1) says that the contracting officer gets "a reasonable time."

What do you think?


By joel hoffman on Saturday, October 21, 2000 - 07:59 am:

Vern, this is the way I've understood the requirement that an explicit or at least clearly implied request from the Contractor to the KO for a "decision" on an issue is necessary in order for it to be classified as a formal claim under the "Disputes" Clause:

FAR "33.206 Initiation of a claim.
(a) Contractor claims shall be submitted, in writing, to the contracting officer for a decision within 6 years after accrual of a claim, unless the contracting parties agreed to a shorter time period."

Clause 52.233-1 "Disputes": (d)(1) A claim by the Contractor shall be made in writing and, unless otherwise stated in this contract, submitted within 6 years after accrual of the claim to the Contracting Officer for a written decision."

Most of the cases I've tracked over the years have been consistent with the requirement to request a KO's Decision, vis a vis what we normally view as a "request for equitable adjustment."

I joined the Corps in 1980 and that's the philosophy they've taught me, since. I do realize that there is much push by the industry and its myriad of claims consultants and attorneys, Nash and Cibinic, some Courts and others to expand everything into a formal Claim or "Dispute", so as to accrue interest on any or all proposals, including those for costs yet to be incurred. Part of the reasoning behind this push is 1) to require quicker action by the Government to resolve issues and 2) to overcome the prohibition on payment of loan "interest" or other financing costs.

Yet our Contractors are ALWAYS quick to point out that an REA is not a formal "claim" when seeking reimbursement for legal and claims consultant fees, as costs incurred "in the furtherance of effective contract administration". It is a standard tactic for them to utilize the consultants and attorneys in framing an "REA", then "convert" it into a CDA claim, later. There is case law both ways on allowability of such costs.

One downside for smaller contractors in turning any matter into a formal "claim" is that attorneys and consultants will be required to participate in almost every matter, without being able to recover those costs from the Government. Such costs would be classified as "costs incurred in a claim against the Government". The smaller contractors would be screwed, in my opinion, Those costs often outweigh CDA interest costs.
Most contractors aren't "claims specialists", thus would need the assistance of the sharks to protect their rights, because I'll guarantee you that the COE lawyers will be involved in every "claim" on the Government's side.

Sorry, Vern - got me going on this one. The word "Claim" is a touchy subject, which will instantly change the working relationships between the Government's KO's , attorneys, us working stiffs and the Contractor. YES, YES, contractors have the right to claim. However, claims artists and "claim happy" contractors find that partnering, liberal contract administration and informal problem resolution channels are out the door, when they put the Government in a formal, defensive mode for otherwise resolvable matters.

The COE has been a leader in promoting "partnering", ADR, for seeking better working relationships in order to resolve problems arising under contracts. We aren't fond of those who would turn any and all issues into "claims".

ANON - I really "feel for you"!!

Yes, it is a big game, with no CLEAR answer.
Happy Sails! Joel

By Vern Edwards on Saturday, October 21, 2000 - 01:04 pm:


No problem. The only point of yours that I've taken issue with is the assertion that a contractor must "specifically request" a CO decision. On the basis of the sources that I have consulted, it is clear that the courts do not require an explicit request. The Court of Appeals for the Federal Circuit made that clear in James M. Ellet Construction Company, Inc., v. U.S., 93 F.3d 1537 (1996):

"Besides meeting the FAR definition of a claim, the CDA also requires that all claims be submitted to the contracting officer for a decision... . This does not require an explicit request for a final decision; 'as long as what the contractor desires by its submissions is a final decision, that prong of the CDA claim test is met.' Transamerica, 973 F.2d at 1576. Thus, 'a request for a final decision can be implied from the context of the submission.' Heyl & Patterson, 986 F.2d at 483."

It is important that COs understand that the absence of an explicit request for a decision does not mean that a request for an equitable adjustment (REA) is not a claim. Thinking otherwise may lead them into the mistaken belief that the claims clock has not started ticking, when in fact it has.

COs must understand that the Disputes Act does not define "claim" and so does not make a distinction between an REA and a claim. Only the FAR defines "claim" and it does not expressly distinguish between an REA and a claim. There is no formal, government-wide definition of the term "request for an equitable adjustment," at least none that I can find. An REA can come to a CO in many forms.

The Federal Circuit's position is that the content of a communication is what determines whether it is a claim or not. It does not matter what the parties call the thing, whether they call it a claim or an REA. Thus, in Reflectone, the Court said that the REA was a claim, because it met all the tests of the FAR definition:

"Because we conclude that FAR 33.201 (1988), which alone defines 'claim' for purposes of the CDA, does not require a pre-existing dispute as to either amount or liability when, as here, a contractor submits a non-routine 'written demand ... seeking, as a matter of right, the payment of money in a sum certain,' FAR 33.201, we hold that Reflectone's REA was a CDA 'claim' and, therefore, the Board has jurisdiction. Accordingly, we reverse the dismissal and remand for adjudication of Reflectone's appeal from the contracting officer's decision on its merits."

"[W]e hold that Reflectone's REA was a CDA 'claim'." This language is why I question John Ford's assertion that REA and claim are "separate concepts." I know that many people think that way, but I'm not sure that you can justify that position on the basis of statute, regulation, or case law. It may be better to say that some REAs are claims and some are not, depending on how they are worded and the circumstances in which they were submitted. Calling REA and claim separate concepts strikes me as too strong a distinction.

Although I agree that COs should check with their lawyers in doubtful cases, perhaps better practice would be to treat every REA as though it were a claim and settle it promptly. The Contract Disputes Act, the litigation about the meaning of "claim," and the rise of the claims consulting industry were, in the main, responses to government foot-dragging and negotiating tactics in the settlement of requests for equitable adjustment.

Based on your last post I think that we agree on these points. I also agree with the other things that you've said. Your advice about interest is sound, and although I never had a problem with that, I thank you for it.


By joel hoffman on Monday, October 23, 2000 - 07:33 am:

Vern, I think we are probably in agreement.

After thinking about it awile, I realized that the COE may look at a "claim" differently than many other organizations brcause of the way we tend to administer contracts.

Almost all of our construction contracts and many of our service contracts are administered by field office ACO's, the PCO is a step away from day to day contract administration. Correspondence is addressed to the ACO. Usual contract interpretation discussions are between the Contractor and the ACO. Directives, Change Orders, etc., come from the ACO, even when PCO permission is necessary.

It's usually necessary for the Contractor to send a request through the ACO for the KO to step in to "decide an issue". Thus, it will be explicit or at least clearly implied that the Contractor desires a step up to a KO decision when there is an impass or lack of ACO action to reso;ve a matter.

This may be different than in agencies where the PCO is often directly involved in contract administration.

Happy Sails! Joel

By joel on Monday, October 23, 2000 - 07:54 am:

Dadgummit, sorry for the atrocious spelling this morning. I can't find my reading glasses. Hope you can still read the above post. Happy Sails!

By Vern Edwards on Monday, October 23, 2000 - 09:33 am:


Some contractors will not label an REA a "claim" because they know that the word aggravates some COs, probably because it suggests disputatiousness. You indicated that yourself when you said, "We aren't fond of those who would turn any and all issues into 'claims'."

Some contractors will send in a "request for equitable adjustment," avoiding any mention of the word "claim," and hope for a prompt resolution. If the CO (ACO) takes too long to settle they may "convert" their REA to a claim and demand a CO decision.

I think that this practice may be what has given rise to the notion that there is a fundamental difference between an REA and a claim. In any event, it seems clear to me that some REAs are claims and some are not, depending on the way that they are worded. I can't find any board or court decision that says that there is a clear distinction between an REA and a claim. But maybe John knows of one.

What's interesting is that there is no agreement in the commercial sector about the use of the word claim.

In Black's Law Dictionary, 7th ed., the main definition of claim is as follows:

"1. The aggregate of operative facts giving rise to a right enforceable by a court. 2. The assertion of an existing right; any right to payment or to an equitable remedy, even if contingent or provisional. 3. A demand for money or property to which one asserts a right."

In Professional Construction Management, 3d ed., by D. S. Barrie and D. C. Paulson, "claim" is defined as follows: "A disagreement that cannot be resolved by mutual agreement under the change-order process." That's an interesting definition because the Reflectone decision said that disagreement ("dispute') is not an essential element of a claim under a government contract, except in the case of routine requests for payment such as invoices.

In Managing Construction Purchasing, by J.G. McConville, claim is defined as follows: "A request for additional payment."

Words are fun.


By John Ford on Monday, October 23, 2000 - 11:52 am:

Vern, regarding your posts of 20 Oct, in discussing the differences between an REA and a claim, we need to determine under what clause relief is being sought. As your friends Nash and Cibinic point out, an equitable adjustment is a term of art that has the same meaning each time it is used. Similarly, as the Court pointed out in Reflectone, claim as used in the Disputes clause and CDA is also a term of art. Therefore, the question is does a particular clause provide for relief in the form of an equitable adjustment or does it provide a process for obtaining relief through a claim.

If we look at the Changes clauses, they all provide specific processes for an adjustment of the contract price and/or schedule. These processes are quite distinct from the processes called for by the Disputes clause and CDA. In addition, there are specific cost consequences to filing a request for an adjustment under the Changes clauses. For example, a contractor does not accrue interest on its request. Also, the cost of pursuing such a request is an allowable cost to the contractor. The adjustment under the Changes clauses is the prototypical equitable adjustment.

On the other hand, the process for handling a claim under the Disputes clause is quite different from pursuing an adjustment under the Changes clause or any other clause providing for an adjustment to the contract. In fact, it has even been held that a contract does not have to be adjusted as a result of a decision favorable to the contractor under the Disputes clause. Unlike an equitable adjustment, interest accrues on a claim and the cost of pursuing or defending a claim is an expressly unallowable cost under FAR 31.205-47.

As regards Reflectone, the issue there was whether a contractor could submit a request for an adjustment to which it was entitled under the Changes clause as a claim without the matter being in dispute. The ASBCA and Court were not asked to decide if an REA and a claim were separate concepts. As I recall, the Court held that a contractor could seek relief under the Disputes clause without the matter being in dispute. However, the Court noted that a contractor did not have to do so, but could pursue the matter under the Changes clause.

Thus, an equitable adjustment and a claim are pursued through different clauses, have different processes, and different consequences for the contractor.

As regards your questions concerning whether your proposed language would be sufficient to be a claim, the answer is no because it specifically requests relief under the Changes clause and is nothing more than the contractor's assertion of its right to an adjustment as required by the terms of that clause. It does not expressly or implicitly invoke the Disputes clause.

By Kennedy How on Monday, October 23, 2000 - 12:22 pm:

After reading John's last post, I'm leaning toward his view on the matter. It seems to me that a contractor can submit an REA under Changes Clause, and if the CO decides that no adjustment is warranted, the Contractor can move on to the Disputes clause, because now it is a dispute. I hate to say that I was working on 3+ multi-million dollar claims on the same contract (all for different reasons), but I think they started off as REAs, before going to a Certified Claim. Even though we've worked close to the contractor for a long time, they chose to do the REA first, got a reply from the Government, then went to a Claim. Since I wrote two sets of replies for the CO to sign, I remember that the CO Final Decision was a rehash of my original letter declining to issue an REA. It was pretty much a formality (for us, anyway) to a case before the ASBCA.


By Vern Edwards on Monday, October 23, 2000 - 12:44 pm:


I disagree with you. The issue not the difference between an equitable adjustment and a claim, the issue is the difference between a "request for an equitable adjustment" (REA) and a claim. I agree that "equitable adjustment" is a term of art, but that doesn't mean that REA and claim are separate concepts. One does not "request a claim," but one can "make a claim for an equitable adjustment." And contrary to what you say, there is no difference in the process described in the Changes clause and the process described in the Disputes clause, because the Changes clause does not describe any "specific processes."

You seem to say that a contractor must cite either the Changes clause or the Disputes clause when requesting money, and that if it cites the Changes clause rather than the Disputes clause, then the request is an REA and not a claim. I think that's wrong.

In order to make a valid claim, a contractor must ask for a sum certain "as a matter of right." In other words, the contractor must assert a basis for entitlement. The Changes clause is an entitlement-granting clause in that regard, the Disputes clause is not.

The Disputes clause does not entitle a contractor to anything except a final decision by the contracting officer, a right to appeal to a board or the Court of Federal Claims, and interest. The contractor only gets interest if the claim was valid. Thus, when making a claim, a contractor must cite a basis for entitlement, e.g., the Changes clause, or some other entitlement-granting clause, or a breach of contract. A contractor cannot cite the Disputes clause as a basis for entitlement to money, except interest on a valid claim.

I say that a contractor can write a letter asking for money, cite the Changes clause as the basis for entitlement, demand a contract modification, never mention the Disputes clause, and, if the amount requested is below $100,000, never use the word "claim," and still have submitted a "claim" as defined in FAR 33.201. I say that the interest clock will start to run the moment that the contracting officer gets that letter.

Finally, contrary to what you have said, the Changes clause does not prescribe "specific processes" for an adjustment of the contract price. It merely says that if a change increases the contractor's cost and time, then the contractor is entitled to an equitable adjustment and the contracting officer must make one. It says that the contractor must assert its right within 30 days, but that the contracting officer can act on a "proposal" submitted before final payment. That is not what I would call a very specific process.

A contractor may request an equitable adjustment without making a claim, but a contractor can request an equitable adjustment by means of the claims process in the Disputes clause. I don't see how that fact makes a request for equitable adjustment and a claim "separate concepts."

By Eric Ottinger on Monday, October 23, 2000 - 01:55 pm:


Granting that the “explicit” request for a Contracting Officer’s decision is not required if there is a certification, doesn’t the language in the statue require some kind of explicit request to the Contracting Officer if the amount is under the threshold and a certification is not required.

Sec. 605. Decision by contracting officer (c) “Amount of claim; certification; notification; time of issuance; presumption
(1) A contracting officer shall issue a decision on any submitted claim of $100,000 or less within sixty days from his receipt OF A WRITTEN REQUEST FROM THE CONTRACTOR THAT A DECISION BE RENDERED WITHIN THAT PERIOD.”

(Emphasis added.)

In a case where the amount of the request is at or under the threshold, it appears that the contractor must explicitly request that a decision be rendered and explicitly request that the decision be rendered within the sixty day period.

The requirement to request a decision within sixty days is clearly more restrictive than the language cited in Transamerica for claims above the threshold. (“All claims by a contractor against the government relating to a contract shall be in writing and shall be submitted to the contracting officer for a decision.”)

Have I missed something?


By Vern Edwards on Monday, October 23, 2000 - 07:35 pm:


My understanding of the passage that you have quoted is that if a claim is for $100,000 or less, and if the contractor wants a decision within 60 days, then the contractor must say so. If the contractor does not make such an explicit request for a decision within 60 days, FAR says that the contracting officer gets a "reasonable" amount of time to issue the decision, whatever that means.

I don't think you've missed anything.

By John Ford on Tuesday, October 24, 2000 - 11:20 am:

Vern, while an REA and a claim may get you to the same place, they are distinct ways to the same end. The origin of the concept of an REA comes from language that was once contained in the Changes clauses. Under the old clauses, a contractor was expressly required to submit a proposal for an equitable adjustment. This proposal was commonly called a request for an equitable adjustment. Thus, historically, an REA has been identified with the Changes clauses. Although the language of the Changes clauses has been changed to only require the contractor to assert its right to an equitable adjustment, the term REA has continued to be applied to such assertions.
While the Changes clauses do not have exhaustive procedures, they do have specific procedures that must be observed. First, the contractor must assert its right to an adjustment. Second, this assertion must be made within 30 days of receipt of the written order. Some Changes clauses also require notification to the KO of constructive changes. Third, the KO is given discretion to accept an assertion made before final payment. Similarly, some clauses impose limitations on what a contractor can recover in regard to timely notice of a change. Fourth, the contracting officer is required to modify the contract if an adjustment is made. Finally, if the parties cannot agree on the adjustment, the Disputes clause can be invoked.
In addition to the requirements of the Changes clauses, other clauses or requirements, such as TINA and the Change Order Accounting clause, impact the equitable adjustment process.
I hope you will agree that these procedures are substantially different from the procedures contained in the Disputes clause.
For a contractor to have the benefits of the Disputes clause, it must invoke that clause. The definition of a claim that you quote applies only to the Disputes clause. This is made clear by paragraph (c) of that clause which states that "as used in this clause" a claim is as you defined it. Thus, a written assertion seeking the payment of money in a sum certain as a matter of right describes a claim under the Disputes clause and not a request for an equitable adjustment under the Changes clauses. At the same time there is nothing in the Changes clauses that indicates the assertion of a right to an equitable adjustment under that clause is automatically to be treated as a claim under the Disputes clause with all its benefits and disabilities. Instead, the Changes clauses clearly indicate that a claim can be raised by invocation of the Disputes clause.
Finally, there is no requirement for a contractor to cite any relief granting clause in its claim for the claim to be valid, although most contractors do. All that is required is that the contractor provide sufficient information for the KO to make an informed decision on the claim. For example, the contractor only has to state "This claim is to recover $X of cost, plus interest, that I incurred as a result of the contracting officer giving me written direction to perform work I was not obligated to perform."