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REAs vs Claims


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I have argued for years that there is no sharp distinction between a request for an equitable adjustment (REA) and a claim. (See the article, "What's in a name: REA versus claim," on the Wifcon Analysis page.)

An REA that meets the criteria of "claim," as defined in FAR 2.101, is simply an REA that is a claim. Some REAs are claims and some are not. That is the bottom line of the Federal Circuit's famous 1995 en banc Reflectone decision—Reflectone, Inc. v. Dalton, 60 F.3d 1572, 1583 (Fed. Cir. 1995).

Unfortunately there are some people who cannot accept long-established established facts. So the Federal Circuit has once again had to make that point to the Court of Federal Claims by overruling its decision in Zafer Construction Co. v. U.S., 151 Fed. Cl. 735 (2020). See Zafer Construction Co. v. U.S., Fed. Cir. 2021-1547, 2022 WL 2793596, July 18, 2022, now on the Wifcon home page:

Quote

 

We recognize that contracting officers will sometimes face the difficult challenge of determining whether a request for equitable adjustment is also a claim. Contractors must choose between submitting a claim—which starts the interest clock but requires the contracting officer to issue a final decision within 60 days—and submitting a mere request for equitable adjustment—which does not start the interest clock but gives the contractor more time to negotiate a settlement and possibly avoid hefty legal fees. See Government Contract Compliance Handbook §§ 16:7, 16:11 (5th ed. Cumulative Supplement 2021–2022). The overlap between these two types of documents might create room for gamesmanship. For example, a contractor could submit a document that is a claim—starting the interest clock—but appears to be a mere request for equitable adjustment—causing the contracting officer to not issue a final decision within the 60-day deadline and allowing interest to accrue for months or years. But the government has tools to address this challenge: The contracting officer can communicate to the contractor that she is going to treat the document as a claim and issue a final decision within 60 days. Or the government can explicitly require the contractor to propose settlement terms and attempt to settle disputes before submitting a claim to the contracting officer for a final decision, as in Ellett.

Because Zafer’s December 2014 request for equitable adjustment implicitly requests a final decision and therefore is a claim, we reverse the Court of Federal Claims’ contrary determination and remand for further proceedings.

 

Emphasis added.

COs simply must understand that there is no sharp distinction between REAs and claims!

What matters is not what the contractor calls it, or what the CO would like it to be, but what it is in light of the official FAR definition of claim.

So when you receive something labeled REA, read the FAR definition of claim, and then think! Communicate and ask intelligent questions.

Or, to put it more simply, Get a professional clue!

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I had a conversation not too long ago with a friend who wrote an article on the "difference" between REAs and claims. We talked through a baseball analogy that convinced him to change his mind (I think).

Think of communications from contractors as pitches. We have names for different types of pitches--fastball, curveball, change-up, etc., just like we have names for different types of communications from contractors. We call one such communication a "request for equitable adjustment". 

If a pitch meets certain criteria, it is a strike. What we call the type of pitch is irrelevant to whether it's a strike. 

Similarly, if a communication meets certain criteria, it is a claim. What we call the communication is irrelevant to it's a claim.

So, saying an REA is different than a claim is like saying a fastball is different than a strike.

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1 minute ago, ji20874 said:

One thing I have done is to reply to the contractor saying that I am seeing the recent letter as a REA and not a claim (or vice versa), and asking for the contractor's confirmation.

And that is the right thing to do, no matter what the contractor calls it.

Moreover, if an inexperienced contractor submits a claim I would ask if it understood the difference between claims and REAs and the significance of submitting a claim instead of an REA.

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1 hour ago, Don Mansfield said:

So, saying an REA is different than a claim is like saying a fastball is different than a strike.

I don't think that the fastball/strike distinction is logically analogous to the REA/claim distinction.

The REA/claim distinction is not valid because both are requests for something as a matter of right, but the law does not clearly distinguish between "REA" and "claim." Some claims are REAs and some REAs are claims.

But the fastball/strike distinction is valid, because one is a species of pitch, while the other is a species of umpire call. They are associated with one another, a call follows every pitch unless there is a hit or foul ball, but they are otherwise entirely different kinds of things.

Language confuses us, because if we were at a game we might say, "That last pitch was a strike," but the correct thing to say would be that the umpire called a strike on that last pitch.

 

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37 minutes ago, Vern Edwards said:

Moreover, if an inexperienced contractor submits a claim I would ask if it understood the difference between claims and REAs and the significance of submitting a claim instead of an REA.

 

7 minutes ago, Vern Edwards said:

The REA/claim distinction is not valid because both are requests for something as a matter of right, but the law does not clearly distinguish between "REA" and "claim."

You are being inconsistent.

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46 minutes ago, Vern Edwards said:

I don't think that the fastball/strike distinction is logically analogous to the REA/claim distinction.

The REA/claim distinction is not valid because both are requests for something as a matter of right, but the law does not clearly distinguish between "REA" and "claim." Some claims are REAs and some REAs are claims.

But the fastball/strike distinction is valid, because one is a species of pitch, while the other is a species of umpire call. They are associated with one another, a call follows every pitch unless there is a hit or foul ball, but they are otherwise entirely different kinds of things.

Language confuses us, because if we were at a game we might say, "That last pitch was a strike," but the correct thing to say would be that the umpire called a strike on that last pitch.

 

So you're saying my analogy was off-base.

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I'm saying the analogy doesn't seem to work, because the relationship between fastball and strike is not analogous to the relationship between REA and claim. The REA/claim distinction is based on classification of two members of the same genus. Fastball and strike are not members of the same genus.

But perhaps you can change my mind.

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