Request for Equitable Adjustment (REA)

[AAC]

We are incurring unplanned costs and schedule slips due to defective GFE equipment. We have done a very good job of documenting the issues with numerous emails/briefings and formal contractual notices to the USG. We are still working the issue to avoid incurring costs and schedule slips.

I have DFARS Clause 252.243-7002 Requests for Equitable Adjustment in my contract. Therefore, I would have to act IAW with this clause should we decide to submit a REA. If this risk is realized, it will occur first with our subcontractor and I am sure we will be paying them before the USG gets around to dealing with the REA which hopefully results in getting us paid. Does anyone have experience dealing with REAs? Any idea on how long a REA can take on average?

[Guest Vern Edwards]

We are incurring unplanned costs and schedule slips due to defective GFE equipment. We have done a very good job of documenting the issues with numerous emails/briefings and formal contractual notices to the USG. We are still working the issue to avoid incurring costs and schedule slips.

I have DFARS Clause 252.243-7002 Requests for Equitable Adjustment in my contract. Therefore, I would have to act IAW with this clause should we decide to submit a REA. If this risk is realized, it will occur first with our subcontractor and I am sure we will be paying them before the USG gets around to dealing with the REA which hopefully results in getting us paid. Does anyone have experience dealing with REAs? Any idea on how long a REA can take on average?

There is no way to answer that question. How long it will take depends upon the complexity of the facts and issues, whether you can clearly establish your entitlement to an adjustment, whether you can prove the quantum of your request, the size of the request (generally, the more money you ask for the longer it will take), the competency of the contracting officer, the contracting officer's workload, and your relationship with the various government parties involved. It could easily take as long as a year or more.

If time is of the essence, submit your REA as a claim under the Disputes clause. If you decide to do that, make sure you comply with all requirements of the clause and FAR Subpart 31.2. Submitting the REA as a claim will force the contracting officer to deal with it in a reasonable period of time, but it may alienate the government's personnel, and it will make your claims preparation costs unallowable pursuant to FAR 31.205-47. So it's a tradeoff.

[joel hoffman]

We are incurring unplanned costs and schedule slips due to defective GFE equipment. We have done a very good job of documenting the issues with numerous emails/briefings and formal contractual notices to the USG. We are still working the issue to avoid incurring costs and schedule slips.

I have DFARS Clause 252.243-7002 Requests for Equitable Adjustment in my contract. Therefore, I would have to act IAW with this clause should we decide to submit a REA. If this risk is realized, it will occur first with our subcontractor and I am sure we will be paying them before the USG gets around to dealing with the REA which hopefully results in getting us paid. Does anyone have experience dealing with REAs? Any idea on how long a REA can take on average?

My advice is to discuss the situation with the Administrative Contracting Officer, if there is one and ask how long he/she thinks it would take. If there is no ACO, discuss with the KO.

It might be possible, if the government recognizes the REA, for them to issue a multiple part modification with at least some funding, pending the formal definitization process.

[Retreadfed]

We are incurring unplanned costs and schedule slips due to defective GFE equipment. We have done a very good job of documenting the issues with numerous emails/briefings and formal contractual notices to the USG. We are still working the issue to avoid incurring costs and schedule slips.

I have DFARS Clause 252.243-7002 Requests for Equitable Adjustment in my contract. Therefore, I would have to act IAW with this clause should we decide to submit a REA. If this risk is realized, it will occur first with our subcontractor and I am sure we will be paying them before the USG gets around to dealing with the REA which hopefully results in getting us paid. Does anyone have experience dealing with REAs? Any idea on how long a REA can take on average?

Does your contract have a Government Property clause, e.g., 52.245-1, in it? If it does, have you complied with the notice requirements in it and received instructions from the government on what action to take?

[joel hoffman]

There is no way to answer that question. How long it will take depends upon the complexity of the facts and issues, whether you can clearly establish your entitlement to an adjustment, whether you can prove the quantum of your request, the size of the request (generally, the more money you ask for the longer it will take), the competency of the contracting officer, the contracting officer's workload, and your relationship with the various government parties involved. It could easily take as long as a year or more.

If time is of the essence, submit your REA as a claim under the Disputes clause. If you decide to do that, make sure you comply with all requirements of the clause and FAR Subpart 31.2. Submitting the REA as a claim will force the contracting officer to deal with it in a reasonable period of time, but it may alienate the government's personnel, and it will make your claims preparation costs unallowable pursuant to FAR 31.205-47. So it's a tradeoff.

I should add to my response above that I don't necessarily disagree with Vern. I don't know from AAC's original post if there is any actual oral communication going on about the problem between the parties or if it is just an email notification approach. I also don't know if AAC has actually requested an adjustment or established an entitlement with government acknowledgment, etc.

But if the Government is sympathetic about the financial hardships being experienced, there are some ways to help out, pending definitization. This assumes that there is some kind of working relationship between the parties.

[formerfed]

Joel,

I know your experience is with the Army Corp of Engineers where claims and REAs occur frequently. You and the organization know how to deal with them promptly. However there are many, many places in the government where claims and REAs just sit and sit. They are a low priority and people often don't know how to deal with them. Often they get sent to a legal office and no one acts further until the contractor complains to their Congressional representative.

[joel hoffman]

Joel,

I know your experience is with the Army Corp of Engineers where claims and REAs occur frequently. You and the organization know how to deal with them promptly. However there are many, many places in the government where claims and REAs just sit and sit. They are a low priority and people often don't know how to deal with them. Often they get sent to a legal office and no one acts further until the contractor complains to their Congressional representative.

That is sad...

[AAC]

Thanks everyone for your insight.

Since September 2009 we have been having problems with the GFE provided to us from the USG. We have provided formal notification to the Contracting Officer (5 letters) , detailing the facts and circumstances. We further have asked the USG to provide us with assistance in trying to understand how the internal mechanisms in the GFE work to help us understand whether the results of our testing is due to some issue with the internal mechanism inside of the GFE. This type of assistance from the USG has not been forthcoming. A few weeks ago we started to receive some assistance but no determination has been made on whether or not the GFE provided is defective. I have the Government Delay of Work, FAR clause 52.247-17 in my contract and perhaps I should be citing this clause to file a claim instead of a REA. We tried to work with the USG to avoid schedule slips by trying to push forward to figure out the problem on our own. However, we are now getting into schedule slips and of course additional cost issues.

[Guest Vern Edwards]

Thanks everyone for your insight.

Since September 2009 we have been having problems with the GFE provided to us from the USG. We have provided formal notification to the Contracting Officer (5 letters) , detailing the facts and circumstances. We further have asked the USG to provide us with assistance in trying to understand how the internal mechanisms in the GFE work to help us understand whether the results of our testing is due to some issue with the internal mechanism inside of the GFE. This type of assistance from the USG has not been forthcoming. A few weeks ago we started to receive some assistance but no determination has been made on whether or not the GFE provided is defective. I have the Government Delay of Work, FAR clause 52.247-17 in my contract and perhaps I should be citing this clause to file a claim instead of a REA. We tried to work with the USG to avoid schedule slips by trying to push forward to figure out the problem on our own. However, we are now getting into schedule slips and of course additional cost issues.

Do you know what you should do before you do anything else? You should find someone to administer the contract for you who knows what he or she is doing. If the problem is defective GFP, then cite the Government Property clause, not the Government Delay of Work clause.

By the way, based on what you have said, I'd say, speaking optimistically, that you will wait at least a year for action on your request for compensation.

[AAC]

Thanks Vern. I have read the property clause and will act accordingly. As always, your comments are very insightful and so inspiring.