On 9/6/2025 at 7:41 AM, Vern Edwards said:

Quote: In consideration of the modification(s) agreed to herein as complete equitable adjustments for the Contractor's ________________ (describe) __________________ “proposal(s) for adjustment,” the Contractor hereby releases the Government from any and all liability under this contract for further equitable adjustments attributable to such facts or circumstances giving rise to the “proposal(s) for adjustment” (except for ____________________ ).

5 hours ago, Vaughn said:

"The Contractor hereby releases the Government, in consideration of the modification(s) agreed to, from all liability under this contract for further equitable adjustments arising from the “proposal(s) for adjustment” (except for _________)."

Just a comparison for info.

I see in the language @Vaughn sets forth we lose the applicability of the release to the underlying facts or circumstances surrounding the change the Government made. We instead apply the release of claims to all things the Contractor wrote in their proposal. So, they could just issue a new proposal and get another swing at it. Imagine a disgruntled contractor up at the plate: "Strike 8 - try again!"

In DOD I once had a boss who was a former NCO that used to say, "Disapproved! Please submit again in 90 days for further disapproval."

I agree with Voyager. The clause has worked since 1984.

40 minutes ago, joel hoffman said:

The clause has worked since 1984.

It's worked longer than that. It appeared at 32 CFR 22-304(b) in 1975:

26-204 Complete and Final Equitable Adjustments. (a) Controversies sometimes arise in interpreting what the parties to a contract intended to include within the scope and terms of the supplemental agreement equitably adjusting changes. To assure that equitable adjustments are complete, contractors should make every reasonable effort to present to the Government all elements of adjustment arising out of the change order to which the equitable adjustment pertains. Supplemental agreements containing a release of claims should be made only after all such elements of adjustment have been presented and considered.

(b) The following is a sample release for use in supplemental agreements: RELEASE OF CLAIMS In consideration of the modification(s) agreed to herein as complete equitable adjustments for the Contractor's ........................................ (describe) ........................................ claim s, the Contractor hereby releases the Government from any and all liability under this contract for further equitable adjustments attributable to such facts or circumstances giving rise to the aforesaid claims (except for: .............................. ).

It probably appeared in regulations long before that.

The issued is not whether it "worked". The issue is, as raised by the OP, how does one interpret "In consideration of..."

I say it refers to consideration flowing from the contractor to the Government in return for it's agreement to modify the contract.

But I could be wrong.

With the "facts or circumstances" language put back in, that leaves open Vern's two questions still:

On 9/6/2025 at 1:02 PM, Vern Edwards said:

When a CO sends the contractor a mod to be signed as a supplemental agreement, isn't that an offer to settle?

A binding contract requires offer, acceptance of the offer, and consideration. Assuming FAR Part 15 source selection procedures were used, prior to award the Contractor proposal's promissory statements were the offer, and, unless the Government counteroffered in discussions, the award document was acceptance of the offer. Consideration, according to The Government Contracts Reference Book, is either a benefit to the offeror or a detriment to the buyer, so at time of award without discussions, consideration was the Government's promise to pay the sums stated in the contract.

Now, here at time of contract modification, I assume the parties are actually negotiating. Now the supplemental agreement drafted by the Government is the offer, as it captures the REA proposal's promissory statements and any other promises the Government offers to the Contractor buyer for bilateral signature. Again, consideration must be either a benefit to the offeror or a detriment to the buyer. Here the detriment to the buyer is the promise to release claims.

On 9/6/2025 at 8:41 AM, Vern Edwards said:

Let's put the predicate after the subject, where it belongs:

The Contractor hereby releases the Government from any and all liability under this contract for further equitable adjustments attributable to such facts or circumstances giving rise to the “proposal(s) for adjustment (except for___________)...

Now, where should we put In consideration of the modification(s) agreed to herein as complete equitable adjustments for the Contractor's ________________ (describe) __________________ “proposal(s) for adjustment..."?

Look at this phrase again: it seems to say the "modification(s)" are the consideration*. But I just said the promise to release claims is the consideration. It is unclear as written. I therefore propose the whole entire template language remain the same except for the first word. Change "In" to "As". Then the offer is the supplemental agreement draft, the acceptance is the Contractor's bilateral signature, and the consideration is the promise to release.

*Here, the modification is actually the binding contract. It is the instrument that requires offer, acceptance, and consideration.

On 9/6/2025 at 12:46 PM, joel hoffman said:

a unilateral equitable adjustment.

What is this?

1 hour ago, Retreadfed said:

What is this?

It’s when the government issues a unilateral modification for an equitable adjustment to the contract price and/or contract time due to a directed change order or constructive change or under another applicable contract clause that may provide for an equitable adjustment, such as Differing Site Conditions, etc.

There can also be unilateral mods for price adjustments but no profit/fee or non-compensable time extensions, etc, etc….

On 9/6/2025 at 12:02 PM, Vern Edwards said:

When a CO sends the contractor a mod to be signed as a supplemental agreement, isn't that an offer to settle?

I think only two contract clauses in the FAR System expressly permit a CO to unilaterally adjust a contract price: FAR 52.230–6 Administration of Cost (June 2010) Accounting Standards and GSA FAR Supp. 552.216-71, Economic Price Adjustment—Special Order Program Contracts (August 2010).

However, it has been done in the past. See Paragon Energy Copr., 88-3 ENGBCA ¶ 20959 (Eng. B.C.A.), ENGBCA No. 5302 (1988):

The lack of parallelism of the faces of the flywheel of .0035 inches caused the Appellant delay and extra cost. Some of the delay was intermingled and concurrent with several other causes of delay during the alignment process. The Government has already made a unilateral equitable adjustment of $10,000 and granted a 3 day time extension. Of this, approximately $5,000 was for work by G.E. On the basis of a jury verdict, we conclude that the total equitable adjustment due the Appellant in this appeal (which adjustment includes the Government's unilateral of $10,000) is $20,000 and 10 day time extension for delay to the alignment process.

Such an adjustment may be disputed. Note that such a unilateral mod is not conditioned on receipt of a release of claims. But it could save the government some interest on a later claim for more money.

On 9/6/2025 at 12:02 PM, Vern Edwards said:

When a CO sends the contractor a mod to be signed as a supplemental agreement, isn't that an offer to settle?

Vern, if you mean, after completion of negotiations and agreement, sending the mod unsigned mod to the contractor to sign and return, I suppose that may be considered an offer to settle, although the parties have already settled the issue through negotiation or a proposal and acceptance of the proposal by either party. .

1 minute ago, joel hoffman said:

Vern, if you mean, after completion of negotiations and agreement, sending the mod unsigned mod to the contractor to sign and return, I suppose that may be considered an offer to settle, although the parties have already settled the issue.

The parties have not settled the issue until both have signed the mod. Prior to that they only have a tentative agreement, which may be subject to approval by higher authority on both sides.

24 minutes ago, joel hoffman said:

t’s when the government issues a unilateral modification for an equitable adjustment to the contract price and/or contract time due to a directed change order or constructive change or under another applicable contract clause that may provide for an equitable adjustment, such as Differing Site Conditions, etc.

Looking at the language of the Changes clause wouldn't this be in the form of a contracting officer's decision under the Disputes clause? I don't see any other way for a CO to unilaterally issue an equitable adjustment.

The CO could just do it. What's to prevent? It would not be binding on the contractor, because without a release of claims the contractor could submit a supplemental claim for more money. An upward unilateral EA would give the contractor some money pending resolution of supplemental claim(s).

On 9/6/2025 at 12:43 PM, Vern Edwards said:

Based on the text of the Changes clause, isn't agreeing to an equitable adjustment a pre-exiting legal duty of the government? Didn't it promise to do that and to modify the contract when it signed the contract?

I think Vern is on to something here. Let's did into this a little deeper. The Changes causes permit the CO to issue certain types of changes. I think we all agree that no additional consideration is necessary for the CO to do this. The consideration for this power was provided at the time of contract inception. Similarly, no additional consideration is required for a CO to agree to an equitable adjustment for a permissible change under the Changes clause. Therefore, the contract modification memorializing these two actions needs no further consideration because that consideration was already provided when the contract was formed. This brings up the question of what consideration is needed for the contractor to provide a release after the parties agree on an equitable adjustment under the Changes clause. None of the Changes clauses requires such a release. However, the parties can agree on including the requirement for a release in the contract. If they do, I would argue that the consideration for providing any such release running to the contractor is included within the price/estimated cost of the contract. On the other hand, if there is no clause in the contract requiring such a release and the CO wants to require one unilaterally, that brings up a lot more questions than consideration.

@Retreadfed Actually, I think you have shown me that I am wrong to think that the release is consideration for the mod.

I'm beginning to think that since no clause requires a release, and since making an equitable adjustment after issuance of a change order is a pre-existing duty of the government and something to which the contractor is already entitled, the government's request for a release is what requires consideration.

🤔😳😵‍💫

We occasionally had contractor’s whose legal departments’ policy was not to sign a release. The usual excuse was that the impact of cumulative effect of changes couldn’t be pre-determined. Then we’d get the REA at the end of performance. Raytheon was a prime example. They “tried” but had zilch of a case to support it. . That’s another story…

14 hours ago, joel hoffman said:

We occasionally had contractor’s whose legal departments’ policy was not to sign a release. The usual excuse was that the impact of cumulative effect of changes couldn’t be pre-determined. Then we’d get the REA at the end of performance. Raytheon was a prime example. They “tried” but had zilch of a case to support it. . That’s another story…

I've only had large firms refuse to sign a release. Never once have I had a small biz push back. Maybe because they don't have the bandwidth at that level?

7 minutes ago, Motorcity said:

I've only had large firms refuse to sign a release. Never once have I had a small biz push back. Maybe because they don't have the bandwidth at that level?

I don’t remember every firm that signed only with reservations but you are probably right.

Edit: The last one I was directly involved with was a large business civil works contractor, Granite Construction, 12 or 13 years ago.