Request for Equitable Adjustment

A Request for Equitable Adjustment (REA) is the formal document through which a contractor requests that the contracting officer modify the contract price, schedule, or both to compensate for additional costs resulting from government-directed changes or other government-caused impacts on contract performance.

What is a Request for Equitable Adjustment?

An REA is the primary mechanism contractors use to recover costs from government-caused impacts that were not part of the original contract scope. REAs arise most commonly from: formal change orders that modify the scope of work; constructive changes (informal government direction that effectively changes the scope); differing site conditions; government-caused delays or suspensions; defective government specifications; and government-furnished property or information failures.

The structure of a well-prepared REA includes: a clear statement of entitlement (the contract clause providing the right to adjustment, and the factual basis establishing the government's responsibility); quantification of direct and indirect cost impacts with detailed supporting schedules; request for schedule extension if the change impacted the critical path; and documentation (government correspondence, directives, records of the impact, invoices, time records).

REAs under $100,000 do not require certification. REAs over $100,000 must be certified by an officer of the contractor's company, the same certification required for Contract Disputes Act claims, because false certification can trigger False Claims Act liability. The certification language is: "I certify that this request is made in good faith, that the supporting data are accurate and complete to the best of my knowledge and belief, and that the amount requested accurately reflects the contract adjustment for which the contractor believes the Government is liable."

REAs are not claims under the Contract Disputes Act. If the contracting officer denies an REA or fails to respond within a reasonable time, the contractor must convert the REA into a certified claim under the CDA to access the appeal rights (Board of Contract Appeals or Court of Federal Claims).

Why REAs matter for government contractors

REAs are the primary financial recovery tool for contractors facing government-caused cost growth. Well-documented REAs submitted promptly, while the evidence is fresh, the witnesses are available, and the contracting officer's recollection of the government's actions is accurate, are far more likely to succeed than REAs submitted years after the events. Contractors should track potential REA entitlements from the day a change occurs, not retroactively at project end.

Example

A defense IT contractor receives an informal email from the Contracting Officer's Representative (COR) directing it to add six additional user groups to a software system originally scoped for 14 groups, a 43% expansion of the user population requiring additional infrastructure, licensing, and testing. The contractor responds immediately noting the change is outside the original scope. Eight weeks later, it submits a formal REA: citing the Changes clause at FAR 52.243-1; documenting the COR's email as a constructive change; providing detailed cost schedules showing $285,000 in additional hardware, software licensing, labor, testing, and overhead; and requesting a 6-week schedule extension. The REA is certified by the Vice President of Contracts. The contracting officer issues a bilateral modification for $265,000 and a 5-week extension.

Frequently Asked Questions

How long does a contractor have to submit an REA?

Time limits depend on the specific clause invoked. Under the Changes clause (FAR 52.243-1), the contractor must assert its right to adjustment within 30 days of receiving a change order. For differing site conditions (FAR 52.236-2), the contractor must provide written notice before disturbing the conditions. Contractors should provide written notice early (even if detailed pricing comes later) to preserve their rights under notice requirements.

What is the difference between an REA and a certified claim?

An REA is a negotiated request, a proposal to modify the contract. A certified claim under the Contract Disputes Act is a formal demand triggering the contracting officer's obligation to issue a Final Decision and the contractor's right to appeal. REAs are preferred as a first step because they are less adversarial; if REA negotiations fail, the REA can be certified and converted to a CDA claim.

Can an REA be submitted without the help of legal counsel?

Yes, and many REAs are prepared without outside counsel. However, for REAs over $100,000 requiring certification, and for REAs involving complex entitlement questions (Was this really a constructive change? Did the government's defective specifications cause the cost impact?), legal and cost accounting advice significantly improves outcomes. The certification carries personal liability for false statements.

What documentation is most important in an REA?

The most important documentation: (1) the government's direction or action that caused the impact (in writing or contemporaneous meeting notes); (2) contemporaneous records showing the contractor did not choose to incur the costs voluntarily; (3) time records, purchase orders, and subcontractor invoices tying specific costs to the change; and (4) the critical path schedule showing schedule impact. Documentation created at the time of the events is far more credible than reconstructions.