Request for Equitable Adjustment

An "Equitable Adjustment" is an adjustment to a contractor's price under a "changes" clause to compensate a contractor for adverse governmental action. Preparing and requesting an equitable adjustment requires effort on the part of the contractor, and the contractor is entitled to reimbursement for those efforts. Efforts incurred for a equitable adjustment are contract analysis, cost analysis, and other fact gathering such as legal entitlement, contractual terms, compiling, drafting, and submitting the request.

Costs of Preparing and Negotiating

Contractor costs incurred in connection with preparing and negotiating a Request for Equitable Adjustment are allowable if:

• (i) the government made formal or constructive changes to the contract,
• (ii) a governmental defect or delay, or
• (iii) the governments breach of contract.

Contractor costs may be unallowable if they are incurred in connection with the prosecution of claims or appeals against the government.

In summary, the costs of preparing, compiling, presenting, and negotiating an equitable adjustment are allowable as part of the equitable adjustment up until the time that the REA is turned into a claim or until an appeal is taken.