In brief: On US federal construction contracts, a request for equitable adjustment (REA) is a request to negotiate a change to the contract price or schedule. A claim is a formal written demand under the Contract Disputes Act that the contracting officer must decide. The choice affects certification, interest, which costs you can recover and how quickly a dispute moves.
What an REA is
An REA asks the contracting officer to adjust the contract price, time or both because of a change, a differing site condition, a suspension of work or another event the contract allows for. On construction contracts the main clauses are the Changes clause (FAR 52.243-4), Differing Site Conditions (FAR 52.236-2) and Suspension of Work (FAR 52.242-14).
An REA is part of normal contract administration. It invites negotiation and usually leads to a bilateral modification. There is no fixed deadline for the government to respond, and no formal decision is required.
What a claim is
A claim is defined in FAR 2.101 as a written demand by one of the parties seeking, as a matter of right, the payment of money in a sum certain, the adjustment or interpretation of contract terms, or other relief. Claims are governed by the Contract Disputes Act (41 U.S.C. §§ 7101–7109) and FAR Subpart 33.2.
Once a valid claim is submitted, the contracting officer must issue a final decision. For claims of $100,000 or less, the decision is due within 60 days if the contractor asks for one. For larger claims, the contracting officer must decide within 60 days or tell the contractor when a decision will be issued. If no decision is issued within the required time, the claim is deemed denied and the contractor can appeal.
The main differences
Certification
Claims over $100,000 must be certified by the contractor in the words set out in FAR 33.207. The certification confirms the claim is made in good faith, the supporting data are accurate and complete, and the amount requested accurately reflects the adjustment the contractor believes the government owes. An REA does not need this certification, although some agencies ask for a similar statement.
Interest
Interest on a claim runs from the date the contracting officer receives the claim until payment. No interest runs on an REA. For a large change negotiated over many months, this can be a significant amount.
Recoverable costs
Under FAR 31.205-47, costs of prosecuting a claim against the government are unallowable. Costs of preparing an REA, as part of contract administration, can be allowable. US case law has drawn this line by asking whether the cost was incurred to support negotiation or to support litigation. This is one reason many contractors start with an REA and only convert it to a claim when negotiation fails.
Time limits
Claims must be submitted within six years after they accrue (41 U.S.C. § 7103(a)(4)(A)). An REA does not stop this period running. Separate notice requirements in the contract also apply, for example the 20-day notice in the Changes clause for constructive changes, and these should be met regardless of whether you file an REA or a claim.
Appeals
A contracting officer’s final decision on a claim can be appealed to the relevant Board of Contract Appeals, usually within 90 days, or to the US Court of Federal Claims within 12 months. An REA cannot be appealed until it has been converted into a claim and decided or deemed denied.
When to use which
- Start with an REA when the relationship with the agency is working, the change is understood by both sides, and you expect to agree a modification.
- Submit a claim when negotiation has stalled, the amount is large enough for interest to matter, or the government has not responded in a reasonable time.
- Convert carefully. An REA can be converted to a claim by submitting a written demand for a final decision, with certification if over $100,000. Make sure the converted claim states a sum certain.
The schedule analysis behind the request
For time-related REAs and claims, the delay must be shown on the critical path. Federal agencies and the boards generally expect a CPM schedule analysis, and the AACE Recommended Practice 29R-03 is widely referred to. Many federal construction contracts also have a scheduling specification, such as UFGS 01 32 01.00 10 on USACE projects or UFGS 01 32 17.00 20 on NAVFAC projects, which sets out how time impact analyses must be prepared and submitted.
A well-supported REA usually includes:
- the contract clause and the facts of the change;
- a time impact analysis based on the current accepted schedule update;
- a cost breakdown separating direct costs, time-related costs and markups;
- the supporting records: daily reports, RFIs, correspondence and invoices.
This article is general guidance, not legal advice. Federal contract disputes have strict procedural rules, and contractors should take advice from a government contracts attorney before converting an REA into a claim.
Related: REA and delay claim consultants · CPM scheduling services · Solvix in the USA
