Requests for Equitable Adjustments and Price Adjustments, Cost Accounting Issues, Claims, and Termination

What do requests for equitable adjustments, requests for price adjustments, cost accounting issues, claims, and termination entail, and which laws and rules apply?

Requests for equitable adjustments (REAs) and requests for price adjustments in government contracts arise when unexpected changes impact contract performance, necessitating adjustments to contract terms. REAs typically stem from government-directed changes, differing site conditions, or unforeseen events, while price adjustments may tie to economic price adjustments or escalation clauses. Florida Statutes § 287.057 governs the procurement process, including contract changes and claims resolution, in the state.

Cost accounting issues often involve disputes over incurred costs’ allowability, allocability, and reasonableness. The Federal Acquisition Regulation (FAR) and Cost Accounting Standards (CAS) apply to federal contracts, while Florida procurement laws also address cost principles and procedures.

Claims and termination can occur when a party alleges breach of contract or seeks to terminate the contract for various reasons, such as default or convenience. The FAR and Florida Administrative Code Rule 60A-1.006 address contract disputes and terminations in federal and Florida procurement, respectively.

Need help regarding government procurement, including bid and contract protests? Schedule your consultation today with a top government procurement attorney.

How can businesses effectively navigate these issues?

Businesses should consider the following strategies:

Understand and adhere to contract terms and applicable regulations: Familiarize yourself with the relevant FAR, CAS, Florida Statutes, and Florida Administrative Code provisions to ensure compliance and understand your rights and obligations.
Maintain thorough documentation: Keep detailed records of contract performance, costs, and any changes to support REAs, price adjustments, or claims. Proper documentation can be critical in resolving disputes and justifying cost adjustments.
Communicate proactively with contracting officers: Regular communication allows for timely identification and resolution of potential issues. Engage with contracting officers when concerns arise and promptly submit any required notices, REAs, or claims.
Seek legal counsel when necessary: Government procurement and bid protest legal services can be complex, and professional guidance can help ensure compliance, protect your rights, and facilitate negotiations.
Stay informed: Monitor regulatory changes and industry developments to maintain awareness of evolving requirements and best practices, enabling proactive risk management and effective issue resolution.

What related issues commonly lead to litigation?

The following issues commonly lead to litigation:

Ambiguity in contract terms: Ambiguous contract language often leads to disputes between parties, as they might interpret the terms differently, ultimately leading to litigation.
Changes in scope or work: Changes in the project’s size or additional work requirements can lead to disputes over requests for equitable adjustments.
Cost accounting discrepancies: Disputes may arise when parties disagree over cost accounting practices or allocations.
Untimely requests: The Florida Administrative Code mandates that requests for equitable adjustments be submitted within 30 days of the occurrence.
Termination disputes: Disagreements about the validity of a contract termination, whether for convenience or default, can also lead to litigation.

When a set of facts is appropriate for litigation, there are many paths a claimant may take. We are value-based attorneys at Jimerson Birr, which means we look at each action with our clients from the point of view of costs and benefits while reducing liability. Then, based on our client’s objectives, we chart a path to seek appropriate remedies.

To determine whether your unique situation may necessitate litigation, please contact our office to set up your initial consultation.

What are effective measures to minimize the associated litigation risks?

Consider these measures to reduce the risk of litigation:

Clear contract language: Drafting contracts with precise language, well-defined terms, and explicit adjustment provisions minimizes the potential for disputes.
Establishing cost accounting standards: Parties should mutually agree upon cost accounting standards and ensure compliance to avoid disputes over cost allocations.
Effective change management: Implementing a change management system that includes documentation, communication, and approval processes for scope changes can help reduce disputes over equitable adjustments.
Timely submissions: Ensuring the submission of requests for equitable adjustments within the required time frame minimizes the risk of litigation over compliance.
Understanding termination provisions: Familiarizing oneself with the contract’s termination provisions and adhering to the proper procedures can help reduce the likelihood of litigation over contract termination.

Please contact our office to set up your initial consultation to see what actions or defenses may be available for your unique situation.

Frequently Asked Questions

What is a request for equitable adjustment?

A request for equitable adjustment (REA) is a claim submitted by a contractor for additional compensation or an extension of time due to changes in a contract’s terms or unforeseen circumstances. In Florida, REAs must be submitted within 30 days of the occurrence.

How does a request for price adjustment differ from an REA?

A request for price adjustment is a claim made by a contractor seeking to revise the contract price due to labor or material cost fluctuations. In contrast, an REA addresses contract terms changes or unforeseen circumstances. Both types of claims are subject to review and negotiation between the parties.

What are common cost accounting issues in government procurement?

Cost accounting issues in government procurement often stem from disagreements over cost allocations, overhead rates, or allowable costs. Therefore, contractors must follow the Federal Acquisition Regulation (FAR) and other relevant guidelines to ensure compliance and avoid disputes.

How can a contractor initiate a claim against the government?

A contractor can initiate a claim by submitting a written request to the contracting officer detailing the basis for the claim, the amount sought, and any supporting documentation. The claim should be certified if it exceeds $100,000, as required by FAR 33.207.

What are the grounds for contract termination?

A contract can be terminated for convenience when the government no longer requires the contracted goods or services or for default if the contractor fails to fulfill their obligations. Termination procedures are outlined in the FAR and the contract’s terms.

Have more questions about a government procurement-related situation?

Crucially, this overview of requests for equitable adjustments, requests for price adjustments, cost accounting issues, claims, and termination does not begin to cover all the laws implicated by this issue or the factors that may compel the application of such laws. Every case is unique, and the laws can produce different outcomes depending on the individual circumstances.

Jimerson Birr attorneys guide our clients to help make informed decisions while ensuring their rights are respected and protected. Our lawyers are highly trained and experienced in the nuances of the law, so they can accurately interpret statutes and case law and holistically prepare individuals or companies for their legal endeavors. Through this intense personal investment and advocacy, our lawyers will help resolve the issue’s complicated legal problems efficiently and effectively.

Having a Jimerson Birr attorney on your side means securing a team of seasoned, multi-dimensional, cross-functional legal professionals. Whether it is a transaction, an operational issue, a regulatory challenge, or a contested legal predicament that may require court intervention, we remain tireless advocates at every step. Being a value-added law firm means putting the client at the forefront of everything we do. We use our experience to help our clients navigate even the most complex problems and come out the other side triumphant.

If you want to understand your case, the merits of your claim or defense, potential monetary awards, or the amount of exposure you face, you should speak with a qualified Jimerson Birr lawyer. Our experienced team of attorneys is here to help. Call Jimerson Birr at (904) 389-0050 or use the contact form to schedule a consultation.