The Top Four Types of Request for Equitable Adjustments (REAs)

The Top Four Types of Request for Equitable Adjustments (REAs)

If you're a federal construction contractor, you're likely to encounter Requests for Equitable Adjustments (REAs) during the course of your work. REAs are requested from the government for additional funds to cover unforeseen costs or changes in the work scope. In this blog post, we will provide an overview of the four most common types of REAs.

#1 Default

A compensable item for a Request for Equitable Adjustment (REA) under the Federal Acquisition Regulation (FAR) is FAR 52.249-10 Default. A Default REA would be triggered “If the Contractor refuses or fails to prosecute the work or any separable part, with the diligence that will ensure its completion within the time specified in this contract including any extension, or fails to complete the work within this time, the Government may, by written notice to the Contractor, terminate the right to proceed with the work (or the separable part of the work) that has been delayed. The FAR 52.249-10 lists examples of unforeseeable causes that are deemed independent of the Contractor's actions, displayed below:

  1. Acts of God or of the public enemy
  2. Acts of the Government in either its sovereign or contractual capacity
  3. Acts of another Contractor in the performance of a contract with the Government
  4. Fires
  5. Floods
  6. Epidemics
  7. Quarantine restrictions
  8. Strikes
  9. Freight embargoes
  10. Unusually severe weather, or
  11. Delays of subcontractors or suppliers at any tier arising from unforeseeable causes beyond the control and without the fault or negligence of both the Contractor and the subcontractors or suppliers

#2 Differing Site Conditions

A second allowable item for a Request for Equitable Adjustments (REA) is a differing site condition. The Federal Acquisition Regulation (FAR) describes the implications of this clause under FAR 52.236-2. As described by FAR 52.236-2, the Contractor should report to the Contracting Officer if any or all of the following are discovered:

  1. Subsurface or latent physical conditions at the site which differ materially from those indicated in this contract; or
  2. Unknown physical conditions at the site, of an unusual nature, which differ materially from those ordinarily encountered and generally recognized as inhering in work of the character provided for in the contract

#3 Unforeseen or Unintended Changes

Another common reason to submit a Request for Equitable Adjustments (REA) is a result of Unforeseen or Unintended Changes. The Federal Acquisition Regulation (FAR) identifies allowable changes that would be classified as unforeseen or unintended under FAR 52.243-4. If a Contractor Officer were to make changes to any of the following, resulting in an increase or decrease in costs, the Contracting Officer is required to adjust the contract accordingly. FAR 52.243-4 includes changes-

  1. In the specifications (including drawings and designs);
  2. In the method or manner of performance of the work;
  3. In the Government-furnished property or services; or
  4. Directing acceleration in the performance of the work.

If you have experienced an increase or decrease in costs due to these changes made by the Contracting Officer you are entitled to submit an REA to be compensated proportionately to the changes that took place.

#4 Suspension of Work

The fourth common Request for Equitable Adjustments (REA) is triggered by a Suspension of Work. The Federal Acquisition Regulation (FAR) 52.242-14 states that monetary adjustments should be made to a contract “if the performance of all or any part of the work is, for an unreasonable period of time, suspended, delayed, or interrupted by an act of the Contracting Officer in the administration of this contract, or by the Contracting Officer’s failure to act within the time specified in this contract.” However, this type of REA is not applicable to the following:

  1. For any costs incurred more than 20 days before the Contractor shall have notified the Contracting Officer in writing of the act or failure to act involved (but this requirement shall not apply as to a claim resulting from a suspension order); and
  2. Unless the claim, in an amount stated, is asserted in writing as soon as practicable after the termination of the suspension, delay, or interruption, but not later than the date of final payment under the contract.

Are you aware that FAR 31.205-33 lists professional and consultant services used to enhance legal, economic, financial, or technical situations as an allowable cost? This means that your cost to hire GovGig to prepare your REA modifications, schedule, and other items is an allowable cost, meaning it is a cost that the government acknowledges to be added beyond the scope of work.