ASSERT REA IN 30 DAYS: EXCEPTIONS MAKE THE RULE

Sometimes exceptions make the rule.  The changes clause says the contractor "must assert" its right to a request for equitable adjustment (REA) "within 30 days from the date of receipt of the written order."  The clause goes on to say the contracting officer may act on the request any time before final payment on the contract.  The exceptions, however, have made the rule.  The 30 days is seldom enforced.

First of all, the rule does not apply to constructive changes.  Those changes are never the subject of a formal written change order.  So, contractors need only pay attention to the requirement to be sure their constructive change REA's are submitted prior to final payment.    As long as there is any outstanding action on the contract, there is no final payment.  So, even some notice (perhaps imputed or constructive) of the change extends the time for submission.

The contracting officer's review of the REA waives enforcement of the 30 day notice requirement.

To enforce the 30 day requirement, the government has to show prejudice by the delay.  This is a difficult burden.  The government must show it was deprived of the opportunity to mitigate its costs.  This is almost impossible especially when the contractor argues the government has actual or constructive knowledge of the change.  If the REA is submitted two years after the change occurs and government records have been lost, the government may be able to show prejudice.

Good contract administration dictates that whenever a contractor encounters a formal change, it should send a short letter to the contracting officer, along these lines:

We have received the referenced change order and we will implement it as instructed.  We hereby assert our request for an equitable adjustment to the contract price and schedule.  We will submit details in support of this request within the next 90 days.

The same type of letter can be used for constructive changes and breaches of the contract.  As soon as the contractor discovers the problem it should assert its right to the REA or claim and follow with the details as soon as practicable.

Although the 30 day requirement in the changes clause is not strictly enforced the requirement that the termination for convenience settlement proposal be submitted within one year is strictly enforced.


bill@spriggslawgroup.com          http://www.spriggslawgroup.com/