Wednesday, March 22, 2023

What Is An Rea In Government Contracting

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Contracting Officer Final Decision

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Each claim by a contractor against the Federal Government relating to a contract shall be submitted to the contracting officer for a decision. Each claim by a contractor against the Federal Government relating to a contract shall be in writing

Courts have ruled that a request for a contracting officers final decision need not be explicit, however, but may be implied from the context of the submission. See Rex Systems, Inc. v. Cohen, 224 F.3d 1367, 1372 Ellett, 93 F.3d at 1543. See Federal Circuit Court reverses Court of Federal Claims on REA claim for negligent estimates.

As a government contractor, you dont want to take chances with free language. You will spend thousands in attorney fees litigating the question of whether your Government REA met the requirements of the Contract Disputes Act. When seeking a change order of equitable adjustment and extra work from the government, you should always seek legal review to make sure that your contract claim against the government meets the CDA requirements.

Rea Government Contracts V Contract Disputes Act Claim Change Order Requirements

When it comes to REA government contracts and change order requests, the Contract Disputes Act states that a contractor claim against the Federal Government REA construction claims to a contract shall be submitted to the contracting officer for a decision. 41 USC 7103 . This is an important requirement when looking at the Boards jurisdiction over a contract claim.

The Contract Disputes Act does not define the term claim. However, when compared to the Government REA Contracting Act, the FAR defines a claim as a written demand or written assertion by one of the contracting 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 arising under or relating to the contract. See FAR 2.101. Furthermore, any claim that exceeds $100,000 must be certified under 41 USC 7103.

  • Appeal Boards look at Contract Disputes Act claims on the merits and facts of each case.
  • Appeal Boards use a common sense approach

How long does a contractor have to submit a claim to the contracting officer?

Should A Contractor File A Request For Equitable Adjustment Or A Claim

When a contractor has a good working relationship with its contracting officer, an REA has a better chance of being successful. It is also the appropriate move when the agency has indicated a willingness to negotiate a change or dispute with the contractor.

However, if the contractor and the contracting officer have an adversarial relationship or it is clear that the contracting officer is not amenable to negotiating the change or dispute, filing a claim may be the better path. Likewise, if the government has already stated it does not believe a contractor is entitled to an equitable adjustment, a claim should be filed instead.

An REA can also be converted into a claim later if necessary. It is important to note that filing an REA does not preclude a contractor from filing a claim later. Many contractors end up filing both a claim and an REA.

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State And Local Government

When many businesses think of government contracting, they tend to focus on federal. However, of the trillions spent every year by the federal government, all the states spend about the same in total dollars.

Obviously, some states spend more than others, but there are significant opportunities for businesses to win contracts in the State, Local, Education marketplace.

As a business owner, the first thought you may have is, “Where do I begin? The are 50 states, and thousands of local governments!”

Initially, the size and scope of where to look and how to manage a search for opportunities can seem overwhelming. After all, there are over 90,000 SLED procurement entities, which produce over 400,000 bids & RFPs every year.

The first step is to think about what your business produces or what services you provide, and start to narrow your focus to which SLED agencies may be interested.

In the Onvia chart on this page, you can see a breakdown of what types of services were in more demand in different parts of state and local government.

The second step then is to start to find which state and local governments, school boards, and hospitals have purchased what you are selling, how frequently, and if there are any new opportunities announced.

The third step is to prioritize what is publicly available now, and what may be coming up in the next few months, and prepare your outreach initiatives.

The Process: How Does A Contractor Request An Equitable Adjustment

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First, there is the preparation for an REA. What you need:

  • Gather key documents, which detail your contract terms.
  • Any correspondence with the government asking for unplanned work or causing unnecessary delays.
  • Any cost estimates the government scope increase or time delay caused.

Mctlaw can analyze this information, break down where the government violated the contract, and tailor a legal strategy to give you the best chance for approval. Let our attorneys do the hard part of writing the formal letter to your contracting officer required for an REA.

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What Every Contractor Should Know About Requests For Equitable Adjustment

Government Contracts, Blog, Small Business Programs 04.10.17

Government contractors quickly learn to expect the unexpected. While working on a construction contract, a contractor may encounter undisclosed utility lines 15 feet underground. Or, an information technology support contractor may be asked to comply with heightened security requirements without being given a contract modification. These changes increase the cost of performance and can put a small business in a precarious position. In situations like this, many contractors file a request for equitable adjustment , seeking additional compensation and/or time. Before preparing and submitting an REA, there are several important things of which contractors should be aware.

  • An REA must rely on at least one contract provision. Although the E stands for equitable, and an REA is intended to make a contractor whole, the claim must be based on a contract or Federal Acquisition Regulation provision. Commonly used provisions include: FAR 52.243-1 Changes Fixed-Price FAR 52.236-2 Differing Site Conditions 52.222-44 Fair Labor Standards Act and Service Contract Labor Standards Price Adjustment. The appropriate FAR provision depends on the specific facts of the situation presented.
  • Provide as much detail as possible. An REA that contains a detailed explanation of the facts providing the basis for the REA is more likely to be granted. The writer should not assume the reader is aware of the circumstances.
  • A Practical Program Managers Guide To Requests For Equitable Adjustment

    My first experience with a request for equitable adjustment was brief and decisive. The O-6 program director didnt literally drop it in the trash bin, but he clearly wanted to.

    His message to the development contractor was to not expect any action by the government, despite the contractor fastidiously mentioning it month after month on a chart listing unresolved contracts business. The REA resulted from a technical disagreement between the contractor and the government regarding how much in-scope testing was required to properly resolve a spacecraft test fault.

    According to Federal Acquisition Regulation subpart 43.2, a contractor requests equitable adjustment essentially a type of proposal in response to a unilateral contract change order, but other unplanned changes to contract terms, such as a late delivery of government furnished property or disputes over scope, can lead the contractor to send an unexpected REA.

    In the daily life of a program office, REAs are rare because planned contract changes are accompanied by requests for proposal. Likewise, when the contractor and government agree about an unplanned change, the program manager would treat the REA similarly to any other proposal. However, when the REA results from disagreement on contract terms, delay of work, or scope , the working relationship may become tense if it isnt tense already. Both the government and contractors must weigh issues of fairness and duty to stakeholders when deciding how to proceed.

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    Rea Vs Contract Disputes Act Claims Request Appealing Contracting Officers Final Decision

    Government contractors often find themselves in a precarious position when they file a request for equitable adjustment but later made the argument that it meets the requirements of a Contract Disputes Act claim.

    Understanding the applicable laws can save contractors thousands in attorney fees when seeking a change order or increasing their chances of getting an equitable adjustment under the FAR.

    Core Standards For All Government Buyers

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    All procurement professionals working for a federal, state, or local government, have some core objectives that they need to meet – both legally and as part of their service to their constituents.

      Competition

      In order to ensure the government buys what it needs at the best possible price, and to be fair to all businesses, it needs to solicit for a contract. This solicitation process needs to be open to competing bids, and needs to be reasonably fair and transparent.

      Though there are circumstances when a government can simply reach out to a select number of businesses for bids without a massive public search or public notification , by and large, the process of requesting proposals to the evaluation process, and then the selection, should be publicized, fairly open to all types of businesses, and follow a transparent process.

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    Requests For Equitable Adjustments & Claims

    Todays contractors must be acutely aware of every Government action or inaction that entitles them to additional money. By using the proper entitlement procedures, contractors will receive the additional dollars due them . One of the most common mistakes that contractors make is that they think submitting a Request for Equitable Adjustment or a claim will upset the agency. The most successful government contractors are quite adept at submitting REAs and Claims. Once submitted both the contractor and the agency enter into negotiations to settle that matter.

    Malyszek & Malyszek specializes in:

    REAs and Claims is a right for all contractors entering a Government Contract via the Changes Clause. The government has the right to make changes on a contract and thus contractors have the right to submit REAs and claims for these changes.

    Another common mistake that we see many contractors make is that they sit or wait to submit REAs and Claims to the end of the contract. The earlier the problems with REAs and Claims are dealt with – the better.

    Example

    ABC Inc., enters a Government Contract for $ 7,000,000.00 and encounters a difference of an opinion with a contracting officer that escalates. Three months later, the contract is terminated for default:

    ABC Inc, should have contacted Malyszek & Malyszek earlier to avoid a total loss of $ 2,450,000.Claims AwarenessClaims Indicators includeMost Government Contractors arent aware that

    Government Contractors Need Experienced Advisors Who Understand Their Industry And Will Deliver Customized Solutions That Fit Their Needs

    Government contractors face a range of challenges when navigating a multifaceted business and regulatory environment. The good news is you dont have to go it alone. Work with the right advisor, one who understands the nuances of working with the federal government.

    Being successful is about more than just financing, its about mitigating business and operational risk. You must adapt to shifts and trends in technology and cybersecurity. You need guidance on filing bid protests and addressing employment-related issues such as the expansion of the mobile workforce and working with subcontractors. Critically, contractors must keep pace with changes in government administration and its evolving policies, rules and regulations. Its a balancing act, but RSM can help.

    We understand the complex challenges you face and provide in-depth, industry-specific knowledge to solve them successfully. Our government contracting services include guiding clients through regulatory compliance issues, assisting in an acquisition or divestiture, enhancing value during the yearly audit and assessing the tax ramifications of regulatory changes. Our government contracting-focused professionals can also advise you across a wide range of disciplines including valuation, M& A, cybersecurity and technology to increase efficiencies and improve performance.

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    What Is A Request For Equitable Adjustment

    A request for equitable adjustment, or REA, is a proposal made by a contractor to its contracting officer seeking an equitable increase on the contracts price based on a change to the requirements of the contract.

    Any time contractors discover an unexpected problem that was not anticipated by the contract, they can negotiate with their contracting officer to find a solution that will allow them to receive an increase in the contract price for performing the new work.

    An REA is considered a contractors first option when the parties are unable to reach an agreement, which usually occurs because the government believes the extra work has already been covered by the contract.

    In a request for equitable adjustment, the contractor explains why it believes that the work is not covered by the contract. If the contracting officer agrees, both parties then enter a new contract modification. However, if the contracting officer disagrees, the next course of action is to submit a certified claim that could lead to litigation.

    Difference Between Claim And Request For Equitable Adjustment Letter To The Agency

    Requests For Equitable Adjustment Archives

    What is Contract Claim?

    The Contract Disputes Act, 41 U.S.C. 7101 7109, does not define claim. FAR 2.101, which defines claim as: a written demand or written assertion by one of the contracting 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 arising under or relating to the contract. The written demand by the contractor seeking the payment of money exceeding $100,000 is not a claim under the Contract Disputes Act of 1978 unless the certification language is included.

    • Invoices or routine requests for payment that is not in dispute are not claims.
    • Note that an REA by itself is not a claim under the Contract Disputes Act. However, it can become one.

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    What Are The Types Of Government Contracts For Small Businesses

    If you think the road to becoming a full-fledged government contractor is tough, wait until you hear about the journey to competing for federal contracts as a small business. Going against established government contractors and huge corporations is an uphill battle for every small business owner.

    Fortunately, the United States government recognizes this struggle within the industry. It has launched different programs and policies to help level the playing field, such as small business set-aside contracts.

    Request For Equitable Adjustment What Is A Government Contract Rea

    Request for Equitable Adjustment ), in government contracting addresses a contract adjustment and is driven by the changes clause, to compensate you due to expenses incurred because of government actions, or to compensate the Government for contract reductions. Many companies have recently fallen prey to submitting a request for adjustment letter that ultimately did not meet the Contract Disputes Act requirement.

    When you submit a request letter to the contracting officer, you want to include the relevant FAR language that protects you later in the event that the government and you cannot come to a final agreement.

    When there is a FAR change order in effect, a request for equitable adjustment letter does include an allowance for profit. How Do Federal Government Contractors Deal With COVID-19 Problems?

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    Time And Materials Contract

    Compared to fixed-price contracts, the federal government prefers time and materials contracts when they are unable to give an accurate estimate of how much product they will need and what level of work they will need, such as when responding to emergencies and disasters.

    Given the vague requirements, the federal government instead negotiates with the government contractor for reasonable specified fixed hourly rates and actual material costs. Although these types of government contracts are for short-term periods only.

    • Labor-hour Contracts

    A labor-hour contract is another variation of the time and materials contract. The only difference between the previous government contract type is that the contractor bound by this contract is not the one who will supply the materials needed for the project.

    • Letter Contracts

    A letter contract is simply a preliminary contract that proves that the government authorizes the federal contractor to manufacture materials or perform services required immediately.

    What Is A Government Contract Rea

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    The Contract Disputes Act does not discuss requests for equitable adjustment letters to the government. A Request for equitable adjustment simply means: a request for an equitable adjustment to one or more contract terms. Contract REAs are discussed in the Changes clauses, FAR 52.243-1 through 5 the Differing Site Conditions clause, FAR 52.236-2 and the Government Property clause, FAR 52.245-1. See more about Construction Contract Claims Appeal for Government Contracts.

    DOD Contractors submitting non-claim REAs valued at more than the simplified acquisition threshold must certify them as required by DFARS 243.204-71 and 252.243-7002.

    Instead, it is simply a request to adjust the contract. There are certain things up front that you can do in order to minimize costly litigation on the issue. Only when there is an impasse is your request for equitable adjustment viewed as a Contract Disputes Act claim.

    • Interest starts to accrue at this point.

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    Request For Equitable Adjustment Process

    DoD contracting personnel shall follow this general process if receive a REA, claim, or any other non-routine written request asking for an adjustment to a contract:

    • First, determine if the request meets the definition and standards of a claim in accordance with FAR 52.233-1, regardless of what its referred to in the document.
    • If it meets the standards of a claim, then you must process it as a claim regardless.
    • If it does not meet the standards of a claim found in FAR 52.233-1:
    • If the contractor has called it a claim , reply immediately to the contractor pointing out the item preventing it from being considered a claim, and work with them for further resolution, encouraging non-legal recourse if possible.
    • If the contractor has called it by some other name , it is more than likely a REA and should be treated as such.

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