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How does a request for equitable adjustment differ from a claim?

In general, if the government causes the agreed-upon costs of a construction project to increase due to constructive changes or delays, then the contractor may want to pursue an equitable adjustment. Through an equitable adjustment, contractors in Massachusetts can be compensated for the increase in costs they incur due to the government's actions.

The Federal Acquisition Regulation does not explicitly define "equitable adjustment," even though it uses that phrase. However, as defined by the court, a request for an equitable adjustment is a modification of the amount due per the terms of a contract or a modification of the amount of time the contractor has to perform under the contract. The modification must be fair in light of the specific circumstances of the case. Equitable adjustments are the result of negotiations and are not adversarial in nature.

Claims, on the other hand, can lead to litigation and are, thus, adversarial in nature. FAR defines claims as the written request by one party to a contract to pursue payment or a modification of the terms of the contract. Claims, by definition, involve disputes. A routine request to be paid that is not in dispute does not satisfy the definition of claim. However, if the request satisfies the written notice requirement and there is a dispute as to fault, the amount to be compensated or the relief was not provided within a reasonable amount of time, then the grounds for pursuing a claim may exist. However, any claim must meet federal regulations before it can be litigated.

This is only a very brief overview of requests for equitable adjustment versus claims. Ultimately, contractors who have a dispute over a project will want to seek professional guidance to determine whether a request for equitable adjustment is appropriate, or whether they should pursue a claim.

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