Pricing of Adjustments

Equitable Adjustment is defined in various sections of the FAR text and several of the contract clauses. But, the FAR text and the 
contract clauses do not clearly define what is equitable, so 
we must induce subjective definitions.

Equitable adjustments are hugely important in government contract law dealings. An equitable adjustment occurs when there is a modification of the contract, which can be described in three ways:

  1. Adding work to the contract.
  2. Subtracting work from the contract.
  3. Substituting work.

A certification for equitable adjustments must be made if the amount surpasses the simplified acquisition threshold. The amount 
of the equitable adjustment is the total of the increase plus the decrease. 

The required language of the certification reads:

 "I certify that the request is made in good faith, and that the supporting data are accurate and complete to the best of my knowledge and belief."

Essentially, when pricing adjustments, the government contractor must not be forced into a worse profit situation on the unchanged work after the change.

Pricing adjustments in government contracts should include: 

• The explicit costs of additional work. 
• Predicted explicit costs of deleted work not yet performed. 
• Inexplicit costs affected by the modification.
• Profit or fee affected by the modification. 

The courts have historically used these methods to authorize equitable adjustments in distinct cases:

• Reasonable cost. 
• Jury Verdict.
• Total cost. 
• Reasonable value. 

At all costs, Malyszek & Malyszek will make sure our clients obtain good positions when dealing with pricing adjustments of government contracts.

Call us if you have a question with pricing of government contract adjustments. You will receive an honest and professional answer, and the first call will be free!