What is a constructive change?
A constructive change is a doctrine of law invented by judges that protects your company from getting “ripped off.” If the contracting officer’s words, writings, communications, acts, or failure to act causes your company to make changes under the contract—even though there was no formal change order—the doctrine of constructive changes may entitle your company to an equitable adjustment. In other words, if the contracting officer’s action or inaction seems like a change order—even though it was not a formal, written change order—it may be construed or interpreted as if it were a formal, written change order.
This doctrine protects your company from being swindled by a contracting officer who nudges you towards different work and refuses to pay you because “there was no official, written change order.” Be careful about relying on constructive changes. A better idea is to ask for a written modification whenever you suspect a change order or any change to the contract.
What is an equitable adjustment?
An equitable adjustment is a modification to the contract price, schedule, or other terms to reflect changed circumstances. Most equitable adjustments are in response to a change order directed by the contracting officer under the Changes clause. For example:
1. Contracting officer issues a change order to use more expensive material
2. Your company complies with the change order because of the Changes clause
3. Your company incurs greater costs than contemplated under the original contract
4. Your company submits a request for equitable adjustment (REA) for more money
5. Contracting officer grants your REA
6. Contracting officer modifies the contract to pay you more money (equitable adjustment)
What is a request for equitable adjustment or REA?
Learn more about requests for equitable adjustment (REA) and claims under the Contract Disputes Act in Part 33, Protests, Disputes, and Appeals. You can also read my full-length article on this topic by emailing me at Christoph@ChristophLLC.com. You just read a free excerpt from the bestselling book, Federal Acquisition Regulation in Plain English. Buy your copy here: https://www.amazon.com/dp/1734198117/