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  • Question

    Is it possible to make an equitable adjustment to decrease the value of the contract in order to pull some of the money back in to the general fund? My question is completely separate from the issuance of a change order.


    Answer

    At time of award, the Government agrees to a fair and reasonable price commensurate with the value of the requirement being provided by the contractor. The requirement drives the price and amount of obligated funds. In orders to reduce the obligated amount, you will need to make a complimentary adjustment to the contractor's requirement to provide goods or services. Typically an equitable adjustment is an alteration to the price of a contract resulting from a Government initiated change in contractual requirements which is determined preferably through a negotiated process.

    In your case, you may find that you can reduce the funding on your contract by way of the version of the "Changes" or "Termination" clauses in your contract.  If you are over budget the most appropriate action may be a termination for convenience or a no cost settlement in accordance with
    FAR 49.101.  Your contract may have other existing provisions that allow for this as well. In any event, we suggest that you follow existing contractual provisions to arrive at a funding reduction rather than resorting to a "mutual agreement of the parties" type of agreement so as to avoid any competition or contract scope issues. 

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