When work scope reduction is a quantity reduction in a unit-priced contract the VEQ clause may apply. The VEQ clause provides that if actual quantity of a unit-priced contract varies more than 15% from the estimated quantity, either party may seek an equitable price adjustment. The government may seek a price adjustment if its orders are more than 115% of the estimated quantity on the grounds that economies of scale reduce unit prices; conversely, contractors can seek a price adjustment for higher unit prices if quantities are less than 85% of estimated quantities because of absence of economies of scale. The Courts have limited recoveries to the government and contractors to only those increased or decreased costs caused solely by the quantity variation itself.

When does the Changes clauses or VEC clause apply? Where neither party causes a quantity variation, Courts have held there should be a no-cost window surrounding the estimate. However, even if the VEC variation thresholds are not met the Courts have held that a price adjustment should be based on the Changes clause. Also, recent cases have ruled the Christian Doctrine does not hold for the VEC clause – if the VEC clause is physically absent from a contract, it does not apply like other important clauses that are in effect whether or not they are physically included or explicitly referenced in the contract.

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