When contract effort exceeds the original scope of work the contractor is entitled to receive a price adjustment to the contract price. An equitable adjustment is the difference between the reasonable cost of the work required by the contract and the actual reasonable cost to the contractor of performing the changed work, plus a reasonable amount of overhead and profit. A contractor generally carries the burden of proving the amount by which a change increased its cost of performance. The following address circumstances when a claim may be justified and some issues related to quantifying the price adjustment.

In its claim the government negligently prepared estimates of anticipated room reservations, the court disagreed finding that in all but one year attendance was within the band estimated by the agency and in the one year the discrepancy was no more than 1% (The Federal Group v US, 67 Fed. Cl. 87). An appeals board ruled that if an estimate is reasonable and based on all available date, the government will be found to have exercised due care (Bannun Inc. v US Dept. of Justice, DOTCAB No. 4450). In its finding the agency did use negligent estimates, the Board established the way to compute damages was so the least paid ensured the contractor suffered no loss by the breach while the most paid ensured the contractor was not put in a better position than had the contract been performed. In so doing, the Board computed an adjustment of the bid unit price to reflect the non-negligent estimate and the resulting per unit price was multiplied by the units ordered during the contract (Spare Parts Logistics, ASBCA No. 54434).

The following addresses what happens when the value of assets sold are less because of government’s breach. A contractor asserted claims against the Dept. of Energy for failing to remove spent nuclear fuel per its agreement that diminished the sales price of two of its facilities. The court denied government arguments finding it "had to have contemplated that some facilities would be sold" and it was fair to infer that failure to adhere to its contract might result in diminution of the value of the assets (Consolidated Edison v. US, 67 Fed. Cl. 285). After the Space Shuttle Challenger exploded NASA announced it would not launch a telecommunications satellite where the contractor had a launch services contract. When the contractor had to sell its satellite division due to financial difficulty it asserted it had to settle for a diminished price without the services contract. The Court rejected the government’s contention that such damages were too speculative holding the proper measurement of damage was the difference between the price the satellite division would have brought with the launch services and the price the contractor received for the division without the contract (New valley Corp.v US, 67 Fed. Cl. 277). In another case the board held the contractor was not entitled to lost profits after the government breached its contract stating though lost profits may be recovered for breach, its was not appropriate here because (1) the contractor could not prove the breach caused any lost profits (2) the lost profits were not foreseeable and (3) the lost profits were not reasonably certain (CACI International, ASBCA No. 53085).

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