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 for performing the changed work, plus a reasonable amount of overhead and profit. A contractor generally has the burden of proving the amount by which a change increased its costs of performing the contract. However, for a downward adjustment in contract price asserted by the government, it has the burden of proving the lower costs caused by the change (George Sollitt Construction Co., v US, 64 Fed. Cl. 229). Because a construction contract did not include required notices of the presence of asbestos and lead paint, despite the government’s knowledge of their existence, the contractor filed a claim for the estimated costs associated with a self-insurance program to cover potential medical costs. The court ruled potential liabilities are not recoverable finding the proper measure of an equitable adjustment is the actual cost incurred and that "incurred potential liability" is not an "incurred cost" (SAB Construction Inc. v US, 66 Fed. Cl. 77).

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