Government contracts involve detailed specifications, demanding schedules, and multiple stakeholders. Despite thorough planning, changes to the original contract scope regularly lead to requests for equitable adjustment, claims, and disputes. These often arise from circumstances that disrupt project flow, increase costs, or alter expectations. Understanding the root causes of change orders and claims enables contractors to anticipate risks, document issues effectively, and pursue appropriate remedies. At Pannier Law, P.C., we help contractors recognize these triggers and develop strategies to protect their interests.
The Nature of Change Orders and Claims
Change orders and claims stem from deviations between the contract’s original terms and the conditions encountered during performance. These deviations can produce additional costs, schedule delays, or disagreements requiring formal resolution to ensure fair compensation. Recognizing common causes allows contractors to document issues contemporaneously, communicate effectively with contracting officers, and negotiate equitable solutions.
18 Common Causes of Change Orders and Claims
1. Additional or Different Work. The government may request work beyond the contract’s defined scope, such as adding new tasks or altering specified materials or methods. These modifications typically require formal change orders to compensate contractors for the expanded scope.
2. Changes in Specifications or Methods. Work requirements may differ from what was anticipated due to revised specifications or unexpected mandates. When the government requires a more costly construction method or approach than those reasonably contemplated in the original contract, change orders become necessary.
3. Revised Contract Documents. Updates, clarifications, or amendments to drawings or specifications can necessitate additional work. When revised blueprints or specifications require substantive changes to completed or planned work, such as structural modifications, contractors are entitled to equitable adjustments.
4. Incomplete Plans or Specifications. Insufficient detail in contract documents can result in unanticipated work. When plans omit critical information like subsurface conditions or other essential details necessary for proper performance, contractors may encounter unexpected requirements that justify change orders.
5. Restricted Work Methods. When specifications permit multiple acceptable methods, but the government subsequently mandates a specific, more labor-intensive approach, contractors may be entitled to compensation for the increased expense beyond their preferred method.
6. Out-of-Sequence Work. Disruptions to the planned work sequence (often resulting from poor coordination or delayed government approvals) can increase costs by forcing contractors to reorganize schedules, redeploy resources, or perform work in inefficient patterns.
7. Government-Furnished Equipment Issues. When the government provides equipment that arrives late, proves defective, or turns out unsuitable for the intended purpose, contractors may incur delays or additional expenses such as renting alternative equipment, warranting equitable adjustments.
8. Accelerated Performance Requirements. To recover from delays or meet revised deadlines, contractors may need to add workers, work overtime, or expedite materials. These measures increase costs and may support claims for compensation.
9. Schedule Modifications. Revisions to the contract schedule, particularly compression of timelines, can disrupt planned workflows and require adjustments to labor deployment or resource allocation. Compressing a timeline might necessitate extra shifts, warranting equitable adjustments when such changes increase performance costs.
10. Relocation Due to Inadequate Information. Lack of accurate site information or coordination failures, such as undisclosed utilities or other site features, can force contractors to relocate work, modify approaches, or perform additional tasks not reasonably foreseeable from the contract documents.
11. Differing Site Conditions. Unexpected physical conditions at the work site, such as unstable soil, hidden obstacles, or other conditions differing materially from those indicated in the contract or ordinarily encountered in similar work, may require additional effort not contemplated in the original agreement. The FAR specifically addresses differing site conditions as grounds for equitable adjustments.
12. Contract Interpretation Disputes. Disagreements over ambiguous contract terms can lead to disputes when contractors and government representatives interpret specifications or requirements differently. When contracts contain patent or latent ambiguities, resolution may require formal claims processes.
13. Defective Specifications. Flawed or internally contradictory specifications can necessitate rework or additional tasks as contractors must address errors to achieve project objectives. The government typically bears responsibility for defects in its specifications.
14. Government-Caused Delays. Delays resulting from government actions or failures to act – such as late approvals, delayed access to work areas, or failure to provide necessary information – can disrupt schedules and support claims for extended overhead or idle labor costs.
15. Improper Work Rejection. When the government rejects work without valid contractual basis, contractors may incur costs for unjustified rework or schedule disruptions, supporting claims for compensation.
16. Increased Inspection or Testing Requirements. Additional or more stringent quality control measures, such as new tests or inspections, imposed beyond original contract requirements can increase costs, particularly when the new requirements differ substantially from those initially specified.
17. Failure to Disclose Material Information. When the government withholds or fails to disclose information material to performance, such as site condition reports or relevant prior studies, contractors may face unexpected challenges supporting claims for equitable adjustments.
18. External Disruptions. Events such as strikes, floods, storms, or other natural disasters beyond the contractor’s control can halt or impede work. While some events may qualify as excusable delays, others may support claims for additional compensation depending on contract terms and circumstances.
Strategic Approaches to Managing These Challenges
Recognizing these common triggers represents the foundation for effective change order and claims management. Contractors should implement systematic approaches to minimize adverse impacts.
1. Understand Contract Terms. Thoroughly understand contract provisions, particularly changes clauses and notice requirements. Familiarity with relevant contract clauses enables prompt identification of compensable changes and compliance with procedural requirements.
2. Maintain Comprehensive Documentation. Establish rigorous record-keeping practices including daily logs, photos, emails, and cost tracking. Contemporaneous documentation of changed conditions, such as documenting a differing site condition with photos and reports, provides essential support for change order requests and claims.
3. Provide Timely Notice. Notify the contracting officer promptly when circumstances arise that may warrant contract adjustments. Early notification facilitates resolution, demonstrates compliance with contract requirements, and preserves rights to equitable adjustments.
4. Develop Defensible Pricing. Prepare cost analyses using detailed, data-driven breakdowns that justify requested adjustments. Ensure pricing methodologies align with contract terms and FAR guidelines for equitable adjustments.
5. Pursue Collaborative Resolution. Approach negotiations transparently with focus on project success and fair treatment. Well-documented proposals presented professionally typically facilitate more efficient resolution and preserve productive working relationships.
Protecting Your Rights and Interests
Understanding the circumstances that commonly trigger change orders and claims enables contractors to respond effectively when issues arise. Proactive management of these situations through early recognition, thorough documentation, prompt communication, and strategic negotiation transforms potential disruptions into manageable adjustments while avoiding protracted disputes.
At Pannier Law, P.C., we provide comprehensive guidance on identifying, documenting, and pursuing change orders and claims in government contracts. Our experience encompasses the full range of circumstances that give rise to contractor entitlements, from differing site conditions to constructive changes and government-caused delays.
For guidance on your government contracting matters, contact us at (310) 971-5093 or visit www.pannierlaw.com.
Disclaimer: This article provides general information only and does not constitute legal advice or create an attorney-client relationship. For advice tailored to your specific circumstances, consult with a qualified attorney.
About the Author: William Pannier, founder of Pannier Law, P.C., has over 20 years of experience representing clients in government contract matters.