Equitable Adjustment – Profit

Equitable Adjustment – Profit

There is no question that profit is an integral part of an equitable adjustment. Rumsfeld v. Applied Companies, Inc., 325 F.3d 1328, 1341 (Fed. Cir. 2003); United States v. Callahan Walker Constr. Co., 317 U.S. 56 (1942). This is true where, for example, a contractor seeks to recover under the changes clause and the differing site conditions clause and includes impact costs. Ryan-Walsh, Inc. v. United States, 37 Fed. Cl. 639, 649 (1997); Delco Electronics Corp. v. United States, 17 Cl. Ct. 302, 334 (1989); N. Am. Const. Corp. v. United States, 56 Fed. Cl. 73, 79 (2003); Bennett v. United States, 371 F.2d 859 (Ct. C1. 1967); Youngdale & Sons Constr. Co. v. United States, 27 Fed. C1. 516 (1993).

Where profit is recoverable, the measurement should reflect a fair and reasonable amount under the circumstances. Nvt Techs., Inc., EBCA No. C – 0401372, 05 – 1 BCA ¶ 32969; Keco Indus. Inc., ASBCA N o. 18730, 74 – 2 BCA ¶10,711. In this regard, the profit rate should fairly reflect the nature of the work and the risks involved to the contractor. I. Alper Co., GSBCA No. 11335, 92 – 3 BCA ¶ 25038; Carvel Walker, ENGBCA No. 3744, 78 – 1 BCA ¶ 13,005; Aerojet-Gen. Corp., ASBCA No. 17171, 74 – 2 BCA ¶ 10,863.

Updated: July 30, 2018