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Your customer asked for changes, your team made them, and the program absorbed the cost. Now the budget is gone, the schedule has slipped and leadership wants to know whether any of it can be recovered. On aerospace and defense programs it often can, but only if the out-of-scope work can be identified, traced to the requests that caused it and priced from real data. This guide explains how that works from the program side, and when to bring in contracts and legal staff.
This page describes program management practice, not legal advice. Contract rights and deadlines depend on the specific contract, and any request for equitable adjustment or claim should be prepared with your contracts and legal staff.
What counts as out-of-scope work?
Out-of-scope work is anything the program performs that the contract, as written and as formally changed, does not require. On highly engineered programs it rarely arrives as a single large request. It arrives in pieces: an extra analysis requested at a design review, an additional test condition at a witness event, a changed interface after a customer integration meeting, a new format for a data deliverable. Each piece looks small. Across a development program they can add up to a substantial share of the cost and many months of schedule.
The test is simple to state and harder to apply: is the work required by the statement of work, the specifications or an approved change? If not, it is new scope, and the question becomes who authorized it and who pays for it.
What is a request for equitable adjustment, and how is it different from a claim?
On US government contracts, the Changes clauses in the FAR 52.243 family allow the contracting officer to make changes within the general scope of the contract, and provide for an equitable adjustment to price and schedule when a change affects the cost or time of performance. A request for equitable adjustment, or REA, is the contractor's request for that adjustment. It is normally negotiated with the contracting officer.
A claim is more formal. Under the Disputes clause and the Contract Disputes Act, a claim is a written demand seeking, as a matter of right, payment of money or other relief, and it asks for a contracting officer's final decision. Claims above a set dollar threshold must be certified. Many disputes start as REAs and become claims only if negotiation fails. Where the government's conduct, such as technical direction, effectively requires extra work without a formal change order, the situation is often described as a constructive change.
| Mechanism | Where it applies | In practice |
|---|---|---|
| Change order or contract amendment | Commercial purchase orders and subcontracts, and formal government changes | The cleanest route: scope and price are agreed before or alongside the work |
| Request for equitable adjustment | Government contracts, and many subcontracts that flow down similar terms | A documented, priced request for adjustment, negotiated rather than litigated |
| Claim | Government contracts under the Disputes clause; commercial disputes under the contract's own terms | A formal demand for a decision, with certification and legal involvement |
Most aerospace suppliers are subcontractors, often to a foreign or domestic prime rather than to the government. Their rights come from their own purchase order or subcontract, which may or may not flow down the government clauses, and requests usually go to the prime rather than directly to the government. Commercial contracts use change orders and whatever change and dispute provisions the parties agreed. That is one reason contracts staff should be involved early.
How do you recognize out-of-scope requests as they happen?
The best time to catch new scope is the moment it is requested. Common signals include:
- A request begins with "could you also" or "while you are at it" during a technical meeting.
- The customer asks for a test, analysis or margin that is not in the verification requirements.
- A drawing or interface changes after a customer review, with no corresponding contract change.
- A data deliverable is rejected for format or content the contract does not specify.
- The customer's engineers ask the team to evaluate an alternative design "just to see".
- Test witness comments add conditions or repeat runs beyond the approved procedure.
None of these is wrong for the customer to ask. The problem is accepting them silently. A signed project charter and a controlled path for technical requests give the team a way to say "we will assess that and come back to you" without refusing to help.
How should changes be documented at the time?
Contemporaneous records are worth far more than reconstructions. For each request, the program should record the date, who asked, exactly what was asked, the requirement it relates to or the absence of one, who on the program accepted it, what configuration items it affects and a first estimate of the cost and schedule impact. Meeting minutes, customer emails and review comments should be filed where they can be found later.
Timing also matters. Many contracts require prompt notice when the contractor believes a change has occurred. For example, the standard fixed-price Changes clause asks the contractor to assert its right to an adjustment within 30 days of receiving a written change order, and some contracts add a notification-of-changes clause for constructive changes. Read your own contract, because the deadlines that apply to you are the ones in it.
How do you trace configuration changes back to requests?
On a development program that has gone through several design iterations, the most reliable method is to work configuration by configuration. Review each iteration of the product, identify every change between one configuration and the next, and trace each change to its cause: a contract requirement, an approved change, a correction of the contractor's own error, or an informal customer request. Only the last category supports an adjustment, and being honest about the others is what makes the remaining items credible.
This is where a requirements-to-work assessment and good configuration management pay off. The compliance matrix shows which features are required. The configuration records show when each change was made. Together with the meeting records, they connect each change to the request that caused it.
How do you quantify the cost and schedule impact?
From the company's own financial data, not estimates made after the fact. Labor charged to the affected work, material and tooling, test facility time, rework and scrap, and supplier charges can usually be identified from the accounting and time-charging systems. Schedule impact should come from the program schedule: which activities the change added or extended, and whether they sat on the critical path.
Credibility depends on separation. Costs caused by the contractor's own problems, such as a supplier defect or an internal redesign, must be excluded. An adjustment request that includes everything that went wrong on the program will be discounted as a whole. One that isolates the changed work, shows the trace from request to configuration change to cost, and explains its method clearly is much harder to dismiss. Government contractors should expect the numbers to be audited, and should prepare them to that standard.
How do you get new scope funded instead of absorbed?
The best outcome is to never need a claim. When a new request is identified before the work is done, the program can price it and give the customer a choice: fund the change, defer it, or proceed without it. Customers often fund changes they genuinely need when the request is presented promptly, clearly and with a sensible price. What they resist is a large, surprising bill for work they believed was included.
Where do contracts and legal staff come in?
Early, and throughout. The program team owns the facts: what was requested, what was done, what it cost and how it affected the schedule. Contracts staff own the contract position: which clauses apply, what notice was required, and how the request should be framed. Legal counsel should be involved before anything is presented as a claim, and whenever deadlines, certification or disputes are in question. The strongest submissions come from all three working together, with the program providing evidence that stands on its own.
How Set Boundaries helps
Set Boundaries helps programs stop absorbing uncontrolled scope and recover what they can. We set up the controlled path for customer requests, build the compliance matrix and configuration trace, and work with your finance, contracts and legal staff to quantify the impact from your own data. We do not provide legal advice, and we do not promise outcomes on claims. We make sure the program side of the case is factual, traceable and complete. If your program has been absorbing customer requests, schedule a call.
Related guides
- Requirements-to-work assessment
- How to write a project charter
- Aerospace and defense program recovery
- Configuration management
- Case studies
References
- Federal Acquisition Regulation, 52.243-1, Changes, Fixed-Price, and the related 52.243 Changes clauses.
- Federal Acquisition Regulation, 52.243-7, Notification of Changes.
- Federal Acquisition Regulation, Subpart 33.2, Disputes and Appeals, and 52.233-1, Disputes.
- Contract Disputes Act, 41 U.S.C. Chapter 71.
- Defense Contract Audit Agency, Contract Audit Manual, guidance on audits of equitable adjustment proposals and claims.
Questions
Common questions
What is a request for equitable adjustment?
A request for equitable adjustment, or REA, is a contractor's documented request to adjust contract price, schedule or both because the government changed the work or otherwise affected the cost or time of performance. It is normally negotiated with the contracting officer rather than litigated. A strong REA identifies the change, shows how it was directed, traces it to the affected work and prices the impact from the contractor's own records.
What is the difference between an REA and a claim?
An REA is a request that the parties negotiate. A claim, under the Disputes clause and the Contract Disputes Act, is a formal written demand for payment or other relief as a matter of right, seeking a contracting officer's final decision, and claims above a set threshold must be certified. Many disputes begin as REAs and become claims only if negotiation fails. Contracts and legal staff should be involved in both.
What is a constructive change?
A constructive change occurs when the customer's conduct effectively requires work beyond the contract without issuing a formal change order. Common examples are technical direction from customer engineers, rejection of compliant deliverables, or demands for tests the contract does not require. The contractor may be entitled to an adjustment, but notice requirements and proof of who directed the work matter a great deal, which is why contemporaneous records are so important.
How quickly do you have to notify the customer of a change?
It depends on the contract. The standard fixed-price Changes clause asks the contractor to assert its right to an adjustment within 30 days of receiving a written change order, and some contracts add notification requirements for constructive changes. Commercial purchase orders and subcontracts set their own terms. The practical rule is to raise new scope as soon as it is identified and have contracts staff confirm the deadlines in your contract.
Can a subcontractor submit an REA to the government?
Usually not directly. A subcontractor normally has no contract with the government, so it raises the matter with the prime contractor under its own subcontract terms. The prime may pass a subcontractor's request through to the government where the change originated there. Many aerospace suppliers work under commercial purchase orders with domestic or foreign primes, in which case the purchase order's change and dispute provisions govern.
What evidence supports a scope-change claim?
Contemporaneous records of each request, including who asked, when and what, a compliance matrix showing the work was not required, configuration records tracing each design change to its cause, and cost and schedule data from the company's own accounting and scheduling systems. Costs caused by the contractor's own problems should be excluded. A clear, conservative submission with a transparent method is far more persuasive than a large total with weak support.
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