A constructive change occurs where a contractor performs work beyond the contract requirements without a formal order, either by an informal order or due to the fault of the Government. Equitable adjustments are corrective measures that make a contractor whole when the government modifies a contract. A contractor is entitled to an equitable adjustment for a constructive change when it is required to perform more or different work not called for under the terms of its contract.
Several categories of constructive change have been identified in existing case law:
The doctrine of constructive change serves to
(1) remediate contractor claims for extra work, and (2) permit contractors to perform disputed work without having to risk abandonment of their contracts to preserve their claims. The theory underlying the constructive change concept is that where the government "should have" issued a change order authorizing the extra work in the first place, the court or board [of contract appeals] may direct the government to do what "should have been done" by directing the government to issue a formal change order. The doctrine in its modern guise is the embodiment of the ancient principle that "what should have been done will be done."
Philip L. Bruner & Patrick J. O'Connor, Jr., Bruner and O'Connor on Construction Law § 4.25 (2002) as quoted in Metric Constr. Co., Inc. v.
In order to recover for a constructive change, a contractor typically must show:
- The work performed was not included in the original scope of work
- All contractual or statutory notice requirements were satisfied
- The owner required the change and was not volunteered by the Contractor
- Contractor tracked its additional costs incurred due to the change
A constructive change situation can sneak up on a contractor or an owner. All four of these elements are usually required to be shown in order for a contractor to recover. Therefore, be sure to contact an attorney early in the project if you are working without a formal change order.
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