Effective October 28, 2022, DoD, GSA, and NASA are issuing a final rule amending the Federal Acquisition Regulation (“FAR”) to implement a section of the John S. McCain National Defense Authorization Act for Fiscal Year 2019, requiring agencies to provide a notice, along with the solicitation to prospective bidders and offerors, regarding definitization of requests for equitable adjustment related to change orders under construction contracts.

This regulation applies to any federal solicitation for small business construction contracts and will require agencies to: publish their policies and procedures for processing change orders; begin tracking the time it takes the agency to definitize change orders; and publish this data on those solicitations and on a public website.

The notice will provide potential small business offerors with information that may be useful to them as they prepare, or decide whether to prepare and submit, a proposal in response to an agency’s solicitation for construction. For example, if an agency has a poor history of definitizing equitable adjustments, potential small business offerors may reconsider whether to submit a proposal in response to that agency’s solicitation. Alternatively, when preparing their proposals, small business offerors may consider the additional costs that could be incurred if they were to experience delays in the timely definitization of equitable adjustments. Finally, contracting offices and contract administration offices are required to collect data on the time required to definitize change orders for construction contracts.

The new regulation will bring transparency to an issue that has long been costing federal contractors time and money by forcing federal agencies to create coherent policies and procedures for processing change orders. If you have questions concerning this final rule, please contact Don Hillmann at dhillmann@couchwhite.com.