SAFETY ActEquitable Adjustment
If DHS denies SAFETY Act designation or certification for anti-terrorism technologies, contractors can request an equitable adjustment or face contract termination, but must act promptly and continue performance during the process.
Overview
FAR 52.250-5, SAFETY Act-Equitable Adjustment, provides a contractual mechanism for adjusting contract terms if the Department of Homeland Security (DHS) denies a contractor's application for SAFETY Act designation or certification for Qualified Anti-Terrorism Technologies (QATTs). The clause defines key terms related to the SAFETY Act, including what constitutes an act of terrorism, QATT, and the processes for block designation and certification. It presumes that contract prices are based on the expectation of receiving SAFETY Act designation or certification and requires contractors to pursue these in good faith, including obtaining required insurance. If DHS denies the application, the contractor may request an equitable adjustment to the contract price or terms within 30 days. The contracting officer may grant an adjustment or, at the government's discretion, terminate the contract for convenience. Disputes over adjustments are handled under the contract's "Disputes" clause, and contractors must continue performance during the adjustment process unless the contract is terminated.
Key Rules
- Definitions and Scope
- Clearly defines key SAFETY Act terms and the types of technologies and services covered.
- Good Faith Pursuit
- Contractors must actively seek SAFETY Act designation/certification and required insurance.
- Equitable Adjustment Process
- If designation/certification is denied, contractors have 30 days to request an equitable adjustment.
- Government Options
- The government may adjust the contract or terminate for convenience if designation/certification is denied.
- Dispute Resolution
- Disagreements over adjustments are resolved under the contract's "Disputes" clause.
- Continued Performance
- Contractors must continue work during the adjustment process unless the contract is terminated.
Responsibilities
- Contracting Officers: Must process equitable adjustment requests, determine adjustments or termination, and ensure compliance with dispute procedures.
- Contractors: Must pursue SAFETY Act designation/certification and insurance, submit adjustment requests within 30 days if denied, and continue performance unless terminated.
- Agencies: Oversee compliance and coordinate with DHS as needed.
Practical Implications
- This clause protects both parties from unforeseen cost impacts if SAFETY Act protections are not granted.
- Contractors must be proactive in seeking SAFETY Act status and prepared to document cost impacts if denied.
- Timely action and documentation are critical to secure equitable adjustments and avoid performance or payment issues.