52.250-5
SAFETY ActEquitable Adjustment
If your contract price assumed DHS SAFETY Act approval, you must diligently pursue that approval and required insurance, then request any equitable adjustment within 30 days of a denial—or risk losing relief while still having to keep performing.
Overview
- FAR 52.250-5, SAFETY Act—Equitable Adjustment, addresses what happens when contract pricing was based on the expectation that the contractor would obtain a Department of Homeland Security (DHS) SAFETY Act designation or certification for covered items, but DHS later denies that application.
- The clause allocates risk by allowing a potential contract adjustment or, at the Government’s option, a convenience termination.
Key Rules
- Definitions and covered approvals
- The clause defines key terms including act of terrorism, Qualified Anti-Terrorism Technology (QATT), SAFETY Act designation, SAFETY Act certification, and related block designation/block certification concepts.
- Pricing assumption
- Contract prices for covered items are established on the assumption that DHS will issue the expected SAFETY Act designation or certification.
- Contractor prerequisites for relief
- To qualify for an equitable adjustment, the contractor must in good faith pursue both the required SAFETY Act approval and the level of insurance DHS requires for that approval.
- Adjustment process after denial
- If DHS denies the application, the contractor may request an equitable adjustment within 30 days of the denial notice. The Contracting Officer may adjust price and/or other terms based on proven cost impacts, or the Government may instead terminate for convenience.
Responsibilities
- Contracting Officers: Evaluate evidence of cost impacts, decide whether to grant an equitable adjustment, and may elect convenience termination.
- Contractors: Diligently pursue DHS approval and required insurance, submit any adjustment request on time, and continue performance unless terminated.
- Agencies: Administer disputes under the contract’s Disputes clause if the parties cannot agree.
Practical Implications
- This clause protects both parties when SAFETY Act approval assumptions built into pricing do not materialize.
- Contractors should maintain documentation showing good-faith pursuit, insurance efforts, denial notices, and resulting cost changes.
- A common pitfall is missing the 30-day deadline or failing to prove that increased costs resulted from the denial.