The Maryland Court of Special Appeals recently ruled against Brawner Builders, Inc., in a case concerning a procurement contract with the State Highway Administration (SHA). The court's decision, filed on May 29, 2026, affects contractors who rely on Variations in Estimated Quantities (VEQ) clauses in government contracts. The ruling clarifies the conditions under which contractors can claim equitable adjustments due to changes in estimated quantities.
Brawner Builders had sought an equitable adjustment of $1,806,493.63 after claiming that SHA purchased less than 75% of the estimated quantities of various contract items. The court's ruling is significant as it emphasizes the strict criteria contractors must meet to secure adjustments based on underruns.
Background
Brawner Builders, Inc. entered into a procurement contract with SHA to provide labor and equipment for highway maintenance. The contract included a VEQ clause, which allows for adjustments in pricing if the government purchases significantly less than estimated, leading to increased costs for the contractor.
After the two-year contract term, Brawner claimed that SHA had purchased less than the estimated quantities, invoking the VEQ clause for an equitable price adjustment. However, SHA denied this claim, stating that Brawner had not demonstrated that its actual costs per unit had increased as required under the VEQ clause.
Brawner appealed SHA's denial to the Maryland State Board of Contract Appeals (MSBCA), but the board ruled against Brawner, stating that while an underrun was established, Brawner failed to prove that its costs had increased due to the underrun. Brawner then took the case to the Circuit Court for Baltimore County, which reversed the MSBCA's decision, leading to SHA's appeal to the Court of Special Appeals.
The Ruling
The Maryland Court of Special Appeals ruled in favor of SHA, reversing the Circuit Court's decision and reinstating the MSBCA's ruling. The court found that Brawner did not meet the necessary criteria to qualify for an equitable adjustment under the VEQ clause.
The court stated, "By failing to satisfy the last three prongs of Genstar, Brawner failed to establish the only basis for an equitable adjustment under the VEQ clause—that its actual costs per unit increased as a result of the underrun."
The judges on the panel included Judge Friedman, along with Judges Shaw and Kehoe. The court emphasized that the VEQ clause is designed to provide a remedy for specific circumstances and does not allow contractors to claim adjustments simply because they misjudged their bids.
Impact
This ruling has significant implications for contractors working with government entities in Maryland. It clarifies that contractors must provide detailed evidence to support their claims for equitable adjustments under VEQ clauses. The decision reinforces the necessity of satisfying all prongs of the established test for equitable adjustments, which includes proving that increased costs are directly attributable to the underrun.
The ruling serves as a reminder for contractors to carefully assess their bids and the potential risks associated with estimated quantities in government contracts. It highlights the importance of accurate forecasting and cost management in public procurement.
What's Next
Brawner Builders may seek further legal options, including potential appeals to higher courts, although details on any such plans were not provided in the court filing. There are currently no related cases pending that would affect this ruling.