Overview
This section contains the standard Federal Acquisition Regulation (FAR) "Changes" clauses, which grant the Government the unilateral right to modify specific contract terms (such as specifications, delivery sites, or performance periods) while providing a mechanism for contractors to receive equitable adjustments in price or schedule.
Key Rules
- Unilateral Authority: The Contracting Officer (CO) may at any time, via written order, make changes "within the general scope" of the contract without the contractor's prior consent.
- Equitable Adjustments: If a change impacts the cost or time required for performance, the CO is required to modify the contract to adjust the price, fee, or delivery schedule.
- 30-Day Assertion Period: Contractors must generally assert their right to an adjustment within 30 days of receiving a change order, though the CO has the discretion to act on proposals submitted any time before final payment.
- Duty to Proceed: Even if the parties disagree on the amount of the equitable adjustment, the contractor is legally obligated to continue performance of the contract as changed.
- Constructive Changes (52.243-4 & 52.243-7): Any written or oral order (including instructions or interpretations) from the CO that causes a change must be treated as a change order, provided the contractor gives timely written notice to the Government.
- Change Order Accounting (52.243-6): For changes exceeding $100,000, contractors may be required to maintain separate accounting for all incurred costs related to the changed work to ensure transparency during the adjustment process.
Practical Implications
- Documentation is Critical: Contractors must meticulously track the "before and after" costs and schedule impacts of a change order to successfully negotiate an equitable adjustment.
- Avoid Unauthorized Changes: Contractors should only take direction from a warranted Contracting Officer or a Specifically Authorized Representative (SAR); following "informal" directions from technical personnel without providing the notice required by 52.243-7 can lead to unrecoverable costs.
- Financial Risk: Because the "Duty to Proceed" is mandatory, contractors may be forced to incur significant additional costs upfront before a final price for the change is negotiated or settled through the Disputes clause.