Government Contract Modifications Guide 2025: Types & Process
Complete guide to government contract modifications. Learn about bilateral and unilateral modifications, change orders, equitable adjustments, and how to protect your rights.
Quick Answer: Contract Modifications
Contract modifications are written changes to the terms of an existing government contract. They can be bilateral(both parties agree) or unilateral (government directs). Modifications can change scope, price, schedule, or other contract terms.
Types of Contract Modifications
Bilateral Modifications
Both parties must agree:
- ✓Supplemental agreements
- ✓Negotiated changes
- ✓Definitization of change orders
- ✓Option exercises
Unilateral Modifications
Government can issue without agreement:
- →Administrative changes
- →Changes under Changes clause
- →Termination notices
- →Exercise of options
The Changes Clause
The Changes clause (FAR 52.243) gives the government the right to make unilateral changes to the contract within the general scope. The contractor must comply but is entitled to an equitable adjustment.
Types of Changes
Drawings/Specifications
Technical requirement changes
Method of Shipment
Delivery method changes
Place of Delivery
Location changes
Packaging/Packing
Shipping requirement changes
Important: Scope Limitation
Changes must be within the general scope of the contract. Changes outside the scope require a new contract or sole-source justification—they cannot be made unilaterally.
Request for Equitable Adjustment (REA)
When a change increases or decreases costs or time, the contractor is entitled to an equitable adjustment. Submit an REA to recover additional costs.
REA Components
Direct Costs
Labor, materials, and other direct costs attributable to the change
Indirect Costs
Overhead and G&A applicable to the change
Profit
Reasonable profit on the changed work
Schedule Impact
Time extension if change delays delivery
REA Submission Tips
- ✓Submit promptly after change
- ✓Document everything
- ✓Segregate change costs from base costs
- ✓Include supporting calculations
Modification Process
Steps to Execute a Modification
Identify the Change
Recognize when a change has occurred or is needed
Notify the CO
Provide written notice of the change and its impact
Submit Proposal
Provide detailed cost and schedule impact
Negotiate
Work with CO to agree on equitable adjustment
Execute Modification
Sign SF-30 to formalize the change
Frequently Asked Questions
What if I disagree with a unilateral change?
You must continue performing as directed. However, reserve your rights in writing and submit an REA or claim for the equitable adjustment you believe you're entitled to.
Is there a time limit for submitting REAs?
Submit REAs as soon as practicable. While there's no strict deadline for REAs (unlike claims), delayed submission weakens your position and may raise waiver issues.
What's the difference between an REA and a claim?
An REA is a request for negotiation. A claim is a formal demand under the Contract Disputes Act requiring a contracting officer's final decision, which can be appealed.
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