Types of Contract "Modifications"

Generally, Government contracts contain a changes clause that permits the contracting officer to make changes to a contract. Changes can be categorized into unilateral changes and bilateral changes. Some changes are purely administrative. Administrative changes are unilateral written changes that do not affect the substantive rights of the Government or the contractor. For example, a change in the point of contract, telephone number, or paying office address are administrative changes that would not likely affect costs or other rights of the contracting parties.

Change orders are also unilateral changes that direct contractors to make a change authorized under the "changes" clause of a contract. Most contracts have a changes clause, either FAR 52.232-1 for fixed price contracts or FAR 52.232-2 for cost type contracts or FAR 52.232-3 for time and material contracts. Change orders usually result in an equitable adjustment.

Other examples of unilateral changes include

• make changes authorized by clauses other than a changes clause (e.g. property clause, options clause, or suspension of work clause)
• termination notices

Bilateral modifications (aka supplemental agreements) is a contract modification that is signed by both the Government and contractor. Bilateral modifications are used to

• make negotiated equitable adjustments resulting from the issuance of a change order
• definitize letter contracts and
• reflect other agreements of the parties modifying the terms of the contract

See FAR Part 43, Contract Modifications, for regulatory coverage of contract modifications.