FAR 43.1—Subpart 43.1

Definitions.

FAR 43.101 defines two core concepts used throughout the contract modification rules in FAR Part 43: what counts as an administrative change and how to determine the effective date of different kinds of contract modifications. It explains that an administrative change is a unilateral written change that does not alter the parties’ substantive rights, with examples such as changing the paying office or appropriation data. It also sets the effective-date rules for solicitation amendments, change orders, administrative changes, supplemental agreements, confirming notices of termination for convenience, modifications converting a default termination to a convenience termination, and modifications confirming a prior letter determination of the amount due in a convenience-termination settlement. In practice, these definitions matter because the effective date controls when the change takes legal effect, which can affect performance obligations, payment processing, termination settlement timing, and the record of what the Government and contractor agreed to or directed. The section is designed to reduce disputes by making clear when a modification is merely administrative, when it is unilateral versus bilateral, and which date governs for each type of modification or termination-related action.

Policy.

FAR 43.102 states the basic policy for who may make contract changes and how those changes should be handled before they are issued. It covers the authority to execute contract modifications, limits on the actions of non-contracting personnel, the prohibition on creating apparent authority or directing work outside the modification process, and the pricing of modifications before execution. It also addresses the special case where a modification could cause a significant cost increase and there is not enough time to negotiate a full price, in which case a ceiling price should be negotiated unless that is impractical. In practice, this section protects the Government from unauthorized commitments, scope creep, and avoidable cost growth, while giving contractors a clear rule: only a contracting officer can bind the Government through a modification. It is a core control point for contract administration because it ties authority, pricing, and timing together before work changes are implemented.

Types of contract modifications.

FAR 43.103 explains the two basic types of contract modifications in federal contracting: bilateral modifications and unilateral modifications. It identifies who must sign each type, and it ties each type to the kinds of actions it is used for, including negotiated equitable adjustments from change orders, definitizing letter contracts, reflecting other agreements between the parties, making administrative changes, issuing change orders, making changes under clauses other than a changes clause, and issuing termination notices. The section exists to distinguish modifications that require mutual agreement from those the contracting officer may issue alone under contract authority. In practice, this matters because the type of modification determines whether contractor assent is needed, what legal effect the action has, and how the change should be documented in the contract file. It is a foundational rule for managing scope changes, pricing adjustments, contract administration, and terminations correctly.

Notification of contract changes.

FAR 43.104 explains what happens when a contractor believes the Government has directed or may have directed a contract change that has not been formally identified in writing and signed by the contracting officer. The section requires the contractor to give written notice as soon as possible so the Government can decide whether the conduct is actually a change, stop or correct the alleged change, or confirm that no change occurred. It also ties this policy to the Notification of Changes clause at FAR 52.243-7, which is the contract clause that implements the notice process and allocates responsibilities between the contractor and the Government. In practice, this section is about preserving the integrity of the written change process, preventing misunderstandings about scope, schedule, or cost, and creating a prompt record that can support funding, direction, or dispute resolution. For contractors, it is a protection against silently absorbing extra work; for contracting officers, it is an early warning system that helps manage contract administration before performance drifts outside the written contract.

Availability of funds.

FAR 43.105 tells contracting officers when they must confirm that money is available before issuing a contract modification that increases the government’s financial obligation, and it identifies the limited exceptions to that rule. It also explains how the required funding certification is measured—normally against the negotiated price, but sometimes against the best available cost estimate if the modification is executed before price agreement. In addition, it implements a statutory restriction on providing funds or making payments to certain institutions of higher education that restrict ROTC or military recruiting access on campus, and it states the acquisitions to which that restriction does not apply. In practice, this section is about preventing unauthorized commitments and funding shortfalls, ensuring fiscal discipline in contract changes, and avoiding prohibited funding relationships with covered educational institutions. It matters both for contract administration and for compliance screening before award, modification, or payment actions are taken.

[Reserved]

Contract clause.

FAR 43.107 explains when a contracting officer may include the Notification of Changes clause at FAR 52.243-7 in a solicitation or contract, and when that clause should not be used. It focuses on the clause’s intended use in negotiated research and development or supply contracts for major weapon systems or principal subsystems, where informal direction or evolving technical requirements can create disputes over whether the Government has ordered a change. The section also sets a dollar-threshold limitation: if the expected contract amount is less than $1,000,000, the clause generally must not be used. The only stated exception is when the contracting officer anticipates circumstances that could lead a contractor to claim the Government made changes other than those identified in writing and signed by the contracting officer. In practice, this provision helps agencies manage change-order risk, preserve clear written authority for changes, and reduce disputes over constructive changes in complex, high-risk acquisitions.