FAR 43.103—Types of contract modifications.
Plain-English Summary
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.
Key Rules
Bilateral modifications require both signatures
A bilateral modification, also called a supplemental agreement, must be signed by both the contractor and the contracting officer. This means the change reflects mutual agreement and is not effective as a one-sided government action.
Use bilateral mods for negotiated adjustments
Bilateral modifications are used to make negotiated equitable adjustments resulting from a change order, to definitize letter contracts, and to record other agreements that modify contract terms. They are the proper vehicle when the parties have reached agreement on the change and its impact.
Unilateral modifications are CO-signed only
A unilateral modification is signed only by the contracting officer. It is a government-issued contract action that does not require the contractor’s signature to be valid when authorized by the contract or applicable clause.
Use unilateral mods for administrative changes
The contracting officer may use a unilateral modification to make administrative changes. These are non-substantive contract updates, such as correcting information or making clerical adjustments, that do not require bilateral agreement.
Change orders may be unilateral
The contracting officer may issue change orders unilaterally when the contract’s changes authority allows it. The contractor must then perform as directed, with any resulting equitable adjustment handled separately if needed.
Other clauses can authorize unilateral changes
Unilateral modifications may be used to make changes authorized by clauses other than a changes clause, such as the Property clause, Options clause, or Suspension of Work clause. The authority for the action must come from the contract clause itself.
Termination notices are unilateral
The contracting officer may issue termination notices by unilateral modification. This reflects the government’s authority to direct termination actions without needing the contractor’s signature on the notice itself.
Responsibilities
Contracting Officer
Determine whether the contemplated action requires mutual agreement or may be issued unilaterally; select the correct modification type; sign unilateral modifications when authorized; negotiate and execute bilateral modifications when agreement is required; ensure the modification is supported by the applicable contract clause, change authority, or negotiated settlement.
Contractor
Review proposed bilateral modifications and sign only when the contractor agrees to the revised terms; comply with valid unilateral modifications issued under contract authority; preserve and assert entitlement to equitable adjustments when a change order or other unilateral action affects cost, schedule, or performance.
Agency/Contracting Activity
Maintain procedures and documentation that distinguish bilateral from unilateral actions; ensure contract files show the basis for the modification type used; support proper administration of changes, definitizations, and terminations.
Practical Implications
The biggest practical issue is knowing whether the government needs contractor agreement or can act alone. Using the wrong modification type can create disputes, delay performance, or undermine the enforceability of the action.
Bilateral modifications are the normal tool for settling the price, schedule, or other terms of a change after negotiation. If the parties have not actually agreed, a bilateral mod should not be used just to force a settlement.
Unilateral change orders and other unilateral actions do not eliminate the contractor’s right to seek an equitable adjustment when the contract allows it. Contractors should track cost and schedule impacts carefully and submit timely requests when appropriate.
Administrative changes should stay truly administrative. If a change affects substantive rights, scope, price, or performance, it may require a different authority and possibly a bilateral agreement.
Termination notices and other unilateral actions must be tied to the correct clause and documented carefully. A contracting officer should confirm the contract contains the needed authority before issuing the modification.
Official Regulatory Text
Contract modifications are of the following types: (a) Bilateral. A bilateral modification (supplemental agreement) is a contract modification that is signed by the contractor and the contracting officer. Bilateral modifications are used to- (1) Make negotiated equitable adjustments resulting from the issuance of a change order; (2) Definitize letter contracts; and (3) Reflect other agreements of the parties modifying the terms of contracts. (b) Unilateral. A unilateral modification is a contract modification that is signed only by the contracting officer. Unilateral modifications are used, for example, to- (1) Make administrative changes; (2) Issue change orders; (3) Make changes authorized by clauses other than a changes clause ( e.g., Property clause, Options clause, or Suspension of Work clause); and (4) Issue termination notices.