FAR 52.243-3—Changes-Time-and-Materials or Labor-Hours.
Plain-English Summary
FAR 52.243-3 is the standard Changes clause for time-and-materials (T&M) and labor-hours contracts. It gives the Contracting Officer authority to issue written changes within the contract’s general scope, including changes to the description of services, time of performance, place of performance, drawings/designs/specifications for specially manufactured supplies, method of shipment or packing, place of delivery, and the amount of Government-furnished property. It also explains how the Government must provide an equitable adjustment when a change affects hourly rates, the ceiling price, the time required for performance, or other contract terms and conditions. The clause sets a contractor deadline to assert a right to adjustment within 30 days of receiving the change order, while allowing the Contracting Officer to consider a later proposal before final payment if justified. Finally, it states that disputes over the amount or entitlement to an adjustment are handled under the Disputes clause, but the contractor must continue performance as changed. In practice, this clause is important because it preserves Government flexibility to direct changes while protecting the contractor from uncompensated impacts, and it creates a clear process for pricing, documenting, and resolving change-related adjustments in T&M and labor-hours work.
Key Rules
Written changes only
The Contracting Officer may change the contract only by written order. Oral directions do not trigger the clause’s formal change process and should be confirmed in writing before the contractor relies on them.
Changes must stay in scope
The clause allows changes only within the general scope of the contract. A change that goes beyond the contract’s scope may require a different procurement action rather than a simple modification.
Specific change areas listed
The clause expressly covers changes to services, performance time, place of performance, drawings/designs/specifications for specially manufactured supplies, shipment or packing, delivery place, and Government-furnished property. These are the categories the CO may direct under this clause.
Equitable adjustment required
If a change increases or decreases hourly rates, the ceiling price, the time needed for performance, or otherwise affects contract terms, the CO must make an equitable adjustment and modify the contract accordingly. The adjustment may affect ceiling price, hourly rates, delivery schedule, or other impacted terms.
Contractor must timely assert claim
The contractor must assert its right to an adjustment within 30 days after receiving the written order. The CO may accept a later proposal before final payment if the facts justify it, but the contractor should not rely on that exception.
Disputes do not stop performance
If the parties cannot agree on the adjustment, the matter becomes a dispute under the Disputes clause. Even so, the contractor must proceed with the work as changed and cannot stop performance because the adjustment is unresolved.
Responsibilities
Contracting Officer
Issue any change only by written order and only within the general scope of the contract. Determine whether the change affects price, hourly rates, schedule, or other terms, and make an equitable adjustment through a contract modification. Consider late adjustment proposals only when justified, and resolve disagreements under the contract’s disputes process.
Contractor
Continue performing the contract as changed, even if the adjustment is not yet agreed. Track the cost, schedule, and other impacts of the change, and assert the right to an adjustment within 30 days of receiving the written order unless the CO accepts a later submission before final payment.
Government
Use the clause to direct needed changes in T&M or labor-hours work while staying within scope and documenting the change properly. Ensure the contract modification reflects any resulting adjustment to ceiling price, hourly rates, delivery schedule, or other affected terms.
Sureties, if any
No direct action is required under the clause because the CO may issue the change without notice to sureties. Their role is affected only indirectly through the changed contract obligations.
Practical Implications
This clause is a key control point for T&M and labor-hours contracts because even small changes can affect labor mix, hours, ceiling price, and schedule. Contractors should treat every written change order as a pricing and documentation event, not just an operational instruction.
The 30-day assertion period is a common pitfall. If the contractor misses it, recovery can become harder or be lost, so teams should route change orders immediately to contracts, project management, and pricing staff.
Because the contractor must keep working while the adjustment is disputed, cash flow and staffing can be strained if the change is large. Contractors should preserve contemporaneous records of labor impacts, inefficiencies, and any added costs to support the equitable adjustment.
The clause only covers changes within the general scope. If the Government is effectively asking for a materially different effort, both sides should evaluate whether a new procurement action or separate modification authority is needed.
For contracting officers, the practical risk is under-documenting the basis for the change and the adjustment. Clear written orders, timely negotiations, and precise modification language reduce disputes and help keep T&M and labor-hours contracts administratively manageable.
Official Regulatory Text
As prescribed in 43.205 (c) , insert the following clause: Changes-Time-and-Materials or Labor-Hours (Sept 2000) (a) The Contracting Officer may at any time, by written order, and without notice to the sureties, if any, make changes within the general scope of this contract in any one or more of the following: (1) Description of services to be performed. (2) Time of performance ( i.e., hours of the day, days of the week, etc.). (3) Place of performance of the services. (4) Drawings, designs, or specifications when the supplies to be furnished are to be specially manufactured for the Government in accordance with the drawings, designs, or specifications. (5) Method of shipment or packing of supplies. (6) Place of delivery. (7) Amount of Government-furnished property. (b) If any change causes an increase or decrease in any hourly rate, the ceiling price, or the time required for performance of any part of the work under this contract, whether or not changed by the order, or otherwise affects any other terms and conditions of this contract, the Contracting Officer will make an equitable adjustment in any one or more of the following and will modify the contract accordingly: (1) Ceiling price. (2) Hourly rates. (3) Delivery schedule. (4) Other affected terms. (c) The Contractor shall assert its right to an adjustment under this clause within 30 days from the date of receipt of the written order. However, if the Contracting Officer decides that the facts justify it, the Contracting Officer may receive and act upon a proposal submitted before final payment of the contract. (d) Failure to agree to any adjustment will be a dispute under the Disputes clause. However, nothing in this clause excuses the Contractor from proceeding with the contract as changed. (End of clause)