FAR 52.243-5—Changes and Changed Conditions.
Plain-English Summary
FAR 52.243-5, Changes and Changed Conditions, is a contract clause that gives the Contracting Officer limited authority to direct changes to the drawings and specifications within the general scope of the contract and establishes a process for handling differing site conditions. It also requires the contractor to promptly give written notice when it encounters subsurface or latent physical conditions that differ materially from what the contract indicates, or when it encounters unknown unusual physical conditions at the site, before proceeding with the work. If either a directed change or a changed condition affects cost or time, the clause requires an equitable adjustment through a contractor proposal submitted before final payment. The clause further limits the Government’s obligation to adjust for changed conditions unless the required written notice was received or the Contracting Officer waives that notice requirement. Finally, if the parties cannot agree on the adjustment, the matter becomes a dispute under the Disputes clause. In practice, this clause is important because it allocates risk for site conditions, preserves the Government’s ability to make within-scope changes, and creates the documentation and timing rules contractors must follow to protect their right to additional compensation or time.
Key Rules
CO may order within-scope changes
The Contracting Officer may issue written changes to the drawings and specifications, but only within the general scope of the contract. This is the Government’s formal authority to direct contract modifications without creating a new procurement.
Contractor must give prompt notice
When the contractor encounters subsurface or latent physical conditions materially different from those indicated in the contract, or unknown unusual physical conditions at the site, it must promptly notify the Contracting Officer in writing before continuing the work. This notice requirement is a condition for obtaining an adjustment for changed conditions.
Equitable adjustment for cost or time impact
If a directed change or a changed condition increases or decreases the cost of, or time required for, performance, the Contracting Officer must make an equitable adjustment. The adjustment is based on a contractor proposal for adjustment submitted before final payment.
Written notice is a prerequisite unless waived
For changed conditions under paragraph (b), the Contracting Officer may not grant an equitable adjustment unless the contractor submitted the required written notice and the CO received it, or the CO expressly waives the notice requirement. This protects the Government from surprise claims and encourages immediate reporting.
Proposal must be timely
The contractor must submit its proposal for adjustment before final payment under the contract. Waiting until after final payment can jeopardize the contractor’s ability to recover additional cost or time under this clause.
Unresolved adjustments become disputes
If the parties cannot agree on the amount or terms of the adjustment, the disagreement is handled as a dispute under the contract’s Disputes clause. The clause therefore preserves the contractor’s right to pursue formal dispute resolution.
Responsibilities
Contracting Officer
Issue any changes in writing and ensure they stay within the general scope of the contract. Review contractor notices and proposals, determine whether a changed condition or directed change warrants an equitable adjustment, decide whether to waive the written notice requirement, and negotiate or determine the adjustment amount. If no agreement is reached, process the matter under the Disputes clause.
Contractor
Promptly notify the Contracting Officer in writing when it encounters materially differing subsurface or latent conditions or unknown unusual site conditions before proceeding with the work. Prepare and submit a proposal for adjustment when cost or time is affected, and do so before final payment. If the adjustment cannot be agreed, pursue the issue through the contract dispute process.
Agency
Ensure the clause is included when prescribed by FAR 43.205(e) and support the Contracting Officer in administering changes and changed-condition claims consistently with the contract and applicable procedures.
Practical Implications
Contractors should treat site-condition discoveries as urgent notice events, not as issues to document later, because late notice can bar recovery unless waived.
Contracting Officers should document all change directives and any waiver of notice requirements, since both affect entitlement and the scope of the adjustment.
Both parties should distinguish between a directed change under paragraph (a) and a differing site condition under paragraph (b), because the notice and entitlement rules are not identical.
The contractor’s proposal for adjustment should address both cost and schedule impacts, since the clause covers increases or decreases in either.
If the parties cannot agree on the adjustment, the issue does not disappear; it becomes a formal dispute, so records, notices, and contemporaneous cost documentation matter from the start.
Official Regulatory Text
As prescribed in 43.205 (e) , insert the following clause: Changes and Changed Conditions (Apr 1984) (a) The Contracting Officer may, in writing, order changes in the drawings and specifications within the general scope of the contract. (b) The Contractor shall promptly notify the Contracting Officer, in writing, of subsurface or latent physical conditions differing materially from those indicated in this contract or unknown unusual physical conditions at the site before proceeding with the work. (c) If changes under paragraph (a) or conditions under paragraph (b) increase or decrease the cost of, or time required for performing the work, the Contracting Officer shall make an equitable adjustment (see paragraph (d)) upon submittal of a "proposal for adjustment" (hereafter referred to as proposal) by the Contractor before final payment under the contract. (d) The Contracting Officer shall not make an equitable adjustment under paragraph (b) unless- (1) The Contractor has submitted and the Contracting Officer has received the required written notice; or (2) The Contracting Officer waives the requirement for the written notice. (e) Failure to agree to any adjustment shall be a dispute under the Disputes clause. (End of clause)