Changes-Time-and-Materials or Labor-Hours
Contractors must promptly assert their right to equitable adjustments when contract changes are ordered, and continue performance while disputes are resolved.
Overview
FAR 52.243-3, "Changes—Time-and-Materials or Labor-Hours," establishes the procedures and rights for making changes to contracts awarded on a time-and-materials or labor-hours basis. This clause allows the Contracting Officer to unilaterally make certain changes within the general scope of the contract, such as altering the description, timing, or location of services, as well as specifications, shipment methods, delivery locations, and the amount of Government-furnished property. If such changes impact the contract’s price, rates, schedule, or other terms, an equitable adjustment must be negotiated and the contract modified accordingly. Contractors must assert their right to an adjustment within 30 days of receiving the change order, though late proposals may be considered before final payment. Disagreements over adjustments are handled under the contract’s Disputes clause, but contractors must continue performance as changed while disputes are resolved.
Key Rules
- Contracting Officer’s Authority
- The Contracting Officer can issue written orders to change specific aspects of the contract within its general scope.
- Equitable Adjustments
- If changes affect price, rates, schedule, or other terms, the contract must be equitably adjusted and formally modified.
- Contractor Notification
- Contractors must request adjustments within 30 days of receiving a change order, though late requests may be accepted before final payment.
- Disputes and Continued Performance
- Disagreements over adjustments are resolved under the Disputes clause, but contractors must continue work as changed.
Responsibilities
- Contracting Officers: Issue written change orders, negotiate equitable adjustments, and modify contracts as needed.
- Contractors: Submit timely adjustment requests, maintain documentation, and continue performance during disputes.
- Agencies: Oversee compliance and ensure proper contract modifications and dispute resolution.
Practical Implications
- This clause provides flexibility for the government to adapt contract requirements as needed.
- Contractors must be vigilant about tracking changes and asserting rights to adjustments promptly.
- Failure to follow procedures can result in lost compensation or compliance issues.