Modifications, REAs, and Claims: What to Do When the Contract Changes

No defense contract executes exactly as written. Government priorities shift. Requirements evolve. The COR asks for something that wasn't in the PWS. Systems that were supposed to be government-furnished don't show up on time. A new regulation kicks in mid-performance.

When that happens, you have three instruments available to you: a contract modification, a Request for Equitable Adjustment (REA), or, in extreme cases, a claim. Each one is different. Each one is appropriate in different circumstances. And understanding which to use, and when, is one of the most practically important skills a contractor PM can have.

The Three Ways a Contract Changes

Mechanism	What It Is	When to Use It	Who Initiates
Contract Modification	A formal, written change to the contract document: scope, price, schedule, terms, or any combination. Executed on a SF-30 (Standard Form 30).	Anytime the scope, price, or terms of the contract need to change, ideally before the changed work begins.	Either party; bilateral mods require both signatures, unilateral mods only require the CO's signature.
REA (Request for Equitable Adjustment)	A formal request to the CO for an increase in contract price or schedule extension, based on a government action or change that caused the contractor additional cost or delay.	When the government has directed or caused a change (formal or informal) and you need to recover associated costs before the dispute hardens.	Contractor, submitted to the Contracting Officer.
Claim	A written demand for a specific sum of money, an adjustment to contract terms, or a decision under the Contract Disputes Act (CDA). More formal and adversarial than an REA. Triggers CO's Final Decision process.	When negotiations on an REA have failed, when the government has denied a legitimate adjustment, or when a dispute has become irreconcilable through normal channels.	Either party, submitted to the CO; requires specific certification for claims over $100K.

Contract Modifications: Bilateral vs. Unilateral

There are two kinds of contract modifications, and they're not the same thing:

Bilateral modifications (supplemental agreements) require signatures from both the contractor and the CO. Both parties agree on the change: the scope, the price, the schedule adjustment. This is the cleanest type. If you're adding work, extending the PoP, or adjusting a deliverable requirement, a bilateral mod is the right instrument.

Unilateral modifications are issued by the CO alone, without contractor consent. The most common unilateral mod is one issued under the Changes clause (FAR 52.243-1 or equivalent), which gives the government the right to direct changes within the general scope of the contract. When the CO issues a unilateral mod directing a change, you must comply, even if you disagree with the price. Your recourse is to submit an REA afterward if the change caused you additional cost. Watch the clock: under FAR 52.243-1, you must assert your right to an adjustment within 30 days of receiving the written change order, and you keep performing while the price gets worked out.

Other common unilateral mods: administrative changes (updating points of contact, correcting clerical errors), exercising options, issuing change orders.

Why You Must Never Perform Out-of-Scope Work Without a Mod

This cannot be stated strongly enough: if someone asks you to do work that's not in your PWS, you do not start that work until a modification is in place. Period. No matter who asks. No matter how urgently they ask. No matter how good your relationship with them is.

Here's why:

• Recovering costs you absorb voluntarily is an uphill fight. If you perform work outside the contract scope without a mod, you may have done it for free. The government didn't obligate funds for it, and getting paid means an official with authority agreeing to ratify an unauthorized commitment (FAR 1.602-3, which is 1.405 in the overhauled FAR) or you winning a constructive change argument. Neither is guaranteed, even if everyone agrees the work was necessary.
• The person asking may not have authority. Your COR can direct you within the existing scope. Only the CO has authority to change the contract. If the COR says "can you also do X," and X is outside the PWS, the COR is asking you to perform unauthorized work, and if you do it, you own the cost.
• It creates a constructive change situation. If you perform out-of-scope work without a mod and later try to recover the cost, you're now in constructive change territory, which means you're filing an REA or a claim to recover what you should have gotten through a routine bilateral mod. That's infinitely harder, slower, and more expensive.

The right answer to any out-of-scope request is: "We want to support that. Let's get a modification in place so we can allocate the right resources." That's not adversarial. It's professional contract management.

The COR Trap

The most common way contractor PMs end up performing unauthorized out-of-scope work: the COR asks for it.

CORs are technical experts who care deeply about their program. They're often great people to work with. And sometimes, in the course of day-to-day interaction, they ask for things that aren't in the PWS: more analysis, a different format, an extra deliverable, a task that was "implied" by the original requirement.

The COR doesn't have authority to change the contract. Only the CO does. When a COR asks for out-of-scope work, they're either not aware it's out of scope, or they're aware but hoping you'll absorb it. Either way, you need to handle it correctly:

1. Document the request in writing. Reply to the verbal request with an email: "Per our conversation today, you've asked us to [X]. We want to support this but want to confirm it's within the existing scope of the PWS, specifically [section]. Can you confirm your interpretation, or should we route this to the CO for a scope discussion?"
2. Escalate to the CO if needed. If the COR confirms it's within scope and you disagree, loop in the CO for a formal scope determination. This is not confrontational. It's proper contract administration.
3. Don't start the work until it's resolved. If you start the out-of-scope work before the scope question is resolved, you've pre-empted the process and will have a hard time recovering the cost later.

Requests for Equitable Adjustment (REAs): How They Work

An REA is your mechanism for recovering costs that a government-directed or government-caused change has imposed on you. The legal basis is the Changes clause in your contract, which entitles you to an equitable adjustment to price and/or schedule when the government directs a change within the general scope of the contract.

Common REA situations:

• The CO issues a unilateral change order and you believe the price adjustment is inadequate
• The government delays delivery of GFE, causing you to incur additional costs
• The government suspends work under the Suspension of Work clause
• A government-directed design change increases your cost of performance
• The government adds new requirements to your contract mid-performance
• Access to government facilities is restricted beyond what the contract anticipated

A strong REA has four elements:

1. Entitlement. What government action or inaction created the change? Cite the specific contract clause, the specific direction from the government, and the documentation of that direction.
2. Causation. How did that government action cause the additional cost or schedule impact? Make the causal chain explicit. Don't assume it's obvious.
3. Damages. What specific costs did you incur as a result? Break this down by cost element: labor, materials, subcontract, overhead impact. Supported by your cost accounting system data.
4. Request. What are you asking for: a specific dollar amount, a schedule extension, or both?

On DoD contracts, an REA that exceeds the simplified acquisition threshold ($350,000) must include a signed certification that it's made in good faith and that the supporting data are accurate and complete (DFARS 252.243-7002).

Constructive Changes: Catching the Problem Before It Becomes a Claim

A constructive change occurs when the government, through its actions or inactions, effectively directs a change to the contract without formally issuing a modification. You absorb additional cost or schedule impact, but there's no paper trail of a formal direction.

Classic constructive change scenarios:

• The COR insists on a different technical approach than the one in your proposal, without a mod
• The government interprets the PWS more broadly than you do, requiring additional effort
• The government delays an approval you needed to meet a milestone, extending your performance period
• The government imposes accelerated delivery requirements verbally that increase your costs
• The government's rejection of a compliant deliverable forces you to revise it

The key to protecting yourself against constructive changes is real-time documentation. When a situation arises that you believe may constitute a government-directed change, document it immediately:

• Date of the direction or event
• Who made the request or took the action (name and title)
• What specifically was asked for or what happened
• Your response and any objection you raised at the time
• The impact on your schedule or cost at that moment

Then follow up in writing to the person who made the request: "This email confirms our conversation of [date] in which [name] requested [X]. We want to flag that we believe this falls outside the current scope of the contract under PWS [section]. We are requesting that this be addressed through a contract modification. If you believe this is within scope, please provide your written direction so we can adjust our execution plan accordingly."

This email does two things: it creates a contemporaneous record of the event, and it forces the government to either confirm the scope or issue a formal direction. Either way, you're documented.

Claims: The Last Resort

A claim under the Contract Disputes Act (CDA) is a formal, written demand for a specific sum of money or other contractual relief. Claims are adversarial by nature. They initiate a formal dispute resolution process that can end in litigation before the Armed Services Board of Contract Appeals (ASBCA) or the U.S. Court of Federal Claims.

Filing a claim is rarely in either party's interest. Claims are expensive, slow, and damage the working relationship. Most experienced practitioners view a claim as a failure of the process, not just of the contract.

Still, there are situations where a claim is the right instrument:

• The government has denied a legitimate REA and negotiations have failed
• The CO refuses to issue a decision on a disputed matter
• The contract has been terminated for convenience and the settlement is inadequate
• The government has taken an action you believe constitutes a breach

For claims exceeding $100,000, the contractor must certify that the claim is made in good faith, that the supporting data are accurate and complete, that the requested amount accurately reflects the contract adjustment believed to be due, and that the person signing is authorized to certify the claim for the contractor (FAR 33.207). False certification can have serious legal consequences.

If you believe you're heading toward a claim situation, engage your contracts manager and legal counsel early. The documentation you've been building since Day 1 (all those contemporaneous records of government direction, impact notes, email confirmations) is the foundation of your claim package. People who document well are the ones who prevail.

The Practical Takeaway

You will never be in a better position to address a contract change than the moment it first arises. The further you get from the event, the fuzzier the memories, the thinner the documentation, and the more expensive the resolution.

Build three habits:

1. Recognize scope changes early. Train yourself and your team to ask "is this in the PWS?" for every request that goes beyond routine performance. When the answer is ambiguous, escalate. Don't assume.
2. Document in real time. Every verbal direction with cost or schedule impact gets an email confirmation. Every government-furnished item gets a delivery receipt. Every out-of-scope request gets a written record.
3. Use the right instrument. Scope increase coming? Get a bilateral mod before work starts. Government cost you money? Submit an REA while the documentation is fresh. Negotiations have failed? Escalate to claim with your full document package.

People who show up prepared (with documentation, with process, with a clear understanding of their contract) are the ones who get equitable adjustments. The ones who wing it are the ones who absorb costs that were never theirs to absorb.