Contract Modifications for Software Companies: Bilateral, Unilateral and the Changes Clause

2026-10-23#saas #federal-market

By Philip Luca — Founder of GovExpress; prior domain experience at Bloomberg Government and GovWin IQ.

Federal contracts rarely end exactly as they were signed. An agency adds users, moves a delivery date, changes a reporting requirement or swaps the office that processes invoices. Each of those changes runs through a formal process, and a software company that understands it protects both its schedule and its price.

The rules sit mainly in FAR Part 43, Contract Modifications, and in the Changes clause written into the contract. This guide explains the two kinds of modification, how the Changes clause works, why commercial software contracts are different, and what to do when the government asks for something the contract doesn’t cover.

Bilateral and unilateral modifications

FAR 43.101 defines a contract modification as any written change in the terms of a contract. Most are issued on Standard Form 30, Amendment of Solicitation/Modification of Contract, and every one is numbered and added to the contract file. There are two kinds:

Bilateral modifications, also called supplemental agreements, are signed by both the contractor and the contracting officer. They are used to make negotiated equitable adjustments, to settle the price of a change, and for any change the two sides agree on, such as adding scope that both have priced.
Unilateral modifications are signed only by the contracting officer. FAR 43.103 lists their uses: administrative changes, change orders issued under a Changes clause, changes the contract itself authorizes (such as exercising an option or a stop-work order), and termination notices.

An administrative change is a unilateral change that doesn’t affect the substantive rights of the parties, such as a new paying office or updated accounting data. It still arrives as a numbered modification, so read every one. Corrections to invoicing details matter directly to your federal invoicing.

Some routine events are also handled as modifications. When a company is acquired or renamed, the government recognizes the change through a novation or change-of-name agreement that is then added to each affected contract.

Who can change a contract

Only a contracting officer acting within the limits of their warrant can modify a contract. FAR 43.102 is explicit: other government personnel must not execute modifications, and must not direct or encourage the contractor to do work that should be the subject of a modification.

That matters because the people you work with day to day are often not contracting officers. A program manager or a contracting officer’s representative (COR) can explain what the agency needs, but they generally can’t add scope, extend the schedule or change the price. Our guide to federal buyer roles explains who holds which authority.

How the Changes clause works

Many contracts include a Changes clause that lets the contracting officer order certain changes without the contractor’s agreement. For fixed-price contracts, the basic clause is FAR 52.243-1. It allows the contracting officer, by written order, to make changes within the general scope of the contract in a limited set of areas. For supplies these include drawings, designs or specifications, the method of shipment or packing, and the place of delivery. Alternate versions for services cover the description of the services, the time of performance and the place of performance.

Two limits shape the clause:

Equitable adjustment. If a change increases or decreases the cost or time of performance, the contracting officer must make an equitable adjustment to the price, the delivery schedule or both. Under FAR 52.243-1 the contractor must assert its right to an adjustment within 30 days of receiving the written order, though the contracting officer can act on a later request.
General scope. A change order must stay within the general scope of the contract. Work that falls outside it, sometimes called a cardinal change, can’t be ordered under the clause. It generally needs a new contract action, often a new competition.

The contractor must keep performing while the adjustment is worked out. Disagreeing with the price of a change is not a reason to stop work.

Why commercial software contracts are different

Most software and SaaS products are bought as commercial products or commercial services under FAR Part 12. Those contracts use the clause at FAR 52.212-4, Contract Terms and Conditions—Commercial Products and Commercial Services. Its Changes paragraph is short: changes in the terms and conditions may be made only by written agreement of the parties.

In practice, that means most changes to a commercial software contract are bilateral. The agency can’t simply order more seats, a new integration or a different hosting arrangement and leave you to argue about the price later. It has to agree the change with you in a signed modification. The main exceptions are unilateral actions the contract already provides for, such as exercising a priced option.

This is also why it helps to build the likely changes into the contract at the start. Priced options for additional users, modules or years, and clear license terms, let an agency grow the contract without renegotiating each step. On an IDIQ or task order contract, new work usually arrives as a new order rather than a modification to an existing one.

When the government asks for something the contract doesn’t cover

The most common source of disputes isn’t a formal change order. It’s an informal request: an agency user asks for a report, a feature or extra support hours that the contract doesn’t include. If you do the work and the government later decides it was outside the contract, you may have no clear basis to recover the cost.

A few habits help:

Read the scope before you say yes. Compare the request to the statement of work or performance work statement. If it’s already covered, do it. If it isn’t, it needs a modification.
Put it in writing. Tell the contracting officer, in writing, what was requested, who asked, and why you believe it is a change. Some contracts include a notification clause, FAR 52.243-7, that sets a deadline for this notice, so check the contract.
Wait for the modification. Price the change, agree it with the contracting officer and start once the signed modification arrives.
Know the escalation path. If you and the contracting officer can’t agree on an adjustment, a contractor can submit a request for equitable adjustment and, if that fails, a claim under the Contract Disputes Act. FAR 33.207 requires claims over $100,000 to be certified, and FAR 33.206 generally requires a claim to be submitted within six years after it accrues.

Changes to the type of contract or its pricing structure are covered in our guide to federal contract types. If the agency wants to end the work rather than change it, see termination for convenience.

What it means for a software company

Track every modification. Keep a log of each SF 30 by number, what it changed and whether you signed it. Your contract is the base award plus every modification.
Read before you sign. A bilateral modification is a contract. Many include release language that settles all claims arising from the change, so make sure the price covers the full effect before you sign.
Price changes early. An equitable adjustment is easier to agree when the work is fresh and documented. Keep records of the hours and costs each change caused.
Design for change. Priced options and clear license terms let an agency add users and modules through a routine modification instead of a new negotiation.

The FAR is being rewritten through the Revolutionary FAR Overhaul, and many agencies now apply the new text by class deviation, so clause numbers and wording may differ in a current solicitation. Check the contract and the clauses it actually includes before you rely on any rule here.

To see where your company stands before your next federal bid, score your company’s federal readiness.

Frequently Asked Questions

What is a federal contract modification?

Under FAR Part 43, a contract modification is any written change to the terms of a contract. It is usually issued on Standard Form 30 (SF 30) and signed by a contracting officer. A bilateral modification is signed by both the contractor and the contracting officer; a unilateral modification is signed by the contracting officer alone.

Can the government change a commercial software contract without my agreement?

Generally not. Contracts for commercial products and services use the clause at FAR 52.212-4, whose Changes paragraph says the terms can be changed only by written agreement of the parties. That makes most changes to a commercial software contract bilateral. Unilateral actions the contract itself provides for, such as exercising an option, are the main exception.

What should I do if a government employee asks for extra work?

Check who is asking. Only a contracting officer acting within their authority can change a contract. If a program manager or contracting officer's representative asks for work the contract doesn't cover, tell the contracting officer in writing and wait for a modification before doing the work. Work done on an informal request may never be reimbursed.

The CMMC brief

What the Phase 2 suspension changed and what it did not — the obligations that still bind, the assessment path a contract puts you on, the scoping decision that drives the cost, and the sequence that fits inside a pipeline. Sourced from the primary record.