A contracting officer can issue bilateral or unilateral contract modifications, which differ in their approval process and the contractor's obligations. Federal contracts follow the Federal Acquisition Regulation (FAR), specifically FAR Part 43, which outlines policies and procedures for contract modifications.
A bilateral modification requires the signature of both the contracting officer and the contractor. This type of modification is used for actions such as making equitable adjustments resulting from change orders, definitizing letter contracts, or reflecting other agreements between the parties. When a bilateral modification is proposed, your firm has the right to negotiate the terms before signing, ensuring mutual agreement on the changes.
A unilateral modification requires only the signature of the contracting officer. This type of modification is used for administrative changes, such as a change in the paying office, or for issuing change orders, exercising options, or issuing termination notices. While your firm must comply with a properly issued unilateral modification, you may have avenues to dispute its terms, such as through a claim under the Disputes clause, if you believe it is outside the scope of the contract or improperly executed. For state and local government contracts, the specific rules for modifications will be found in the state or local procurement code and the relevant vendor guide for that procurement portal.