Constructive Changes in Federal Subcontracts: When Direction Becomes Extra Work

The federal construction clause recognizes more than formal change orders

FAR 52.243-4 states that certain written or oral orders, directions, instructions, interpretations, or determinations from the Contracting Officer that cause a change can be treated as a change order when the contractor gives the required written notice.

Official source: FAR 52.243-4 — Changes.

At subcontract level, authority is the first question

• Who is authorized to change scope, price, schedule, or method of performance?
• Can a project manager issue binding field direction, or must commercial authorization come from a contracts officer?
• Does the subcontract require written notice before performing disputed extra work?
• Can the prime direct immediate performance while price is negotiated later?
• Does failure to follow a daily ticket or notice procedure waive recovery?
• How will a Government-caused change be sponsored upstream?

Document the baseline and the departure

A constructive-change record should show what the subcontract originally required, what new direction or condition changed that requirement, when the subcontractor notified the prime, and how cost or time increased. Contemporaneous labor, equipment, material, schedule, and correspondence records are more persuasive than a reconstructed narrative months later.

Do not confuse performance with agreement

Continue-performance clauses may require the subcontractor to keep working while entitlement is disputed. If so, written reservation-of-rights language and segregated change accounting can help show that continued performance was not acceptance of uncompensated scope.