Good news for government contractors in the early redraft of the Contract Modifications clause
In good news for government contractors, the initial redraft of Federal Acquisition Regulation (“FAR”), part 43-Contract Modifications released on June 12, 2025, did not eliminate the contract clauses that address the requirements for contract changes. The revision is part of the Revolutionary FAR Overhaul ("RFO") mandated by the April 15, 2025, Executive Order that directed agencies and the FAR Council to eliminate any regulations that were not statutorily required.
Notably, FAR part 43 and its related contract clauses (collectively referred to as the "Changes clause") are not required by statute and could have been eliminated or substantially modified by the revision. Instead, the changes to FAR part 43 were minimal and limited to removing commentary related to contractor accounting systems, field pricing review, and requirements for government review. In fact, the RFO website specifically states "[n]on-statutory procedures for contract modifications remain to support uniformity across Government."
Takeaways
The recognition that the Changes clause should remain, despite the lack of statutory requirement, is encouraging as it suggests a common-sense approach for the RFO and that long-standing clauses necessary for effective contract administration will not be removed. However, whether this practice will apply to other FAR clauses that are not statutorily required, such as FAR 52.236-2 Differing Site Conditions, remains to be seen. To date, in addition to FAR part 43, FAR parts 1 (describing the FAR), 10 (Market Research), 11 (Describing Agency Needs), 18 (Emergency Acquisitions), 34 (Major System Acquisition), and 39 (Acquisition of Information and Communication Technology) have been reviewed and updated, as well as the associated contract clauses in part 52. This leaves more than 40 sections of the FAR to be reviewed and updated prior to the October 13, 2025, deadline set by the Executive Order.
Regulations eliminated from the FAR that remain relevant to effective procurement processes will be revised into "buying guides" that will be living documents updated with recommended best practices and related guidance. Important for contractors is the lack of requirements for Contracting Officers to follow such "guides" and the probability that procurement and contract administration will vary from agency to agency. For example, FAR 52.236-2 Differing Site Conditions requires an equitable adjustment in the event a different site condition exists. If this FAR clause, and the underlying regulation, becomes mere guidance, the government would not be obligated to make an equitable adjustment if a differing site condition is encountered on a project.
What's Next
Following the completion of the RFO, the FAR Council will engage in the formal rulemaking process required for regulatory changes. At that time, the public will have the opportunity to issue formal comments to the proposed changes, which will be considered as part of the final rules. Contractors should consider submitting formal comments, particularly related to vital contract clauses and regulations that may become best practices with no legal obligations on the part of the government. Additionally, informal comments can be submitted in response to the revised FAR sections on the RFO website. Feedback for FAR part 43 can be submitted here.
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