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Paragraph 6-10   Contract Modifications.

A.  General.  Occasionally, it is necessary to modify a contract or purchase order to reflect changes in the required effort.  Contract and purchase order modifications shall be issued in on of the following modification forms:

1. bilateral modifications (such as a supplemental agreement in which both parties mutually agree on contract changes) that is signed by both the Contracting Officer and the contractor; or
2. unilateral modifications (a modification that is signed only by the Contracting Officer, such as a change order pursuant to the Changes clause on Form HUD-5370, or administrate modification, such as a change in the address of the payment office).

Bilateral modifications are the preferred method of modify contracts and purchase orders.  In either case, all contract modifications shall be in writing.

B.  Change Orders.

1. A change order is a change issued by the Contracting Officer, after the award of a contract, in any of the contract terms, including specifications, completion time, description of the work, etc., within the scope of the contract.  All HA contracts shall contain a Change clause, such as that on the forms HUD-5370 (for construction) or HUD-5370-A (for non-construction).  A change order may be issued unilaterally by the Contracting Officer.  In such cases, the contractor is entitled to submit a change order proposal to identify any changes in cost or schedules as a result of the change, and the parties negotiate an equitable adjustment.
2. Change orders may be issued bilateral if the contractor will agree to the change in advance.  When a change is mutually agreed upon, including price adjustment for concessions made by either party, a contract modification document is prepared and signed by both parties to the original contract.  Change Orders shall include at least the following:
a.  a detailed description of the proposed change in work;
b.  a reference to the applicable working drawings and specifications;
c.  a fixed price (credit, debit, or co change) for the change in contract work;
d.  estimated of any additional time, if any, required to complete the work;
e.  the contractor's itemized breakdown of the cost of materials and labor and an  itemized
     breakdown for any applicable subcontractors; and
f.  the change indicated on the architectural or engineering drawings, if applicable.

C.  Limitations on Change Orders.   There are limitations on the use of change orders.  The Change clause prescribes the specific circumstances in which a change order may be issued.  Changes such as increasing the number of items being purchased or other types of new work are not considered within the scope of the contract or within the authority of the Changes clause.

D.  Records.  The HA shall maintain accurate records and documentation regarding contract modifications by including a register in each contract file.  This is required to provide a permanent record of all actions taken in connection with each contract.  To provide an overview of all contract modifications and for tracking purposes, the HA should consider maintaining in the contract file a register of modifications to identify:
[24 CFR 85.36(b)(9)]

1. the number of the modifications;
2. a brief decription of the modification;
3. the cost of the proposed modification;
4. the date submitted tot he HUD Field Office for approval, if applicable;
5. any critical deadline dates that must be met by the Field Office
6. if applicable, the date of Field Office approval or disapproval and the action taken; and
7. the amount of any additional time required by the contractor.