13.06 Managing contract amendments

Managing contract amendments is the handling of changes that arise during contract execution. Typically these changes involving variations in costs or requirements that were not originally anticipated, but which are not in dispute.

Managing contract amendments requires incorporating necessary changes into the contract while avoiding unwanted ones.

It is the responsibility of staff managing the contract to:
  • negotiate the appropriate contract changes regarding cost, schedule and quality/performance;
  • ensure that the contract is formally amended so that it at all times reflects the agreed expectations of both parties under the contract;
  • document any amendments in the contract registry file; and
  • ensure that any changes are reasonable and justifiable in terms of cost, time and quality.
A contract amendment originates from a request for small changes or additions to the contract from the end-user or the contractor, or from a discovered need for adjustments in order for the contract to clearly reflect the expectations of the contract parties.

Contract amendments are appropriate if the contract provisions call for modifications, or if additional related goods, services or works are to be rendered by the same supplier in furtherance of the execution of an original contract.

Contract amendment is not appropriate if the amendment involves a substantial change to the scope of the goods, services or works to be delivered. In these cases, a new competitive process must be started.

Whenever there is an amendment, the amended contractual document shall be sent to the supplier for acceptance and signature.

Limit on the number of contract amendments

No contract can be amended to run for longer than three times the original duration without a new competitive process.

No contract can be amended for a total cumulative value higher than two times the original contract amount without a new competitive process.

The exception to the above is if such a potential amendment has been indicated as part of the competitive process.

No-cost extensions

Sometimes there is a need to amend the end date of a contract to reflect that a delayed service provider is still under contract.
Amendments must be made to the contract and recorded in the ERP.

Amendments with financial implications

Requests for contract amendments must be made well in advance of the proposed effective date of the amendment and always before the expiry date of the contract.
If the contract has already expired, no amendments can be made.

Contract value increases of less than 20% of the previously reviewed and approved value will normally not require a new review. The exception is for a situation where the increase in value results in a new aggregate value that requires approval from a different procurement authority than the one that approved the original contract.

If the increase is for 20% or more, the case must be submitted for formal review and subsequent award of contract to the respective awarding authority based on the cumulative value.  See 6.11: Cumulative contracts.

Before requesting an amendment, attention should be given to the points below.

 If ... Then ... 
A contract amendment results in an increase in costs…  …staff managing the contract must justify the reasonableness of cost (e.g. unit prices should not exceed those in the original contract).
In such cases, deviations from the original unit prices must clearly be explained and justified in submissions or awards.
The contract amendment (including previous amendments without review) is less than 20% of the previously approved contract value, and the total amount is within the approval of the awarding authority that last approved it…   … there is no need for a submission for review
Approval may be given by the relevant officer with delegation of authority