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Revolutionary FAR Overhaul Includes Change Order Reform

Reform regarding change orders in federal contracting is part of the ongoing, comprehensive "Revolutionary FAR Overhaul" (RFO) initiated by a series of Executive Orders in early 2025. This initiative, led by the Office of Federal Procurement Policy (OFPP) and the Federal Acquisition Regulatory Council (FAR Council), aims to streamline the entire Federal Acquisition Regulation (FAR) by removing non-statutory requirements.

Key updates and implications for change orders:

  • Focus on Statutory Roots: The primary objective is to return the FAR to its statutory requirements, eliminating over 1,000 non-statutory rules in total. This may lead to fewer explicit, non-statutory clauses related to contract modifications and change orders within the main FAR text.
  • Revised FAR Parts: Revisions have been made to several FAR parts, including parts 6, 10, 31, and 43, the latter of which specifically addresses change orders. These changes aim to simplify the rules governing acquisitions and potentially reduce administrative burdens on contractors.
  • Increased Agency Discretion: The overhaul encourages contracting officers to use "good business judgment" and innovative approaches, which might provide greater flexibility in handling change orders and evaluating equitable adjustments.
  • Non-Regulatory Guidance: Many of the removed non-statutory rules and best practices will be placed in a non-regulatory "FAR Companion" or "Practitioner Albums". While not legally binding regulations, these resources will still offer practical advice and may influence how agencies process changes.
  • Uncertainty and Transition: The rapid implementation and move away from detailed regulatory guidance have created some uncertainty for contractors regarding specific performance obligations and pricing for changed work. Contractors are advised to monitor agency-specific deviations and guidance closely.
  • Undefinitized Change Orders (UCOs): Existing rules regarding limitations on obligations for undefinitized change orders (e.g., the 50% limit before definitization, potentially increasing to 75% upon a qualifying proposal) remain in force under the Defense Federal Acquisition Regulation Supplement (DFARS).

Goal of Efficiency: The overarching goal is faster acquisitions, greater competition, and better results for the government. Streamlining the change order process is likely a component of this broader efficiency push

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