Construction

Construction Program Guide

Contract Changes

The FHWA's policies for construction contract modifications provide for the use of standardized changed condition clauses for certain projects and for the review and approval of contract modifications for Federal-aid participation.

Authority/Legal Basis

Laws

• 23 USC 315 Rules, regulations, and recommendations (2012) provides very broad authority for the Secretary of Transportation to prescribe regulations to carry out the Federal-aid highway program. However, there are no specific statutes dealing with construction contract modifications other than the required use of standardized changed conditions clauses as required by 23 USC 112(e).

Regulations

• Value Engineering Final Rule (09/05/2014)
• 23 CFR 635.102 Definitions (04/01/2013)
• 23 CFR 635.109 Standardized changed condition clauses (04/01/2013) prescribes the standardized contract clauses mandated by the 1987 Surface Transportation and Uniform Relocation Assistance Act. These contract clauses include the following:
  • Differing Site Conditions,
  • Suspensions of work ordered by the engineer, and
  • Significant changes in the character of work
  Subsection (c) address the unique use of changed condition clauses for design-build contracts. The FHWA encourages but does not require the use of such clauses in design-build contracts.
• 23 CFR 635.120 Changes and extra work (04/01/2013) address the unique use of changed condition clauses for design-build contracts. The FHWA encourages but does not require the use of such clauses in design-build contracts.
• 23 CFR 635.121 Contract time and contract time extensions (04/01/2013) describes the FHWA approval procedures for the review and approval of time extensions.
• 23 CFR 635 Construction and Maintenance; Contract Procedures; Standardized Contract Clauses (01/30/1989)

The above regulations provide the FHWA's regulatory policy regarding construction contract modifications. However, please note that these regulations were last updated on August 2, 1991 and do not include revised stewardship, oversight, and applicability requirements resulting from the 1991 ISTEA and the 1998 TEA-21. See the discussion in the FHWA Contract Administration Core Curriculum Manual for a summary of current FHWA policy).

Policy

• The FHWA Contract Administration Core Curriculum Manual summarizes policy and provides general guidance concerning contract modifications. Please refer to the following sections of the manual for more specific guidance:
  • Standardized Changed Condition Contract Clauses
  • Change Orders (Extra Work and Time Extensions)
• Cardinal Change in Scope of Work (11/15/1996) provides general guidance concerning the eligibility of cardinal changes which provide significant changes in the scope of the work.
• Participation in the Cost of Corrective Work Resulting from Construction Engineering Errors (09/08/1978) provides guidance for FHWA's participation in the cost of consultant design errors that are not the result of carelessness or gross negligence.
• Federal Participation in Construction Engineering Errors (08/15/1978)
• Participation in Engineering Errors (07/12/1963) provides guidance for FHWA's participation in change orders where carelessness, negligence, incompetence or under-staffing are not contributing factors.

Guidance

General Information

• FHWA Contract Administration Core Curriculum Manual
• FHWA Form 1365 - Record of Authorization to Proceed with Major Contract Provision is a form that can be used to document the FHWA's advance approval of change orders
• Final PY 2019 Core Question Guide (03/20/2018)
• FHWA Guidance Compliance Assessment Program (CAP) (April, 2017)
• Final PY 2018 Core Question Guide (04/27/2017)
• Additional Guidance on 23 CFR 635 A former Federal-aid Policy Guide, Nonregulatory Supplement, 23 CFR 635A (10/09/1996) 5) Changes and Extra Work; and 7) Contract Time and Contract Time Extensions

Training

• NHI 134037A - Managing Highway Contract Claims: Analysis and Avoidance
• NHI 134049 - Successfully Managing Construction Scheduling and Risk
• FHWA Contract Administration Core Curriculum (Course Description (.pdf))

Archive

• Price Adjustment Contract Provisions (08/21/1990)
• Expediting Completion of Highway Construction in Urban Areas (02/16/1970) provides guidance for division staff to critically review contract time allowances and any change orders that affect contract time on projects in urban areas.
• Adoption of Specifications to Preclude Third Party Beneficiary Claims Under Construction Contracts (05/22/1968)
• Advance approval of changes and extra work on Federal-aid highway projects (03/01/1967)
• Construction Changes and Extra Work Orders (04/13/1960)