Unforeseen contract amendments not pre-approved

An unforeseen contract amendment not pre-approved is a change to a federal contract that nobody anticipated when the contract was first approved. The CanadaBuys Buyer's Guide describes these as amendments needed to incorporate work or contract changes that were neither foreseen nor pre-approved in the original contract approval.

The term belongs to the federal approval process for contract amendments. It tells buyers that a change outside the original approval needs the right sign-off before it goes ahead. The guidance appears on the CanadaBuys contract amendment page.

Examples the Buyer's Guide gives

The guide lists four kinds of change that fall under this term:

• Buying additional quantities that were not previously anticipated or approved.
• Adding a requirement that was not anticipated.
• Extending the contract period because of unexpected delays beyond the contractor's control.
• Increasing the contract value beyond the original approval.

What links these examples is that the original approval did not cover them. A change the original approval already anticipated is a different case.

How the approval level is set

The approval route depends on the complexity level of the amendment. For amendments at complexity levels 1 to 3, the buyer completes a Risk and Approval Assessment (RAA), and the RAA determines the appropriate approval level. For complexity levels 4 and 5, approval is required from the PSPC Assistant Deputy Minister, Procurement Branch, or from the Defence and Marine Procurement Branch. The buyer's decision also considers the aggregate value of the amendment, as set out in the CanadaBuys guidance.

Treasury Board limits and firm-price contracts

Treasury Board rules sit behind the CanadaBuys guidance. The Directive on the Management of Procurement requires the applicable approval when a contract or an amendment exceeds the relevant specified limit, and those limits include applicable taxes and fees.

Firm-price contracts carry a further restriction. CanadaBuys states that a firm-price contract generally may not be amended without prior Treasury Board approval, unless an escalation clause or another contract condition authorizes the adjustment. Treasury Board approval is mandatory for claims for extra payment. See the CanadaBuys page on financial claims.

Written authorization before work starts

Approval must come before the work does. PSPC's Contemplated Change Notice form asks the contractor to quote a firm price for a proposed revision. It states that no work may begin until a change order or written authorization has been signed and issued.

CanadaBuys guidance on managed contracts, including task-authorized arrangements, says anticipated changes must be authorized in writing by the PSPC contracting authority through a contract amendment. That authorization must be in place before additional work is performed or a task authorization is issued. See the CanadaBuys special considerations guidance.

What it means for a supplier

If you hold a federal contract and a change comes up that the original approval did not cover, such as more quantity, a new requirement, a delay extension or a higher value, expect the buyer to run it through an approval step. Do not start the extra work on an informal request. Wait for a signed change order, written authorization or contract amendment from the contracting authority. Price any proposed revision as a firm quote, and expect larger or more complex amendments to take longer because they go to a more senior approval authority.