Contract Variation

A contract variation (also called a contract modification or change order) is a formal amendment to the scope, value, duration, or other material terms of an existing public contract. Public procurement law places strict limits on variations to prevent awarded contracts from being materially altered in ways that would have attracted different or additional bidders — effectively a new procurement through the back door.

EU Directive 2014/24/EU (Article 72) defines permissible modifications: those below 10% of the contract value (15% for works) and below EU thresholds; modifications made necessary by unforeseen circumstances; additional works or services from the original supplier where switching would be disproportionately disruptive; and modifications explicitly provided for in the original contract (options, review clauses). Material modifications not meeting these criteria require a new procurement.

For vendors, contract variations are commercially important but legally constrained. Claiming for scope changes — particularly in construction and IT implementation — requires meticulous documentation of what was instructed, by whom, and the resulting cost. Unauthorized variations performed without a proper change control process may be unenforceable. For authorities, patterns of high variation rates on a contractor's contracts are audit red flags indicating poor original specification or commercial gaming.