Certified Professional Public Buyer (CPPB) Practice Test

What occurs when a public agency interprets a contract in a manner that increases expenses during the performance of work?

1. Constructive change

2. Contractual abandonment

3. Improper modification

4. Unilateral change

The correct answer is: Constructive change

When a public agency interprets a contract in a way that results in increased expenses during the performance of work, this is referred to as constructive change. Constructive change occurs when one party’s actions or interpretations effectively modify the scope or terms of the contract, even if no formal amendment has been executed. In such situations, the contractor may have incurred additional costs due to requirements or expectations imposed by the agency that were not explicitly stated in the original contract. The essence of constructive change lies in the notion that the contractor may be entitled to compensation for these additional expenditures since the work altered or expanded beyond the initial agreement without a formal change order. This principle is vital in public procurement as it ensures that contractors are recognized for the additional costs they incur when an agency’s instructions or actions lead to changes in the contract's performance scope. Understanding constructive change is crucial for managing contract performance and budgeting accurately.