Understanding Contract Amendments

A contract amendment is any change made to an active contract that alters the fundamental obligations and entitlements of the contract; that is, you are changing or adding to the contract values that you specified in the Contract Entry component, on the Special Payment Terms page, or on the Related Project page. You make amendments to a contract using the Amendment Processing feature.

Once a contract is active, you can create a new amendment or update an existing pending amendment by clicking the Amend Contract button on any page within the Contract Entry component, Prepaids page, Special Payment Terms page, or Related Projects page. When you click the Amend Contract button, you access the Amendments page. If a pending amendment exists, your changes are added to it. If no pending amendment exists, the system creates a new amendment. On the Amendments page, you can define the high-level details of the amendment, including the amendment type and amendment reason. The edits made through Amendment Processing include adding new contract lines, activating pending contract lines, cancelling active contract lines, changing billing and revenue amounts and limits on active contract lines, and so forth.

The Amendment Billing Allocation page is used to update amounts used for billing and is always editable. Use this page to update the total billing amount for the contract and the line level billing amounts and billing limits for amount and rate based contract lines. The Amendment Revenue Allocation page is used to update the total revenue amount for the contract and the line level revenue amounts and revenue limits for amount and rate based lines if billing and revenue are separated on the contract. The contract level options to separate fixed billing and revenue and separate as incurred billing and revenue work independently and these options impact the columns that are editable on the Amendment Revenue Allocation page. The logic and approach are similar to that used on the Revenue Allocation page before a contract is activated. That is, if fixed billing and revenue is separated on the contract, then amount based lines are editable on the Amendment Revenue Allocation page. If as incurred billing and revenue are separated on the contract, then rate based lines are editable on the page. Both fixed amount and as incurred contract lines can be separated as well. If neither option is selected, then the entire Amendment Revenue Allocation page is read only and amounts equal those shown on the Amendment Billing Allocation page. Recurring contract lines are applicable only when the contract is not separating fixed billing and revenue. Amounts for these lines are editable only on the Amendment Billing Allocation page since billing and revenue are always managed as one amount for recurring lines and Billing Manages Revenue is always the revenue recognition method.

Changes to total billing, total revenue, total fixed billing and total fixed revenue can also be made on the Amendment Details page. These high-level amendment details remain editable on the Amendment Details page as long as an amendment is in pending status.

When you save contract amendments, the system saves the new data in separate amendment tables and assigns the amendment an amendment number. The amount fields are updated with changes that you make to the amended amounts on the Amendment Billing Allocation page and Amendment Revenue Allocation page. More specifically, use these pages to:

• Adjust the total billing and total revenue values for the contract.

• Adjust billing and revenue amounts on amount and percent based lines.

• Adjust billing and revenue limits on rate based lines.

• Adjust amounts for billing/revenue on recurring lines.

• Check for unallocated adjustments across contract lines.

• Allocate adjustments to total revenue across contract lines using a specified basis for allocation.

After you finish entering amendment data, set the status of the amendment to ready. If the process date of the amendment is less than or equal to the amendment processing run date, the amendment is eligible to be applied by the Amendment Processing engine. You can process an individual amendment by clicking the Process Amendment button on the Amendment Details page, or you can process multiple amendments through the Amendment Processing page. When an amendment is processed, the system sets the amendments status to completed, and the values that you specified for that amendment become the current active contract values.

When making an amendment to the prepaid purchased amount and the amendment is processed, the initial billing must be processed for the modified difference amount. The user should review the bill plan if the status of the bill plan is set to Action Required.

When the amendment is processed, the application engine (CA_CHG_CTRL) runs and makes the appropriate changes to the Contract Total Billing, Total Revenue, total Fixed Billing, total Fixed Revenue, line level amounts and the Prepaid Bill Plans.

See Prepaid Amendments.

This section discusses:

• Amendment statuses

• Status flow for amendments

• Contract line cancellation

• Contract level changes for total billing and total revenue

• Contract line billing and revenue amount changes for amount and percent based lines

• Contract line billing and revenue limit changes for rate based lines

• Contract line amount changes for recurring lines

• Amendment processing

• Amendment example

Note:

For contracts with a contract classification of Government, additional amendment rules apply.