What is the purpose of supplemental agreements in contract management?

The purpose of supplemental agreements in contract management is to definitize letter contracts, which are often used in situations where there is an urgent need for supplies or services and the exact terms cannot be immediately finalized. A letter contract allows work to commence while the formal contract is still in development. However, to protect both parties involved and ensure clarity, a supplemental agreement is later used to amend the terms to formalize the contract fully. This definitization process includes establishing necessary details such as cost, schedule, and specific obligations.

While amending pricing contracts and clarifying scope of work can also involve supplemental agreements, those functions are part of broader contract management practices rather than the primary intention behind supplemental agreements. Additionally, terminating vendor agreements typically involves different legal procedures and documentation that do not align with the purpose of supplemental agreements.