Making changes to existing contracts is common. What is not so common is a challenge in the Courts to such changes.
In James Waste Management LLP v Essex County Council it was alleged by James Waste that Essex Council had varied a contract beyond the narrow boundaries permitted by the Public Contracts Regulation 2015 (“PCR 2015”). The implication being that a variation of a contract beyond the restrictive limits permitted by Regulation 72 PCR 2015 is effectively a prohibited direct award of a contract which ought instead to have been subject to further competition through a compliant procurement.
James Waste’s claims was unsuccessful as they were not able to prove that the modification was sufficiently “substantial” within the meaning of Regulation 72(8).
The judge held that the ‘safe-harbour’ tests in Regulation 72 (1) (a)-(f) should be interpreted narrowly because they amount to an exemption from the general rule set out in Regulation 72 (9) that a new procurement procedure is required for all modifications of the provisions of a public contract or a framework agreement during its term other than those which fall within the safe-harbours, and not being considerable, substantial, significant or material.
Interestingly the judge was clear that the burden of providing evidence and proof fell on the claimant, James Waste. In addition, for Reg 72(8)(b)(ii) to be satisfied, it is sufficient for a claimant to show that there is a real (as opposed to fanciful) prospect that another tenderer would have won the modified contract, because of the conditions newly introduced. It is not necessary, however, to show that the new conditions would have entailed the acceptance of a different tender. The judgement is well worth a read and includes useful lessons for us all.
New Procurement Act
There have been few Court cases involving substantial modifications. One reason for this may be the generally limited amount of publicity around modifications. This is going to change under the new Procurement Bill which allows far greater flexibility for Contracting Authorities to make modifications to public contracts, but also requires greater transparency and disclosure of contract changes than under the existing PCR 2015 regime. So, whilst on the one hand the more accommodating regime may encourage Contracting Authorities to make more modifications to their contracts, the risk is that with added disclosure through the Bill’s new Contract Change Notice procedure we will see greater scrutiny and many more challenges to contract modifications put before the Courts.
In2 the bargain 