European Union Legislation and Procurement Reform (Scotland) Act 2014: reference pack

13. Contract Performance

Modification of contracts during their term

Regulations set explicit requirements regarding modifications of contracts. The starting position is that modifications to contracts will require a new competition to be held, unless one of the six exceptions can be applied.

These provisions do not apply to contracts above the Reform Act regime threshold and below EU advertising thresholds.

These exceptions are:

a) Where the modification is provided for in a clear, precise and unequivocal contract condition, which was included in the initial procurement documents.

b) For additional works, services or supplies where a change of contractor is not possible for economic or technical reasons and would result in significant inconvenience or substantial duplication of costs. However, any increase in price must not exceed 50% of the value of the original contract.

c) Where the need for modification is brought about by circumstances which a diligent public body could not foresee, which does not alter the overall nature of the contract and where any increase in price is not higher than 50% of the value of the original contract.

d) Replacement of the original contractor by another under a contract condition; universal or partial succession, perhaps due to takeover, merger, acquisition, or insolvency; or where the authority steps in and assigns some or all of the goods, works or services back to itself.

e) Where the modifications, irrespective of their value, are not substantial.

f) Where the modification does not change the overall nature of the contract and the modification is below:

i) the relevant threshold value for the type of contract, and

ii) is below 10% of the initial contract value, for service and supply contracts, or is below 15% of the initial contract value for a works contract.

Modification of Concession Contracts During Their Term

The only sections of “modifications contracts” in the Concessions Contracts (Scotland) Regulations 2016 which differ from the approach taken in the Public Contracts (Scotland) Regulations 2015 are as follows:

Concessions may be modified without a new procurement procedure where the value of the modification is below the OJEU advertising thresholds, and below 10% of the initial concession value (as opposed to 10% of the initial contract value for supplies or services or 15% of the initial contract value for works contracts or framework agreements in the Public Contracts (Scotland) Regulations 2015).

Termination of EU Regulated Contracts

Public bodies can, at least under the following circumstances, terminate a public contract during its term where:

• the contract has been subject to a substantial modification, which would have required a new competition due to the modification being beyond the scope of that allowed by the Regulations;
• the contractor had, at the time of contract award, been caught by one of the mandatory or optional exclusions and should therefore have been excluded from the procurement procedure;
• the contract should not have been awarded to the contractor in view of a serious infringement of the obligations under the Treaties and Regulations that has been declared in an EU infringement procedure by the Court of Justice of the European Union.

The Regulations state that public bodies “must ensure” that their contracts contain a clause which allows for termination in these circumstances. If a contract does not contain such a clause, the Regulations state that the ability for a public body to give notice of termination under these circumstances shall be an implied term of contract.

QUIZ

Question 23

A public body that has awarded a service contract valued at £200,000 (above EU threshold- non-social and other specific services) seeks to modify this with the value of modification being £30,000. Does the new legislation allow for the contract to be modified without the need for a new competition?

a) Yes

b) No.