Question: My organisation is a contracting authority that has already entered into a public service contract with a provider, but now we want to vary the contract so that we can obtain some additional services from the supplier. Can we do this without having to run the procurement process all over again?
Answer: Possibly – it really depends on the scope of the amendment to the services and whether the amendment was contemplated at the time the original procurement process was run.
The risk is that the amendment to the scope of the services supplied is sufficiently “material” that a court would regard the amended contract as a “new” contract for the purposes of the Regulations, and therefore decide that it ought to be procured via a new competition. Case law sets out the following three tests for whether an amendment is “material” in this way:
- Does the amendment introduce conditions which, if they had been part of the initial award procedure, would have allowed for the admission of bidders other than those initially admitted or allowed for the acceptance of another bid?
- Does the amendment extend the scope of the contract as originally tendered by encompassing services not initially covered?
- Does the amendment change the economic balance of the contract in favour of the supplier in a manner not provided for in the terms of the initial contract?
If the answer to any of these questions is “yes”, the amendment is likely to be “material” and to trigger the requirement to run a new procurement process.
Let’s take, for example, an existing contract for the supply of 100 widgets. If the public body simply wished to slightly extend the scope of the contract such that 110 widgets are supplied, the answer to the first two questions is likely to be “no”. While the answer to the third question may well be “yes”, one could probably argue that the shift in favour of the supplier from 100 to 110 widgets is too small to be “material”.
At the other extreme, let's take for example an existing contract for the supply of a computer system. If the public body wished to extend the scope so that a telecomms system was also supplied, it is likely the answer to all three parts of the above test would have to be “yes” and therefore that a new procurement would have to be run.
There is however less risk involved where the original OJEU notice and contract documents clearly contemplate the extension in scope proposed, and contracting authorities who know in advance that they may well wish to change the scope of the contract are well advised to plan for this upfront from day one; doing so may well save the expense and time of having to run a procurement process for a second time.