Once a contract has been let, circumstances often lead Public Sector bodies to want to modify the contract in some way. This note outlines when, and how, contracts may be modified without the need for a new procurement procedure.
Modification of contracts, including changes in value of up to 10%
Unless the modification changes substantially the nature of a contract, changes of up to 10% in total contract value are permissible. The total value of all changes must total no more than 10%. It is not permissible to increase the contract value by 8% and then later increase it by 5%.
A modification of a contract shall be considered substantial where:
- The modification renders the contract agreement different to the originally concluded contract substantially.
- The modification introduces conditions which, had they been included in the initial procedure, may have allowed for the admission of other candidates or attracted additional participants.
- Where the modification changes the economic balance in favour of the contractor, not provided for in the initial contract or framework.
- Where the modification extends the scope of the contract considerably.
Modification of contracts, including changes in value of up to 50%
Contracts may be modified up to a maximum 50% increase in value if:
- Additional services have become necessary. These were not included in the initial procurement and a change in contractor would cause significant inconvenience or substantial duplication of costs for the contracting authority.
- The modification could not have been foreseen by the contracting authority and it doesn’t alter the overall nature of the contract.
Substantial modification of contracts, not limited to a 50% increase in value
The limitations on modifying a contract are removed if the potential modifications, irrespective of their monetary value, have been detailed in the procurement documents in a clear, precise and unequivocal way. This may include price revision clauses or options provided they:
- State the scope and nature of the possible modifications or options as well as the conditions under which they may be used.
- Do not alter the overall nature of the contract.