Contract Amendments: Deviations & Modifications
The Procurement Act 2023 introduces new rules and guidance regarding contract modifications, providing contracting authorities with legal certainty when making changes to existing contracts. This article explores the key aspects of contract amendments under the new legislation.
Permitted Modifications
According to the Procurement Act 2023 guidance, contracting authorities may modify a public contract or a convertible contract if the modification falls under one of the following categories:
- Permitted modification under Schedule 8
- Non-substantial modification
- Below-threshold modification
Schedule 8 Modifications
Schedule 8 of the Act lists several grounds on which a contract may be modified, including:
- Modifications provided for in the original contract
- Modifications due to urgency and the protection of life
- Modifications due to unforeseeable circumstances
- Modifications due to the materialisation of a known risk
- Additional goods, services, or works
- Transfer on corporate restructuring
However, some of these grounds are complex and may only be usable in a narrow range of situations.
Non-Substantial and Below-Threshold Modifications
Non-substantial modifications, as defined in section 74(3) of the Act, are permitted if they do not:
- Increase or decrease the contract term by more than 10% of the maximum term provided for on award
- Materially change the scope of the contract
- Materially change the economic balance of the contract in favour of the supplier
Below-threshold modifications are allowed if they do not increase or decrease the estimated contract value by more than 10% for goods or services contracts, or 15% for works contracts, and do not materially change the scope of the contract.
Transparency Requirements
The Procurement Act 2023 introduces enhanced transparency requirements for contract modifications. Before modifying a public contract or a convertible contract, contracting authorities must publish a Contract Change Notice in most circumstances. Additionally, within 90 days of executing a modification with an estimated contract value exceeding £5 million, the contracting authority must publish a copy of the modified contract or the modification itself.
Key Message for Contract Amendments & Modifications
Contracting authorities should exercise caution when modifying contracts under the Procurement Act 2023, as some of the new provisions lack clarity. It is essential to be aware of the enhanced administrative burden created by the Act's notice requirements. As always, seeking specific guidance on any particular issue is recommended.
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Contact us todayHow Thornton & Lowe Can Help
Thornton & Lowe, as public sector procurement professionals, offer expertise in the practical application and management of challenges for public sector buyers, ensuring both compliance and value for money. While they cannot provide legal advice, their highly practical and experienced guidance and support can be invaluable when navigating contract modifications under the Procurement Act 2023.
Thornton & Lowe's services include completing a full options appraisal, highlighting any risks along with mitigation strategies. Their in-depth understanding of the public sector procurement landscape, combined with their commitment to helping businesses win public sector contracts, positions them as a valuable partner for contracting authorities seeking to make contract amendments while adhering to the new legislation.
By using Thornton & Lowe's expertise, public sector buyers can confidently approach contract modifications, secure in the knowledge that they are receiving guidance from professionals who understand the intricacies of the Procurement Act 2023 and its practical implications.
