In our final update to this Part 1 and 2, we shall further analyse:

• Contingencies—Part 3.

1. Non-substantial modification of a public procurement contract

A modification to the public procurement contract shall be deemed as non-substantial when the following criteria are jointly met:

• the modification does not introduce terms which, if initially inserted in the tender phase, would have allowed the selection of other (i) candidates, (ii) offers or (iii) would have permitted the participation of other candidates to the public procurement procedure;

• the modification does not alter the economic balance of the public procurement contract in a way that was not initially foreseen;

•  the modification does not extend in a considerable manner the scope of the contract.

An example of a modification which would be non-substantial, pursuant to the Instruction, is the change of the sequence of the works when such change does not affect the Time for Completion, the qualification/selection criteria and/or the contract price.

In accordance with standard FIDIC clauses, a Variation[1] “means any change to the Employer’s Requirements or the Works, which is instructed or approved as a variation under Clause 13 [Variations and Adjustments].”

Although by reading Sub-Clauses 13.1 [Right to Vary] and 13.3 [Variation Procedure] of the General Conditions of FIDIC contracts someone may understand that Variations have to do always with additional works, thus additional payments, from the joint lecture of FIDIC relevant Sub-Clauses and the Instruction, situations whereby modification of just the sequence of works, without price impact, are considered also as modification of the public procurement contract (i.e. Variations in the case of FIDIC).

Therefore, in the case whereby the price of the contract is not affected, a Variation is likely to be considered non-substantial.

In consideration of the foregoing criteria to determine whether a modification represents a non-substantial modification, there are however situations when a modification with impact on the public procurement contract price is still considered non-substantial.

The criteria – which, yet again, must be met jointly are:

• the modification must be in relation to a public procurement contract – new independent works or intervention works to existing ones;

• the value does not exceed the value coming from the application of the contingencies percentage, if such was determined in the contract in accordance with the legal provisions or 10% from the initial contract price, if a contingencies percentage was not so established;

• the modification is strictly necessary for the execution of the public procurement contract;

• the modification is directly linked to the scope of the contract;

• the general character of the contract is not altered, meaning that the scope of the contract and the main indicators which characterize the respective contract remain unchanged.

In determining the value of the modification, the public authority shall consider the net value from the monetary point of view. Any modification shall be calculated based on similar prices in the public procurement contract, if such exist. In case such similar prices do not exist in the public procurement contract, a reasonable price for executing the work shall be considered, to which reasonable profit shall be added.

2. Effects of non-substantial modifications

The non-substantial modifications of existing public procurement contracts do not represent a new award and do not require a new awarding procedure.

In the event the non-substantial modifications have an impact on the contract price, the public authority may, for budgetary reasons, conclude an addendum to the public procurement contract without organizing an awarding procedure.

However, the right of the public authority to implement non-substantial modifications does not exonerate it from applying the principles of judicious use of funds, including assessment of the necessity and opportunity of the modifications.

3. Substantial modification of the public procurement contract

A modification to the public procurement contract shall be deemed as substantial when the criteria applicable to non-substantial modifications are not jointly met and at least one of the following criteria is met:

• the modification introduces conditions which would have permitted the selection of other tenderers or it would have allowed other candidate to win the award for the public procurement contract;

• the modification does alter the economic balance of the public procurement contract in a way that was not initially foreseen;

• the modification does extend in a considerable manner the domain of the contract.

4. Effects of substantial modifications

If a modification during the validity period of a public procurement contract is substantial, the public authority has the obligation to run a new tendering procedure. Any substantial modification of the initial conditions of the public procurement contract shall be deemed to be an addendum/contract which must follow the tendering procedure, in order to avoid the disruption of the initial competition.

Under exceptional conditions, provided by EGO 34/2006, the tendering procedure may be the negotiation without the publication in prior of a tender announcement.

Publishing date: 03.06.2016