Q&As regarding the modification of a supply contract

Dear colleagues,

We have recently received some queries regarding the modification of a supply contract and would like to share both the questions and suggested answers provided, which may also come in handy should you find yourselves in the same situation!

Are thresholds in 2.10.1 of PRAG "consumed" or "partially consumed" by the variation of quantities, i.e. can we still modify the contract by simple addendum up to 50% or 10% or we have only 25% left for modifications a) and b) of 2.10.1?

Consumed:

Article 22.2. GC supply contract: "Subject to the limits of the procedure thresholds set in the Practical Guide, the Contracting Authority reserves the right to vary by an administrative order the quantities per lot or per item by +/- 100 % at the time of contracting and during the validity of the Contract. The total value of the supplies may not rise or fall as a result of the variation by more than 25% of the tender price. The unit prices quoted in the tender shall be applicable to the quantities procured under the variation".

It should be noted that all other modifications which result in an increase or reduction in the total value of the contract or substantial modifications require an addendum (see 20.10.3 DEVCO Companion)

What can be covered by "modifications" under b) and c) of 2.10.1? Can those modification include supply of the same as the originally procured (i.e. in fact a further increase in quantity)?

Yes depending on what is foreseen in the relevant tender documents and as long as the modifications respect the PRAG thresholds as mentioned above.  

1. Under b) or c) of 2.10.1, these modifications can cover any possible modification of supply contract, i.e. also "partial replacement of supplies or installations or extension of supplies or installations" in sense of 4.2.5.1.c)? In those cases could we eventually decided to rather go for a simply addendum than a negotiated procedure?
2. Yes but a negotiated procedure is foreseen in addition to the addendum:
3. Section 20.10.3. DEVCO Companion 'Addendum', p.610: An addendum is necessary when additional deliveries by the original supplier become necessary. In this case, following negotiated procedure, an addendum to the contract can be concluded under the following conditions: (i) when the additional deliveries are intended as partial replacement of normal supplies or installations; or (ii) where the additional deliveries are the extension of existing supplies and installations; and (iii) where a change of supplier would oblige the Contracting Authority to acquire equipment having different characteristics which would result in either incompatibility or disproportionate technical difficulties in operational maintenance.

• • • Do "Successive modifications" include all possible amendments/administrative orders on a single contract?

Yes.

• • • • In our example, if we chose to supply additional deliveries after the variation of quantities and we wish to conclude an addendum rather than a new contract, do we still have to seek a PAP? And the negotiation can it be done by simply sending only the TechSpec to the original contractor and then writing a negotiation report?

The supply of additional deliveries concerns Section 4.2.5.1(c) PRAG: "For additional deliveries by the original supplier intended either as a partial replacement of supplies or installations or as the extension of existing supplies or installations, where a change of supplier would oblige the Contracting Authority to acquire supplies having different technical characteristics which would result in either incompatibility or disproportionate technical difficulties in operation and maintenanceIn this case, Annex 1 of the Deviation and PAP Policy, 29 September 2016 applies: Case 26(c)= only requires an EVR- no need for a PAP.

1. 1. We would also like to confirm, that indeed only administrative order is necessary for variation of quantities under art. 22 of GC (art. 4.6. PRAG). We believe that an approval of AOSD would be necessary as budgetary commitment would have to be increased.

Article 22.1. GC supply contract foresees either an addendum or administrative order depending on the type of amendment:Contract amendments must be formalised by a contract addendum signed by both parties or by an administrative order issued by the Project Manager or the Contracting Authority. Substantial amendments to the contract, including amendments to the total contract price must be made by means of an addendum. Any contractual amendments must respect the general principles defined in the Practical GuideA variation of quantities under Article 22 GC is possible subject to the limits foreseen in Article 22.2 (see answer to question 1). However, as stated in 20.10.3 DEVCO Companion: It is necessary to proceed through a contract addendum when the envisaged modification would result in an increase or reduction of the total value of the supplies in excess of 25% of the initial contract price. An addendum is also necessary when additional deliveries by the original supplier become necessary.