Supreme clarity on substantial modifications ...

Those who have been swotting up on the Public Contracts Regulations 2015 (PCR 2015) will know that they do not apply to any public contract whose procurement process was commenced before 26 February 2015.

Those who really know their stuff will also be aware that Regulation 72 of the PCR 2015 now sets out when amendments to existing public contracts may be made without needing a completely new procurement process. This regulation codified and clarified the previous position which until then had only been set out in case law (i.e. the Pressetext case). While Regulation 72 does not change the existing law it does clarify it and provide greater certainty as to whether a modification is likely to be substantial.

However there has been something of a conundrum here. If the original contract was regulated by the old 2006 regulations but the amendment was being made after 26th February 2015 which set of regulations applied to the new amendment?

Would Regulation 72 of the PCR 2015 be in force in relation to the amendment seeing as it was being made after 26th February 2015? Or in the alternative analysis would it not apply given that the transitional provisions at Regulation 118 of the PCR 2015 say that (to paraphrase) Nothing in these Regulations affects any procurement commenced before 26th February 2015?

When the Crown Commercial Service (CCS) put out its guidance on Regulation 72 it stated very clearly that if the amendment was being made on or after 26 February 2015 then new Regulation 72 of the PCR 2015 would apply to the question of whether that amendment was a substantial modification or not.

The CCS view has recently been lent authority by the Supreme Court which today handed down its judgment in the Edenred case. This case turned on whether a proposed amendment to a pre-existing contract without a new procurement procedure was lawful or not. As part of the analysis the Court needed to establish what law would apply to the proposed amendment and decided that since the amendment would fall on or after 26 February 2015 Regulation 72 of the PCR 2015 would apply (even though the PCR 2015 do not apply in general to the original contract concerned).

The decision is welcome as it clears up the uncertainty and as it allows contracting authorities to take advantage of the clearer and more detailed tests set out in Regulation 72 when deciding whether an amendment to a contract is lawful or not.

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