HM Insights

Don't forget the contract in the pursuit of procurement excellence

The whole purpose of a procurement procedure is to award a contract to a supplier. However, with contracting authorities devoting their attention to the procurement procedure itself, often the actual contract is not given proper consideration.

Contract Signing

Contractual conditions are essential to ensure that the successful supplier is obliged to deliver the services, goods or works which the contracting authority requires, at the times required and to the specification required. The contracting authority will require appropriate contractual mechanisms in place if this doesn't happen, including financial compensation and possibly step-in rights.

Other particularly important commercial provisions include the extent of any warranties and indemnities while contracting authorities must always consider whether bespoke conditions are required in relation to particular contracts rather than using template documents without consideration.

Can’t you just amend the contract later?

There is limited scope to amend the terms of a publicly procured contract during the procurement process or after it has been awarded. The new directive provides that all contractual documents must be available from the date of publication of the OJEU notice (historically, contractual conditions have often been issued later in the procurement process). This means that the actual terms of the contract must be given early and detailed consideration.

The new directive also usefully codifies the rules on amendment of a publicly procured contract after it has been awarded. Again, the detailed rules on permissible modification highlight the need for contracting authorities to anticipate in advance what changes may be required to the goods/ services/ works over the period of the contract and any consequent amendment to price, term, liability provisions etc. It is important to anticipate as much as possible how the requirement may change over time and to build in sufficient flexibility in respect of unanticipated events; this can avoid the need to re-procure the contract in the event of modification to the requirement.

Getting it right from the start

Careful and detailed consideration of contractual conditions at an early stage in a procurement procedure is essential - to ensure compliance with the procurement rules but also to ensure that the contracting authority's commercial objectives are achieved and that it realises its desired outcome. No matter how appropriate, well-run and successful the procurement procedure is, the contracting authority must ensure that the successful supplier is in fact contractually obliged to deliver what it has promised.

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