Before, during and after a waste procurement process

Alex Lawrence looks at how to deal with recent – and ongoing - changes to waste procurement

The law is (almost) always changing. Whether that is a new case reinterpreting a long-standing doctrine or the government of the day having a new idea.

This is seen across all service areas but has been particularly prevalent in the waste sector. Councils find themselves planning (often based on inconsistent or limited information) for a range of regimes including simpler recycling, the impact of extender producer responsibility schemes and the inclusion of energy from waste facilities in the UK emissions trading scheme.

In this article, we consider the approach councils should take when planning to procure, during the procurement and once a waste contract is awarded, to manage change in law. These principles are of equal application to other service areas.

Before

Councils will be faced with different scenarios:

• changes that are fully worked up and all substantive detail of the change is known;
• changes where some but not all detail is known with further consultation, legislation or guidance due to be published; and
• changes where the detail is very limited and/or inconsistent.

The changes in all of the scenarios above might be due t come into force from the start of the contract or at some point during the planned term.

Where possible, councils should seek to build the impact of the change into the procurement – including the specification, contract terms and the pricing. This is only likely to be possible in the first and potentially the second (depending upon how much is still to be determined) scenarios above.

If the change is substantively known but will not be in force from the commencement of the service, then it is important to ensure that, as far as possible, bidders have priced for a change option and that there is a clear obligation on the successful contractor to implement the change at the direction of the council or from a trigger point/date.

If substantive or almost all detail is unknown, then the council is unlikely to be able to build in a clear option but should provide as much information about the potential change and its current thoughts on the impact (and who would be responsible for any costs) as possible. That allows bidders to have that information and factor it into their risk assessment.

A transparent approach with bidders should assist with implementing the change down the line. If the authority is in a position to fully scope out the change, then it is likely going to be able to authorise that change post-award as a clear, precise and unequivocal option or one that is unambiguously provided for. A general variation clause will not be enough. To fall within this provision:

• the modification must not change the overall nature of the contract;
• the level of detail included must state the nature and scope of the change – consider here the impact on the specification and the contract terms generally (including risk allocation) as well either a specific alternative price (bid back during the procurement) or a transparent process that will enable the parties to arrive at the price (including by reference to existing pricing); and
• the conditions for exercising the option must be included so that it is clear when it could come into force (even if that is just at the discretion of the council).

Even if this is not possible, giving as much information on the potential change and its impacts – not least putting all bidders on notice that the contract is expected to be varied during its term – will assist with any permitted variation analysis down the line.

During

Even with the best planning of a procurement, an unplanned change in law could arise during the process itself.

The council will need to consider whether:

• the change is so fundamental that it needs to restart the procurement;
• it can change the procurement in compliance with the applicable procurement law and in particular the principles of equal treatment, transparency and nondiscrimination as well as its own standing orders; or
• whether it is better to continue as is but make clear to all bidders that it is likely the contract will need to be amended post award (and potentially post it being entered into) setting out that such change will be made in accordance with the law on permitted modifications. Putting all bidders on notice can assist with risk mitigation down the line.

After

Where a change in law needs to be implemented during the contract term, the council should start by looking at the original procurement and the terms of the contract with the following questions in mind:

Did we plan for this? If yes:

• What did we say?
• Is there a specific option to vary for this change and how does it apply?

If unplanned or there is no specific option to change, is this a change in law that is within scope of the change in law provision? If it is, then follow the change in law clause and the change protocol. If it is not, then consider is the contractor obliged to comply at its own cost? Even if this is the case, the change protocol will likely still apply to ensure any operational changes are properly approved by the council.

Once the position under the contract is established, the authority should plan how it will engage with the contractor. The scale of the change (and likely cost implications), the contractual position (including clear options), as well as the authority/contractor relationship will dictate this.

It is important to plan for the likely reaction and arguments of the contractor – particularly if the council’s analysis of the contract is that some level of cost falls on the contractor – and structure the engagement to head off those arguments.

The council should also be taking advice from its legal and procurement teams on the procurement compliance of the change and any practicalities that need to be followed (including publicity/transparency requirements and the correct authorisation in accordance with standing orders and the scheme of delegation).

Hopefully, the engagement is not contentious – in which case the parties should follow the applicable change process and ensure the change is fully documented. Where this is not the case, then the council should utilise the contract governance mechanisms including the dispute resolution procedure to seek to resolve the issue. Where dispute mechanisms are needed, then consider separating out the people (on both sides) dealing with the business-as-usual operation and those managing the dispute to try and preserve good working relationships.

Alex Lawrence is a senior associate in the projects department at Anthony Collins LLP