Public procurement notice: Modification Of A Contract/Concession During Its Term
Published: 2019-05-21
Buyer: Ministry of Justice
Country: UK
Contract type: Services
Procedure: Negotiated procedure
CPV classification: 75100000 | 75230000 | 75231240 | 75240000 | 80400000

Technical requirements: Transforming Rehabilitation: Contracts for the Services of Rehabilitative Services and Offender Management
Following publication of Contract Notice ref 2013/S 183-315991, successful bidders acquired the Community Rehabilitation Companies (CRCs) and contracts were awarded on 5.12.2014 for the delivery of probation services, with contracts entered on 18.12.2014. The contracts were for a 7-year initial term with an option to extend for a further 3 years. The contracts are due to expire on 4.12.2020, following service of termination notices in December 2018. The GBP (£) figures quoted within the original contract award notice were the maximum anticipated, total, real value of the contracts if the contracts had been extended to the fullest amount allowed under the contract and payment by results had been paid at the maximum level in all periods including all extensions.
This notice relates to modifications to the Lot 3: The Durham Tees Valley Community Rehabilitation Company (“CRC”) contract (the contract) to allow the Authority:
2) To change the payment mechanism including replacing the payment by results with a cost plus model during the extension period; and
3) Add enhanced Authority audit rights. The Authority considers the modifications of the contract without prior publication of a Contract Notice is permitted by the Public Contracts Regulations 2015 (PCR) and Directive 2014/24/EU. The Contract was modified in accordance with Regulation 72(1)(b)/Article 72(1)(b) on 5.3.2019 and accordingly does not in the Authority's view amount to the award of a new contract and/or an unlawful substantial change. The modification does not alter the overall nature of the contract, and the increase in price does not exceed 50 % of the value of the original contract, namely 184 000 000,00 GBP as stated in the Contract Award Notice ref: 2015/S 027-045770. It is necessary for the additional services to be taken on by the contractor because a change of contractor to an economic operator who is not an existing CRC cannot be made for economic and technical reasons and would cause significant inconvenience and substantial duplication of costs for the Contracting Authority. In combination with the relative shortness of the extension period and requirement for the additional services, there is a very high level of human, operational and technical infrastructure required to operate a CRC, requirements of interoperability with the Contracting Authority and CRCs existing equipment. The Contracting Authority's exercise of its right to extend the Contract beyond 4.12.2020 to expire on or before 30.6.2021 will help to ensure safe and stable transition and mobilisation of probation services.
The Authority has agreed heads of terms with the contractor to vary the contract to add an option for the Authority to extend the contract beyond the termination date of 4.12.2020 to a date no later than 30.6.2021. Under the heads of terms, in the event that the Authority exercises its right to extend the contract, for the period of 5.12.2020 to the revised termination date, the contract shall be modified as follows:
— replacing the fee for service mechanism with a “cost plus” mechanism to entitle the Contractor to recover all recoverable costs incurred by the contractor to deliver the services, plus a percentage of the contractor’s actual costs,
— adjustment to the calculation of the payment by results mechanism so that no new quarterly cohorts or annual cohorts shall be deemed to have commenced from 5.12.2020 onwards, and
The contract value of 6 960 000,00 GBP stated in Section VII.1.6) above relates to the additional services for the full potential extension period 5.12.2020 to 30.6.2021 only. The Authority has also submitted a Contract Award Notice for publication.
The modification is brought about by the need for additional services, namely the proposed extension of the contract beyond the termination date of 4.12.2020. The modifications are in accordance with Part 2 of the Public Contracts Regulations 2015 (the “Regulations”) which implements Directive 2014/24/EU (the “Directive”). The modifications are particularly provided for in Regulation 72(1)(b) (additional services) of the Regulations. The Authority considers the modification without prior publication of a Contract Notice is permitted by the regulations and the directive. The contract was modified on 5.3.2019 in accordance with Regulation 72(1)(b)/Article 72(1)(b) and does not in the Authority's view amount to the award of a new contract and/or an unlawful substantial change. Please refer to Section VII.1.4) for further details. The “updated total contract value before the modifications” in VII.2.3) below reflects previous changes to the contract as set out in Modification Notice 2019/S 028-063371.


Winner: The Durham Tees Valley Community Rehabilitation Company Ltd