Modifications to public procurement contracts

Latvia: Recent changes in the Public Procurement Law set a clear framework for possibilities to amend procurement contracts after completion of the tender procedure

So far the contracting authorities were very limited in the scope of modifications. This meant they were often unable to ensure economically more successful implementation of contracts. On the one hand, restrictions facilitate openness and free competition between suppliers. On the other hand, it is economically justified to make flexible modifications during performance of contracts, especially if they are implemented over several years or in areas where available technologies and solutions are rapidly changing (e.g. in IT).

Additionally, a new EU Directive on public procurement provides the threshold under which even substantial modifications of contracts are permitted without carrying out a new tender procedure.

Under the amendments, further modification of procurement contracts is permitted if the modifications are (i) non-substantial; or (ii) substantial, but in exceptional circumstances; or (iii) (a) below the 10% threshold of the value of the initial purchase or service contract, or below the 15% threshold of the value of an initial construction contract, and (b) below the threshold where the call for tenders must be published in the Official Journal of the European Union (e.g. EUR 5 186 000 for construction and EUR 207 000 for supplies and services). Exception (iii) could apply regardless of whether the modifications are substantial or not.

Substantial modifications are modifications (i) that would have made a difference to bidding or participation / selection of tenderers, or (ii) where the economic balance (risks and their compensatory measures) are changed in the favour of the supplier, or (iii) including work not provided for by the initial contract, (iv) replacing the supplier.

Substantial modifications are permitted only if the tender documentation has clearly provided for the possibility and if the conditions on which the modifications plus the extent and nature of possible modifications are acceptable, or if the modifications are made within a specific negotiating procedure, or if the supplier is replaced due to restructuring or transfer of enterprises by law.

The subject and aim of contracts cannot be modified.

Source: Amendments to the Public Procurement Law (2015)

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