The case of Colas Ltd & Ors V Transport for London [2018] relates to requests to vary a Schedule of Rates agreed under a publicly procured Framework Agreement.
Background
In 2013, TfL entered into framework agreements for the maintenance of roads with four different contractors, including a joint venture between Colas, VolkerHighways and AECOM (“CVU”).
The Framework Agreement provided for conditions, rates, and prices for the carrying out of various highway works across London. CVU and TfL entered into a Call Off Contract under the Framework for works to the highway network.
Permission is required from the relevant highways authority where works will restrict the width of a carriageway. In this case, a scheme had been set up by TfL known as the London Permit Scheme (LoPS) to deal with requests for permission. It is a criminal offence for a contractor to carry out works to the highways without a permit and conditions may be imposed on the grant of any permit provided.
In this case, conditions were imposed by LoPS and so CVU sought a declaration that it was not restricted to pricing the works under the agreed Schedule of Rates. CVU argued that it was entitled to submit a quotation outside of the Schedule of Rates to take account of the extra costs that would be incurred as a result of the restrictions. TfL argued that the Schedule of Rates was deemed to include the value of compliance with restrictions imposed by LoPS.
Judgment
The Court refused to grant the declaration sought by CVU.
The judge accepted TfL’s argument that the rates were deemed to include the cost of any restrictions imposed. The judge held that TfL’s interpretation was in accordance with the natural and plain meaning of the words and made commercial sense. In particular, the judge held that any risk that contractors would include a premium to take account of the uncertainties inherent in the permit scheme was offset by the competitive tendering process which had been held.
Comment
Even though the variation may have been permitted under Regulation 72 of the Public Contracts Regulations 2015, the judgment confirms the general position that contracting authorities are unwilling to accept any post-tender changes in order to avoid the risk of procurement challenged.
This represents a real dilemma for bidders tendering for a place on a Framework Agreements. If a bidder decides to include enhanced rates to take account uncertainties, it will no doubt risk being rejected from the shortlist.
Bidders therefore need to consider their proposed rates in detail and seek any necessary clarifications prior to submitting their tenders in order to ensure they do not end up “out of pocket”.
