2.  CONTRACTOR INITIAL RESPONSE

2.1.  Subject to paragraph 2 (Limits on Changes) of Part 1 (General Provisions) within ten (10) (Business Days of receipt of the Authority Change Notice (or such longer period as reasonably set out by the Authority in the Authority Change Notice in consultation with the Contractor and taking into account the characteristics of the Authority Change and/or any modification to the Authority Change, the Contractor shall provide the Authority with a Contractor Initial Response which shall comprise:

(a)  an indication of the Estimated Change in Project Costs that will result from the implementation of the Authority Change

(b)  the Third Party Costs that will be incurred with respect to the activities referred to in paragraph 2.1(c) of Part 4 (High Value Changes) below) as a firm or capped sum;

(c)  the details of the third-party activity that will be incurred in providing (and discussing with the Authority) the Contractor Stage 1 Response;

(d)  where applicable pursuant to paragraph 6 (Due Diligence (of Part 1) (General Provisions), (the anticipated cost of the insurers carrying out due diligence) (which shall be capped or a firm sum) (; and

(e)  the Project Management Fee which shall be a capped sum, calculated in accordance with paragraph 2.5 that will be incurred in providing (and discussing with the Authority) the Contractor Stage 1 Response.

2.2.  The time period for the initial Response shall be extended by 10 days if Contractor requests the same because Senior Lender due diligence is required.

2.3.  The Authority shall consider in good faith the Contractor Initial Response.  If the Authority finds that any material aspects of the Contractor Initial Response are unsatisfactory, it shall notify the Contractor of the same, giving reasons, and offer reasonable assistance to the Contractor to enable it to address such deficiencies and resubmit the Contractor Initial Response as soon as reasonably practicable.

2.4.  The Authority shall, within ten (10) Business Days of receipt of the Contractor Initial Response (as may be amended pursuant to paragraph 2.3), confirm in writing (an Authority Initial Confirmation) to the Contractor that either:

(a)  the Contractor should proceed with developing a Contractor Stage 1 Response and the Authority shall confirm in the Authority Initial Confirmation:

(i)  the agreed Project Management Fee in relation to the development of the Contractor Stage 1 Response and a reasonable period within which to discuss the same with the Authority pursuant to paragraph 3.1;

(ii)  the agreed Third Party Costs in relation to the development of the Contractor Stage 1 Response; and

(iii)  the agreed date by which the Contactor Stage 1 Response shall be submitted which date shall reflect the complexity of the High Value Change and, where not agreed by the parties (each acting reasonably) shall be not more than [sixty (60)] Business Days from the date of the Authority Initial Confirmation;

(b)  or that the Authority withdraws the Authority Change Notice.

2.5.  The Contractor may charge a Project Management Fee for the time incurred by its employees (or relevant Subcontractor) in project managing the development, procurement and implementation of the High Value Change. The Project Management Fee shall:

(a)  be based on actual time spent (validated by timesheet records);

(b)  be calculated at the daily rates as set out in Part 4 of Appendix 2 (Project Management Fee) of this Change Protocol but capped at [£10,000] in relation to the Initial Response and the sum set out in the Contractor Authority Stage 1 or Stage 2 Confirmation as applicable to those stages;

(c)  not include the time of any person who is not an employee of the Contractor r relevant Sub-Contractor;

(d)  not include any mark-up or profit cost or additional overheads; or

(e)  be paid in two stages as follows:

(i)  on the Authority issuing an Authority Stage 1 Confirmation pursuant to paragraph 3.2; and

(ii)  on the Authority issuing an Authority Stage 2 Confirmation pursuant to paragraph 6.1 (a) or withdrawing the High Value Change pursuant to paragraph 6.1(b).

and at each stage, the Contractor shall charge (subject to the applicable cap) only for the time incurred by its staff up to completion of that stage.

2.6.  Subject to paragraph 2 of Part 1 (Limits on Changes) of this Change Protocol, within the period specified in the Authority Change Notice (or if no time is specified within thirty (30) Business Days) the Contractor shall submit a report (a Contractor Stage 1 Response), which shall (where applicable) include, but not be limited to, the following information which shall contain sufficient detail to enable the Authority to make an informed decision pursuant to paragraph 3 and shall take account of the Authority's affordability thresholds set out in the Authority Change Notice:

(a)  an outline programme for implementation of the Change including time periods for design development, Authority review of the design, anticipated dates of any applications for Consents (including planning applications) and time periods for the provision and training of staff;

(b)  a broad indication of the impact of carrying out and implementing of the High Value Change on the provision of the Services and in particular whether relief from compliance with any obligations set out in this Contract is likely to be required, including the obligations of the Contractor to meet the performance regime and any fixed dates during the Service Period during the implementation of the High Value Change;

(c)  an outline of the Estimated Change in Project Costs that will result from implementing the High Value Change, taking into account any Capital Expenditure that is required or no longer required as a result of the High Value Change;

(d)  any Capital Expenditure that is required or no longer required as a result of the High Value Change and where the Authority has specified in the Authority Change Notice that the Contractor shall use its reasonable endeavours to raise financing for the Authority Change, the steps the Contractor has or will take to secure such financing;

(e)  an estimate of any loss of, or increase in, third-party revenues that may result from the High Value Change;

(f)  the proposed Project Management Fee to develop a Contractor Stage 2 Response which shall be a capped fee164 calculated in accordance with paragraph 2.5 of this Part 4 of this Change Protocol;

(g)  a budget (or budgets) [together with a capped or fixed fee] for Third-Party Costs and details of the third-party activity likely to be incurred by the Contractor, such as, third-party advice, the carrying out of surveys, obtaining Consents, the Senior Lender carrying out due diligence and independent certification that may be required to be completed prior to agreement of the High Value Change in relation to the development of a Contractor Stage 2 Response together with a proposed process for approval of such costs by the Authority before they are incurred;

(h)  a summary of any amendments required to this Contract or any Ancillary Document or the Financing Agreements as a result of the Change;

(i)  a value for money assessment explaining why the Contractor's proposals represent value for money taking into account both the proposed Capital Expenditure and Whole Life Cost; and

(j)  an estimate of the time period required by the Contractor to develop a Contractor Stage 2 Response for the High Value Change should the Authority notify the Contractor pursuant to paragraph 3.2(a) of its requirements for a Contractor Stage 2 Response.

2.7.  In preparing the outline Estimated Change in Project Costs, including the calculation of any Capital Expenditure, the Contractor shall, as specified by the Authority in the Authority Change Notice) either comply with the:

(a)  provisions of paragraph 7 of this Part 4 of this Change Protocol if the Competitive Tendering Process is to apply;

(b)  provisions of paragraph 8 of this Part 4 of this Change Protocol if the Benchmarking Process is to apply; or

(c)  provisions of paragraph 9 of this Part 4 of this Change Protocol if an Independent Technical Advisor has been or will be appointed with the agreement of the Contractor.

2.8.  The Contractor shall ensure that the performance risk involved in implementing the High Value Change and any interface risks involved in linking new facilities or services with the Facility and/or the Services are reflected (depending on the risk profile of the High Value Change in the Estimated Change in Project Costs and not priced separately over and above the Estimated Change in Project Costs.  The Contractor shall not include any separate charge or fee payable to the Contractor or any sub-contractor of the Contractor in the costs included in the Estimated Change in Project Costs.

(a)  In developing a Contractor Stage 1 Response the Contractor shall liaise with the Authority [and relevant end users (being such persons or organisations as the Contractor in consultation with the Authority considers appropriate)].  The Authority shall provide to the Contractor such information as to its requirements as the Contractor may reasonably require and shall assist the Contractor in the review of any draft designs in relation to the Contractor Stage 1 Response.  Any and all information and other input or feedback provided by the Authority to the Contractor shall, unless expressly stated otherwise by the Authority, be provided without warranty and shall be without prejudice to the Authority's rights under this Change Protocol.

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164  The Authority may agree to a fixed fee, and if so it should be fixed in stages.  Note the provisions of paragraph 2.2.