The procedure for managing Qualifying Changes in Law identifies a number of matters, including:
• a list of relevant issues that the parties should address;
• who should be responsible for the costs of the different types of Qualifying Changes in Law that may materialise; and
• how any additional Capital Expenditure costs should be funded once the Change is agreed.
Changes in Law are treated as Authority Changes, which means they should be managed under the terms of the Change Protocol (discussed at section 5.3 above) as well as under Clause 44.1.
The WIDP Contract (Clause 44.4) envisages a sharing45 of costs between the Authority and the Contractor in the context of General Changes in Law that give rise to Capital Expenditure. The Contractor should be responsible for all costs associated with General Changes in Law that have a revenue implication.
The Authority may have agreed on a value for money basis to extend this cost sharing arrangement for other types of Change in Law too, in line with footnote 91 of the WIDP Contract and WIDP guidance. The WIDP Contract assumes that the Contractor's Share for General Changes in Law will be set in percentage terms on a sliding scale, decreasing as the value of the Cumulative Capital Expenditure increases. It follows that the Authority is more likely to pay a greater share of the costs relating to Capital Expenditure for Changes required later on in the Contract.
The Contract Manager should become familiar with the approach agreed on a project specific basis and make sure this is reflected in the Contract Management Manual.
On a case by case basis, waste PFI/PPP contracts may contain special provisions that link Changes in Law with certain Third Party Waste Contracts. For example, in line with footnote 90 of the WIDP Contract:
• the Authority and the Contractor may have agreed to share the costs of a Qualifying Change in Law in proportion to the Authority's usage of the Facility; and
• the parties may have agreed for the Authority to recover the Change in Law costs attributable to third party capacity through the excess Third Party Income.
The Contract Manager should ensure that the Contract Management Manual is clear about the mechanism that will apply for handling Changes, as will have been agreed on a project specific basis.
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45 Footnote 34 to the definition of "Contractor's Share" in Schedule 1 of the WIDP Contract indicates that the precise sharing arrangement is typically a bid back item and so it will vary from project to project.