Under the WIDP Contract (Clause 83) the Contractor is obliged to perform its contractual obligations in accordance with applicable Legislation and Guidance. This includes an obligation to give all necessary notices and to pay all fees, although any costs incurred will be subject to the Change in Law provisions (Clause 44).
The Contractor is also required to use reasonable endeavours to mitigate the impact of the Change in Law (Clause 44.2).
The Contract Manager should be proactive in ensuring the Contractor demonstrates this by minimising any increase in costs and maximising any reduction in costs.
The Contract Manager should seek evidence that the Contractor has used reasonable endeavours to pass any increase in costs to its Third Party Waste or Off-Take customers. More generally, the Contract Manager should carry out due diligence of the information that the Contractor provides and draw on specialist advice to understand the implications.
The Contract Manager should be aware there are other possible financial consequences to the Authority of a Change in Law, for example:
• bearing the cost of the additional Capital Expenditure arising from a General Change in Law if the Contractor is unable, despite its reasonable endeavours, to secure funding on terms reasonably satisfactory to the Contractor and Senior Lenders; and
• paying the Contractor for irrecoverable VAT arising as a result of a Change in Law.
The Change in Law provisions are complicated. The Contract Manager should involve the Authority's Legal Department and financial advisers when managing Changes in Law and making any necessary adjustment to the Unitary Charge. Specifically, they should ensure that any such adjustments are made in the context of other adjustments, for example Third Party Income, Indexation, market testing and benchmarking.
In the WIDP Contract (Paragraph 6 of Schedule 19) there are specific provisions setting out how Third Party Income should be taken into account when using the Financial Model to calculate the change in the Unitary Charge as a result of a Qualifying Change in Law.