2.  AUTHORITY CHANGES

2.1.  The Authority has the right to propose changes to the Services in accordance with this Schedule 14.  The Authority shall not propose a change to the Services which:

2.1.1.  requires the Services to be performed in a way that infringes Legislation or is inconsistent with Good Industry Practice;

2.1.2.  would cause any Consent to be revoked (or would require a new Consent required to implement the relevant change in the Services which is likely to be unobtainable);

2.1.3.  would, if implemented, result in a change in the nature of the Project;

2.1.4.  would materially and adversely affect the Service Provider's ability to deliver the Services;

2.1.5.  would materially and adversely affect the health and safety of any person; or

2.1.6.  the Authority does not have the legal powers to require to be implemented.

2.2.  If the Authority requires a change to the Services, it must serve an Authority Notice of Change on the Service Provider in accordance with paragraph 2.3.

2.3.  The Authority Notice of Change shall:

2.3.1.  set out the change in the Services required in sufficient detail to enable the Service Provider to calculate and provide the Estimated Change in Project Costs in accordance with paragraph 2.4 (the "Estimate");

2.3.2.  in the event that the Authority Change will require Capital Expenditure, state whether the Authority intends to pay the Service Provider the costs involved in implementing the Authority Change or whether the Authority requires the Service Provider to use its reasonable efforts to obtain funding in accordance with paragraph 2.11; and

2.3.3.  require the Service Provider to provide to the Authority within 15 Business Days of receipt of the Authority Notice of Change the Estimate.

2.4.  As soon as practicable and in any event within 15 Business Days after having received the Authority Notice of Change, the Service Provider shall deliver to the Authority the Estimate.  The Estimate shall include the opinion of the Service Provider on:

2.4.1.  whether relief from compliance with obligations is required, including the obligations of the Service Provider to meet the requirements of the Output Specification and the Payment Mechanism during the implementation of the Authority Change;

2.4.2.  any impact on the provision of the Services;

2.4.3.  any impact on the Transition Plan;

2.4.4.  any amendment required to this Agreement and/or any Sub-Contract as a result of the Authority Change;

2.4.5.  any Estimated Change in Project Costs that results from the Authority Change;

2.4.6.  any loss of revenue that results from the Authority Change;

2.4.7.  any Capital Expenditure that is required or no longer required as a result of the Authority Change; and

2.4.8.  any regulatory approvals which are required.

2.5.  As soon as practicable after the Authority receives the Estimate, the parties shall discuss and agree the issues set out in the Estimate, including:

2.5.1.  providing evidence that the Service Provider has used reasonable endeavours (including (where practicable) the use of competitive quotes) to oblige its Sub-Contractors to minimise any increase in costs and maximise any reduction in costs;

2.5.2.  demonstrating how any Capital Expenditure to be incurred or avoided is being measured in a cost effective manner, including showing that when such expenditure is incurred, foreseeable Changes in Law at that time have been taken into account by the Service Provider; and

2.5.3.  demonstrating that any expenditure that has been avoided, which was anticipated to be incurred to replace or maintain Assets that have been affected by the Authority Change concerned, has been taken into account in the amount which in its opinion has resulted or is required under paragraphs 2.4.5 and/or 2.4.6 and/or 2.4.7.

2.6.  In such discussions the Authority may modify the Authority Notice of Change. The Service Provider shall, as soon as practicable, and in any event not more than 10 Business Days after receipt of such modification, notify the Authority of any consequential changes to the Estimate.

2.7.  If the Service Provider does not intend to use its own resources to implement an Authority Change it shall comply with Good Industry Practice with the objective of ensuring that it obtains best value for money (taking into account all relevant circumstances including, in particular, the requirements that the Service Provider should not be worse off as a result of the implementation of the Authority Change) when procuring any work, services, supplies, materials or equipment required in relation to the Authority Change.

2.8.  If the parties cannot agree on the contents of the Estimate then the Dispute will be determined in accordance with the Dispute Resolution Procedure.

2.9.  As soon as practicable after the contents of the Estimate have been agreed or otherwise determined in accordance with Dispute Resolution Procedure, the Authority shall:

2.9.1.  confirm in writing the Estimate (as modified if applicable); or

2.9.2.  withdraw the Authority Notice of Change.

2.10.  If the Authority does not confirm in writing the Estimate (as modified) within 20 Business Days of the contents of the Estimate having been agreed in accordance with paragraph 2.5 or determined pursuant to paragraph 2.8 then the Authority Notice of Change shall be deemed to have been withdrawn.  Where there is such a withdrawal (either pursuant to this paragraph 2.10 or paragraph 2.9 above) the Authority shall pay to the Service Provider the reasonable additional third party costs incurred by the Service Provider in preparing such Estimate provided that:

2.10.1.  the Service Provider has used all reasonable endeavours to submit a reasonably priced Estimate;

2.10.2.  the Service Provider has made available to the Authority a cost breakdown of the Estimate including an estimate of third party costs to be incurred by the Authority if the Authority Notice of Change is withdrawn or deemed to be withdrawn;

2.10.3.  the Authority has:-

2.10.3.1.  approved the estimate of third party costs referred to in paragraph 2.10.2 above and the type of third party prior to any third party costs being incurred; and

2.10.3.2.  agreed that, given the nature of the proposed Change, it is reasonable to expect the relevant third party to incur costs in preparing the Estimate on the basis of the extent of the proposed change to the Services and the work required in submitting an accurate Estimate in compliance with this paragraph 2; and

2.10.4.  the Service Provider has provided the Authority with such evidence as it may reasonably require in order to verify the additional third party costs incurred by the Service Provider.

2.11.  In the event that the Estimate (as modified) involves estimated Capital Expenditure then (unless the Authority has elected to fund such costs in accordance with paragraph 2.3.2) the Service Provider shall use its reasonable endeavours to obtain funding for the whole of the estimated Capital Expenditure, on terms reasonably satisfactory to it.

2.12.  If the Service Provider has used its reasonable endeavours to obtain funding for the whole of the estimated Capital Expenditure, but has been unable to do so within 40 Business Days of the date that the Authority confirmed the Estimate, then the Service Provider shall have no obligation to carry out the Authority Change, unless the Authority agrees within 15 Business Days of the end of such period to pay the costs for which funding is not available on the basis provided for in paragraph 2.15 below.

2.13.  The Authority may, at any time following the date on which the Estimate is confirmed, agree to meet all or, to the extent the Service Provider has obtained funding for part of the Capital Expenditure, the remaining part of the estimated Capital Expenditure.

2.14.  In the event that the Estimate has been confirmed by the Authority, then the adjustment to the Payment shall be calculated in accordance with Clause 33 (Financial Adjustments).

2.15.  Where the Authority agrees to pay the costs for which funding is not available pursuant to paragraphs 2.3.2 or 2.12 or 2.13 above:

2.15.1.  the Authority and the Service Provider shall agree:

2.15.1.1.  a payment schedule in respect of the payment of such sum reflecting the amount and timing of the costs to be incurred by the Service Provider in carrying out the Authority Change to the extent borne by the Authority; and

2.15.1.2.  where payment for part of a change in the Services reflects the carrying out of, or specific progress towards, an element within the Authority Change, an objective means of providing evidence confirming that the part of the Authority Change corresponding to each occasion when payment is due under the payment Schedule appears to have been duly carried out,

(such payment and evidence to be determined in accordance with the Dispute Resolution Procedure, in the event of the Authority and the Service Provider failing to agree as to its terms);

2.15.2.  the Authority shall make a payment to the Service Provider within 10 Business Days of receipt by the Authority of invoices presented to the Authority complete (in all material respects) in accordance with the agreed payment Schedule (as the case may be, varied by agreement from time to time) accompanied by the relevant evidence (where applicable) that the relevant part of the Authority Change has been carried out; and

2.15.3.  if payment is not made in accordance with paragraph 2.15.2, the Authority shall pay interest to the Service Provider on the amount unpaid from the date 15 Business Days after receipt of the relevant invoice until paid at the Prescribed Rate.