2  Service Provider Response

2.1  Subject to paragraph 2 of Part 1 (Prohibited Changes) of this Schedule 15, within the period specified in the Authority Change Notice (or such other period as the parties may agree), the Service Provider shall provide the Authority with a Service Provider Response which shall include (where applicable) the following information:

(a)  a detailed programme for the design, Authority review of the design, construction and/or installation of the Medium Value Change (including the procuring of any Necessary Consents);

(b)  a detailed programme for commissioning and implementing any change in, or addition to the Service, including the provision and/or training of any staff;

(c)  the proposed method of certification of any installations or operational aspects of the Medium Value Change, if not covered by the procedures set out in this Contract;

(d)  the proposed consultants, sub-contractors and suppliers the Service Provider intends to appoint to process the Medium Value Change;

(e)  details of any impact of the Medium Value Change on the carrying out of the Service or the provision of the Service and in particular, details of any relief from compliance with any obligations of this Contract required during the implementation of the Medium Value Change (including relief from Milestones and/or Performance Standards);

(f)  any Estimated Change in Project Costs that result from the Medium Value Change, taking into account any Capital Expenditure that is required or no longer required as a result of the Medium Value Change;

(g)  where the Authority has specified in the Authority Change Notice that the Service Provider shall raise finance for the Authority Change, the steps the Service Provider has or will take to secure finance;

(h)  any loss of or increase in third-party revenue that may result from the Medium Value Change;

(i)  an estimate of any third-party costs and the details of the third-party activity that will be incurred in providing the Service Provider Response including (where applicable pursuant to paragraph 5 (Due Diligence) of Part 1) the anticipated cost of the Senior Lender carrying out due diligence (which shall be a [capped][fixed] sum), together with a proposed process for approval of such costs by the Authority before they are incurred; and

(j)  any amendment to this Contract or any Project Document or any Financing Agreement required as a result of the Medium Value Change.

2.2  In calculating the Estimated Change in Project Costs (including the Whole Life Costs) and/or Capital Expenditure, the Service Provider shall apply the following principles wherever applicable:

(a)  the unit cost of any construction or installation works (excluding any professional fees, contingencies, overheads and profit margins) required to implement the Medium Value Change shall be the equivalent unit rates set out in Part 1 of Appendix 2 of this Schedule 15.  If the Service Provider can demonstrate to the reasonable satisfaction of the Authority that such works are designed to a higher quality as compared to the Service, then the unit rates shall be increased to reflect such increase in quality;

(b)  any lifecycle maintenance associated with additional works (or changes to the Service) shall be consistent with the maintenance profile of the original Project Network Part as such maintenance profile may be amended as a result of a Change (for example, but without limitation, in terms of the replacement cycles for equipment) and the Service Provider shall reflect improvements in technology that can optimise the Whole Life Costs for the Authority.  The unit costs to be applied to the pricing of the lifecycle maintenance shall be the equivalent unit rates set out in Part 2 of Appendix 2 of this Change Protocol.  If any additional works are designed to a higher quality as compared to the Service, then the unit lifecycle maintenance costs shall be (in real terms) lower;

(c)  any professional fees, contingencies, overheads and/or profit margins charged by the any consultant, sub-contractor or supplier in respect of construction and/or installation and/or lifecycle and/or service provision shall be the equivalent rates set out in Part 3 of Appendix 2 of this Schedule 15.  If the Service Provider can demonstrate to the reasonable satisfaction of the Authority that the fees, overheads and profit margins being charged by consultants, sub-contractors and/or suppliers in current market conditions have changed significantly from those set out in Part 3 of Appendix 2 of this Schedule 15, then the Authority shall amend the rates set out in Part 3 of Appendix 2 of this Schedule 15 to reflect current market rates;

(d)  the unit cost of any extension of, or change to, any Service (either in scope or area) shall be consistent with the equivalent unit rates set out in Part 4 of Appendix 2 to this Schedule 15.  If the Service Provider can demonstrate, to the reasonable satisfaction of the Authority, that as a result of the Medium Value Change, the relevant Service will be of a higher quality than required by the relevant part of the Output Specification then the rates shall be increased to reflect any increase in quality;

(e)  the cost of any Service Provider time, reasonably incurred in preparing the estimate for the Medium Value Change (or proposed Medium Value Change) may be charged for at the rates set out in Part 4 of Appendix 2 of this Schedule 15 (and no additional mark-up or management fee shall be charged by the Service Provider over and above the costs it will be liable to pay its sub-contractors in carrying out the works and/or services (as the case may be)); and

(f)  where the parties agree that paragraph 2.2(a) to 2.2(e) are not applicable any analogous Y values or rates in the Catalogue, and if no such rates apply, rates which are fair and reasonable and reflect market rates.

Agreement of Service Provider Response

2.3  As soon as practicable, and in any event no later than ten (10) Business Days after the Authority receives the Service Provider Response, the parties shall discuss and endeavour to agree the issues set out in the Service Provider Response, and the Service Provider shall:

(a)  provide evidence that the Service Provider has used reasonable endeavours (including, where practicable (and without prejudice to the provisions of paragraph 7 (Competitive Tendering) of Part 4 of this Schedule 15) the use of competitive quotes) to oblige sub-contractors and suppliers to minimise any increase in costs and maximise any reduction in costs;

(b)  demonstrate 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 would be taken into account by the Service Provider; and

(c)  demonstrate that any expenditure that has been avoided, which was anticipated to be incurred that has been affected by the Authority Change, has been taken into account in the Capital Expenditure and/or Estimated Change in Project Costs.

2.4  If the Service Provider fails to provide the information required by paragraph 2.2 or satisfy the provisions of paragraphs 2.3 (a) to 2.3 (c) (inclusive), the Authority may (in writing) reject the Service Provider Response, in which event the parties shall meet within ten (10) Business Days of the notice of rejection to discuss the reason for the Authority's rejection of the Service Provider Response.  The Service Provider shall use all reasonable endeavours to address the Authority's concern about the quality and content of the Service Provider Response.  In particular, the Service Provider shall provide any additional information or documentation that the Authority shall reasonably require which relates to the contents of the Authority Change Notice and/or the Service Provider Response and/or the information required by paragraphs 2.3 (a) - 2.3 (c) (inclusive).  The Authority may require the Service Provider to resubmit the Service Provider Response amended to take account of, and address, the Authority's concerns.  The Service Provider shall submit such revised Service Provider Response within twenty (20) Business Days of such request.

2.5  If the parties cannot agree on the contents of the Service Provider Response (as may be amended pursuant to paragraph 2.4), then either party may refer the dispute to the Dispute Resolution Procedure, provided that no determination shall oblige the Authority to issue an Authority Confirmation in respect of the disputed Medium Value Change.  If the Service Provider Response is found to have failed to provide the information required by paragraph 2.2 or satisfy the provisions of paragraph 2.3 (a) to 2.3 (c) (inclusive) then the Authority may reject the Service Provider Response and paragraph 2.9 shall apply.

Authority Confirmation

2.6  The Authority shall, in writing, either confirm or withdraw the Authority Change Notice or reject the Service Provider Response and in the event that the Authority:

(a)  confirms the Authority Change Notice then the Authority shall issue a Confirmation Notice which shall set out the Change in Project Costs and agreed timescales for implementation [and attach the Service Provider Response amended as agreed]; or

(b)  withdraws an Authority Change Notice, paragraph 2.7 shall apply; or

(c)  rejects the Service Provider Response, paragraph 2.9 shall apply.

2.7  If the Authority does not issue a written notice pursuant to paragraph 2.6 within twenty (20) Business Days of the contents of the Service Provider Response having been agreed in accordance with paragraph 2.4 determined pursuant to paragraph 2.5, then the Authority Change Notice shall be deemed to have been withdrawn.

2.8  Where an Authority Change Notice is withdrawn pursuant to paragraph 2.4 or deemed to have been withdrawn pursuant to paragraph 2.7 or paragraph 4.2 (Implementation) of Part 1, the Authority shall pay to the Service Provider the reasonable additional third-party costs incurred by the Service Provider in preparing such Service Provider Response provided that:

(a)  the Service Provider has used all reasonable endeavours to submit a reasonably priced Service Provider Response;

(b)  the Service Provider included in the Service Provider Response a cost breakdown of the estimated third-party costs to be incurred by the Service Provider in preparing the Service Provider Response and the Authority has:

(i)  approved such estimate of third-party costs and the type of third-party prior to any third-party costs being incurred; and

(ii)  agreed that, given the nature of the proposed Medium Value Change, it was reasonable for the relevant third-party to incur costs in preparing the Service Provider Response on the basis of the extent of the proposed Medium Value Change and the work required in submitting an accurate Service Provider Response in compliance with this Schedule 15;

(iii)  been provided with such evidence as it may reasonably require in order to verify such third-party costs; and

(iv)  confirmed that no cap or fixed fee given by the Service Provider (whether in the Service Provider Response or otherwise) in respect of any third-party cost has been exceeded.

2.9  The Authority shall not be responsible for payment of any costs incurred by the Service Provider in preparing the Service Provider Response where the Authority has rejected the Service Provider Response on the grounds of non-compliance with the requirements of this Schedule 15.

2.10  In the event that:

(a)  the Service Provider has either:

(i)  failed to provide a Service Provider Response in accordance with this paragraph 2 within the time period specified in the Authority Change Notice or such other time period as agreed between the parties; or

(ii)  provided a Service Provider Response in accordance with this paragraph 2 but has failed to fully implement the Medium Value Change within ten (20) Business Days of the date set out in the Confirmation Notice referred to in paragraph 2.6 (a) as being the date by which the Medium Value Change should have been implemented; or

(b)  it is determined pursuant to paragraph 2.5 that the Service Provider has failed to submit a fair and reasonable Service Provider Response,

then the Authority may notify Service Provider that the Authority Change Notice is withdrawn and following such notification, may procure the implementation of the Medium Value Change without further recourse to the Service Provider and the provisions of paragraph 7 (Implementation of a Change by the Authority) of Part 1 (General Provisions) shall apply.