2  Service Provider 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 the Service Provider shall provide the Authority with a Service Provider 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 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 Service Provider Stage 1 Response;

(d)  where applicable pursuant to paragraph 5 (Due Diligence) of Part 1 (General Provisions), the anticipated cost of the insurers carrying out due diligence (which shall be a capped or a firm sum); and

(e)  the Project Management Fee which shall be a capped sum, calculated in accordance with paragraph 2.4, that will be incurred in providing (and discussing with the Authority) the Service Provider Stage 1 Response.

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

2.3  The Authority shall, within ten (10) Business Days of receipt of the Service Provider Initial Response (as may be amended pursuant to paragraph 2.2), confirm in writing (an Authority Initial Confirmation) to the Service Provider that either:

(a)  the Service Provider should proceed with developing a Service Provider 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 Service Provider 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 Service Provider Stage 1 Response and a reasonable period within which to discuss the same with the Authority pursuant to paragraph 3.1; and

(iii)  the agreed date by which the Service Provider 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; or

(b)  the Authority withdraws the Authority Change Notice.

2.4  The Service Provider may charge a Project Management Fee for the time incurred by its employees 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 5 of Appendix 2 (Project Management Fee) of this Change Protocol but capped at the sum set out in the Authority Stage 1 Confirmation;

(c)  not include the time of any person who is not an employee of the Service Provider; or

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

(e)  be paid in two stages as follows:

(i)  on the Authority issuing an Authority Stage 1 Confirmation pursuant to paragraph 4.2; and

(ii)  on the Authority issuing an Authority Stage 2 Confirmation pursuant to paragraph 7.1(a) or withdrawing the High Value Change pursuant to paragraph 7.1(b),

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