2  Contractor Response

2.1  Subject to paragraph 2 (Limits on Changes) of Part 1 (General Provisions), within the period specified in the Authority Change Notice (or such other period as the parties may agree), the Contractor shall provide the Authority with a Contractor 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 Services, including the provision and/or training of any staff;

(c)  the proposed method of certification of any construction 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 Contractor 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 Works or the provision of the Services and in particular, details of any relief from compliance with any obligations of this Contract required during the implementation of the Medium Value Change;

(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 Contractor shall raise finance for the Authority Change, the steps the Contractor has or will take to secure such 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 Contractor Response including (where applicable pursuant to paragraph 5 (Due Diligence) of Part 1 (General Provisions) 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;

(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 Contractor shall apply the following principles wherever applicable:

(a)  the unit cost of any construction or installation works (excluding any temporary or demolition works, 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 Change Protocol.  If the Contractor can demonstrate to the reasonable satisfaction of the Authority that such works are designed to a higher quality as compared to the Works, 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 Works) shall be consistent with the maintenance profile of the Original Facilities 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 Contractor shall reflect improvements in technology that can optimise 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 Works, 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 Change Protocol.  If the Contractor 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 Change Protocol, then the Authority shall agree to amend the rates set out in Part 3 of Appendix 2 of this Change Protocol 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 of this Change Protocol.  If the Contractor 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 Service Specification then the Authority shall agree to increase such rates to reflect any increase in quality;

(e)  the cost of Contractor 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 Change Protocol (and no additional mark-up or management fee shall be charged by the Contractor 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));

(f)  where the parties agree that paragraph 2.2(a) to 2.2(e) are not applicable the value of any Medium Value Change shall be calculated in accordance with rates which are fair and reasonable and reflect market rates.

Agreement of Contractor Response

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

(a)  provide evidence that the Contractor has used reasonable endeavours (including, where practicable, and without prejudice to the provisions of paragraph 8 (Competitive Tendering) of Part 4 (High Value Change), 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 Contractor; 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 Estimated Change in Project Costs.

2.4  If the Contractor fails to provide the information required by paragraph 2.2 or satisfy the provisions of paragraphs 2.3(a) - 2.3(c) (inclusive) the Authority may (in writing) reject the Contractor 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 Contractor Response.  The Contractor shall use all reasonable endeavours to address the Authority's concern about the quality and content of the Contractor Response.  In particular, the Contractor 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 Contractor Response and/or the information required by paragraphs 2.3(a) - 2.3(c) (inclusive).  The Authority may require the Contractor to resubmit the Contractor Response amended to take account of, and address, the Authority's concerns and the Contractor shall submit such revised Contractor Response within twenty (20) Business Days of such request.

2.5  If the parties cannot agree on the contents of the Contractor 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 Claim.

Authority Confirmation

2.6  The Authority shall, in writing, either confirm or withdraw the Authority Change Notice or reject the Contractor 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 agreed Contractor Response amended as agreed; or

(b)  withdraws an Authority Change Notice, paragraph 2.8 shall apply; or

(c)  rejects the Contractors 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 Contractor Response having been agreed in accordance with paragraph 2.4 or 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 2.6 or deemed to have been withdrawn pursuant to paragraph 2.7 or paragraph 4.2 (Funding) of Part 1 (General Provisions), the Authority shall pay to the Contractor the reasonable additional Third Party Costs incurred by the Contractor in preparing such Contractor Response provided that:

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

(b)  the Contractor included in the Contractor Response a cost breakdown of the estimate of Third Party Costs to be incurred by the Contractor in preparing the Contractor Response and the Authority has:

(i)  acting reasonably, 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 Contractor Response on the basis of the extent of the proposed Medium Value Change and the work required in submitting an accurate Contractor Response in compliance with this Change Protocol;

(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 Contractor (whether in the Contractor 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 Contractor in preparing the Contractor Response where the Authority has rejected the Contractor Response on the grounds of non-compliance with the requirements of this Protocol.

2.10  In the event that :

(a)  the Contractor has either:

(i)  failed to provide a Contract Response in accordance with 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 Contractor Response in accordance with paragraph 2 but has failed to fully implement the Medium Value Change within ten (10) 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

(iii)  it is determined pursuant to paragraph 2.5 that the Contractor has failed to submit a fair and reasonable Contractor Response

then the Authority may notify the Contractor 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 Contractor and the provisions of paragraph 7 (Implementation of a Change by the Authority) of Part 1 (General Provisions) shall apply.