2 Contractor Stage 1 Response

2.1 Subject to paragraph 2 of Part 1 (Limits on Changes) of this Change Protocol, within the period specified in the Authority Change Notice (or if no time is specified within thirty (30) Business Days) the Contractor shall submit a report (a Contractor Stage 1 Response), which shall (where applicable) include, but not be limited to, the following information which shall contain sufficient detail to enable the Authority to make an informed decision pursuant to paragraph 3 and shall take account of the Authority's affordability thresholds set out in the Authority Change Notice:

(a) an outline programme for implementation of the Change including time periods for design development, Authority review of the design, anticipated dates of any applications for Necessary Consents (including planning applications) and time periods for the provision and training of staff;

(b) a broad indication of the impact of carrying out and implementing of the High Value Change on the provision of the Works and/or the Services and in particular whether relief from compliance with any obligations set out in this Contract is likely to be required, including the obligations of the Contractor to meet the performance regime during the implementation of the High Value Change;

(c) an outline of the Estimated Change in Project Costs that will result from implementing the High Value Change, taking into account any Capital Expenditure that is required or no longer required as a result of the High Value Change;

(d) any Capital Expenditure that is required or no longer required as a result of the Medium Value Change and where the Authority has specified in the Authority Change Notice that the Contractor shall raise financing for the Authority Change, the steps the Contractor has or will take to secure such financing;

(e) an estimate of any loss of, or increase in, third-party revenues that may result from the High Value Change;

(f) the proposed Project Management Fee which shall be a capped fee26 calculated in accordance with paragraph 2.2;

(g) a budget (or budgets) [together with a capped or fixed fee]27 for third-party costs and details of the third-party activity likely to be incurred by the Contractor, such as, third-party advice, the carrying out of surveys, obtaining Necessary Consents, the Senior Lender carrying out due diligence and independent certification that may be required to be completed prior to agreement of the High Value Change together with a proposed process for approval of such costs by the Authority before they are incurred;

(h) a summary of any amendments required to this Contract or any Project Document or the Financing Agreements as a result of the Change; and

(i) a value for money assessment explaining why the Contractor's proposals represent value for money taking into account both the proposed Capital Expenditure and Whole Life Cost.

2.2 The Contractor 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 Contractor Stage 1 Confirmation;

(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 3.2; and

(ii) on the Authority issuing an Authority Stage 2 Confirmation pursuant to paragraph 6.1(a) or withdrawing the High Value Change pursuant to paragraph 6.1(b).

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

2.3 In preparing the outline Estimated Change in Project Costs, including the calculation of any Capital Expenditure, the Contractor shall, as specified by the Authority in the Authority Change Notice) either comply with the:

(a) provisions of paragraph 7 if the Competitive Tendering Process is to apply;

(b) provisions of paragraph 8 if the Benchmarking Process is to apply; or

2.4 The Contractor shall ensure that the performance risk involved in implementing the High Value Change and any interface risks involved in linking new facilities or services with the Facilities and/or the Services are reflected (depending on the risk profile of the High Value Change) in the Estimated Change in Project Costs and not priced separately over and above the Estimated Change in Project Costs. The Contractor shall not include any separate charge or fee payable to the Contractor or any sub-contractor of the Contractor in the costs included in the Estimated Change in Project Costs.

2.5 In developing a Contractor Stage 1 Response the Contractor shall liaise with the Authority [and relevant end users (being such persons or organisations as the Contractor in consultation with the Authority considers appropriate)]28. The Authority shall provide to the Contractor such information as to its requirements as the Contractor may reasonably require and shall assist the Contractor in the review of any draft designs in relation to the Contractor Stage 1 Response. Any and all information and other input or feedback provided by the Authority to the Contractor shall, unless expressly stated otherwise by the Authority, be provided without warranty and shall be without prejudice to the Authority's rights under this Change Protocol.

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26 The Authority may agree to a fixed fee, and if so it should be fixed in stages. Note the provisions of paragraph 2.2.

27 See paragraph 6.3(b). A process for agreeing or signing off these costs must be agreed. Where possible caps and fixed fees should be sought.

28 Authority to consider whether this is appropriate for Stage 1 of the process or should be limited to Stage 2.