Procurement Act 2023: Government publishes further guidance on the Manage phase: contract modifications

On 4 September 2024, the Cabinet Office published further guidance on the Procurement Act 2023 (the ‘Act’) which is now due to “go live” on 24 February 2025. The new guidance covers contract modifications under the Manage phase of the commercial pathway.

Contract modifications may need to be made to reflect commercial reality, as demands and circumstances change throughout the lifetime of the contract. Modifications may only be made if at least one of the ten grounds set out in section 74 and Schedule 8 to the Act applies.

The key changes detailed in the guidance are the new modification grounds under the Act, intended to give authorities more flexibility to deal with the challenges in managing contracts. The guidance makes it clear that more than one ground may apply to a particular modification. The new grounds are:

1. Urgency and the protection of life: modification is permitted if it could be achieved by directly awarding a contract under section 41 (direct award in special cases), and such award could be made by reference to either extreme and unavoidable urgency, or regulations made under section 42 (direct award to protect life).
2. Materialisation of a known risk: modification is permitted where a risk that was known about at the time of procurement has materialised and now threatens the satisfactory delivery of the contract. Notably, the risk materialising must not be due to the fault of either the Authority or the contractor.

There are also two new grounds specific to defence authority contracts.

Read the full guidance document here.