Lawful and Transparent

All changes must comply with

• Procurement (Scotland) Act 2014,
• Public Contracts (Scotland) Regulations 2015, and
• Organisation-specific standing orders/financial regulations.

If a change risks being considered a new contract or a substantial modification, the contract must be re-tendered.

Control and Governance

Medium-to-high risk contracts require:

• Robust oversight,
• Senior management approval, and
• Formal documentation of decisions and rationale.

Proportionality & Risk Assessment

The complexity and level of scrutiny should match the risk level, value, and potential impact of the change.

Value for Money

Changes must be commercially justified and deliver:

• Outcomes aligned with the original contract,
• Cost efficiency,
• Continued service performance.

Variation

A change to the contract’s scope, requirements, deliverables, service levels, or working methods.

Examples:

• Adding new reporting requirements
• Changing a service delivery location
• Increasing or reducing volumes
• Adjusting Key Performance Indicators (KPIs) or service levels

Contract Extension

Extending the contract term where:

• The original contract includes an option to extend, and
• The value including extensions was accounted for in the procurement.

Amendment

Any change to contractual terms and conditions such as:

• Pricing mechanisms
• Governance arrangements
• Liability clauses
• Payment terms

Changes must meet one of these conditions:

1. Clearly provided for in the original contract (e.g., indexation, agreed change control mechanism).
2. Not substantial (i.e., do not materially alter the nature of the contract).
3. Below legal thresholds and within permitted percentage increases (as per regulations).
4. Unforeseen circumstances make the change essential and compliant with regulation allowances.

There are a variety of issues that should be considered in any change management process to ensure that it is effective. Three key areas for consideration are:

• the need for change impact reports;
• any pricing principles that will apply to the change; and
• the supplier's obligation to undertake the change.

Where the consequences of getting things wrong are significant and it is recognised that a change is required, it makes sense to run a formal pilot. If the pilot fails to meet expectations, you can revisit and retest until you achieve the required results. This can be done before committing your resources to, and reputation on a wider scale contractual change.

For example, "Plan, Do, Check, Act" (PDCA) is a recognised continuous improvement plan (CIP) model. It can be utilised to ensure your change will deliver the desired results. As its name indicates, there are 4 steps to the model of which steps 2 and 3 can be repeated until the desired result is achieved. The 4 steps can be summarised as:

Variations (changes to requirements) to the contract should be exceptional, not routine.

Contract variations should only be permissible where changes do not significantly alter the original contract’s scope, value or duration.

A significant change could be to the:

• contract scope
• contract value
• contract duration

If a proposed change is significant (change in scope, large value increase, much longer duration) then you may need to conduct a new procurement exercise.

If you are unable to estimate the value of a contract that contract will be explicitly made subject to the procurement rules.

If a significant change to the contract is proposed, you must contact your local Procurement Function or Centre of Expertise for advice on how to proceed before making changes.

Suggested Responsibilities/Considerations

• when permitted.
• process to follow - all changes must follow formal change control procedures.
• procurement must be involved in significant amendments.
• escalation should be earlier for high-risk/strategic suppliers, and proportionate.

Why it is Important

• variations or amendments changes the terms of a legally binding agreement
• proper management ensures changes are authorised, documented, and compliant with procurement and governance rules
• prevents disputes or claims later about what was or wasn’t agreed
• without a formal process, even small changes can invalidate parts of the contract or create ambiguity
• public sector organisations must show that all contract changes are fair, transparent, and traceable
• clear records of variations support audit, governance, and reporting requirements
• demonstrates accountability for decision-making and use of public funds
• a structured variation process creates documented evidence of:
  • what changed and why
  • who approved it
  • when it was implemented
  • the impact on cost, scope, and delivery

A Contract Variation Request Form is available for you to use and can be found at the bottom of this page.

Step 1 — Identify the Need for Change

Triggers include:

• Legislative or regulatory changes
• Business needs shifts
• Performance issues requiring remedy
• Budget changes
• Operational needs discovered during delivery

All changes must be justified in writing.

Step 2 — Assess the Impact

Assessment should consider:

Contractual Impact

• Does the scope change?
• Is the change substantial?
• Does it alter competition?

Commercial Impact

• Price changes
• Market benchmarking
• Supplier cost justification

Risk Impact

• Service continuity
• Reputational or legal risks
• Risk of challenge by non-winning suppliers

Operational Impact

• Implementation timelines
• Resources required

Financial Impact

• Budget availability
• Whole-life cost implications

Complete a Change Impact Assessment Form. There is  a template available for use to use at the bottom of this page.

Step 3 — Legal and Procurement Review

• Procurement colleagues must review the change.
• Legal services should confirm compliance.
• If necessary, conduct a procurement law risk analysis.

Failure to do this may invalidate the contract.

Step 4 — Governance Approval

Approvals depend on organisational rules, but common requirements include:

• Contract Manager recommendation
• Senior Responsible Officer (SRO) sign-off
• Finance approval (for cost increases)
• Procurement approval
• Legal approval

High-risk changes may require:

• Governance board approval
• Audit committee notification
• Change control board sign-off

Step 5 — Supplier Engagement

Do not start discussions or negotiate with the supplier(s) until internal approval is secured.

Supplier engagement should cover:

• Necessity of the change
• Commercial impacts
• Implementation timelines
• Risks and mitigations
• Alternative options

Document all discussions.

Step 6 — Formal Change Control Documentation

Use a Change Control Notice (CCN) or Contract Modification Form including:

• Description of change
• Justification
• Revised pricing or contractual terms
• Implementation timeline
• Signatures from both parties
• Updated schedules / KPIs / pricing tables

All signed documents must be retained in a contract file.

Step 7 — Update Documentation & Systems

Update:

• Contract registers
• Risk logs
• Balanced scorecard/KPIs
• Contract management plan
• Procurement documentation
• Financial forecasting and budgets

If the change results in a modified value above thresholds, publish a Contract Modification Notice on Public Contracts Scotland (PCS).

Before any change request can be properly considered, the customer and the supplier must understand the implications of the proposed change. To support this you may require the service provider to prepare an impact report. (The service provider will normally be in the best position to assess the impact of a change). Ideally, the impact report will present a full description of the change, including how the change is to be implemented and, where relevant, detail:

• the feasibility of the change;
• the effect of the change on the ability of the supplier to meet its obligations under the contract;
• any cost implications of the change;
• any consequential impact of the change;
• where appropriate, acceptance testing procedures and acceptance criteria for the proposed change; and
• any other information likely to be of relevance.

A detailed Change Management Process is of little value if the change required has been determined, and the supplier refuses to implement. Accordingly, the Change Management Process may mean the supplier cannot unreasonably refuse (either directly or indirectly) a change requested by the Organisation.

Unreasonable grounds for refusing a change might include:

• demanding unreasonable charges for the change;
• imposing unreasonable conditions for undertaking the change; or
• refusing to include the change under the agreement.  This could be despite the subject matter being reasonably related to, or connected with, the services.

A carefully drafted Change Management Process can mean the difference between what the customer requested in terms of systems/services, and what they discover is actually needed during the term of the contract.

You should specify how costs associated with any change will be allocated between your Organisation and the supplier(s).  This should be done as part of the Change Management Process.

Ordinarily, the Organisation should be required to pay for a change when the change is not considered to be within scope of the existing contract.

Where a change falls outside the scope of the existing contract, the Change Management Process may detail the principles that will determine the price to be paid by the Organisation. For example, the Change Management Process may stipulate that the price for any change should be:

• reasonable;
• competitive; and
• not higher than the price a customer would pay for similar products or services from another supplier.

The Change Management Process may enable the Organisation to request the supplier to provide an auditor's certificate.  This could confirm that the pricing of any change complies with the pricing principles.

Principles

To extend legally:

1. Extension option must be included in the original contract.
2. Original estimated value must include all extension periods.
3. Extension must not alter the original scope.
4. Approvals and governance must be followed.

Extension Due Diligence Checklist 

• Review contract performance
• Assess supplier capability
• Consider market testing (if appropriate)
• Review value for money
• Update risk assessment
• Confirm budget availability
• Prepare a contract extension report/approval paper
• Obtain approval from senior management or governance board

Document the Extension

Use a Formal Extension Agreement signed by both parties.

When a variation becomes a new procurement

A change may be deemed substantial if it:

• Introduces material new services
• Changes the overall nature of the contract
• Alters the economic balance in favour of the supplier
• Increases value beyond permitted thresholds

If substantial → a new procurement is required.

Avoiding Scope Creep

Actions:

• Enforce a strong change control process
• Challenge unnecessary changes
• Document and monitor all variations
• Use a central register of changes
• Ensure value for money remains demonstrable

Audit and Accountability

Medium-to-high risk contracts must maintain a clear audit trail, including:

• Justification documents
• Approval evidence
• Change logs
• Negotiation notes
• Updated KPIs and performance reports

It is possible for an Organisation to terminate a contract during its term.  These circumstances are covered in the Dispute Resolution, Termination & Contract Exit 

Please note: you cannot terminate a contract with the aim of avoiding procurement rule obligations.