An Unforeseen Need for Change in a Public Contract

Martin Mehlsen

Student thesis: Master thesis

Abstract

The purpose of this thesis was to investigate the new public procurement regulation in Denmark with regard to changes in an on-going tender contract between a public entity and a contractor. Firstly the equal treatment principle was explained to give a frame of how to use the principle in public tenders. The different rules concerning changes in public tenders were afterwards analysed to find out which rule gave the broadest possibilities of changing an on-going contract. The thesis has therefore been focusing on an unforeseen need for change in a public contract because using this rule gives the broadest possibilities and most flexible conditions to change a contract. The rule was further analysed to see how broad changes could be done. It was afterwards concluded that two of the three conditions in the rule allowed too broad a possibility to change and therefore were in conflict with the equal treatment principle. In the next section the transaction cost analysis gave response as to which governance structure was best to use, and at the same time enlightened that the contractor could show opportunism by speculating in taking advantages by using higher prices when need for contract changes. It was afterwards relevant to investigate if the possibilities for the contractor to change the contract actually gave opportunity for the contractor to takes advantage of the possibility by using prices for work, which was not a part of original contract, because the public entity does not have the possibility to see if the used prices are as competitive as the original ones. Due to the fact that the public entity did not specify the exact result that was expected when changes of the contract occurs the public entity could not compensate for the right result. This means that the contractor would rather spend time on work that is being compensated for and thereby given opportunity for the contractor to take advantage of the changes in work by using prices that was not specified in the original contract. In the last chapter a game between the public entity and the contractor is created to find the economically efficient solution. This was found where both sides chose a limited possibility to change the contract because the equal treatment principle would be respected and the contractor would increase the possibility of getting the contract. This was followed by an analysis of how the law should be to create what is economically efficient, which concluded in a suggestion on how the law can contributed in creating the economically efficiently solution.

EducationsMSc in Commercial Law, (Graduate Programme) Final Thesis
LanguageDanish
Publication date2016
Number of pages83