The four permitted cases
Article 120 opens with a significant reservation, preserving the provisions of article 60 on price revision clauses. Revision therefore follows its own regime and does not fall among contract modifications.
| Paragraph | Situation |
|---|---|
| a) | Modifications provided for in clear, precise and unequivocal clauses of the initial tender documents, irrespective of their monetary value, including in the form of option clauses |
| b) | Supplementary works, services or supplies becoming necessary and not provided for in the original contract, where a change of contractor would be impracticable for economic or technical reasons and would cause the authority considerable inconvenience or substantially increased costs |
| c) | Variations during the works for unforeseeable circumstances, such as extraordinary natural events, new legislation or unforeseen technical difficulties |
| d) | Replacement of the contractor, permitted in typed cases such as death, insolvency or corporate restructuring, provided the incoming operator meets the original requirements |
Paragraph a) is the most underestimated and the most useful. Because it operates irrespective of monetary value, an option clause clearly drafted in the initial documents allows modifications of significant value without engaging the other regimes. The quality of drafting of the tender documents therefore determines the flexibility of the whole contract.
The condition that the structure remain unaltered
For the situations in paragraphs a) and c) the code imposes a further condition: notwithstanding the modifications, the structure of the contract or framework agreement and the underlying economic operation must be capable of being regarded as unaltered. The condition is assessed against the economic operation and not the value alone.
The wording is deliberately substantive. Observing the quantitative limits is not enough: the subject matter and the economic balance of the operation must remain those the competition put to the market. A modification that respects the threshold but transforms the nature of the performance is not permitted.
The fifty per cent limit
For the situations in paragraphs b) and c) the contract may be modified only if any price increase does not exceed fifty per cent of the value of the original contract. The limit applies to each modification and not to their aggregate.
Two points on the calculation are essential and frequently overlooked. They concern options and the scope of the original value.
Where there are several successive modifications, the limitation applies to the value of each modification, not to their aggregate. The rules specify, however, that successive modifications must not be aimed at circumventing the regime, which returns the assessment to a substantive plane.
On optional works, ministerial interpretative practice has clarified that their value is added for the purpose of calculating the percentage increase only where the options have actually been exercised. Options not exercised therefore stay outside the percentage calculation.
Who establishes the conditions
On this point case law is clear and worth knowing because it delimits what an operator can obtain. There is no contractor's right to a modification of the contract.
The adequately reasoned finding that the conditions justifying the modification are met falls within the exclusive competence and responsibility of the contracting authority. The mere existence of considerable inconvenience for the authority or of reasons of expediency is not sufficient to avoid a change of contractor.
The practical consequence is that a request for modification made by the contractor, however technically well founded, must be translated by the authority into a reasoned finding on the statutory conditions. The quality of the technical material the operator supplies bears directly on the authority's ability to construct that reasoning.
The roles in the procedure
The rules on performance give the parties involved distinct functions. The project officer and the works supervisor have their own instruments.
The works supervisor proposes to the single project officer the modifications and variations to contracts under performance and the related variation estimates, stating the reasons. It also provides the project officer with the investigative and advisory support needed for the findings leading to modifications and variations.
The possibility remains of ordering detailed modifications that involve no increase or decrease in the contract value, notifying them to the project officer in advance. Prior notification is a condition and not a subsequent formality.
That last provision marks out a useful operational space on site, but its scope is narrow: the absence of any effect on the contract value is the condition. Any effect on the contract value takes the modification outside that space.
Notification duties
Modifications and variations during the works give rise to duties of notification and transmission to the supervisory authority, discharged by the single project officer, as set out in the annex to the code. The formalities fall to the authority and not to the contractor.
Two consequences complete the picture. If the authority finds the approved variation unlawful, it exercises the powers the code confers on it. And failure to comply with the notification duties attracts administrative financial penalties.
For an operator the relevance is indirect but real: a variation approved without the required formalities is an exposed variation, and that exposure reflects on the stability of the contractor's position. It is worth checking that the formalities have been discharged.
The corrective decree's provision on design errors
The corrective decree added to article 120 a provision that directly concerns whoever prepared the design. It concerns errors and omissions in the detailed design.
Contracting authorities verify, in a process involving the designer and the contractor, errors or omissions in the detailed design that prejudice, wholly or in part, the delivery of the works or their future use, and promptly identify detailed design solutions consistent with the principle of result. The process allows the designer to put its case.
The provision creates a three way process in which the designer is no longer external to the performance stage but a party required to contribute to the solution. For a practice this means design liability now arises in a defined procedural setting, and documenting design choices acquires direct defensive value.
The most frequent errors
Performing first and regularising later is the first, and turns a potentially permitted modification into a non conformity. The correct order is the formal instrument before the work.
Aggregating successive modifications to test the fifty per cent limit is the second, and does not match the rule, which applies the limitation to each modification. The test is applied modification by modification.
Assuming that observing the threshold is enough is the third, and ignores the condition that the contract structure remain unaltered. The threshold is a necessary condition and not a sufficient one.
Confusing contract modification with price revision is the fourth: the latter is expressly preserved by article 120 and follows its own regime. The two mechanisms are triggered on different conditions.
Note: the legislative references in this page relate to Italy and are current as at the date of publication. Article 120 was substantially revised by the corrective decree: the text in force and the documents of the individual award should be checked before any operational use.