The main rule in the procurement law regime is that an agreement entered into by an authority may not be modified unless the authority first carries out a new procurement procedure. Exceptions to this main rule apply, for example, to contract amendments of lesser value. However, the modification may not entail an overall alteration of the nature of the previously procured agreement.
The Swedish Police Authority had carried out a procurement of a framework agreement for vehicle towing, but during the term of the agreement, the authority agreed to amend the terms of remuneration. The amendments involved extending the distances to be covered at a fixed price, whilst at the same time increasing the remuneration levels.
The Swedish Competition Authority, which considered that the modified agreements constituted unlawful direct awards of contract, applied for a procurement fine. One of the issues that arose was whether the new remuneration terms meant that the overall nature of the framework agreement had been altered.
The Supreme Administrative Court obtained a preliminary ruling from the European Court of Justice to clarify what is meant by an alteration the overall nature of a framework agreement. The judgment of the European Court of Justice makes it clear that a modification of the method of remuneration of a framework agreement does not alter the overall nature of the agreement, provided that it does not lead to a fundamental change in the balance of the framework agreement. The Supreme Administrative Court found that there was nothing to suggest that the price adjustments had any purpose other than to compensate the supplier because the supplier agreed to a greater extent to accept remuneration based on a fixed price, and that the fact that the modified conditions had given rise to other considerations from a risk perspective is not the same as saying that the modification to the agreement had unilaterally benefitted the supplier. The Court held that the overall nature of the framework agreement had not changed.
The lower courts had not addressed whether the value of the amendment agreement was sufficiently low to be exempt from the obligation to conduct a new procurement procedure on that basis, and the case was therefore remanded for further consideration.