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CLYDE AND HEBRIDES FERRY SERVICES: INVITATION TO TENDER
ANNEX 22
MATERIAL CHANGE EVENTS
A material change provision provides, in the terms and conditions of contract between the Executive and the successful tenderer, for certain events that significantly affect the cost or provision of the service to be taken into account and, if necessary, for the subsidy to be revised. This Annex sets out the main material change events which will be acceptable to the Executive. The terms and conditions of contract will set out the material change provisions in more detail. From time to time the Executive may also notify the operator in writing of any additional material events which it will accept.
For the purposes of the CHFS tender agreement, the term "Material Change" is defined as:
"An event which materially and directly affects the Operator's capability to fulfil the requirement of the Service Specification and contract terms. Such material event being tangible and beyond the control of the Operator and which directly affects:
- the operator's ability to generate the projected revenue from the approved services and/or
- the projected cost to the Operator of providing the approved services
Such material change must not have been approved or foreseen prior to the date of contract commencement and will be limited to the following:
- changes that were not on the statute book, proposed or foreseen in the following:
- changes in Scottish Law
- changes in English Law
- changes to shipping regulations
- changes in European Union rules
- change in Government, economic or other policy (including but not limited to grant support payments to producers and transport providers) which affects the economics of and the market for the movement of passengers, accompanied cars, freight or livestock between the Clyde and Hebrides and the Scottish mainland
- in the event Ministers vary the successful Tenderer's fares proposals, this would amount to a material change (provided the successful Tenderer's proposals did not amount to more than CPI on any route - see also Schedule 2 paragraphs 3.8.9 to 3.8.11)
- a significant change in the courses to be sailed by the vessels in the provision of the Approved Services or in the ports served by the Approved Services being imposed on the successful tenderer through circumstances beyond their control, other than obligations under the contract or those circumstances set out as relief events and which requires the successful Tenderer to increase voyage length/fuel consumption and therefore operating costs
- VesCo changing the terms for the leasing of its facilities and chartering of vessels during the contract period (other than those set out at the outset in relation to the procurement of new vessels or events caught by other material change clauses)
- passenger, vehicle and freight traffic on approved services being directly affected by any UK Government, Executive or local authority sponsored actions
- ship fuel costs where this varies by more than 10% above or below the base price in the business model. In such circumstances the operator would be expected to have made reasonable provision (i.e. act as a reasonable operator would who was considering his commercial interest) for fluctuations in fuel price e.g. bunkering
None of the above material changes above will apply to services which are provided at the discretion of the successful tenderer (i.e. over the minimum standard set out at Schedule 3 and related Annexes)
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