Využití mechanismu změny závazků ve veřejných zakázkách

Why is every amendment to a public contract a ticking time bomb?

What, then, is a "substantial modification"? Under Czech legislation, Section 222(3) defines it as an amendment that, for example, would alter the circle of potential suppliers, influence the selection of the winner, shift the economic balance in favor of the supplier, or significantly expand the scope of performance. The consequences of violating this prohibition are drastic – fines from the Office for the Protection of Competition (ÚOHS) can reach up to 10% of the contract value, the amendment risks being declared invalid, and in extreme cases, the entire project may be jeopardized.

Yet, this section is not just a set of prohibitions. Rather, it is a toolkit that, when used correctly, allows the necessary flexibility to be managed legally and safely.

We also summarize the entire topic in a video. In it, we walk through which contract amendments are permitted by law and when they already constitute a prohibited substantial modification. https://www.youtube.com/watch?v=pUt5X2nozpQ

The best defense is a good offense: Plan flexibility with reserved modifications 

The most strategic and safest way to manage future uncertainty is to use the concept of reserved modifications of the commitment under Section 100 of the ZZVZ (Czech Public Procurement Act). These are not retroactive adjustments, but pre-planned mechanisms that are part of the original tender documentation and contract.

For such a modification to be valid, it must meet strict conditions: its content and the conditions for its application must be defined absolutely unambiguously in the tender documentation, and it must not alter the overall nature of the contract.

Practical examples of reserved modifications:

• Inflation clauses: Allow price adjustments based on objective and pre-defined indices, such as those from the Czech Statistical Office. This protects both parties from unpredictable market price developments.

• Measurable items: Ideal for construction contracts where the quantity of required material cannot be precisely determined in advance (e.g., the volume of excavation work or the amount of concrete). The contract sets a unit price, and the final amount is based on the quantity actually executed.

• Mechanisms for shifting deadlines: The contract can contain clear rules for extending performance deadlines in the event of specific, objectively verifiable events, such as delays in obtaining a building permit from the authorities.

Our Czech legal team at ARROWS specializes in preparing tender documentation that includes these flexible mechanisms from the very beginning, thereby protecting your investment and project goals. To assess your existing contracts and prepare new ones, write to us at consultation@arws.cz.

When life brings the unexpected: A guide to permitted modifications 

What to do when a modification was not planned in advance? Under Czech legislation, several exceptions are available that allow a modification to be made without a new procurement procedure. However, their application requires precision and caution.

Small but permitted: "De minimis" modifications 

This exception under Section 222(4) allows for minor modifications, provided they meet two conditions simultaneously: their value is lower than the financial threshold for an above-threshold public contract AND, at the same time, is lower than 10% of the original value of the commitment for supplies and services, or 15% for works.

It is crucial to realize that the values of all such modifications are cumulative. It is also essential that the modification does not alter the overall nature of the contract. For example, you can add higher-quality design elements to a building, but you cannot change a contract for the supply of IT equipment into a contract for cleaning services.

Responding to a crisis: Modifications due to unpredictable circumstances

This exception under Section 222(6) can only be used if the need for modification arose due to circumstances that a contracting authority acting with due diligence could not have foreseen. This could include, for example, a sudden spike in energy prices due to a geopolitical conflict or the impacts of a pandemic in its initial phase.

However, the decision-making practice of the ÚOHS is very strict. If the problem could have been foreseen (for example, an already known shortage of chips on the market at the time the contract was advertised), this exception cannot be invoked. Therefore, the contracting authority's ability to precisely document that it acted with due diligence and that the circumstance was truly unpredictable is crucial.

Necessary additional work and extra services

Additional works, services, or supplies are permissible if they are necessary for the completion of the original subject of performance and, at the same time, a change of supplier is not possible for technical or economic reasons, or would cause significant difficulties for the contracting authority.

For modifications under Section 222(5) and (6), a common financial limit applies: the total price increase associated with these modifications must not exceed 30% of the original value of the commitment.

Navigating these exceptions requires detailed knowledge of the decision-making practice of the ÚOHS. ARROWS lawyers assess similar situations daily and will help you correctly qualify the modification and prepare bulletproof documentation. Do you need legal assistance? Contact us at consultation@arws.cz.

Most common mistakes in contract amendments and their prevention

Hidden danger: When does even your inactivity become a prohibited modification?

One of the most underestimated risks is that an unauthorized contract modification does not only occur by signing an amendment. According to the case law of the Supreme Administrative Court, even the mere non-enforcement or significant postponement of the application of a contractual penalty can be considered a substantial modification.

The reason is that such inactivity alters the economic balance of the contract in favor of the supplier. Other bidders in the original tender calculated their bids with the risk of sanctions in mind. If the selected supplier is in fact exposed to this risk to a lesser extent, they are unfairly advantaged.

For project managers, this presents a huge dilemma. In the interest of maintaining good relations and completing the project, they often postpone the application of sanctions without realizing that they are committing a serious breach of the law. This is not a formal but a factual modification of the commitment, which carries the same legal consequences.

These hidden risks can jeopardize even experienced managers. ARROWS provides professional training for your teams, teaching them to recognize these legal pitfalls in daily practice. To ensure compliance in your company, write to us at consultation@arws.cz.

Practical scenarios and their solutions with ARROWS

Turn risk into opportunity with experts by your side

The issue of contract modifications in public procurement is complex, but with proactive planning and expert guidance, it becomes manageable. Section 222 of the ZZVZ is not just a threat, but also a guide on how to proceed correctly and ensure the necessary flexibility for the successful implementation of your projects.

At ARROWS, we are not just lawyers; we are strategic partners who understand not only the law but also your business reality. Our experience from long-term cooperation with more than 150 joint-stock companies and 250 limited liability companies allows us to transform legal complexity into a competitive advantage. Our deep knowledge in this area is also key to the successful implementation of publicly funded projects. You can find more about this service on our website.

Do not leave key projects to chance. Contact us at consultation@arws.cz and get a tailored legal solution that protects your interests and ensures the success of your public contract.