INTRODUCTION

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Review of two worlds. By its General Assembly notice of September 15, 2022 made public on the 21st of the same month, the Council of State responded to the various questions asked by the Minister of the Economy regarding the modification of public procurement contracts and the theory of unpredictability in a context of soaring prices. At the end of details that are sometimes enlightening, sometimes disappointing or confusing, two worlds are now very distinct: that of modification of the contract and that of compensation for unforeseeability which does not fall within it.

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I – THE WORLD OF THE CONTRACT: THE MODIFICATION OF THE ONLY PRICE OR THE ONLY DURATION ALLOWED UNDER CONDITIONS

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“Dry” modification allowed.

Contrary to the circular of March 30, 2022 which specified that it was not permitted to “modify by amendment the clauses setting the price when this modification of the price is not linked to a modification of the scope, specifications or conditions of execution of the contract", the Council of State admits that if, in principle and according to articles R.2112-7 et seq. of the public procurement code, public contracts are concluded according to a final price, these provisions “are not intended to restrict the possibilities of modifying a market”. It is therefore indeed possible to modify only the financial clauses of a public contract, which administrative “doctrine” considered impossible, unlike university doctrine (in this sense, H. Hoepffner, Administrative Contract Law , 2nd ed., Dalloz, p. 609) and the case law in certain isolated decisions rendered on specific questions (CE, September 20, 2017, Sté Area Impianti, n°408542).

 

It is also possible, specifies the opinion, to extend - "dry" again - the duration of the contract, although, having regard to the conditions under which this modification can be made - in particular the limitations of amount - it is In practice, it may be difficult to translate a duration into a numerical value.

 

Finally, the opinion admits the possibility that a price variation clause or a revision clause could be integrated a posteriori in the event that the modification is justified by the unforeseen circumstances of articles R.2194-5 and R.3135 -5 of the code, in a very permissive interpretation of the letter of the text, but requested since at least the health crisis by practitioners.

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Conditioned “dry” modification.

The lock on the so-called principle of absolute intangibility of financial clauses having been lifted, only the classic and known conditions for modifying public procurement contracts remain. Thus, the modification of the price or the duration can only be agreed on the general condition of not “changing the overall nature” of the contract. Beyond this limit, which applies in all situations, several hypotheses are possible with regard to the provisions of the code, which all meet specific conditions:

• Unforeseen circumstances:the Council of State recalls the classic conditions which govern a modification for unforeseen circumstances. Thus, the modification of the financial clauses must strictly aim to take into account the new circumstances, without exceeding what is necessary to respond to them, nor the ceiling set at 50% of the initial amount of the contract. It should be noted that, for the definition of unforeseen circumstances, the Council of State specifies that these are “new circumstances [which] have exceeded the limits that could reasonably have been envisaged by the parties when entering into the contract”. again deviating from the letter of the code which targets “circumstances which a diligent buyer could not have foreseen”. Finally, it recalls, as a warning to contracting authorities, that the modification must respect the principles of equality before public offices, good use of public funds and prohibition of generosity.

• Small amount changes: here, the General Assembly of the Council of State adds a condition to what is required by the code. By considering that a modification of a small amount should not have "the effect of compensating, even partially, the part of the aggravation of the charges which does not exceed that which the parties had foreseen or should have reasonably foreseen", it binds this hypothesis of modification to unforeseen circumstances in a questionable interpretation of the code. In our opinion, the general limit of such modifications should lie more in the principle of prohibiting public persons from granting donations.

• Non-substantial changes: the Council of State also specifies that if the envisaged modification is not substantial - and therefore authorized by the provisions of articles R.2194-7 and R.3135-7 - it must still, if decided to deal with unforeseeable circumstances, be below the 50% threshold. The precision is astonishing: it comes from a constructive interpretation of the text and it seems unlikely in practice that a modification could be qualified as insubstantial when it increases the initial value of the contract by more than 50%.

 

“Dry” modification dominated by the contracting authority.

Quite logically, the notice recalls that modification of the contract cannot be a right for the contract holder, who can only initiate the opening of a discussion. The modification must therefore systematically be approved by the contracting authority. Therefore, in the absence of agreement from the contracting authority (or a dedicated clause), the contractor has no other alternative than to request unforeseen compensation.

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II – THE WORLD OF IMPREVISION: THE SAFETY VALVE 

 

(in)defined unpredictability.

The predominant feeling when reading the opinion is that of the marginalization of the theory of unforeseen circumstances, which (really) no longer appears to be the preferred way of resolving unforeseen situations. First, the Council of State completely and explicitly exempts it from unforeseen circumstances opening the possibility of modification of the contract. Indeed, the provisions of article L6 of the public procurement code which codify the theory of unforeseeability do not specify that it is governed by other provisions, which makes it independent of any provision of the code of public procurement. For the rest, the Council of State remains very imprecise on the contours of the theory. He states that "the unforeseen compensation is intended to ensure the continuity of the public service", which seems highly questionable to us given that it is a general rule applicable to administrative contracts, potentially triggered during the execution of contracts (supply contracts in particular) which do not have public service as their object. It also settles, in a rather peremptory manner, an old doctrinal debate by qualifying the theory of unforeseeability as an “extra-contractual right to compensation” which “cannot be considered as a financial consequence of the execution of the contract” (!), which which is far from self-evident as the action open to the co-contractor for the award of unforeseen compensation is opened before the contract judge is classically assimilated to an action for contractual liability... But this has the merit of tracing a clear border between modification and unforeseeability, even if this opens new contentious questions and further distinguishes administrative unforeseeability from that of article 1195 of the civil code which, let us remember, authorizes the "renegotiation of the CONTRACT ". From this point of view, the trench separating administrative contracts from private contracts and public procurement is widening further.

 

 

(im)specified conditions.

Obviously, the Council of State does not resolve the fatal questions, those of the percentage from which additional costs lead to an upheaval of the economic balance of the contract and the compensation rate. But this should not be surprising: not only did the Minister of the Economy not ask the question, but the risk of too much generality leading to unsatisfactory particular situations is too intense. But we could have been filled with hope before reading the paragraph entitled “on the implementation of the theory of unforeseeability according to the category of contracts and the form of prices”. Hope quickly disappointed.

• Public contracts and concessions: with regard to the distinction between public contracts and concessions, the Council of State only specifies that in matters of concessions, it is necessary to take into account "the non-negligible part of the risk of loss" that the concessionaire accepted. This is not surprising, since the concession transfers an operating risk to the concessionaire, the latter is more subject to the virulence of execution hazards. We regret that the Council of State did not take the opportunity to clarify more precisely the distinction between the two contracts, especially since it uses the expression "operating deficit" indiscriminately, which however does not has economic relevance than with regard to concessions, public contracts being more subject to additional execution costs. The difference is not only a matter of semantic vanity, it also makes it possible to better calibrate the methods for assessing the upheaval of the contractual balance and for calculating the unforeseen compensation.

• Flat rate and unit prices: it is also recalled that the distinction between fixed prices and unit prices does not condition the opening of a right to compensation.

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Enriched practical terms.It is especially with regard to the practical modalities of implementing the theory of unpredictability that the opinion is interesting. The circular of March 30, 2022 had already invited the contracting authorities to formalize the granting of unforeseen compensation in an independent agreement linked to the contract, in order to materialize the specific nature of the financial compensation (it is not a question here to modify the financial clauses, but to grant compensation). The opinion commented here specifies that the unforeseen compensation does not have to be included in the general and final statement, unlike the compensation allocated in the event of application of the theory of unforeseen constraints, which further excludes the theory of the unpredictability of the world of contracts.

 

Practical advice.

To deal with the rise in prices, buyers and public procurement contract holders are strongly advised to favor discussion. In particular, for public contracts concluded under the new CCAG, the review clause introduced during their reform must facilitate the process and now be read as being the contractual basis for the opening of a discussion in view of a price change.

 

The theory of unpredictability must be seen as a lifeline that can only be mobilized in two situations:

• The increase in prices is such that the limits set by the public procurement code for modifications due to unforeseen circumstances are not enough to restore the economic balance of the contract which has been very severely disrupted.

• The contracting authority refuses to modify the financial clauses.

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