The reports of the National Audit Office (NAO) have become an invaluable source of information about the development of public contracts and the PFI process. A report published by the NAO last month, NIRS 2: Contract Extension, considers the approach to be taken in providing for additional work in IT contracts, the compatibility of extensions of contracts with EU law and the likelihood of the extension being affected by a complaint.
The extension of the computer system in question was required to take account of the introduction into national insurance legislation in 1998 of stakeholder pensions and pension sharing on divorce. These provisions could not be catered for within the scope of the original NIRS 2. Legal advice was sought as to whether the extension was consistent with EU procurement legislation.
