Expansions and extensions of contracts

Requests from national departments and public entities to expand and extend existing contracts rather than request new bids from potential suppliers to perform the work.

1. Requests for expansions may entail expanding the contract value and/or extending the duration of the contract with no cost implications.
2. An expired contract cannot be extended or expanded.
3. Accounting Officers are responsible for approving expansions and extensions below the prescribed threshold, if the thresholds are exceeded, these should be directed to the relevant Treasury.
4. A request to expand or extend a contract may be justified in order to ensure continuity of service or to finalise outstanding work not completed within the contract specifications or timelines particularly if there were delays beyond the control of the supplier.
5. It is not good practice to request expansions, but preferable to keep the value of expansions to 15% of the initial contract value for goods or services and 20% for construction.
6. Expansions and extension should be the exception rather than the norm and should not be requested frequently.

If a department or entity is frequently asking to expand contracts, it can be an indication that the procurement function of the department / entity is not planning its procurement adequately and is therefore seeking to prolong the duration and/or value of existing contracts. It can also serve as an indication of possible poor governance practices and service delivery issues.

The quarterly expansions and extension reports report lists the department/entity requesting the extension/expansion, the project description, the supplier, the reason provided for requesting the expansion/extension, the original contract value, the value of the contract extension/expansion, value of previous extensions/expansions, date that the department/entity made the request, whether Treasury supported the request and the contract start and end date. This information can be used to gain a snapshot of the procurement practices of departments/entities. The information can be analysed in conjunction with National Treasury guidelines for managing deviations, contract variations and expansions.