
Dementia currently affects 1 in 14 people in the UK. Many people will either know someone with dementia, have had to support and care for someone with dementia or have been diagnosed themselves.
Like PPN 02/20 itself, this new “Construction Guidance” is only advisory. Contracting authorities are under no legal obligation to follow it or even to have regard to it, although some will want to do so, particularly where they are experiencing problems on-site due to the pandemic. The answer to Q3 in the “Construction Guidance” makes it clear (as does PPN 02/20 itself) that a contracting authority’s main motivation for providing any support to a contractor should be “to ensure that the contractor can complete the works in due course”, but only where this support represents “value for money”.
As in PPN 02/20, this “construction-specific” guidance suggests various ways in which contracting authorities could assist their supply chains. These include:
The Construction Guidance provides template wording for Deeds of Variation to vary NEC3 Engineering and Construction Contracts (April 2013 edition) and JCT Design and Build Contracts 2016 to provide some of the kinds of support referred to in PPN 02/20.
The template wording covers only “project contracts” for a defined project, such as a new build construction or a refurbishment project. There is no drafting for “term contracts” such as the NEC Term Service Contract or JCT Measured Term Contract 2016.
The drafting (for both NEC ECC and JCT D&B contracts) covers the following options:
The draft Deeds seek to prevent the contractor from terminating the contract (for any reason including employer breach of contract or non-payment) during the Covid-19 period or any subsequent period when Covid-19 payments are being made, or advance payments are being recouped. In the case of JCT D&B suspension of the works for force majeure for a longer than a period stated in the contract (two months is the default) gives either party the right to terminate the contract. For NEC ECC, this will be an issue only if the project manager has given an instruction to stop or not to start any substantial work (although the project manager may be required to do this due to the “prevention” caused by Covid-19). Whilst neither party is likely to want to terminate, removing the risk of termination is likely to be beneficial to both parties.
The draft Deeds also seek to stop the contractor from claiming relief from the employer and furloughing employees at the same time. If the contractor does this, the employer is given the right to reclaim any payments made.
There are several issues with the template wording, for example:
One of the main issues with PPN 02/20 and the associated Construction Guidance is that it is not clear how it is intended to interface with the general approach from Government that construction work should continue as far as possible despite Covid-19. If a site remains open, then contractors may well have additional PPE costs, materials and their transport costs may be higher, and work may take longer to complete because of social distancing. Whilst the employer may be prepared to contribute to these additional costs, linking this to the last three monthly payments for works makes no sense at all.
If a site closes, though, employers may well question why they should continue to pay for work that is not being delivered, rather than the contractor furloughing the workforce and claiming government support towards their costs of this. If the Government’s objective is to keep the workforce employed rather than on furlough, the Government should provide financial support to contracting authorities to enable them to support their contractors in some of the ways set out in the PPN.
As the PPN 02/20 Construction Guidance says (in at least four places) it is important for contracting authorities to take legal advice before amending any of their contracts. This is not only (as the PPN 02/20 Construction Guidance recognises) to ensure that any contract amendment reflects bespoke amendments that might have been made to the standard form contract, but also to ensure that any amendments are clearly limited to the period for which the contracting authority wishes to provide relief and are consistent with the rest of the contract. It is also important to ensure that any relief offered or contract changes made are consistent with a contracting authority’s other obligations under procurement law, state aid law and charity law (as applicable to the authority).
If you have any questions on this e-briefing, please contact Andrew Millross, your usual ACS contact or another member of our Construction and Procurement Team.
Dementia currently affects 1 in 14 people in the UK. Many people will either know someone with dementia, have had to support and care for someone with dementia or have been diagnosed themselves.
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