aca-ace framework alliance contract - 25 february 2016

Francis Ho, Head of Construction | Thursday, 25 February [email protected] | +44 20 7067 3505 | @fkyh

King’s College London Centre of Construction Law: Open Forum

ACA/ACE Framework Alliance Contract – Legal Implications

http://www.linkedin.com/in/francis

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Framework Agreements - Generally

constructiveblog.comKing’s College London: Open Forum | ACA/ACE Framework Alliance Contract – Legal Implications | 25 February 20162

• Umbrella agreement under which terms agreed in advance for works

and services

• Works/services instructed each time via “call-offs”

• Each call-off becomes a separate contract

• Typically in place for several years

• Suitable for works or services

• No need to negotiate terms or tender prices each time

• Requires more upfront work; saves time and cost in the long-term

• No guarantee of work but economies of scale may reduce suppliers’

costs

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Framework Agreements - Generally


• Create long term relationships with suppliers

• Can measure performance for continuous improvement

• May allow clients to gain advice from construction experts without

taking on staff, e.g. project management, cost management, legal

advice

• Multi-supplier framework allows mini-competitions between suppliers

• Mainly bespoke but some standard forms exist:

ACA/ACE (2016)

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ACA/ACE Framework Alliance Contract – General Points


• Can work with any project agreement

• Minimum level of work or no guarantee

• Both private and public sectors

• Can be used for any type of construction or engineering work

• For use in UK and internationally

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ACA/ACE Framework Alliance Contract – Key Differences


• Client, Alliance Manager and one or more other Alliance Members

• Alliance Members may be competitors, e.g. contractors

• Multi-party duties of care

• Single project or multiple projects

• BIM-ready

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ACA/ACE Framework Alliance Contract – Key Differences


• Core Group

• Direct Award Procedure and Competitive Award Procedure

• Interested Parties

• Additional Clients (or additional Alliance Members)

• Special Terms

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Roles and Responsibilities


• Client, Alliance Manager and other Alliance Members – the parties

• Alliance Manager – implements Direct Award and Competitive

Award Procedures, issues Project Contracts and Orders

• Core Group – represents Alliance Members and review achievement

of objectives, makes decisions by consensus, deals with Early

Warning

• Interested Parties – interested in a project (but not parties or

beneficiaries)

• Additional Clients/AM – further clients/AMs added through JA

• Spirit of trust, fairness and collaboration

• Local law can be expressed to take priority

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Objectives, Incentives, Success Measures and Targets


• Proposals for Supply Chain Collaboration and other Alliance Activities

to improve value

• Success of Framework Programme and performance assessed by

Core Group by reference to Success Measures and Targets

• Incentives can be agreed against Objectives and/or Targets

• If Targets not achieved:

• Core Group meets and proposes actions to meet Targets or revised

Targets, which may be approved by Client

• Client may reject proposals and terminate FAC or take any other actions

set out in FAA

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Alliance Manager


• Alliance Manager implements Direct Award and Competitive Award

Procedures, issues Project Contracts and Orders

• Calls and chairs Core Group meetings

• May be an independent consultant or Client employee

• Client/Additional Client may authorise Alliance Manager to represent

it

• Services form part of Framework Documents

• Client pays fees

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Prices


• Must be agreed:

• In accordance with relevant Direct Award Procedure or Competitive

Award Procedure (including within any Budget)

• Using Alliance Member’s Framework Prices in accordance with above

• Profit and Overheads set in accordance with Alliance Member’s

Framework Alliance Agreement and subject to DAP/CAP

• Alliance Members may agree fluctuations

• Open-Book basis if required under FAA, subject to DAP/CAP

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Award of Project Contracts


• No competition Direct Award Procedure

• Alliance Members compete Competitive Award Procedure

• DAP/CAP requires Template Project Documents

• Project Contract issued with Agreed Prices and Approved Project

Proposals

• No minimum guarantee of work (but can be adjusted in FAA)

• No exclusivity to Alliance Members unless stated in FAA (but can be

adjusted in Success Measures and DAP/CAP)

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Alliance Activities, Supply Chain Collaboration and Timetable


• Alliance Activities include Supply Chain Collaboration, Sustainability,

improved Operation and other benefits

• Achieved through longer term, larger scale Specialist appointments

through sharing information through the Core Group, reviewing and

comparing Specialists’ prices, renegotiating or tendering Specialists

contracts

• Alliance Activities to be carried out in accordance with Timetable

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Orders


• Orders for Pre-Contract Activities (cf. “Project Contracts”)

• Governed by contract terms (if agreed, can be governed by Project

Contract terms)

• May be terminated by Client on 10 Working Days’ notice

• Form set out in Appendix 3 of FAC

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Payment


• FAC governs payment under Orders

• Agreed Prices for Projects governed by Project Contract not FAC

• Monthly applications

• Suspension for non-payment if failure continues after Final Date for

Payment and Alliance Member has given notice of intention to

suspend

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Risk Management, Insurances and Intellectual Property


• Alliance Members undertake:

• Risk Management according to Framework Documents and Risk

Register

• Alliance Activities according to Risk Register

• Insurances specified in Framework Alliance Agreement and

Framework Brief

• Market-facing intellectual property clause from Alliance Members to Client

in relation to Alliance Activities and preparation of Framework Contract and

Project Proposals or undertaking Pre-Contract Activities

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Duty of Care


• Reasonable skill and care appropriate to roles, expertise and

responsibilities

• Multi-party but limited to Alliance Activities

• In respect of other activities, liability between Client and Alliance Member

only

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Duration and Termination


• Term set out in FAA

• May be terminated for failure to meet Targets where Client

dissatisfied with proposals to remedy

• Automatic termination against insolvent Alliance Member or for all if

Client/Additional Client insolvent (unless agreed by Alliance

Members)

• Project Contracts will not automatically terminate

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Confidentiality, Problem-Solving and Dispute Resolution


• Short confidentiality clause

• Core Group meeting convened when difference or dispute arises. Seeks to

achieve agreed solution

• Options to refer to Conciliation, Dispute Board, mediation or other ADR

• Adjudication where applicable in the jurisdiction

• Default is CIC procedure

• Slip rule

• Option to select arbitration or courts

• Parties to agree arbitration rules and seat

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Why use the ACA/ACE Framework Alliance Contract?


• Legally binding

• Suitable with any forms, e.g. not biased towards ACA/ACE suites

• Deals with important issues that other standard forms do not, e.g.

• Deals with whole supply chain

• Alliance Activities (e.g. Supply Chain Collaboration) allow AMs to work together for

Improved Value

• Multi-party

• Compliant with EU procurement rules

• Allows for competition between suppliers

• Allows for early activities/services through Orders

• Truly collaborative through Core Group which resolves issues quickly

• Is a collaborative solution

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For more information please contact

Olswang:Changing Business.

www.olswang.com

Francis Ho

Head of Construction+44 20 7067 [email protected]

Brussels

+32 2 647 4772

London

+44 20 7067 3000

Madrid

+34 91 187 1920

Munich

+49 89 206 028 400

Singapore

+65 6720 8278

Paris

+33 17 091 8720

Thames Valley

+44 20 7071 7300

mailto:[email protected]