Hussey FraserChanges to Contracts

CHANGES TO PUBLIC SECTOR CONTRACTS

1. Substantive changes since 2007

2. Web based Contracts – v – traditional position

3. Version 7 of the Main Forms of Contract

OVERVIEW

FIVE YEARS AGO: CONCLUSIONS

Well drafted and organised Update and codify No Amendment by Employers Detailed information to be provided Transfer of Risk

OVERVIEW

FIVE YEARS AGO: OBSERVATIONS

New Management and Contract Administration Roles

New claims procedures

Programme Contingency (deemed inclusion – time and money contingency)

OVERVIEW

FIVE YEARS AGO: ASSUMPTIONS

QUALITY OF INFORMATION?20% UPLIFT?

SINCE THEN:

5 YEARS: now 11 FORMSCONTRACT: VERSION 7FTS: VERSION 4BOND VERSION 4(Model form)

Overview

FRAMEWORKPILLAR 1 -CONTRACTSPILLAR 2 -CONSULTANTSPILLAR 3 -COSTS PLANNINGPILLAR 4 -GUIDELINES

Website: http://consructionprocurement.ie

CHANGES

90 Changes from VI30 Changes from V6 Some negligble Some clarify Some as a result of representations Some result from changes in Law Some very signficant

CHANGES

ARBITRATION COSTS CHANGE: FTS

28 July 2011 – Website“ Apart form a change to text relating to

disputes in the Form of Tender, minor changes have been made to the Schedule which include insurance, weather requirement and named specialists in the Schedule”

CHANGES

1954 Act Section 30: No agreement re costs until dispute arises.

2010 Act Section 21: parties can agree – at contract stage – re costs in Arbitration.

UK: Adjudication costs: Tolent clauses Construction Act ; bans agreement re costs

at Contract Stage (i.e. bans Tolent clauses)

CHANGES

CLAUSE 21(1) Arbitration Act 2010

“The parties to arbitration agreement may make such provision as to costs of the arbitration as they see fit”

CHANGES

“We also agree that should a dispute arise under any Contract formed by acceptance of this tender that is referred to Arbitration, to the extent permitted by Law under the Arbitration Act 2010 and a sealed offer has not been made or where a sealed offer has been made and the Contractor’s award is greater than the sealed offer then each party will bear their own costs in relation to the Arbitration proceedings.

If an award is equal to or less than the sealed offer the Contractor is liable for the costs of both parties in relation to the Arbitration proceedings.

CHANGES

Effect of Change – if a contractor claim ends up in arbitration, the contractor will, notwithstanding the outcome, be unable to recover costs incurred in pursuit of legitimate claims.

Disincentive for commercial resolution of disputes with Public Works Employers – no arbitration cost risk.

Not reciprocal – bargaining advantage for employer

CHANGES

BACKGROUND INFORMATION“Greater clarity given to the positionRegarding background information”

Clause 1.10 Long established – no warranty in respect of

information provided “on or before or after the Contract date….

except as expressly stated in the Contract”

CHANGES

Significant strengthening of the Language Exclusion clauses – carefully considered and construed by the Courts

Walsh v Jones Lang Lasalle 2007

Clayton Love v B & I

Exclusion clauses struck down where their effect was to exempt a party from carrying out his Contractual obligation

CHANGES

Two significant changes to Contract.

CLAIMS PROCEDURE“Disputing on ER’s decision has a finite period”.

10.5.3 – 10.5.5If no determination within 20 Days – deemed rejectionFINAL AND BINDING UNLESSRejection referred to Conciliation within 28 days

CHANGES

FINAL ACCOUNT11.5 “if no final statement is given within the

time required(i.e. 2 months from p.c.) the Employer shall be relieved of all liability under or in connection with the Contract.”

Bulletin “Tighter provisions included in time to submit final statement in order to comply with original intention”

TIGHT DEADLINE: CONSEQUENCES OF FAILURE Discipline required Default position favours Employer - both

CHANGES

ADMINISTRATIVE 4.12 Wage records all “Workers” 5.39 REA’s – engage with TU Officials 5.7 Keep Records – Submit Notes of hours

worked for every ‘Worker’ each Monday.

Adds to information available to Employer in defence of Claims

CHANGES

CONCURRENT DELAY No question of proportionalityCONTRA PROFERENTUM RemovedINSURANCES “Employer liability and insurance provisions

revised to reflect what is available in the market following discussions with Insurance Brokers”

CHANGES TO BE CHECKED BY BROKERS

CHANGES

LANDS MADE AVAILABLE“The definition of lands made available has changed”

S.6.2.2 and S 7Right to occupy – area providedObligation to secure, supervise and provide access – extends to entire site.

DELAYRemoves “cannot avoid” & replaces with “made all reasonable efforts to avoid”

CHANGES

FORM OF TENDER 13 Changes

Arbitration costs Works Requirements – VolumesInsurance changes Weather events Naming of Specialists VAT

CHANGES

WEATHER EVENTS. Unforeseen ground conditions – excludes

weather New document - contains definition of

weather event for schedule 1K (17 pages long)

SPECIALISTS: PART 2 - SCHEDULE Contractor may be required to name

Specialists at Tender Stage If identified – cannot be changed without

further agreement.

CONCLUSIONS

READ THE CONTRACTS; MEET THE DEADLINES PROACTIVELY – ENGAGE IN THE

PROCEDURES FAILURE TO DO SO: SIGNIFICANT RISKS DEFAULT POSITION

NO JUDICIAL INTERPRETATION

ARBITRATION ACT 2010

CHANGES

ARBITRATION COSTS DOMINANT POSITION DELIBERATE INCLUSION RIA

“Costs of the Arbitration process are borne equally between parties in Accordance with the Arbitration Act 2010 which allows for Contracting Authorities under Section 21 to put in place pre-Dispute agreements in relation to costs of Arbitration”

CHANGES

MANNER OF INTRODUCTION

WEB BASED NATURE

CONSTANT VIGILANCE

WHAT FORM IS USED - EVERY TENDER

CHANGES

NEW ENVIRONMENT : ALL CLAIMS INFORMATION AVAILABLE CENTRALLY Arbitration rules 17.2 – Awards to

Department within 14 days

Different Claims – Different Contracts – Different Employers – information ends up as part of a pool available to the Department.

Today’s Claim – Tomorrow’s Amendment