Hussey Fraser Changes to Contracts

CHANGES TO PUBLIC SECTOR CONTRACTS 1. Substantive changes since 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 FORMS CONTRACT:VERSION 7 FTS:VERSION 4 BONDVERSION 4 (Model form)

Overview FRAMEWORK PILLAR 1-CONTRACTS PILLAR 2-CONSULTANTS PILLAR 3-COSTS PLANNING PILLAR 4-GUIDELINES Website:

CHANGES 90 Changes from VI 30 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 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 Contractors 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 position Regarding 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 ERs decision has a finite period – If no determination within 20 Days – deemed rejection FINAL AND BINDING UNLESS Rejection referred to Conciliation within 28 days

CHANGES FINAL ACCOUNT 11.5 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 REAs – 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 proportionality CONTRA PROFERENTUM Removed INSURANCES 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 and S 7 Right to occupy – area provided Obligation to secure, supervise and provide access – extends to entire site. DELAY Removes cannot avoid & replaces with made all reasonable efforts to avoid

CHANGES FORM OF TENDER 13 Changes Arbitration costs Works Requirements – Volumes Insurance 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. Todays Claim – Tomorrows Amendment