Public Works Contract Forms - Recent Revisions

January 2014 changes are now implemented.

These are to reflect the safety, health and welfare at work (construction regulations) 2013.

The changes are available on the construction procurement reform site in the news section.

Adjudication and the Construction Contracts Act 2013 - a few more anomalies perhaps?

As I've only a partial legal background (in the form of PGrad's in Law courses) the following is purely an observational take on Justice Clarke's informal discussion in the IEI yesterday evening.

In the main the discussion was related to Constitutionality, which by it's nature is a complex but very interesting part of the Law. It is also safe to say that this area of Law is best left to the experts but I'll give a blast at my take on it anyhow, in my own observational manner.

The first note I took is the way the Irish Constitution works placed alongside the UK is incomparable. We have a written one they don't. This then requires the adjudication process or the process of the adjudication itself to be a stronger requirement in Ireland. The process must fundamentally be a fair process. Fairness is crucial.

Two main area's of controversy are viewed.

1. What is fair process in the eyes of the court and how will the courts approach this issue if someone cries hardship and unfairness of the adjudication process?
2. The speed required (28 days).

Fair process:

Examples - a recent challenge to the NAMA legislation was a success. It was unfair for the lads in NAMA to grab the performing loans even though the legislation gave them that power.

The adjudication process is seen perhaps more of an inquisitorial nature rather than a litigious one and this then could be compared to the current emigration process's. 

The advice emanating is that all information and particularly any significant information that the adjudicator has within the adjudication process must be shared equally between the parties. 

Also Adjudicators take note that you will have a Constitutional duty placed upon you under the Act.

Speed:
No easy answer on this requirement. The only comparison that is possible is the examiner process which allows a maximum of 100 days. Some examiner-ships have missed the deadline having not had enough time for all the hearings and what not and ultimately liquidation was instigated, i.e. recently the O'Brien Sandwich's examiner-ship.

In summary the process itself doesn't require us to follow rules of evidence, fairness is all that is necessary. Also for fairness to be seen and in order to get to the facts of some cases, cross examinations will be necessary. This again will place added time pressures.

Other issues raised apart from the Constitutional aspects are that there still isn't available a specialist court to speedily enforce a decision and also that no rules of court have been drafted for such an instrument.

One also feels that the poor old draft code of practice got a good bashing over the last few days for it's repetitive nature and other such anomalies (i suppose that's what drafts are for). The Society of Chartered Surveyors (SCS) views re-affirmed what has been stated in the lectures and group think-ins over the last while, i'm sure they won't mind me offering the link to their document.

To finalize for now, my thoughts are that one got the feeling over the last few days that if the Judges were allowed to say something on this Act in a cut chase fashion they would be saying something along the lines of "us Judges are the law makers, we make the laws, ye lads are the builders, ye build stuff, let us do our job and ye do yers".

Construction Contracts Act 2013

Apologies once again to all followers to this blog for my demonstration as the laziest blogger of all time. I will definitely make it a new years resolution to beat my number of posts of last year.

Anyhow, just in from the Adjudication Society conference this morning where widespread discussion on the possible new Adjudication coming into our industry.

As far back as 2011 we were a bit negative here towards some aspects and some of the mechanisms of this new Construction Bill (in the draft format it was in at the time) and after today's overview I would say that this negativity has only increased.

Many holes were picked through the Act by the expert and experience speakers:

Some of these are summarized from my notes as follows:

1. Unclear if 'paid when certified' will be a loophole that can be exploited and the Act is silent on this,
2. The terminology is not linked to contract 'speak', i.e. the term 'Payment Claim' is new,
3. Payment Claim Notice is silent on time,
4. Act mentions 'subject matter' of a claim, fruitful exploitation for lawyers here as this could be anything?
5. With holding notice by the payer - this will generate additional administration for payers,

On top of all this the final after lunch talk given by a highly eminent Judge was damning to say least. His focus was mainly on section 6 of the Act. 

S.6 part 9 states that 'initiative' is to be used by an adjudicator. This wording is weak as far as the Judge is concerned and the wording here should have been drafted better. The Judge also did not like the temporary binding nature of the Act as set out in S.6 part 10. In fact the Judge went as far as to state that 'bad law' could be pleaded by a party in order to thwart the whole process.

I hope to revert back to this whole subject in more detail later. Like everyone else this is all new and thus more information gathering is necessary.

I also understand that another Judge will be giving a view on this tomorrow evening in Engineer's Ireland which will be interesting.

Time will tell how this Act will be implemented, if implemented at all!

Construction Contracts Bill

There has been a lot of talk emanating from the CIF, the Irish Concrete Federation and also some TD's and Senators in relation to the new construction contracts bill. This talk is along the lines that if this bill was currently in place then some recent problems on sites would not occur.

Random statements are coming into the public domain without any real substance or backup to justify why this pending piece of legislation would somehow magically save sub-contractors.

The latest on this is to do with the Brian McCarthy Ltd Pepsi site in Cork where sub-contractors are owed money and are threatening to blockade the site.

Any new legislation that will improve matters is certainly helpful but for people to be effectively saying that the new Bill will stop main contractors going bust and stop any non-payments going down the supply chain is simply untrue.

It would be best if the CIF and other's would advise sub-contractors to simply arrange a contractual link to the client on such projects by way of a collateral agreement. This is the simple solution rather than moaning and groaning about a Bill that may not even work or function correctly. For example, if conciliator here were a plastering subbie for a project for Pespi then the wise thing to do would be to ensure that if the Main Contractor goes belly up I can run to Pepsi to get money due, it is not that difficult to get this agreement in place at the outset.


Links to recent developments as follows;

Irish Examiner

Irish Construction

CIF News Pepsi

CIF News Kilfinane

p.s. Rather than been guilty of random statements myself  I will do another blog separately on the Construction Bill in the near future outlining it's potential flaws. Link below to something I blogged on the topic a few years back.....

Conciliators previous discussion on the Bill

Another Victim of the Industry

According to the Irish Examiner Newspaper Brian McCarthy Contractors Ltd became the latest victim of the building crash after confirming that it has ceased trading.

In place for the past 36 years this builder employed over 220 during the boom and the decision to cease trading will result in the loss of the 20 direct jobs that remained at the firm. 

A spokesman for the company confirmed a receiver was appointed and stated: “It is a sad time. We have long-serving employees who have been very loyal. It will be as orderly a wind-down as possible.” 

The spokesman said that the company decided to close “due to the unavailability of profitable work”. 

He said: “It was not viable to continue and there was insufficient workload to cover overheads. It was an extremely difficult decision to cease trading, but it was also a prudent commercial decision as it was not feasible to continue.” 

The spokesman said that the Government awarding contracts to below-cost tenders for public works “made it very difficult to continue”. 

The spokesman said: “We have a pessimistic view of the market in Ireland. The public sector is the main market for contracts and the new form of government contract is so loaded against the contractor, it would have been bordering on reckless trading if we had tried to enter into these contracts.” 

The company said that the last 18 months “have been quite stressful when you are doing everything possible to generate new sources of work".

Road Projects for 2012

It looks like 3 road projects are certain for 2012. These are, the N11 Arklow - Rathnew, Newlands Cross and the Ballaghaderreen bypass.

The N11 is the section between Arklow and Rathnew. Newlands Cross is the final set of traffic lights on the M7 heading east. Ballaghaderreen will be a 14km standard single carriageway project carried out on a design and build basis. Pre-Qualification tenders for the Ballaghaderreen Project are advertised and are due in on the 9th Jan '12.

In relation to the Motorway Projects the Minister for Transport, Mr Varadkar said: "I am delighted to be able to announce the upgrading of Newlands Cross, and of the N11 between Rathnew and Arklow. Both projects will make a real difference to the travelling public and to businesses. Each one covers a critical section of road, and is among a handful of stretches which were never resolved during the boom years.

"Thanks to this new arrangement, the work can finally be initiated.

"It’s particularly welcome to be able to remove the last traffic light between Dundalk and Cork, on one of Ireland’s most important and busiest national routes. The construction process will also create employment for hundreds of people.”

Given the timeframe experienced on the procurement of these types of projects in the past and as they are design and build projects one presumes it will be late 2012 rather than mid 2012 before a sod is turned on these jobs?

Public Works Contracts - Important Changes

A number of amendments have been made at the end of July 2011 to the PW-CF's.

These include the following:

• The definition of ‘lands made available’ has changed;
• A requirement for records included;
• Changes to Programme Contingency;
• Disputing an ER’s decision has a finite period;
• Tighter provisions included in regard to time to submit final statement in order to comply with original intention;
• Employer liability and insurance provisions revised;

A new clause 1.10 has been added in relation to 'background information'-

"1.10 Background Information

1.10.1 In this sub-clause 1.10 Background Information means any information made available on, before or after the Contract Date to the Contractor or to anyone on the Contractor’s behalf by the Employer or by anyone acting on the Employer’s behalf in connection with the Contractor’s tender for the Contract, which information is not included in this Contract. Background Information also includes any information stated to be ‘Background Information’.

1.10.2 The Contractor acknowledges and agrees as follows:

(1) The Employer has no liability whatsoever to the Contractor in contract, tort, under statute, or on any other basis whatsoever (including negligence and breach of statutory or other duty) in connection with Background Information.

(2) The Employer has not made and does not make any warranty, representation, or undertaking in connection with Background Information.

(3) The Employer has not authorised anyone to make any warranty, representation, or undertaking on the Employer's behalf in connection with Background Information.

(4) Without limiting anything in this sub-clause 1.10, the Contractor irrevocably and forever waives any liability that the Employer may have to the Contractor in connection with Background Information regardless of any of the following circumstances, and the Contractor acknowledges that the Employer makes no warranty, representation, or undertaking in regard to those circumstances:

a) whether or not the Background Information is correct

b) whether or not Background Information is complete

c) whether or not any testing, investigation, surveys, or other work to prepare Background Information was done negligently or in breach of statutory or other duties

d) whether or not those who carried out any testing, investigation, surveys, or other work to prepare Background Information were properly selected or supervised

e) whether or not Background Information was suitable for the purposes for which the Contractor or anyone on the Contractor's behalf might use it

f) whether or not any errors or omissions in Background Information are major or numerous or both

g) whether or not Background Information represents all the information available to the Employer

h) whether or not any works described in Background Information are done as described in Background Information or at all

i) whether or not the Employer had or has other information that might render Background Information misleading

j) the manner in which Background Information was made available

k) whether or not the Contractor had adequate opportunity to carry out any testing, investigations, surveys, or other work or otherwise to verify Background Information.

(5) The Contractor has included in the Contract Sum for the risks that the Contractor has agreed to bear under this sub-clause 1.10"

I'm not fully sure why this new clause is deemed necessary? If the client is bearing no liability for the correctness of the background information then any uncharted or miss-charted services are remediable under the contract in any event.

Another change is that the contract form is attempting to contract out or nullify the contra proferentem rule with the addition of the following sub-clause:

"1.2.4 No rule of legal interpretation applies to the disadvantage of a party on the basis that the party provided the Contract or any of it that a term of the Contract is for the party's benefit."

The doctrine of contra proferentem would possibly come into play in relation to this actual condition itself - this is certainly one for the lawyers and barristers which brings us nicely on to the new Form of Tender and the new Arbitration Act 2010, Section 21.

"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 it's own costs in relation to the arbitration proceedings".

Of course it also states in a footnote that if the award is less than or equal to the sealed offer then the Contractor is liable for the costs of both parties.

Unfortunately this is a change to the law by virtue of the Arbitration Act 2010 and it has effectively removed any incentive that the employer had to resolve the dispute before it went to arbitration by making a realistic sealed offer to the Contractor. Now employers can hold off, delay or thwart proceedings on the basis that the worst case scenario for them is a share of the costs, barring extra ordinary circumstances.

The Contract sets out new time provisions on the Employer side which is helpful, prior to this there were no clear or concise time provisions towards the route to dispute resolution. This new clause clearly defines this and encourages the Employers Representative to Act in a Concise Manner:

"10.5.3 If the Employer’s Representative fails to take any of the actions in sub-clause 10.5.1 within the time stated, the Employer’s Representative will be taken to have made a determination under sub-clause 10.5.1(3) that there be no adjustment to the Contract Sum, no use of programme contingency referred to in sub-clause 9.4, and no extension to any Date for Substantial Completion. The determination will be taken to have been made on the last day of the time provided for in sub-clause 10.5.1.

10.5.4 A determination of the Employer’s Representative notified to the Contractor and the Employer under sub-clause 10.5.1(3) or 10.5.2 shall be final and binding on the parties unless, within 28 days after receiving notice of determination (or, if sub-clause 10.5.3 applies, within 28 days after the determination is taken to have been made), the Contractor or the Employer gives notice to the other under sub-clause 13.1.1 disputing the determination and referring the dispute to conciliation.

10.5.5 Notice of an agreement under sub-clause 10.5.1(2) shall be final and binding on the parties unless, within 28 days after receiving the notice, either:

(1) the Contractor both (a) notifies the Employer’s Representative and the Employer that the Contractor disagrees that the notice correctly records agreed terms and (b) gives notice to the Employer under sub-clause 13.1.1 referring the dispute to conciliation or

(2) the Employer both (a) notifies the Employer’s Representative and the Contractor that the Employer does not agree with the terms notified by the Employer's Representative and

(b) gives notice to the Contractor under sub-clause 13.1.1 referring the dispute to conciliation"

The general synopsis on this is the Employer has 20 days to make his determination (like old engineers decision under the IEI form) and this is final and binding unless it is disputed within the 28 day time frame set out.

Finally a most important change is clause 11.5 - final account. This has now become a condition precedent.

If no final statement is given within the time required, the Employer shall be released from all liability to the Contractor under or in connection with the Contract.

All of these changes can be viewed on line and it is remarkable that the Department of Public Expenditure and Reform have only noted these changes as been minor amendments on the news part of the website.