Wednesday, February 10, 2016
On 18 January, the Department of Public Expenditure and Reform released Circular 01/16: ‘Construction procurement – revision of arrangements for the procurement of public works projects’. This Circular outlines new amendments to the construction procurement process in relation to public works, as well as how these amendments are to be implemented through the documentation comprising the Capital Works Management Framework (“CWMF”).
The Government Construction Contracts Committee (“GCCC”) undertook a performance review of the CWMF suit of Public Works Contracts (“PWC”) in 2014 resulting in a report subsequently published by the Office of Government Procurement. The recommendations outlined in this report were then the subject of a series of stakeholder engagement sessions throughout 2015, after which four interim amendments to the Conditions of Contract forms PW-CF1 – PW-CF5 (inclusive) were proposed as part of a medium term strategy towards reform. These amendments have now been incorporated into the PWC documents and will be implemented from 4 April 2016 (with certain derogations).
The revised requirements
The four amendments to PWCs are as follows:
- Pricing: The Bill of Quantities is now the primary reference document for the pricing of public works tenders for projects designed by the contracting authority, replacing the former Pricing Document. Production of a fully measured Bill of Quantities to an approved method of measurement is now mandatory and any inconsistencies between the Bill of Quantities and the Works Requirements will result in a Contractor Compensation Event. Further changes are defined in the revised Form of Tender and Schedule, part 1K (17), including the removal of the option to transfer the risk of quantities to the Contractor in the Employer-designed PWC forms. The risk associated with the accuracy and completeness of the Bill of Quantities therefore now rests entirely with the contracting authority.
- Direct Tendering of Specialist Works: Contract forms PW-CF1, PW-CF3 and PW-CF5 now introduce a procedure for contracting authorities to directly obtain tenders from specialist works subcontractors. These reserved specialist subcontractors will then be appointed by the Contractor. This change is an addition to the existing process of novation that continues to be available on Employer-designed forms PW-CF1 – PW-CF5 inclusive.
- Dispute Resolution:
3.1 A dispute management procedure has been introduced under forms PW-CF1 – PW-CF4 inclusive. This procedure would be carried out at the parties’ management level prior to any reference to conciliation.
3.2 The parties must now appoint a Standing Conciliator up front for projects with a value in excess of €10 million under forms PW-CF1 – PW-CF4 inclusive. The Standing Conciliator is optional for projects between €5-10 million.
When will the amendments become effective?
Contracting authorities must use the updated PWCs on all public works procured from 4 April 2016 onwards (subject to the derogations outlined below).
The amended forms can be used before this date if the contracting authority:
- has prepared its tender documents in accordance with the new requirements as noted above; and
- is satisfied that the scope of services upon which it is engaging its design team meet the new requirements (e.g. in relation to the preparation of the Bill of Quantities in particular).
Amendments to PWCs must be reflected in the design team’s scope of services. In light of this from 4 April 2016:
- If a contracting authority is commencing procurement under Service Stages (ii) to (v) of Schedule B to the Standard Conditions of Engagement (Technical) it must outline in its briefing documents the new, updated scope of services necessary to meet the amended PWC requirements.
- If a contracting authority has commenced procurement of its design team before 4 April 2016 with the specified date for receipt of tenders falling after that date, it should amend the scope of the services outlined in the brief. This must be accompanied by an extension to the tender timelines to allow interested service providers to update their applications.
Are there any exceptions?
Contracting authorities can avail of derogations after the 4 April 2016 implementation date if:
- The design team has been engaged before 4 April 2016;
- Contracting authorities can also avail of a limited derogation up to 8 January 2017 if the deadline for receipt of design team tenders under any or all Service Stages (ii) to (v) of Schedule B to the Standard Conditions of Engagement (Technical) is prior to 4 April 2016. However, the scope of the design team service required must not extend to the requirements of the amended conditions of the PWC; or
- The latest versions (with a cited v.1 revision reference) of the PWCs and their related Instructions to Tenderers and Forms of Tender and Schedule published under Pillar 1 of the CWMF can be used until 8 January 2017. These can be found under Pillar 1 of the CWMF on www.constructionprocurement.gov.ie. These versions of the PWCs may only be used in a tender process with a return date falling after 8 January 2017 if prior approval has been obtained from the GCCC.
The amended PWC forms and updated guidance notes are now available on www.constructionprocurement.ie.