New COVID-19 Note on Public Works Contracts
The Office of Government Procurement has published a new note on managing delay and cost under the Public Works Contracts in light of site closures arising from current COVID-19 restrictions (which apply until 5 March 2021). The note identifies the contract mechanisms relevant to notifying and managing COVID-19 related delay. The Public Works Contracts do not provide an entitlement to the Contractor to recover costs associated with a delay arising from COVID-19 related site closure, but “having regard to the exceptional circumstances currently facing Contractors on publicly funded projects, the OGP recommends that Contracting Authorities consider implementing the measures” outlined in the Note.
- For ongoing contracts made before 14 April 2020: Parties should aim to use last Summer’s Co-operation Framework to determine and make ex gratia payments in respect of permissible costs (which will be subject to the ‘burden share’ approach in the Framework). The intention is that (subject to any contract provisions to the contrary) ex gratia payments will not commence for the period before 8 January 2021 and will not continue for the period after 4 March 2021. Supplementary guidance on ‘permissible costs’ is anticipated.
- For ongoing contracts made after 14 April 2020: For these contracts (and, again, subject to any contract provisions to the contrary) ex gratia payments will not commence for the period before 31 January 2021 and will not continue after 4 March 2021. Closure periods for which the Contractor is not entitled to recover costs under the contract are excluded (presumably in recognition that contracts made after April 2020 will likely have taken the impact of COVID-19 into account in works requirements and/or pricing).
What’s next? In light of the enduring nature of the pandemic, the Office of Government Procurement intends to prepare an amendment to the Public Works Contracts whereby, in the event of a site closure for public health grounds, certain costs will be shared between the Employer and the Contractor. This is expected in Q2 of 2021 and will be seen as a welcome development for contractors required to cease work to comply with public health measures.