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NEC3 ECC: Is the Employer entitled not to pay the Contractor amounts which is in excess of open market rates for amounts the Project Manager thinks was not competitively tendered?

+2 votes
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If the Contractor selects a bid which amount is higher than open market price and the Project Manager thinks that price of the bid was not competitively tendered because the selected bid was the highest, can the Project Manager source out prices from open market (acquire offer/quotation from open market) and compare it with the Contractor's selected bid. If the selected bid is of higher price than the price of the quotation the Project Manager have sourced from open market, can the Project Manager remove the difference in amount between the two offer from the Defined Cost?
asked May 6, 2016 in NEC3 Payment by Roger Blando (480 points)  
   

1 Answer

0 votes
I have seen this same question asked a few different ways recently and I will give it the same answer that has already been given. I am assuming this is an option C or D contract You can only not pay the Contractor for elements that fit a reason for them being a disallowed cost. You then need to go to this definition (which may be amended with your own Z clauses so read your definition for your actual contract) to see if it fits a reason for being disallowed.

The only reason I see it could fit is if they "did not comply with a constraint on how they were to provide the Works stated in the Works Information", and only then if you stated very clearly a process to follow that they did not follow.

At the end of the day you ave to ask what is in it for a Contractor to not try to do the efficently? If they procured a subcontractor for a higher cost than they needed to, they will pay out that money which will eat into their gainshare.

If this is for a compensation event then yes it should be assessed at open market rates but that then taken into account when you 2implement" the CE.
answered May 6, 2016 by Glenn Hide (27,780 points)