Call off contract from an existing framework has “The percentage for people overheads is” line missing in Contract Data Part 2.
No query was raised during the tender process and the Contractor is proposing to use “The direct fee percentage is” in its place.
In the absence of “The percentage for people overheads is” are they entitled, assuming yes is using the % for “The direct fee percentage is” reasonable?
They cover different things - see clause 41 of the Shorter Schedule of Cost Components for what the percentage for People O/Hs is. While it can vary hugely, it is “typically” in the low teens.
Whereas direct fee percentage is more typically in the high noughts e.g. 5.5% to 12%'is range, so you would probably get a good deal by accepting it.
However, I would ask whether the Contractor actually understands what this percentage covers and then work through it with them to get a figure which works for both Parties. Signing up to a contract where the commercials are not understood usually leads to problems down the line.
Hi Jon, I agree that it is reasonable but is there are argument that as it wasn’t included in the tender the % shouldn’t apply?
If it’s off a framework, I would have thought the percentages would have been fixed at framework procurement stage. If they aren’t, then as both the Contractor and Employer have contributed to the error, a negotiated figure would seem to be the best way forward. A framework is supposed to be a long-term relationship.
In response to BPMC : No, I believe this is not the case legally. The Parties can agree a figure or if not, it would be what is reasonable which is just a little subjective.
I echo Dave Meller’s comments