The Contractor has recently submitted for acceptance an element of Equipment for hire. However the actual Equipment has been on the Site and working for some time prior to the current acceptance request. In essence they’re seeking acceptance not having demonstrated up front that amongst other things that the Equipment has been acquired at open market rates. There is little point in the Equipment not being used on the project and to find a replacement would set the project back a significant period. Can the PM offer a qualified acceptance confirming that use of the Equipment is accepted, but that the commercial arrangements have not been undertaken in accordance with the procurement procedure, and that part of the hire cost could be considered as Disallowed Costs? Is the PM covered by Cl. 14.1 in this regard?
There is no express requirement to seek acceptance from the PM for equipment as such.
Assuming you are referring to “design of an item of equipment” under clause 23.1 the short answer is no. The PM needs to follow acceptance process in clause 23.1. It gives the PM three reasons for not accepting the design, otherwise it’s a CE. It’s worth noting the Contractor also doesn’t need to submit particulars of the equipment design unless requested to do so by the PM.
The contract under 52.1 also requires the Employer to pay the rates for equipment stated in the contract data to my mind as is (and even if they aren’t open market rates) and only other amounts at open market. This will have bearing if the equipment rate in question was already agreed in the contract data. There are reasons why you might not pay the equipment cost elsewhere in the contract but I cannot see anything from your question that suggests you shouldn’t pay these costs.
The acceptance and payment aren’t linked as such. Clause 14.1 means the contractor will still be responsible for his design and providing the works as per the contract regardless of the PM acceptance but the PM may still liable he he fails to manage the contract correctly.
Chris - thanks for the reply…the issue was less about the design of the equipment, rather it relates to the commercial consequences of its use. It’s an Option C contract which includes a Z clause introducing a procurement procedure requiring the Contractor to demonstrate value for money. They haven’t followed this and haven’t sought PM acceptance prior to bringing the equipment to site.
I’d say the answer to the first part of your question below is “no” you cannot give a qualified “acceptance”, unless there is an express provision to do this. Moreover whilst I don’t have a copy of the amendments you are referring to, the general principle with disallowed cost in relation to procurement procedure, is that you can disallowed additional and unnecessary costs that have been incurred e.g. not costs that would be need to incurred in providing the works. In an unamended version of the contract wastage and plant utilization rates are a grey area but i think you answer your own question stating that rejecting it now would set the project back.