Competitiveness of SOCC 1 people cost

NEC3 and NEC4 Contracts SOCC SSOCC
1

For a NEC4 Option C contract, for payment to agency staff, the wages are paid under SOCC14.

  1. What should the firm of providing the agency staff be categorized as? Should not be Subcontractor according to Clause 11.2(25). Should it be a supplier?
  2. Since all Defined Cost has to be at open market rates or competitively tendered prices. However, the tender procedure stipulated under Clause 25 is not applicable. Does it mean the Contractor has to present several quotations to justify the competitiveness upon payment stage of the secondment before getting its entitlement of SOCC14?
1 Like
2

I think you have an amended contract, so its going to be difficult to answer. In an unamneded the definition of Subcontractor is at 11.2(19), not (25). Subcontracting is at 26, not 25. But doing my best:

  1. This organisation does not meet the definition of a Subcontractor at 11.2(19); unless they are a designer. In fact, it seems like they are one of the ‘excepts’ in the final bullet. So not a Subcontractor. However, it looks like your clause may be amended.
  2. An unamended clause 26 does not require a tender. Moreover, in SoCC only certain Defined Cost has to be open market or competitively tendered, not all of it. SoCC 14 does not mention open market or competitively tendered. If yours does, it is amended.

I’m not sure anyone will be able to be more helpful than that.

I would also suggest that a process that forced a Contractor to employ individuals based on tendered price rather than competence and / or ability would be unlikely to produce optimum results.

3

AN and Andy, I would just add that the references to ‘open market rates’ or ‘competitively tendered prices’, do not mean the cheapest. Provided the Contractor can demonstrate that they have either obtained an ‘open market rate’, i.e. the going rate for that category of person, or have had some form of competition, the rate should be valid. The NEC does not prescribe the criteria for any tender competition, the criteria for choosing a subcontractor could be reliability, expertise, etc and not cost.
Also note that it is not open market rate and competitively tendered, it is ‘or’.
Happy to discuss.

1 Like