Effects on fuel prices due to the USA/Iran War

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1

We are operating a NEC 4 Term Service contract for roads maintenance.

The Contractor has submitted an early warning regarding the exceptional increases in fuel prices due to the UAS/Iran war. We sympathetic to the Contractor’s position, however we cannot see that there is a compensation event that would be applicable.
Is there any contractual mechanism whereby we can compensate the Contractor?

We operate a 6 monthly CPF clause to adjust the Price List which is implemented on 01 April and 01 October of each contract year. Unfortunately for the Contractor the latest adjustment that has been implemented does not take account of the current increases. The Contractor has suggested that the CPF clause should be changed to monthly adjustments rather than bi-annual to take account of the volatility of fuel prices, which is a sensible proposal, but again we cannot see the contractual mechanism to enable this.

Are you aware if National Highways has a position on this problem.

I would be grateful for your comments

Thank you.

2

As for the impacts of this, I understand the Contractor’s logic, but isn’t it the case that your CPF clause will pick this up when the time comes? A 6-month cycle was agreed. I wonder if trying to bring it forwards might cause problems as well as solve them.

In ‘clean’ NEC there is no mechanism to change the contract other than mutual agreement, which you can do using Cl. 12.3.