Under the X2 clause we notified (CEN) the PM of a ‘change in law’ which causes an increase to the contract costs.
The changes in the law came into effect in October 2019. The Contractor was notified of this change on May 2019 by governing body. The contractor did not notified the PM of this compensation event until in December 2019 after the event came into effect. This was not a tactic by the contractor to submit claims towards the end of the project as the project was still 1 year away from completion when the notification was officiated.
Following the Compensation Event procedure under the Contract, the contractor notified the PM that he failed to respond to the notification.
The Contractor eventually received the PM’s response to the notification after the allowable ‘period for reply’ stated in cl 61.4. The PM responses to the contractors notification ‘time bars’ the contractor - stating the contractor was made aware in March 2019 and notification was not issued until December 2019.
Can the PM apply the ‘time bar’ to the CEN- when in fact the PM is time barred cause he has failed to respond to the notification after the reminder was issued per clause 61.4? Is this not treated as accepted by the PM due to his failure to respond?
Rob Horne has previously answered a similar question at the following link;
Essentially the suggestion is that the ‘time bar’ period commences when the applicable legislation comes into force (as stated on the legislation). Prior to this date the ‘proposal’ may be subject to consultation or debate, whereby the content could be subject to change prior to becoming legislation.
With regard to the PM’s failure to respond to the notification, the further notification means that the matter is treated as though it were accepted by the PM, provided the ‘further period of time’ passes without a response (clause 61.4), so the notified matter would be a CE. The PM could notify a CE under 60.1 (8) as a ‘changed decision’ although I’m not sure if this could apply, as the previous ‘decision’ was not to respond to your notification, which may not be considered as a ‘decisive action’ under the contract.
Remember that if you have main option C, D or E, the Disallowed Cost provisions refer to cost incurred only because an early warning was not given, so be aware of this if different measures could have been taken to address the new legislation and an early warning was not given.