NEC ECC: Failure to reply within the Period for Reply by a Contractor

It is interesting to note that under clause 13.3 the obligation to reply within a set period is given for all Parties however under clause 60.1 the only place where a consequence of not replying is (6) and that is only a CE if it is the PM or supervisor who doesn’t reply. There seems to be no recourse for the Employer should the Contractor not reply. I am aware that the PM can make his own assessment of a CE should the Contractor fail in his obligations, for example under clause 64, however what about an instance whereby a Contractor has been requested to respond to an issue over a possible dispute? Example as follows:

The Contractor has issued a CE which the Employer has time barred. A meeting of the Senior Representatives has been convened (Z clauses amend the standard NEC 3 options on disputes) and the next step is for either Party to raise this as a dispute. The Employer would not raise this as he does not believe there is a relevant CE nor does he believe he has incorrectly time barred the submission. Therefore it falls to the Contractor to put this into dispute. The Employer has stated that it is not the CE issue that is in dispute, it is the time barring of it. The Contractor has been requested to advise if he wishes to pursue this or not and has been requested to do this within the Period for Reply as a general communication under the CEMAR management package being used. The reality of this is that it is in his interest not to formalise this because he believes he may be able to negotiate even though there is no clause for that - it has happened before on other contracts with this Employer.

Therefore what recourse do we have to ensure a reply is provided and if one isn’t forthcoming?

Hopefully the CE was ‘notified’ by the Contractor and the matter ‘time barred’ by the Project Manager (not the Employer). Consequently, the matter has been formally closed under the CE procedure .

The next step is either for the Contractor to accept that decision or to exercise the right to refer the matter to dispute resolution in accordance with the provisions under Option W2.

The general communication requesting a response on the matter does not align with any particular, relevant procedure under the contract. The Contractor could also just respond by saying something like ‘content noted’.

It looks like the Employer is keen to protect their commercial interests, although as part of the PM’s response to the CE appropriate documentary records to evidence that the 'matter was ‘time barred’ should have been included. As the contract is being administered through CEMAR then such records will be retained for any possible future reference.

Often discussions between the Employer and Contractor ‘off the record’ lead to some form of ‘commercial agreement’ to ‘wrap up historic issues’, although that is a decision for the Employer to make, possibly for the ‘wider business interests’, and implemented accordingly (possible Supplemental Agreement).

The PM, however, should continue to administer the contract as stated, regardless of any such discussions.

The CE was rejected by the PM; sorry I used the wrong terminology. Further I would attach the communication to clause 13 of the NEC, in particular to clause 13.3. Nowhere does it state the remedy or consequence should the Contractor not reply and that was my question. Our Z clauses replace the standard W1/W2 clauses and these are very specific however the immediate issue is trying to get the Contractor to advise whether he wishes to place this issue in dispute or not. You are quite correct in your penultimate paragraph by the way, which is why we need to get the Contractor to decide. But what if he doesn’t?

From what you have said it doesn’t look like you can ‘force’ the Contractor to directly respond to the matter. What you can do, however, is to get the matter independently reviewed, possibly by somebody within the same organisation but not directly involved in the project, to provide a degree of certainty to the outcome.

Focus on all possibilities relating to the ‘time bar’ issue, which seems to be the key here, that is when the Contractor would have become aware of the event, which means awareness of the event itself occurring not awareness that the event is a compensation event. Draw up a timeline and identify who in the Contractor’s organisation would have been aware and when this information was communicated etc.