NEC ECC: Subcontract Start Date Earlier than Submission Date

NEC3 and NEC4 Contracts General
1

The Contractor has entered into a Subcontract prior to submitting it to the Project Manager for acceptance. Can the Project Manager decide to not accept the Subcontract due to the dates pre-dating the submission for acceptance and if so, which reason should the Project Manager provide?

1 Like
2

Clauses 26.2 and 26.3 prohibit the Contractor from appointing a proposed Subcontractor (on the proposed subcontract conditions) so this is where the breach of contract occurs. The only remedy in the contract for this is found in the termination provisions at clause 91.2 R13 but this is only available if the Subcontractor was appointed for “substantial work” before the PM accepted them.

Technically the PM could still not accept the appointed Subcontractor however I’m not sure where this would get you. If the Contractor insisted in using that Subcontractor and continued to do so you’d have to issue an instruction to stop or not to start the subcontract work, instruct removal of an employee (the Subcontractors workforce), or instruct a change the Works Information (do not use Subcontractor X).

I’d urge caution in doing any of this for what is a fairly minor, technical breach of contract as the PM could end up delaying the project unnecessarily. If you used instructions to resolve things the Contractor would most likely not be entitled to a compensation event as the PM could argue that it was the Contractor’s fault (clause 61.4). This said if I was the Employer I wouldn’t be happy with my PM for doing this if the result was still a delayed project (regardless as to fault).

For me the question is, ignoring the Contractor’s breach, would the PM have most likely accepted the Subcontractor or not? If so then make the response to the breach proportional to the breach. Explain to the Contractor where they went wrong and what options the PM could have used to resolve it which should be enough to make sure it doesn’t happen again. If not, then I 'd suggest using the early warning / risk reduction process in the first instance to discuss the PMs concerns and try to find a solution.