NEC PSC: Does a change to staff rates arising from Option X1: Price adjustment for Inflation require an Early Warning?

NEC3 and NEC4 Contracts Secondary X, W and Y options
1

We have a Framework Contract with a Public Sector Client that is approaching its first anniversary and we are beginning the process of calculating new rates in accordance with Option X1.

We are unclear if the change in rate requires a “formal” early warning to be issued to the Employer in advance of the anniversary.

We are in two minds at the moment. We can see why the changes requires an Early Warning as it will “increase the total of the prices.” Equally, we can see why it would not since Option X1 is part of the Contract, the Index was set by the Employer at the outset and it will be a “risk” that is immediately realised.

Any guidance or suggestions would be appreciated.

2

I don’t think there is a contractual need to notify an early warning in this situation. It would not seem as though anything could be done about it anyway - which is the whole point of an early warning i.e. what can we do about it.

Whatever you call it though - it would do no harm to let the Employer know this increase is coming just so they can understand increased costs/manage expectations elsewhere - it just doesn’t need to be on a piece of paper called an “early warning”.