According to SOCC, the cost of people who are directly employed by the Contractor can be classified as the Defined Cost. This is indisputable.
However, the Contractor is formed by “an Unincorporated (Contractual) Joint Venture” and the question is: can the staff who are seconded from the JV Parties also be fallen into the category of “Directly Employed by the Contractor”?
If the answer is “No”, what is the possible alternative solution that can resolve this issue.
Each company that comprises the Joint Venture will have presumably been named as the party and required to execute the contract. Consequently each company is effectively a party to the contract and you could sensibly argue that their employees can be treated as ‘directly employed’ under the Schedule of Cost Components.
If there are any ‘legal technicalities’ with this approach then you could always revert to s14 and treat each person as ‘not directly employed’ but then you have less control over the cost, as certain cost components could be included in the rate which would not be ‘allowable’ under s12 and s13.
To my mind more important issues are; liability of the JV members, insolvency of a JV member, insurance requirements, serving of notices and what happens if the JV is terminated, etc.
Hi Andrew,
Refer to 2nd para of your reply, it means that s12 & s13 are not reimbursable if we treat the people under s14?
If you calculate a People rate under s12 and 13 you need to use the stated categories of cost as those which are included. Under s14 you take the invoice cost of People, which would be a daily rate with no particular reference as to how it was calculated.