NEC3 Option C disallowed Subcontractor costs

We are the main Contractor on an NEC3 option C contract. We have multiple option A contracts with suppliers who are manufacturing mechanical components for us. There has been issues with design that have caused significant delay to the project. The Project Manager has not issued a Compensation Event for these delays but we have issued multiple Comp events to the supply chain who have lost revenue due to men and machines standing idle as we try to sort the design issues out.
If the Project Manager doesn’t agree the design issues and subsequent delay costs incurred are a CE, can he disallow the costs we have paid the supply chain for their down time? I believe what we have paid the suppliers is defined cost but now I am not so sure.

The only disallowed cost that the Project Manager could apply would be if it was a Defined Cost paid to a Subcontractor which should not have been paid. So as long as it can be demonstrated that each compensation event was a valid one under their contract with you then there should be nothing to disallow. There should be no incentive for a Contractor to pay more to a Subcontractor than they have to, as under option C that would eat into any Contractor gainshare that they would otherwise be entitled to.

What you should do/should have done is spend more time making sure you notify what you believe is a compensation event to the Project Manager, and getting a response within one week if they agree or not. If they don’t agree - at that point you should spend more time giving additional evidence why it definitely is one to see if you can get them to agree, or if not think about whether this is something you are adamant about and wish to look at a dispute process i.e. senior representatives or adjudication. It is in both Parties interest to get through the CE process as quick as possible so you both know where you stand i.e. get agreement that you both agree it is a compensation event and then after that you need to agree the impact in cost/time that it has had.