NEC3 PSC: To Terminate or Not to Terminate?

We have an NEC3 PSC Contract with a Client which currently runs to 31 March 2018. The Client has a new parent company who has decided to retender the services and use a new, non-NEC, form of Contract.

The Client has now indicated that he intends to award a Contract to a different, cheaper, supplier with immediate effect.

I believe the Client is entitled to terminate our current Contract under Clause 90.3 and transfer the provision of services to a new Provider.

My question is, should I expect the Client to terminate our PSC NEC3 Contract or is the Client entitled to transfer services to a new Provider but allow our Contract to end naturally in March 2018?

The reason for asking is that if our Scope/Services decline with time over the next six months, or I have a Contract with nothing to provide, it will be difficult to plan and resource whereas a fixed termination date will, at least, allow me to plan appropriately for the affected people both before and after that date.

In the unamended contract, they need to terminate your contract in order to award work covered by that scope to another party as you are the one with the contract to do it. Otherwise you can sue for breach ! It would be far cleaner for both Parties of this was not the case !

And if they are terminating, you might get something through the termination procedures.

John, assuming an un-amended NEC3 PSC April 2013 does 90.3 prevent the Employer awarding remaining services to another party i.e. as the services are still required?
If the Employer wants the right to contract remaining services to another party then the Employer would have to express this right in the contract in a Z clause I would have thought. Quite topical this kind of event at the moment, especially when the Employer is a Main Contractor and some clarity would be useful. I think FIDIC have tried to address this matter.

I may be missing something here, but here goes:

  • If the Employer has terminated your contract, they can award the work to another consultant;
  • of your contract has reached Completion, say because it was under option G, term contract, then they can now award work of the same ‘services’ (in italics) / similar scope (small ‘s’) to the new Consultant;
  • if neither of the above, then typically there would be something written as an option Z clause to allow them to give work of a similar nature/scope to another Consultant.

Devil is in the detail though.