On an NEC3 Term Service Contract with X19 as an option, we have issued task orders at the contract tendered rates. The supplier is not happy with those rates because of inflation, so is refusing to confirm agreement to the contract rates and accept the task orders. There are other suppliers who can provide the services for the contracted rates. We have said that until there is an acceptance the task orders are suspended. As such, the supplier is raising an early warning 60.1(4) CE and x19.10(3). However, if the task order has not been agreed , is it right that there would be no contract via task order therefore no CE. What is the status of task orders issued but not accepted and how can this be resolved as we are not willing to move on agreed prices.
I’m not sure what you mean when you say that you suspended the Task Orders - did you instruct the Contractor to stop work? If anything, that would give rise to a CE under 60.1 (4) as already happened or is about to happen (I don’t believe that X19.10 (3) is suitable but this would turn on the facts).
The contract does not provide, I believe, for the Contractor to “accept” the Task Orders, albeit it states that the Service Manager consults with the Contractor about the contents; as regards the Prices, items in the Task price list which are not taken from the Price List, are assessed in the same way as CEs - in such a scenario the use of rates stated in the Price List would have to be agreed between the Service Manager and the Contractor (see clause 63.3).
Further, if X1 applies, the Contractor has also that route to recover inflation costs.
Therefore, agreement is only required for rates from the Price List that are used by the Service Manager for assessing Prices for items in the Task price list, as described above. The Contractor is obliged to carry out the Task, regardless of the Service Manager’s assessment, if applicable.
See below a very informative and detailed post from Jon Broome, in response to a similar query.
This is such a helpful and clearly set out response Peter and has greatly assisted me with the approach we should take going forward. Many thanks for your time, it is very much appreciated.