Under an NEC3 ECC contract does a contractor need the Employers / Project Managers consent to change subcontract terms?

NEC3 and NEC4 Contracts General
2

Interesting question if not hopefully a rare occurrence. Not sure if you mean:

  1. Contractor has an ECC contract with the Employer and they are proposing to use a non-NEC contract with their Contractor that they have not yet had accepted, or:
  2. They have had a Subcontractor accepted and were/are using an NEC contract and now they are proposing to change to a different form of contract

If it is 1) then the Contractor is obliged to submit the terms that they are planning to engage their Contractor under, if it is not an NEC form of contract (26.3) unless the Project Manager agrees such a submission is not required. This is over and above the obligation in any case to get the proposed Subcontractor “accepted” before the Contractor should appoint them. The only reason the Project Manager would have for not accepting a Subcontractor is that they would not allow the Contractor to Provide the Works. Do they have to use an NEC form of contract with their Subcontractor – no. However, it is strongly encouraged as otherwise you will not be “back to back” in terms of early warnings, programme and compensation event requirements (and don’t forget Z clause amendments).

If it was option 2 (which I suspect not as you would have to renegotiate by agreement a whole new contract) then probably contractually slightly tricky. The practical answer would be that yes the PM would want to know about that and have the opportunity to accept or not accept, but arguably not a contractual requirement under options A/B as you HAD satisfied clause 26 initially (contract probably assumes that such a change would never/hardly ever happen – and I for one have never seen it). Potentially more control under options C-F where clause 26.4 obligates the Contractor to submit proposed contract data for each Subcontractor, and if you were changing contracts you would have to re-submit such details for acceptance.

3

Unfortunately I have seen such a situation arise as outlined in 2 above by Glenn. On option C and raises the isue of whether under clause 11.2(25) whether the change would be a disallowed cost because the PM decides that the cost incurred on the Subcontract " should not have been paid to a Subcontractor or supplier in accordance with his contract"?