Withdrawal of a subcontractor and Clause 60.1(19)

NEC3 and NEC4 Contracts Compensation Events
1

A Contractor has undertaken a procurement process for a subcontract. They have followed all of the requirements for the procurement set out in Clause 26 and the Works Information which included a requirement for them to submit a subcontract tender report including their recommendation to the PM for acceptance.
The report was duly produced submitted and accepted by the Project Manager and then right at the last moment the subcontractor decided that they did not want to undertake the subcontract and withdrew…
The Contractor is claiming that neither they nor the Employer had any control over the subcontractors decision to withdraw right at the last minute and as such are claiming a compensation event for the lost time under clause 60.1(19).
To me this doesn’t seem to be the appropriate way to deal with this situation bearing in mind that the Contractor had control of the following items:

  • Who was on the tender list
  • The terms of the tender
  • The recommendation of who whom the tender report recommended to undertake the subcontract

Any experience or advice would be greatly appreciated bearing in mind that the PM has acknowledged the NCE as valid

2

Ken, in my view the starting point would be that the Contractor, if work is subcontracted, is responsible for Providing the Works as if they were not subcontracted (cl. 26.1).

As regards the use of cl. 60.1(19), it seems that this is an event which at least one Party (the Contractor) could prevent, therefore the criterion set out by the 3rd bullet point of the clause is not satisfied.

Finally, given that the PM has accepted this as a CE, I don’t see how the above will be of any benefit, although I hope it will.

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3

Peter,
thanks for this, and that accords with the advice we have given our client here but the reference to clause 26.1 is a useful addition to our thinking which had previously focussed on the fact that 60.1(19) wasn’t applicable due to the procurement process being completely under the control of the Contractor