COVID-19: Office of Government Procurement publishes ‘ex gratia payment’ supporting documents
03/03/2021
Insights Blog
The Office of Government Procurement has followed up on its recent note on managing COVID-19 under the Public Works Contracts (see our recent post) with supporting documents for use by parties wishing to agree to share some of the costs of delay caused by the pandemic. The position is summarised below:
| For ongoing contracts made before 14 April 2020 | For ongoing contracts made after 14 April 2020 |
| Parties should aim to use last Summer’s Co-operation Framework to determine and make ex gratia payments in respect of permissible costs (which will be subject to the ‘burden share’ approach in the Framework). The intention is that (subject to any contract provisions to the contrary) ex gratia payments will not commence for the period before 8 January 2021 and will not continue for the period after 5 March 2021. | For these contracts (again, subject to any contract provisions) ex gratia payments will not commence for the period before 31 January 2021 and will not continue after 5 March 2021. Closure periods for which the Contractor is not entitled to recover costs under the contract are excluded (presumably in recognition that contracts made after April 2020 will likely have taken the impact of COVID-19 into account in works requirements and/or pricing). |
| Supplementary Note: ‘permissible costs’ are elements of Contract Preliminary Costs which are unavoidably incurred, reasonable and vouched for the relevant closure period. They are described in the Note under the headings of Supervision; Plant; Scaffolding; Hire of site accommodation and storage; Insurance; Health and safety obligations; and Site security measures. They are to be shared, with the Employer bearing up to a maximum of 50% of the agreed permissible costs. | Supplementary Note: ‘permissible costs’ are elements of Contract Preliminary Costs which are unavoidably incurred, reasonable and vouched for the relevant closure period. A formula is provided to determine the ex gratia payment. (It comprises Contract Preliminary Costs less elements of Initial set-up costs, Consumables, and Supervision items.) They are to be shared, with the Employer bearing up to a maximum of 50% of the agreed permissible costs. |
| Site Closure Supplemental Agreement which captures the approach parties may take to agreeing ex gratia costs. | Site Closure Supplemental Agreement which captures the approach parties may take to agreeing ex gratia costs. |
| ‘Covid Closure Costs Notice’, issued by the Employer’s Representative pursuant to the Site Closure Supplemental Agreement. | ‘Covid Closure Costs Notice’, issued by the Employer’s Representative pursuant to the Site Closure Supplemental Agreement. |