The Office of Government Procurement (OGP) has today published Circular 05/2022: Construction Procurement Reform – Revised Guidelines for Professional Indemnity Insurance Levels in Public Works Projects and amendments to the Capital Works Management Framework (CWMF) to address risks caused to the procurement and delivery of capital works projects by on-going capacity constraints in the professional insurance indemnity (PII) market. This first tranche of amendments relates primarily to the procurement of Consultants.
The amendments, summarised below, also incorporate substantial changes to the suitability assessment questionnaires for consultants (QC1 & QC2) and a range of associated documents. These changes are aimed at reducing the extent of documentation to be provided by applicants in a procurement process, to better facilitate digital submission and to clarify the process for applicants who are reliant on the capacity of others to meet pre-qualification criteria.
Revised PII Requirements
– In Pillar 4 (Guidance Notes), a new Guidance Note GN 1.1.2 has been published that summarises the challenges presented by the current constraints in the PII market. It addresses the impact that the manner in which consultants and contractors are engaged can have on liability, summarises the options available to a contracting authority with respect to insuring design risk and provides guidance on the measures that can be taken where PII can no longer be obtained to meet contractual requirements. Revised guidelines for contracting authorities to select the appropriate levels of PII to apply in competitions for consultants and contractors are also provided.
– In Pillar 2 (Conditions of Engagement), the requirements for the provision of PII on an “each and every claim” only basis for Consultants have been amended. If, because of the current market conditions, applicants in a competition are unable to provide PII on an “each and every claim” basis, cover on an “annual aggregate” basis will now be acceptable. This is on condition that the applicant undertakes a review of the availability of PII on an “each and every” basis with the Client upon the annual renewal of its policy. Where such a review concludes that PII is available on an “each and every” basis within the terms set out in the Form of Tender, the Consultant will be required to provide the PII on an “each and every” basis.
Amendments have been made to the forms of Tender and Schedule (FTS-9 and FTS-10), Model Forms 2.1 (PII Certificate) and 2.3 (Collateral Warranty) to implement this provision.
– In Pillar 3, the minimum standards for the PII criterion in the Suitability Assessment Questionnaires for Service Providers (i.e. QC1 & QC2) relating to the terms, including the level of excess of the required insurance policy have been amended. New requirements are introduced in relation to the entity providing insurances and the form of evidence required to demonstrate an Applicant either does or can meet the requirements for PII, Public Indemnity and Employers Liability Insurances.
– In addition, where, as a result of the current insurance market conditions, during the term of a contract or a collateral warranty, a Consultant cannot provide professional indemnity insurance on an each and every claim basis at the level stated in the contract/collateral warranty, a new model form letter has been introduced. The letter sets out the conditions that the Consultant must meet that will permit the Client to accept temporary alternative insurance arrangements, which are subject to review on an annual basis. MF 2.11 Letter re Temporary PII Arrangements (in Pillar 2, Conditions of Engagement) is provided for Consultants.
In Pillar 2, (Conditions of Engagement) and Pillar 3 (Suitability Assessment), general updating of the Instructions to Tenderer (“ITT”) documents, Model Forms and SAQ documents for Consultants including but limited to:
– In order to reduce the extent of documents that make up the pre-qualification submissions under both an open or restricted procedure the layout of QC1 and QC2 has been re-configured such that they now comprises two parts, which are now to be completed separately by the Contracting Authority and Applicants. Part 2, which forms the basis of an applicant’s response has been standardised to respond to either QC1 or QC2. Evidence, if required to be submitted by the Contracting Authority, must still accompany Part 2 if the submission is to be valid.
– The introduction, in Pillar 2, of new model forms of contractual commitments for entities relied upon for the purpose of pre-qualification. Where, in order to meet the requirements of a qualification criterion in the SAQ, a successful Tenderer relies upon the resources of another entity (including the provider of a specialist skill who is not the Tenderer itself), the entity relied upon is required to enter into a contractual commitment to make the resources available.
Where an entity has been relied upon for financial and economic criteria, the entity is required to provide a guarantee in the form of MF 2.9 Reliance Guarantee, and where an entity has been relied upon for any of the technical competency criteria, the entity will be required to provide a warranty in the form of either MF 2.10 Reliance Warranty or a Collateral Warranty in the form of MF 2.3 (having regard to the resources relied upon) for the benefit of the Client. (Specialist Skill Providers are still required to provide a Collateral Warranty, where it is required in the Particulars.)
At SAQ stage, entities relied upon by an Applicant, are required to provide confirmation that they will provide the appropriate contractual commitment either by completing an eESPD (where an eEPSD is required in the competition); or providing an undertaking in the form of a new letter provided as Appendix D in Pillar 3.
– General updating of the documents where appropriate including strengthening of the provisions in the documents, including electronic submission and use of an eESPD to provide a self-declaration in relation to Regulation 57 Exclusion Grounds of SI 284/2016 for above-threshold competitions. Where a competition is sub-threshold, and a Contracting Authority elects to apply the requirements of Regulation 57 (Exclusion Grounds), they may either specify that Applicants must complete a new Appendix A (Applicant’s Self-Declaration in relation to Article 57), or an eESPD, to provide a self-declaration. Contracting Authorities are encouraged to use electronic submission (and an eESPD, where appropriate) for sub-threshold competitions.
– In Pillar 3, former Appendices A (Declaration Under Oath re Article 57) and A1 (Confirmation that the Oath is still valid) are updated for the requirements of Regulation 57 of SI 284/2016 and are now contained in Pillar 2 as Model Forms MF 2.7 and MF 2.8 respectively.
– The ITT’s no longer require that the Tender must be executed in the same way as the contract.