31 March 2023
Further to the announcement on 21 March 2023 of the introduction of liability caps for those engaged in public works contracts by the Minister for Public Expenditure, NDP Delivery and Reform, the Office of Government Procurement (OGP) has today issued amendments to Pillar 2 (Conditions of Engagement) of the Capital Works Management Framework (CWMF). The amendments incorporate Liability Caps into the Standard Conditions of Engagement, Consultancy for technical and archaeology services. The introduction of Liability Caps follows commitments made in Circular 05/2022: Construction Procurement Reform- Revised Guidelines for Professional Indemnity Insurance Levels in Public Works Projects published on 9 February 2022.
The amendments are summarised below.
Details of Amendments
- Introduction of Liability Caps
In Pillar 2 (Conditions of Engagement), the Standard Conditions of Engagement for technical consultancy services (COE1) and archaeological services (COE2) have been amended by the incorporation of new sub-clauses (called Limit of Liability) that provide that the Consultant’s liability to the Client arising out of or under the contract is limited, to a monetary amount ascertained in a calendar year (“the Liability Cap”). Amendments have been also been made to the Forms of Tender and Schedule (FTS-9 and FTS-10), to facilitate the introduction of the new sub-clauses in COE1 and COE2. In the Schedule, Part A, the Client must state the monetary amount of the Liability Cap. The Liability Cap does not apply in all circumstances and is subject to exclusions (such as death, personal injury or illness, wilful default or gross negligence), also stated in the Schedule, Part A.
In Pillar 4 (Guidance Notes), a new Guidance Note GN 1.6.4 Liability Caps: Application in the Standard Conditions of Engagement COE1 and COE2 is provided. The note describes the operation of the Liability Cap and outlines a recommended framework (based on an assessment of risk of loss/damages to the Client and considering relevant value for money considerations) to arrive at an appropriate monetary amount to apply to the Liability Cap for the contract concerned. When setting the amount of the Liability Cap, a Client should conduct a considered assessment of the potential risks associated with the contract, combined with consideration of factors that may influence value for money in the tender process.
The guidance will be kept under review and may be amended or supplemented as necessary.
- Additional provisions relation to insurance requirements
Additional provisions regarding insurances have been incorporated into both forms of the Standard Conditions of Engagement in order to provide the Client with an enhanced level of oversight in relation to the insurances required under the contract.
Other
An additional provision that requires the Consultant to procure that the Collateral Warranties from sub-consultants in a form approved by the Client has been incorporated into the Standard Conditions of Engagement.
Minor clarifications and minor formatting changes have been made to the Forms of Tender and Schedule FTS9 and FTS10.
The new provisions will apply to those tenders received from 10 April 2023 onwards (10 April being the date 10 days after the date of publication of the amendments, disregarding the day of publication). For those tenders, Clients should arrange to issue tenderers with the amended form of the Tender and Schedule, and may consider extending their tender deadline(s) to accommodate the implementation of the amendments.
Subsequent Phases
Liability Caps will also be introduced into Pillar 1 (Public Works Contracts) early in the second quarter of 2023.
The introduction of Liability Caps into the CWMF is an output from the ongoing CWMF Review and is intended to improve the overall risk/reward balance, and to provide greater certainty for parties engaged under the CWMF contracts. It is envisaged that the introduction of Liability Caps will also encourage both competition and participation in the tendering process for public works projects, and lead to improved results for clients, contractors and service providers.