30 September 2024
Following the announcement from the Minister for Public Expenditure, NDP Delivery and Reform on 12-09-2024, the OGP has today published amended forms of the Standard Conditions of Engagement for Technical Services and Archaeological Consultancy Services (COE1 & COE2 respectively).
The amendments include:
- Amendments to the Payment clause to introduce a new fee adjustment mechanism for inflation that replaces the previous prolongation mechanism in the Prolongation clause;
- Amendments to the Intellectual Property Rights clause;
- Additions of new sub-clauses for Corrupt Gifts, Key Team Members and Conflict of Interest to the Performance clause;
- Additions to the Termination clause of new termination grounds for those contracts subject to EU procurement regulations.
The Amendments are described in more detail here.
Introduction of a new Fee Adjustment Mechanism for Inflation
The mechanism for adjusting fees for inflation in the Prolongation clause is removed and replaced by a new fee adjustment mechanism in the Payment clause.
The new fee adjustment mechanism provides that tendered lump sum fees and tendered hourly rates are fixed for an initial duration of 2 years (from the date of the tender) and thereafter are subject to adjustment for inflation. The adjustment is carried out by applying the COE Fee Adjustment Factor (‘the COE-FAF’) to the amount of the element of the Fee for services performed during a particular indexation year.
The COE-FAF is a composite factor that has been developed for use with the COE. The factor uses movements in economy-wide wages and prices that are compiled by the Central Statistics Office. Seventy per cent (70%) of the fee will be adjusted for increases in average hourly wages figures, and twenty per cent (20%) of the fee will be adjusted for movements in the Consumer Price Index (CPI). Ten per cent (10%) of the fee is not subject to adjustment. The COE-FAF operates on a risk-sharing basis, whereby the Client bears the first 2% increase in the average hourly wage figure and the CPI, and thereafter will bear 70% of any increase in excess of 2%. The COE-FAF is described further in the COE Fee Adjustment Factor Methodology.
To minimise the administrative burden for Clients and Consultants, the OGP will calculate the value of the COE-FAF on a regular basis and publish it on the CWMF website. The first COE-FAF will be published in [Q4 of 2026], which is the earliest date that the new mechanism will be become operational for contracts tendered from [Q4 of 2024] onwards.
As a result of the replacement of the fee adjustment mechanism in the Prolongation clause, changes have been also been made to the Form of Tender and Schedule (FTS-9 & FTS-10). Contracting Authorities are no longer required to enter a Total Performance Period in Schedule B. Read further information on the changes to the Form of Tender and Schedule here. [Contracting Authorities are, however, still required to provide durations for Stage Performance Periods in Schedule B. It is recommended that Contracting Authorities give careful consideration to arriving at appropriate durations for the Stage Performance Periods to perform the Services. Further, Contracting Authorities should include in the Service Requirements, estimates of durations required between Stage Performance Periods for approvals (such as statutory approvals, funding approvals, business case approvals) (“inter-Stage periods”). The total of the Stage Performance Periods and inter-Stage periods provide Tenderers with an estimate of the total duration during which the Services will be required to be performed.]
The OGP will publish updated Guidance Notes in due course to support the implementation of the new mechanism.
The development and introduction of the COE-FAF is one element of the ongoing review of risk allocation in the Capital Works Management Framework and follows changes for Professional Indemnity Insurance in 2022 and the introduction of Limitation of Liability in to the Conditions of Engagement 2023. This transparent approach to addressing inflation is intended to maintain high service quality on public projects which are of longer duration.
A schedule of amendments made can be found here.
What Contracting Authorities need to do now
Contracting Authorities are reminded to always use the most recently published version of documents when conducting tenders. In particular, the Instructions to Tenders provides that it is that version of the relevant contract published ten days before the tenders are due that applies to the tender procedure. Consequently, the amended Conditions of Engagement will apply to those tenders received on or after 10 October 2024 (10 October being the date 10 working days after the date of publication of the amendments, disregarding the day of publication).
Tenders due prior to 10 October 2024
For tenders due to be received prior to 10 October 2024, no change is necessary. However, Contracting Authorities who wish to avail of the amended version of the COE, and who are in a position to do so, could extend their tender deadlines, in which case the steps below for Tenderers due after 10 October are to be followed.
Where the tender submission dates fall on or after 10 October 2024, the Conditions of Engagement published on 30-09-2024 will apply. In order to give full effect to the amendments it is important that Contracting Authorities complete and issue the corresponding Form of Tender and Schedule published on 16-09-2024 (i.e. FTS-9 or FTS-10).
Actions Required
- Notify Tenderers that a revised form of the Conditions of Engagement has been published on the Capital Works Management Framework website, together with an Information Note describing the changes.
- Complete and issue to Tenderers the appropriate Form of Tender with a publication date of 16-09-2024.
- Clarify that in Section 4.1 of the ITT, that the second sentence is amended by the deletion of “The total performance period for the performance of the Services, together with” is deleted. The sentence is to read “The Performance Periods for performance of each stage of the Service, are set out in Schedule B to the Conditions of the Engagement”.
- Inform Tenderers [by way of Supplemental Information] of the total duration over which the Services are to be performed, including any inter-Stage periods.
What Tenderers need to do now
Consultants tendering for public projects should ensure that they are completing the most up to date versions of all CWMF documents. Should documents issued in Competitions not be those currently published on this website, Tenderers should bring this to the attention of the Contracting Authority running the Competition.
When considering their tendered Fee, Consultants should take into account that their Fee will now be subject to Indexation in 2 years time, if this is relevant to the project duration, and tender accordingly.
[ENDS]