Framework agreements are meant to ensure regular workflow and collaboration – but crucial omissions in the new NEC and JCT forms make this hard to achieve
Published framework agreements are like buses – you wait ages for one and then two come along at once. Both the NEC 3rd Edition and the JCT 2005 suites of contracts include standard form framework agreements for the first time.
On the face of it, the timing should be just right. Public sector clients see the EU Consolidated Directive coming into force in early 2006, recognising four-year framework agreements for works and services and regulating their structure. Meanwhile, contractors and consultants in any sector need a stable workflow if they are to invest properly in their businesses, and framework agreements should deliver the long-term commitment they seek.
To achieve these objectives, a framework agreement needs to identify a programme of work and the team’s prospective share of that work. It also needs to set out the model documents and preparatory procedures governing the award of project contracts, plus any other hoops that team members need to jump through to keep the work flowing – such as mini-competitions and performance targets.
So do the NEC and JCT documents cover all of these issues? The NEC framework contract (admirably brief at four pages) states that an employer will invite tenders over a set term according to a selection procedure and a quotation procedure, but then provides no details or guidance for either of these key contract provisions. Contractors and consultants looking for an agreement that establishes a secure workflow will be disappointed in the NEC form unless it is expanded to describe exactly what work is on offer and how it will be awarded.
Also omitted are any provisions describing how the employer will obtain the benefits that would motivate it to create a framework in the first place – for example, the integration of different suppliers to achieve improved efficiencies or a system of measured performance incentivised by the award of further work.
Thus, the NEC framework contract points us in the right direction, but with customary NEC minimalism leaves out the detailed provisions. In this case the details are fundamental to achieving the desired commercial benefits.
Turning to the JCT framework agreement (or to use its acronym the JCT suite FA), this does not appear to function as a framework at all. Instead it is evidence of the JCT dipping its toe in the waters of collaborative working. It comes in “binding” and “non-binding” options but both are stated to be subsidiary to the underlying building contracts.
The JCT framework agreement (or to use its acronym the JCT suite FA), does not appear to function as a framework at all
The JCT framework agreement contains no reference at all to the award of a regular flow of work or to the processes by which successive building contracts or professional appointments will be entered into. Hence, it is not a document that can satisfy the requirements of the EU Consolidated Directive or can secure a stable workflow for contractors or consultants.
What it does offer is a series of provisions encouraging collaborative working by such means as shared information, risk management, value engineering and early warning. These are sound processes reflecting current good practice, but the JCT FA does not integrate them with any of the corresponding JCT building contract provisions, with which many are in potential conflict.
For example, what main contractor or subcontractor will warn the employer of delay or disruption (as required by the JCT FA) if this is simply used as evidence to trigger deduction of liquidated damages under its JCT building contract?
Additionally, why would the parties agree a communications protocol (as required by the JCT FA) if this has no effect on notices or communications under the JCT building contracts?
Partnering and collaborative working have long since moved on from the “twin-track” approach encouraged by the JCT framework agreement. Either collaborative working provisions are appropriate for a particular team or they are not – and if they are, then they belong not only in a framework agreement but also in all related building contracts, subcontracts and professional appointments.
Framework agreements, motivating improved performance through the award of a series of projects, are central to successful public procurement and the needs of the construction industry. To do their job they need to be clear, “bankable” documents. The first attempts by NEC and JCT do not cover the new EU regulatory requirements or contain the basic contractual provisions necessary to create long-term commercial relationships.
David Mosey is a partner in Trowers & Hamlins and head of projects and construction