| Date | 27 February 2008 |
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| Judgment | The JCT Framework Agreement 2007 |
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| The Issue | What’s new in the 2007 form of this contract? |
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| Implication |
The JCT Framework Agreement 2007 is a recent update to the form of contract that appeared for the first time in the JCT suite in 2005. The purpose of the form is to provide an overriding framework of complimentary provisions directed at encouraging best practice and under which work can be called off and procured in accordance with the terms of one or more underlying contracts. The form is intended for use by private and public clients and the JCT has updated the 2007 form to accord with the requirements of The Public Contracts Regulations 2006. |
printThe recently published JCT Framework Agreement 2007 (FA 07) replaces the versions of the form that appeared in the JCT suite of contracts for the first time in 2005. It is intended for use by private and public clients, and has been updated primarily in response to the requirements of The Public Contracts Regulations (SI 2006/05) which implemented the EC Consolidated Directive (2004/18/EC). The parties to FA 07 are termed the employer and the service provider. The form has been designed for use by an employer who anticipates procuring a significant volume of construction / engineering work and/or services over a period of time, and who wants to have an overriding set of provisions that encourage best practice procedures that are not provided for in the other commonly used standard JCT forms of contract. It is also intended to encourage the achievement of progressive improvements over time. Whilst the guidance note refers to the procurement of services, the form itself states that it is appropriate for use by employers with contractors and / or suppliers; or contractors with sub-contractors and / or suppliers, The stated purpose of FA 07 is given at clause 3.1 as follows: “The main aim of this Framework Agreement is to provide a mechanism for the Tasks to be called off and carried out and also to provide a supplemental and complementary framework of provisions designed to encourage the Parties to work with each other and with all other Project Participants in an open, co-operative and collaborative manner and in a spirit of mutual trust and respect with a view to achieving the Framework Objectives.” The agreement provides a framework under which individual tasks are called off. The tasks have to be described in the framework particulars and are procured using “underlying contracts”, the provisions of which are supplemented by the framework agreement. Where there is conflict between the requirements of the underlying contracts and the framework agreement, the underlying contract will prevail. One of the criticisms of the 2005 form was that it left open the potential for providers to make lost opportunity claims. Clause 4.1 of the 2007 form now makes it clear that the employer makes no representation or guarantee that it will actually call off any task to be carried out by the provider and the employer retains the right to award call-offs to other providers. This is all very well from the employer’s perspective, but from the contractor’s perspective the often considerable effort and cost of securing the position of provider under such framework arrangements is only justified if the expected work is subsequently called off. This has been a major issue for contractors under certain framework arrangements in recent years. Thus if an employer wants the potential benefits of such arrangements, it must be realistic and honest with providers about the likely programme of work that is expected to be required. The framework agreement sets out at clause 5.1 the following objectives:
There have been various changes made to the form to ensure compliance with The Public Contracts Regulations (SI 2006/05) to enable the form to be used by public employers. The Regulations specifically envisage the use of framework agreements for the procurement of public contracts that fall within the scope of the Regulations (typically those that have a value above specified thresholds). The advantage of a framework agreement is that only the framework itself needs to be the subject of advertisement in the OJEU and the subsequent EC procurement procedures applicable to tendering those works. Through such a framework the public body can establish relationships with a single provider or several providers for a maximum term of 4 years without having to go through the rigmarole of complying with the procedures for each task. However for a framework to satisfy the requirements of the Regulations it must comply with the following requirements (provision for which is made in the new Framework Agreement 2007):
This agreement is effectively a term partnering agreement which will see the most benefits being obtained by the creation of a cohesive team involved in delivering a series of tasks where the shared experience of working together and the measurement of key performance indicators can generate improvements in subsequent tasks.
CJ-0808
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