The Scottish Procurement and Commercial Directorate have issued the Consultation document on the amendments for the Scheme for Construction Contracts (Scotland) Regulations 1998 and the Construction Contracts Exclusion Order 1998. It is available by clicking here.
The Scheme requires to be updated as a result of the amendments to the Housing Grants Construction and Regeneration Act 1996 which form part of the Local Democracy Economic Development and Construction Act 2009.
The consultation is to run for 8 weeks from 7 February to 1 April 2011. The aim is to issue a report on the consultation process by 24 June 2011. This will pave the way for the new Scheme to be published allowing both it and the 2009 Act to be brought into force by the planned date of 1 October 2011.
The three main areas covered by proposed amendments to make the Scheme comply with the new Act are adjudication costs, the "slip rule" whereby adjudicator's will be allowed to correct clerical or typographical errors, and payment notices.
The consultation is also seeking views on other matters including confidentiality of the process, the power of the adjudicator to open up and review any decision taken or certificate issued, the power of the adjudicator to award interest, and whether the Scheme should provide for the Court to make an order requiring a party to comply with the adjudicator's decision.
There is also a proposed change to the Exclusion Order. Currently it excludes certain tiers of PFI contracts from the application of the 1996 Act. One of the amendments in the 2009 Act is to exclude arrangements whereby payment is made conditional on performance of obligations under another contract, a mechanism heavily used at present in PFI contracts to manage risk away from the Project Co. The proposal is to amend the Exclusion Order so as to exclude subcontracts in PFI schemes from the ambit of the Act. This will retain for them the possibility of payments being conditional on performance up the line and do away with the need for other mechanisms to fall into their place, such as Project Bank Accounts and extended payment periods.
The overall aim is to allow the 2009 Act along with the amended Schemes and Exclusion Order to come into force by October 2011. Where standard form contracts are used, care will be required to ensure that, after the date the new Act comes into force, only compliant standard form contracts are used. Particular notice will need to be taken where a tender process starts pre-1 October but where contract award is after. The standard forms in place currently will not comply with the new provisions and should not be used after they come into force. The drafting bodies such as JCT and SBCC are already preparing for the changes. Where bespoke or amended forms are used, these will also require to be amended to bring them in line.