This article is produced by CMS Holborn Asia, a Formal Law Alliance between CMS Singapore and Holborn Law LLC.
The Public Sector Standard Conditions of Contract (“PSSCOC”) is the standard form used for all public sector construction projects in Singapore, and encompasses separate forms for i) Construction Works, ii) Design and Build and iii) Nominated Sub-Contracts. In this update, we discuss the key amendments in the recent 8th Edition to the PSSCOC for Design and Construction Works, especially in light of the COVID-19 pandemic.
Extension of Time and Force Majeure
In the previous edition of the PSSCOC, “force majeure” was listed as a ground for extension of time under Clause 14.2(a), but it was left undefined. There was therefore uncertainty as to what events would qualify as force majeure and its applicability to the COVID-19 pandemic.
In the 8th Edition:
- Clause 14.2(a) now expressly defines force majeure as “an event which is beyond the Contractor’s reasonable control (a force majeure event)”.
- A new Clause 14.2(q) provides an additional ground for extension of time, for “Epidemics or pandemics resulting in shortages of the labour, goods, materials or Construction Equipment required for the Works or inability to proceed with any part of the Works.”
In light of these amendments, it is now clear that the COVID-19 pandemic will entitle the Contractor to an extension of time under the 8th Edition. However, and as discussed in the commentary below, it is an open question as to the impact of these amendments on the interpretation of corresponding provisions under previous editions of the PSSCOC.
Loss and Expense
The PSSCOC expressly allows for the claiming of Loss and Expense. In the 8th Edition, the definition of “Loss and Expense” has been refined to include, inter alia, the direct relevant costs of labour, Plant, Construction Equipment, materials, or goods actually incurred.
The inclusion of “Construction Equipment” in the definition of Loss and Expense is consistent with the Building and Construction Authority (“BCA”) Circular dated 29 June 2020 on Ex-Gratia Co-Sharing of Prolongation Costs due to COVID-19, which expressly states that prolongation costs includes, inter alia, plant and equipment costs.
Clause 2.5 of the PSSCOC provides for a procedure to validate oral instructions from the Superintending Officer (i.e. the contract administrator). Previously, the Contractor could, within 7 days, confirm in writing to the Superintending Officer any oral instruction, and if such confirmation is not in writing within 7 days shall be deemed to be a valid instruction.
In the 8th Edition:
- The time period has been shortened to confirmation of the oral instruction within 3 working days by the Contractor and for the Superintending Officer to contradict such confirmation within the next 3 working days (excluding Sundays and public holidays).
- Should the Superintending Officer withdraw any such oral instructions within the aforesaid period, then the Superintending Officer may certify pursuant to Clause 32 (Progress Payments), such sum as may be reasonable in respect of such Loss and Expense that the Contractor has incurred by reason of his compliance with the Superintending Officer’s oral instruction that has been withdrawn.
While the amendments do not go so far as to mandate payment of loss and expense by the Employer, it nevertheless recognizes a prima facie entitlement to loss and expense incurred in complying with oral instructions that were subsequently withdrawn.
The Contractor and Employer are obliged to give Notices under Clause 37.2 of the PSSCOC for various matters.
The following clauses have been amended to allow reciprocal notifications from either the Contractor or the Employer:
- Clause 4.4: Responsibility for Identifying Ambiguities, Discrepancies;
- Clause 10.7: Defects during the Progress of the Works; and
- Clause 18.4: Notify and Search for Defects
These amendments were unlikely to have been made in response to the COVID-19 pandemic. Nevertheless, the collaborative approach envisaged between the Contractor and the Employer may assist in preventing further disputes from arising during this difficult period.
While the amendments to the PSSCOC are welcomed, they are at first glance unlikely to apply to current public sector contracts affected by the COVID-19 pandemic (which would have been entered into on the basis of previous editions of the PSSCOC). It also remains to be seen if the Government will issue tender addendums to incorporate these amendments for ongoing tenders.
One can certainly be guided by the definition of Force Majeure in the 8th edition in the interpretation of earlier editions and there is now clarity that pandemics are covered by the amendments to Clauses 14.2(a) and (q). However, the amendments in events in the new Clauses 14.2(a) and (q) has not been added to Clause 22 which suggests that affected contractors can only seek an extension of time but not loss and expense arising from the said events unless they fall within the events in Clause 22.
However, the amendments to Clauses 14.2(a) and (q) nonetheless raise interesting issues of interpretation for previous editions of the PSSCOC, that may arguably impact the preparation and determination of claims arising from the COVID-19 pandemic: This may be the case if one considers the amendments as merely clarifying, as opposed to augmenting, the intent under previous editions of the PSSCOC.
In any case, the amendments are consistent with BCA’s various advisories and circulars to provide the appropriate extensions of time to Contractors. Contractors in existing public sector projects can take comfort that the Singapore Government will attempt to provide the requisite assistance to cope with the effects of the pandemic. However, the timing and therefore impact of the amendments on current public sector contracts remain an issue for further deliberation.