On 9 April, the Scottish Government issued a Scottish Procurement Construction Policy Note “Coronavirus (COVID-19): impact on construction contracts” (CPN 1/2020). This relates to the planning and delivery of public works projects in Scotland. The CPN states that it must be read alongside:

• “Coronavirus (COVID-19): construction sector guidance” issued on 6 April (refer to our blog Construction site closure “Guidance”);
• Scottish Procurement Policy Note “Coronavirus (COVID-19): supplier relief” (SPPN 5/2020) issued on 26 March (read our blog on this); and
• Scottish Procurement Policy Note “Coronavirus (COVID-19): procurement regulations for public bodies” (SPPN 4/2020) issued on 20 March.

Other construction specific guidance that is relevant includes the SFT Guidance on Operational PPP Projects. Read our blog “Operational Projects and COVID-19 – Guidance from the Scottish Futures Trust”.

The CPN is also to be read in the wider context of the Coronavirus (Scotland) Act 2020, The Health Protection (Coronavirus) (Restrictions) (Scotland) Regulations 2020 and other Scottish Government guidance relating to the COVID-19 outbreak.

The CPN and SPPNs relate to Scottish projects. It should also be noted that the UK Government has separately issued guidance for contracting authorities. The UK guidance is on different terms and has been issued on different dates to the Scottish guidance which adds another layer of complexity for those companies operating UK wide. The UK guidance also goes further than the Scottish Government guidance in respect of existing works contract and it is unclear at this stage whether further similar guidance will be issued in Scotland.

Scottish Government CPN

The CPN relates to the planning and delivery of public works projects in Scotland and will therefore apply to any contractors and consultants engaged in public sector construction projects in Scotland.

Pipeline Projects / Procurement

Contracting authorities are advised to:

• “…determine if it is practicable to maintain their current project pipeline including the related programme of procurement activity for construction contracts”
• “…for all non-essential works…. determine if it is necessary to introduce a hold point at contract award to delay the commencement of any on-site works for a suitable period.”
• “…request bidders to propose their suggested programme for the works, which can then be evaluated in all the circumstances relating to when the finished project can best be commissioned into public service in relation to the COVID-19 pandemic.”
• “…give consideration to suspending any requirement for “wet” signatures on contract documents in favour of a typed signature or an electronic facsimile or scan of the appropriately-designated signatory’s true manuscript.”  
• “…request details of bidders’ contingency plans in the event that key staff become unavailable due to COVID-19…”

The key point is that procurement procedures for public contracts must still adhere to the relevant legislative requirements (pursuant to the Public Contracts (Scotland) Regulations 2015 and Procurement Reform (Scotland) Act 2014).

Existing / Live Contracts

Contracting authorities are advised to “urgently engage with contractors in order to ascertain their current status on a range of key matters” including:

• Current progress on site against programme requirements;
• Value of work undertaken on site to date;
• Impact of supply chain disruption; and
• Any applications made to the UK Government and/or Scottish Government relating to emergency loans / grants etc.

Contracting authorities should check and understand provisions in live contracts such as suspension, insurance (including where works are suspended), resumption of safe work once coronavirus restrictions are lifted, extensions of time, loss and expense, LDs, retention and force majeure. Contracting authorities are advised to consider whether a construction programme can be extended to accommodate disruptions. For example, is there is a hiatus between practical completion of the works and the required operational readiness of the project?

For more guidance on contractual relief mechanisms refer to SPPN 05/2020.

Comment

The SPPNs / CPNs are guidance only. It is up to the public sector bodies as to whether the guidance is followed.

There is a consistent key message in all public sector guidance issued to date. This is that the current coronavirus pandemic is not an opportunity to exploit or gain from another party’s loss and contracting authorities and contractors should seek to address the issues practically and constructively. The Scottish Government’s focus is to ensure that Scotland’s construction sector survives the current crisis and can effectively recommence work in order to deliver current and future construction projects. The measures will be reviewed on 30 June 2020.

Will more guidance be issued? The UK Government has issued a series of guidance notes for contracting authorities, one of which includes model deeds of variation that can be used for NEC3 and JCT standard form contracts to contractually implement agreed relief options. It is unclear at present whether the Scottish Government will publish further similar guidance.

The Scottish construction sector is having to keep up with a fast moving and evolving series of guidance notes from the Scottish Government. We will continue to keep you informed.

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