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Alternative A - Provisions relating to Target Costs
(applicable where the Purchase Order provides for payment of the Supplier
by reference to a Target Cost)
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6.1
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Open book recording of costs
The Supplier will keep detailed records of the Actual Cost incurred in
performing the Services on an "open book" basis, i.e. on the
basis that the records of Actual Cost are maintained in a fully auditable
manner and are made available to the Purchaser whenever reasonably required
for purposes of verification in connection with the Project. The Purchaser
and the Supplier will agree what records need to be kept by the Supplier
in respect of the Actual Costs and what form the breakdown referred to
in clause 6.3 will take before the date the first payment becomes due
to the Supplier.
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6.2
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Access to original vouchers and books of account
The Supplier will provide to the Purchaser, or its representatives or
agents, full access to and/or details of, all original vouchers and books
of account necessary to demonstrate its Actual Cost if and when reasonably
requested to do so by the Purchaser.
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6.3
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Regular breakdowns of Actual Cost
The Supplier will provide the Purchaser at monthly intervals (commencing
on the date agreed by the Purchaser and the Supplier or, failing agreement,
on the date one month after the Supplier’s commencement of the Services)
a statement of its Actual Cost with a breakdown showing how it is made
up together with any additional information reasonably requested.
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6.4
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Purchaser’s objection to any Actual Cost
The Purchaser may (acting reasonably) object to any Actual Cost incurred
by the Supplier on the basis that the cost is not properly incurred for
the performance of the Services. In the event of any objection, the parties
will seek to agree the amount of the Actual Cost and will, if considered
appropriate by either party, meet to discuss any differences between them.
Any failure to reach agreement will be resolved in accordance with the
Dispute Resolution Procedure.
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6.5
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Notice of payment due to Supplier
Within 14 days after receipt by the Purchaser of the Supplier’s
breakdown of its Actual Cost incurred during the preceding monthly period
the Purchaser will give notice of the amount of the payment made or proposed
to be made and will pay that amount to the Supplier by the final date
for payment referred to in clause 6.8.
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6.6
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Notice of withholding payment
At least 7 days before the final date for payment of any amount due to
the Supplier, the Purchaser will give notice to the Supplier of any amounts
of the Actual Cost claimed by the Supplier that the Purchaser either objects
to and is seeking to withhold or of any amounts that the Purchaser is
owed by the Supplier (including any amounts previously overpaid to the
Supplier) which the Purchaser is seeking to withhold. Any notice will
set out the sum or sums proposed to be withheld, the ground or grounds
for withholding payment and the amount attributable to each ground.
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6.7
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Date when payment due
The reimbursement by the Purchaser to the Supplier of any Actual Cost
will be due 14 days after receipt by the Purchaser of the Supplier’s
breakdown of its Actual Cost in accordance with clause 6.3. Payment of
instalments of the Supplier’s Margin will be due 14 days after the
date of completion of the Services in relation to the relevant stage (as
set out in the Purchase Order). In the case of any VAT payable to the
Supplier, the VAT will be due 14 days after receipt by the Purchaser of
a VAT invoice in accordance with clause 6.15.
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6.8
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Final date for payment
The final date for payment of any sums referred to in clause 6.7 will
be 14 days after the date that the relevant payment became due.
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6.9
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Payment of Supplier’s Margin
Payment of the Supplier’s Margin will be due at the intervals set
out in the Purchase Order. If any change to the amount of the Supplier’s
Margin is agreed by the parties the change and the amended payments will
be recorded in writing and the relevant provisions of the Purchase Order
will be amended, or be deemed to be amended, accordingly. Unless the Supplier’s
Margin is expressed as a percentage of the Target Cost, increases or decreases
in the Target Cost will not automatically produce any change in the Supplier’s
Margin.
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6.10
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Actual Cost less than Target Cost
If the Actual Cost of completing the Services is less than the relevant
Target Cost, the difference between the two figures will be shared between
the parties in the relevant proportions set out in the Purchase Order.
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6.11
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Actual Cost greater than Target Cost but less than Guaranteed Maximum
Cost
If the Actual Cost of completing the Services exceeds the relevant Target
Cost but is equal to or less than the relevant Guaranteed Maximum Cost
(if any), the Supplier will only be entitled to receive the proportion
of the amount of the excess set out in the Purchase Order. If the Supplier
has already received payment in excess of its entitlement in accordance
with this clause, it will immediately repay to the Purchaser the amount
of the overpayment.
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6.12
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Actual Cost greater than Guaranteed Maximum Cost
If the Actual Cost of completing the Services exceeds the relevant Guaranteed
Maximum Cost (if any), the amount of the excess will be borne by the Supplier
alone.
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6.13
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Additions to the Target Cost and Guaranteed Maximum Cost
If any additional sums are properly due to the Supplier in accordance
with clause 4 the amount of those additional sums will be added to the
Target Cost and the Guaranteed Maximum Cost (if any) and both sums will
be deemed to be amended accordingly.
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6.14
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Reductions from the Target Cost and Guaranteed Maximum Cost
If changes to the Project are made that reduce the cost to the Supplier
of carrying out the Services, the Target Cost and the Guaranteed Maximum
Cost for the Services or the relevant stages of the Services will both
be reduced by an appropriate amount.
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6.15
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VAT
All sums payable by or to the Purchaser or the Supplier are exclusive
of VAT. Where VAT is chargeable on any sums, the paying party will, upon
production of a valid VAT invoice from the other, pay the amount of the
VAT.
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6.16
|
Interest on late payments
If the Purchaser is late in making any payment due to the Supplier in
accordance with the Contract, the Purchaser will pay interest on the amount
of the late payment at the rate specified in the Purchase Order from the
final date for payment of that amount until the date on which the relevant
payment is received by the Supplier.
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Alternative B - Provisions relating to a Contract Sum
(applicable where the Purchase Order provides for payment of the Supplier
by reference to a Contract Sum)
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6.1
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Applications for payment
On the dates or on completion of the relevant activities or milestones
shown in the Payment Schedule, the Supplier will provide the Purchaser
with: -
-
an application for payment showing the amount the Supplier considers
to be payable, together with a summary of the total amount previously
paid; and
-
a statement confirming the activity or milestone the Supplier considers
to have been completed or the progress the Supplier has made against
the relevant programme for the provision of the Services (as the case
may be).
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6.2
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Additional information
The Supplier will provide any additional information and explanation
that the Purchaser may reasonably request.
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6.3
|
Disagreement as to completion of activities/milestones or payments due
The Purchaser may (acting reasonably) question the completion of any
activities or milestones, or the payments due as referred to in the Supplier’s
application for payment in accordance with clause 6.1. In the event of
any question being raised, the Purchaser and the Supplier will seek to
agree the issues in question and will, if considered appropriate by either,
meet to discuss any differences between them. Any failure to reach agreement
will be resolved in accordance with the Dispute Resolution Procedure.
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6.4
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Notice of payment due to Supplier
Within 14 days after receipt by the Purchaser of the Supplier’s
application for payment in accordance with clause 6.1 the Purchaser will
give notice to the Supplier of the amount of the payment due to the Supplier,
being the lesser of: -
-
the amount claimed in the Supplier’s application for payment;
or
-
the amount agreed in accordance with clause 6.3 or (in the absence
of agreement) the amount the Purchaser (acting reasonably) considers
is due to the Supplier.
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6.5
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Notice of withholding payment
At least 7 days before the final date for payment of any amount due to
the Supplier the Purchaser will give notice to the Supplier of any amounts
claimed by the Supplier that the Purchaser either objects to and is seeking
to withhold or of any amount that the Purchaser is owed by the Supplier
(including any amounts previously overpaid to the Supplier) which the
Purchaser is seeking to withhold. The notice will set out the sum or sums
proposed to be withheld, the ground or grounds for withholding payment
and the amount attributable to each ground.
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6.6
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Date when payment due
The payment of the sums due to the Supplier in accordance with clause
6.4 will be due 14 days after the receipt by the Purchaser of the Supplier’s
application for payment in accordance with clause 6.1. In the case of
any VAT payable to the Supplier, the VAT will be due 14 days after receipt
by the Purchaser of a VAT invoice in accordance with clause 6.10.
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6.7
|
Final date for payment
The final date for payment of any sums referred to in clause 6.6 will
be 14 days after the date the relevant payment became due.
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6.8
|
Adjustments to the Contract Sum
Whenever there is any adjustment to the amounts due to the Supplier
(either upwards or downwards) in accordance with clause 4 the parties
will endeavour to agree an appropriate adjustment to the Payment Schedule,
failing which, the Purchaser will make any adjustments that, acting reasonably,
it considers to be appropriate. The Contract Sum will then be adjusted
accordingly.
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6.9
|
Payment Schedule revision
If the Services do not progress in accordance with the programme applicable
to their performance or the activities or milestones set out in the Payment
Schedule, either the Purchaser or the Supplier may give notice to the
other requesting a revision to the Payment Schedule. If the parties cannot
agree on a revision to the Payment Schedule, the Purchaser will make any
revision that is, in its reasonable opinion, appropriate. The revised
Schedule, once agreed or issued by the Purchaser will become the Payment
Schedule.
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6.10
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VAT
All sums payable by or to the Purchaser or the Supplier are exclusive
of VAT. Where VAT is chargeable on any sums, the paying party will, upon
production of a valid VAT invoice from the other, pay the amount of the
VAT.
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6.11
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Interest on late payments
If the Purchaser is late in making any payment due to the Supplier in
accordance with the Contract, the Purchaser will pay interest on the amount
of the late payment at the rate specified in the Purchase Order from the
final date for payment of that amount until the date on which the relevant
payment is received by the Supplier.
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