Earlier this year saw the launch of the new NEC4 Facilities Management (“FM”) contract, together with an accompanying Subcontract, Short Contract, and Short Subcontract. The latest additions to the NEC contract family have been welcomed by those seeking a tailored contract solution for the governance of facilities management services, especially as the market continues to see very notable growth in the outsourcing of such services to external providers.
With the NEC contracts renowned for their flexibility, it should come as no surprise that the new FM suite is intended to support a wide range of FM contract approaches. It includes three different pricing options (NEC Main Options A, C and E), can be used for both ‘Hard’ and ‘Soft’ FM services, and is suitable for multi-jurisdictional use. It also follows the NEC approach of using plain and simple language, with a view to ensuring complete understanding between the parties and thereby stimulating good contract management.
The general concept of a standard form term service agreement is not new for NEC. When the NEC3 suite was first published back in 2005, it included a new ‘Term Service Contract’, which has been successfully used on countless FM arrangements since (and indeed still can be). However, the NEC says that the new FM contracts have been “specifically developed for the FM sector” and include “market recognised phrases and definitions,” meaning that they are more commercially aligned with the FM sector and its practices.
The FM contracts do, nonetheless, have a very similar structure and feel to the TSC suite. That said, there are some notable differences and these include the following:
It is also fair to say that the FM contracts are more ‘skeletal’ than the TSC contracts (and indeed the other NEC forms as well) – a somewhat inevitable consequence of their versatility and reliance on the technical annexures (Scope, Performance Table etc.) to dictate the detail of the parties’ contractual duties and obligations. Whilst undoubtedly a welcome addition to the NEC suite, the FM contracts are not something that can be treated as an ‘off the shelf’, low maintenance form of contract. Rather, they require careful and collaborative input from technical, legal and contract management personnel, to ensure that the full commercial agreement of the parties is accurately and comprehensively captured.
If you require further information about the matters raised in this article, please contact Laura Reeve.
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