Knowledge Highlights 25 February 2022
On 17 February 2022, the Building and Construction Authority (“BCA”) issued a Circular titled “End of relief period under Part 2 and Part 8B of the Covid-19 (Temporary Measures) Act for relevant contracts in the Built Environment sector” (“Circular”).
The relief period under Part 2 and Part 8B of the Covid-19 (Temporary Measures) Act 2020 (“COTMA”) is scheduled to end on 28 February 2022. Part 2 provides for temporary relief for the inability to perform contracts, while Part 8B provides for temporary measures for cost-sharing in construction contracts.
BCA has seen encouraging signs of the sector’s recovery and notes that the current level of construction output is close to pre-Covid levels, as observed from the project progress payments made at the industry level. This indicates that construction activities are progressing at a steady pace. As the relief period for the relevant construction and supply contracts under Part 2 and Part 8B is scheduled to end on 28 February 2022, it is stated in the Circular that contracting parties may consider the actions outlined below, if they have not done so, while continuing discussions to achieve amicable outcomes.
Preparing for end of relief period under COTMA Part 2 and Part 8B
If contracting parties require relief under Part 2, the contracting parties must serve a Notification for Relief (“NfR”) before 28 February 2022. The defence to a claim for a breach of contract will continue beyond the expiry of the relief period if the NfR is served before 28 February 2022, i.e. defaulting parties can still raise the defence under the COTMA at any legal proceedings even after the relief period if the NfR is served before the end of the relief period.
If contractors wish to claim cost-sharing of the qualifying costs incurred on or before 28 February 2022 from the inability to complete the construction works by the completion date due to Covid-19, they need to include the item in their regular payment claims to their customers/clients. While there is no specific deadline to put up the payment claim, it is advisable for contractors to submit such claims as soon as reasonably practicable so as to allow clients sufficient time to evaluate their claims and minimise potential disputes.
COTMA Part 10A (increase in foreign manpower salary cost)
Currently, the relief period for COTMA Part 10A is scheduled to end on 31 March 2022. Part 10A provides for reliefs for construction contracts affected by increase in foreign manpower salary cost.
Contractors may apply to seek a Part 10A Assessor’s determination before 31 May 2022 to adjust the contract sum for the increase in foreign manpower salary costs. Such increase of costs should be in respect of Work Permit Holders, due to the impact of Covid-19 during the period from 1 October 2020 to 31 March 2022, if contracting parties are unable to reach an amicable outcome. The application for an Assessor’s determination can be made at https://go.gov.sg/cotma10a.
Ex-gratia Extension of Time (“EOT”) for public sector projects from July 2021
BCA had earlier announced an ex-gratia EOT of 34 days for the period from January 2021 to June 2021 for eligible public sector construction contracts affected by Covid-19. For the period from July 2021, BCA is in discussion with government agencies on the ex-gratia EOT to be provided for eligible public sector construction contracts. Details will be announced by BCA when they are ready.
Further details on the processes can be found at the following links:
- Part 10A https://go.gov.sg/cotma10a