We are the employer on an ECC Option B and our contractor has not yet submitted the bond required under clause X13 some 11 weeks into the contract. The contractor has submitted a request for payment of general items, but no work has been carried out other than site set up. Should we withhold payment or reduce payment only to site setup costs?
You cannot withhold any monies for the lack of bond, unless you have an item in the bill of quantities for the bond – in which case that item will not be paid until the bond is provided. However, you should not let the matter rest there. A suitable bond should have been provided within 4 weeks of the contract date and all the time you do not have it you are at risk if the contractor defaults.
Ultimately you are entitled to terminate if the situation continues – see the second bullet of clause 91.2. We suggest that your project manager gives the contractor a default notice under this clause. That will then enable you to terminate if this default continues for a further 4 weeks after your project manager’s notice has been given. It will, of course, be up to you whether or not to use this sanction, but your project manager should issue a notice in any event to give you the option.