Assisting with a tender for works at a power station

Advice to an energy technology company on a tender for a major EPC contract in connection with a UK power station.

Facts

Client: Energy company

Country: UK

Industry: Energy

Issues

Our client was recognised internationally for its work in the energy sector, but had limited exposure to UK contracting. It established a subsidiary to bid for projects in the domestic power sector. Fenwick Elliott was asked to advise on procurement issues in the UK, and to strengthen our client’s tender for works at a power station. The project, a major engineering, procurement and construction (EPC) contract, involved designing and installing equipment to reduce the plant’s NOX emissions.

There was a question over whether the contract would be based on fixed-price contract terms or an alternative arrangement based on NEC3 target-based terms.

Solutions

To understand the logistical issues involved in the project, we spent time with our client learning about the technology central to its bid.

Then after discussion over the possible forms of contract, including various alliance-based and collaborative forms, an NEC3 target cost contract was chosen for the bid. Fenwick Elliott prepared comparison models, drafted heads of terms and then drafted a contract in partnership with the in-house legal departments of both JV partners.

Benefits

The contract review and drafting process which Fenwick Elliott undertook with both JV partners has given both firms a greater understanding of risk allocation for domestic EPC contracts – and put them in a stronger position when competing for future tenders in the UK.