Government recommended guidance promotes integration of FAC-1 with NEC4 contracts

At the NEC User’s Group conference in June this year, NEC and the Association of Consultant Architects (ACA) launched new guidance (NEC 2024) on using NEC4 contracts with the ACA Framework Alliance Contract 1 (FAC-1) (ACA 2016).

FAC-1 creates and implements collaborative framework and alliance arrangements and is recommended by the UK government. NEC4 contracts are also recommended by the government because they stimulate good management of relationships which create an environment for successful project delivery.

Following extensive discussions, it was agreed there is significant benefit for NEC and ACA to work together and set guidance out on how both forms can be integrated.

Contractual integrator

FAC-1 is a multi-party contractual integrator which can be applied alongside NEC4 contracts to establish practical collaboration across a number of projects or across the different parts of a complex project. It has been used successfully in conjunction with NEC contracts and can create relationships that support the Project 13 enterprise approach.

FAC-1 describes activities that can govern the award of NEC4 contracts, integrate NEC4 contracts and enhance the implementation of NEC4 contracts. FAC-1 features which fit with NEC4 contracts include procedures for award of contracts for any types of works, services and supplies; framework-level early supply chain involvement; framework-level performance measurement and incentives; an option to create a digital information management integrator; and framework-level early warning and risk management.

NEC4 contracts encourage cooperation, they can complement FAC-1 and they can enhance the implementation of the FAC-1 relationships and systems. NEC4 features which fit with FAC-1 include consistent contracts for any types of works, services and supplies; project-level early supply chain involvement; project-level performance measurement and incentives; an option to use digital information management; and project-level early warning and risk management.

Benefits of guidance

The new guidance document will help NEC users – including clients, consultants, contractors and specialists – understand how to combine FAC-1 with NEC4 contracts. It shows how clauses in NEC4 contracts can be used to support the objectives of FAC-1 and how provisions in FAC-1 can support the use of NEC4 contracts. It clearly sets out the mechanisms of each form to help prepare contracts and to manage them accordingly.

Really importantly, the guidance shows how FAC-1 and NEC4 complement each other, explaining their combined strengths and including case studies that illustrate how strategic FAC-1 collaboration in conjunction with NEC contracts can lead to better programme and project outcomes.

For example, under the UK’s Crown Commercial Service FAC-1 construction framework alliance, the Ministry of Justice created an FAC-1 strategic alliance using project contracts based on the NEC4 Engineering and Construction Contract (ECC) Option A (priced contract with activity schedule) to procure the four prisons in its £1.2 billion New Prisons Programme (Fullalove 2023).

The strategic alliance supports the use of building information modelling and modern methods of construction to agree optimum designs and strategic relationships with tier 2 supply chain members. This model has been replicated on other Ministry of Justice programmes of work and by other UK public-sector clients such as Defence Infrastructure Organisation.

Gold standard

Really pleasingly for NEC and FAC-1, as I discussed in the January issue of this newsletter (Welch 2024), the UK’s Constructing Excellence organisation has been piloting a verification scheme for framework providers to achieve ‘Gold Standard’ verification for their frameworks and alliances and for their use of integrated framework alliance contracts.

The initiative is on the back of Cabinet Office endorsement of the 24 recommendations set out in Constructing the Gold Standard (Mosey 2021), an independent review of construction frameworks commissioned as part of the production of The Construction Playbook (HM Government 2022). The agreed features of a Gold Standard framework can be built on the relationships and processes set out in FAC-1.

The verification pilot includes Crown Commercial Service, the Ministry of Justice, the Environment Agency, Scape, Communities and Housing Investment Consortium, LHC Procurement Group and Places for People, with Crown Commercial Service being the first to achieve the Gold Standard.

As I have suggested before, NEC users should familiarise themselves with the practical recommendations in Constructing the Gold Standard. The new guidance on using NEC4 contracts with FAC-1 is the perfect document to support its implementation.

References

ACA (2016) FAC-1 Framework Alliance Contract, ACA, Hanworth, UK. https://acarchitects.co.uk/product/fac-1-framework-alliance-contract.
Fullalove S (2023) UK alliance starts on first of four NEC4-procured prisons. NEC Newsletter 123 (January 2023): 1.
HM Government (2022) The Construction Playbook: Government Guidance on Sourcing and Contract Public Works Project and Programmes, version1.1, Cabinet Office, London, https://assets.publishing.service.gov.uk/media/6312222de90e075880923330/14.116_CO_Construction_Playbook_Web.pdf.
Mosey D (2021) Constructing the Gold Standard: An Independent Review of Public Sector Construction Frameworks. Cabinet Office, London, https://assets.publishing.service.gov.uk/media/61b9cb41e90e07043e8ff5cc/Constructing_The_Gold_Standard_Final.pdf.
NEC (2024) Guidance on using NEC4 contracts with the FAC-1 Framework Alliance Contract, https://www.neccontract.com/getmedia/927fb0b0-eab4-406d-895e-7e3f14b4627a/NEC4_FAC-1-Guidance-Notes.pdf.
Welch J (2024) New ‘Gold Standard’ verification for procurement frameworks. NEC Newsletter 129 (January 2024): 2.