Also, the contractor appointed the subcontractor without acceptance from our project manager. We do not want termination, though defined cost in this instance is not demonstrated to be at open market or competitively tendered rates (clause 52.1). How should we deal with this?
Clearly the contractor should not have appointed the subcontractor before it was accepted by the project manager, and this could be grounds for termination under clause 91.2.
If the subcontractor is being paid defined cost plus fee for the work under its subcontract, then this will be an amount paid to the subcontractor and recoverable by the contractor under cost component 4 in the short schedule of cost components. The defined cost payable to the subcontractor under the subcontract would need to be broken down into the relevant schedule of cost components in the subcontract. The fee in the subcontract then applied to these amounts.
In respect of ECC clause 52.1, the amounts included in defined cost must be at open market or competitively tendered prices. If the project manager is of the view this is not the case, they should instruct a revised quotation to be provided or make their own assessment of the compensation event under clause 64.