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DEFENCE RESPONSE TO COVID-19

Advice and Protocols

COVID-19 ADVICE AND PROTOCOLS FOR DEFENCE AND INDUSTRY CONTRACTED ARRANGEMENTS

INFORMATION AS AT 14 APRIL 2020, SUBJECT TO FURTHER UPDATES.
NOTHING IN THESE FAQs IS INTENDED TO BE PROVIDED AS LEGAL OR CONTRACTING ADVICE, CONTRACTORS AFFECTED SHOULD SEEK THEIR OWN ADVICE BASED ON THE AGREED CONTRACT.

Frequently Asked Questions

In light of COVID-19, Defence acknowledges that it is possible that its contractors may be unable to perform their contractual obligations (for example, achieving milestone or delivery dates) and may seek postponement (also called “excusable delay” or “extension of time” in some contracts) or seek other performance relief.

A dedicated Industry Support Cell has also been established within the Defence COVID-19 Taskforce. This team operates as the primary point of contact for all industry related enquiries, requests for assistance and proposals. The best way to contact the Defence COVID-19 Taskforce is via email to covid19.isc@defence.gov.au.

The situation continues to evolve and we will continue to monitor whether we need to update this advice. Please refer to the relevant website page for updates.

Purpose of FAQs

Defence’s position on any particular claim for postponement or other performance relief will be based on the terms of the specific contract and the relevant circumstances. The purpose of these FAQs is to provide high level guidance on a number of key issues. These FAQs are not intended to provide any legal advice or representations to contractors in relation to any individual contract or particular circumstances.

Defence appreciates that there are significant challenges associated with the COVID-19 pandemic, and Defence is committed to working with Defence industry to manage the impact. However, Defence must also manage its contracts in accordance with the highest standards of public accountability and integrity. As such, any claims for postponement or relief will need to be carefully assessed by Defence, and any relief to be provided must be justified by the contractor and defensible in the circumstances.

In managing the impact of the COVID-19 pandemic, ongoing and early communication between Defence and its industry partners is vital. The impact of a range of potential delays can be appropriately mitigated through a number of different mechanisms so that contracts can continue to be performed.

FAQs

Do all of Defence’s Contracts have postponement or performance relief clauses?

No. Defence utilises a variety of different contract suites and templates. These FAQs primarily refer to the ASDEFCON contracting suite. Individual contracts may not be based on ASDEFCON or may utilise other templates from a part of Defence that does not use the ASDEFCON contracting suite. Alternatively, the contract may be an older contract which may contain different postponement or performance relief clauses.

Within the ASDEFCON suite itself, Strategic Materiel, Support and Complex Materiel Vol 2 have postponement or performance relief clauses. However, other templates Do not, including Complex Materiel Vol 1, Support Short and the Deed of Standing Offer.

Are all postponement or performance relief clauses the same?

No. ASDEFCON template postponement and performance relief clauses have changed over time and often differ between templates. In addition, template clauses may have been amended. Bespoke contracts that were not based on an ASDEFCON template may have significantly different terms.

You should review your specific contract to understand what postponement or performance relief clauses may apply. Do not, assume your contract operates the same way as the template or another contract.

What if a contract does not contain postponement or performance relief clauses?

As mentioned above, there are a number of Defence templates that do not contain postponement or performance relief clauses. Non-ASDEFCON contracts may or may not have equivalent clauses. In these circumstances, Defence and the contractor will need to discuss, and formally agree, how delays will be dealt with.

Does ‘Force Majeure’ apply?

ASDEFCON templates do not contain ‘force majeure’ clauses, but (where applicable) have specific postponement and performance relief clauses instead. As such, in almost all circumstances the impact of COVID-19 will be considered in the context of any postponement or performance relief clause.

What about existing delays?

If a Contractor is currently in a situation of delay (for example, has failed to achieve a Milestone Date) and forms a view that it has been further delayed due to a new COVID-19 pandemic related event, then this must be notified to the Commonwealth in accordance with the affected contract. Whether relief is available will be dependent on the terms of the contract and the circumstances.

Mitigation

Contractors should take action to implement mitigation steps to ensure contracts are able to be performed and any losses are minimised.

Subcontractors

Defence does not generally have a direct contractual relationship with subcontractors. The contractual terms under which Defence’s Contractors engage their various subcontractors is a matter as between the Defence Contractor and the subcontractor. If you are a subcontractor to a Defence contract, you should engage with the other party to your contract about how to deal with any impacts the COVID 19 pandemic is having on your ability to perform the subcontract.

Defence’s expectation is that its contractors and subcontractors throughout the supply chain will act reasonably with each other at all times in considering and addressing the impacts of the COVID-19 pandemic.