Standard Acquisition Clauses and Conditions (SACC) Manual
Section 4 - Supplemental General Conditions
Ship Construction - Firm Price
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Supplemental General Conditions
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Active 1028 Ship Construction - Firm Price (2010-08-16) 1028
Superseded 1028 ARCHIVED: Ship Construction - Firm Price (2004-12-10) 1028
Cancelled 1028 ARCHIVED: Ship Construction - Firm Price (1998-02-16) 1028
Remarks – Recommended Use of SACC Item
Use the following supplemental general conditions in contracts for ship construction.
Use in conjunction with general conditions 2030.
Legal text for SACC item
01 Interpretation
02 Conduct of Work
03 Inspector Final Judge of Work, Materials, etc.
04 Re-execution of Inferior Work
05 Drawings & Models Prepared by Contractor
06 Specifications Provided by Canada
07 Design Changes and Modifications
08 Accommodation
09 Care of Vessel during Construction
10 Wharfage and Dockage Fee
11 Overhanging Charges
12 Warranty
13 Public Ceremony
1028 01 (2010-08-16) Interpretation
In the Contract, unless the context otherwise requires:
"Design Change"
means any change to approved drawings, Specifications, or statements of requirements. Work necessary to eliminate " fouling" points or for the correction of errors made by the Contractor is not a "Design Change" within the meaning of this section;
"General Conditions"
means the general conditions forming part of the Contract;
"Inspector"
means the inspection authority or any other person designated in the Contract to carry out the inspection duties;
"Vessel"
means the ship or vessel to be constructed by the Contractor under the Contract and includes the whole of its respective hulls, engines, boilers, machinery, auxiliaries, equipment, fittings, and appurtenances where the context permits,
and the term "Work"
as used in the Contract includes the vessel as defined in the Contract;
These supplemental general conditions must be read with the General Conditions, provided that, in the event of any inconsistencies between the provisions of the General Conditions and of these supplemental general conditions, the latter must prevail.
The singular includes the plurial and vice versa.
1028 02 (2010-08-16) Conduct of Work
Canadian Labour:
To the full extent consistent with availability, proper economy and the expeditious performance of the Contract, the Contractor will employ Canadian labour exclusively. A reasonable proportion of the labour force employed will consist of persons who have been demobilized or honourably discharged from Active Service in Canadian Forces, where such persons are available and qualified for the Work to be performed.
The Contractor must procure all materials, parts, components and equipment required in connection with the performance of the Contract from the sources proposed in its bid or such other sources as may be authorized by Canada.
Performance Control:
The Contractor may, at any time, apply to Canada for advice or direction on matters pertaining to the Contract.
The Contractor must submit for examination by the Inspector and/or the Contracting Authority all proposed contracts including those to be effected by Purchase Orders, if requested to do so.
The Contractor must permit the Inspector to examine any designs, drawings, models or Specifications, completed or under preparation by it or on its behalf in connection with the Contract at any time.
The Contractor must comply with all directions and instructions that may, from time to time, be given by the Inspector and/or the Contracting Authority with respect to the recording and reporting upon the conduct, progress and Cost of the Work.
1028 03 (2010-08-16) Inspector Final Judge of Work, Materials, etc.
If any part of the Specifications provides for a method of construction or for the supply and/or use of materials, equipment or parts which are not specified with particularity, the Contractor will have the right of selection provided that:
the construction so performed and the materials, equipment and parts so supplied and/or used are in accordance with good marine building practice for the type and class of Vessels covered by the Contract, and
the Specifications and drawings and all other Contract requirements are fully complied with.
The Inspector is the final judge of the quality, quantity and suitability of the workmanship, parts, materials, plant, machinery, apparatus, tools and equipment used in or for the purposes of the Work and as to the meaning or interpretation of the Specifications. Its decision with regard to the foregoing matters, or any of them, is final and binding upon the Contractor.
The Contractor must comply promptly and fully with all orders, directions or instructions at any time given by the Inspector with respect to the Work or the conduct or progress of the Work or with respect to the parts, materials, plant, apparatus, machinery, tools or equipment used in or for the purposes of the Work.
1028 04 (2010-08-16) Re-execution of Inferior Work
The Inspector may reject or refuse to accept or approve any part of the materials or Work if, in its opinion, the same or any workmanship, parts or materials used in the manufacture or production of the Work are not in accordance with the provisions of the Contract. The Contractor must immediately at its own expense replace or otherwise make good to the satisfaction of the Inspector any part of the materials or Work which may have been rejected by the Inspector. Canada will not be liable for any work done, materials, or parts delivered or assembly made by the Contractor, unless and until the same are approved by the Inspector as evidenced by its certificate in writing.
1028 05 (2010-08-16) Drawings & Models Prepared by Contractor
All drawings, copies of drawings and models, which have been prepared by the Contractor pursuant to the Contract are the sole property of Canada and may be used as Canada sees fit.
Approval of the drawings, whether express or implied, does not relieve the Contractor of its responsibility under the Contract to deliver a vessel that will meet the performance requirements in the Specifications.
Where modifications are requested to the drawings before their approval, the Contractor will be deemed to have accepted such modifications and to have agreed that they do not constitute a change in Specifications and that they will not affect the performance of the vessel adversely, unless it notifies Canada, in writing, within fourteen (14) days after receipt by it or notice of the modification, that it considers that such modification constitutes a change in specification or that it will adversely affect the performance of the Vessel. If the Contractor does not withdraw such notice, it will be relieved of any liability for failure of the Vessel to perform in accordance with the warranty insofar as such failure can be shown to be the direct result of such modification.
The provisions of the preceding subsection apply to Design Changes.
1028 06 (2010-08-16) Specifications Provided by Canada
All Specifications, drawings, patterns, samples and other information furnished by Canada to the Contractor in connection with the Contract must be used by the Contractor solely for the purpose of carrying out the Work and for no other purpose except with the consent in writing of Canada and must remain the property of Canada and be returned to Canada upon demand.
Any minor part or parts not shown in the Specifications, drawings, patterns or samples, but which are necessary for the due completion of the Work will be deemed to be included in the Contract Price and no addition to the Contract Price will be allowed by reason of such omission, unless otherwise agreed to by Canada.
1028 07 (2010-08-16) Design Changes and Modifications
Canada may, at any time and from time to time, order a suspension of the Work in whole or in part, and make modifications of, changes in or additions to the Specifications, changes in methods of shipment or packing and in the place or time of delivery. The Contractor must comply with all directions given by Canada with respect of the foregoing. If any such suspension, modification, change or addition result in an increase or decrease in the Cost of the Work, the Contract Price will be adjusted accordingly provided that the Contractor will in no event be entitled to compensation for any loss of anticipated profits and provided further that minor increases or decreases in cost will be disregarded.
Any adjustment to the Contract Price made pursuant to paragraph 1 will be ascertained and agreed to by the Parties before the purchase of any materials or the commencement of any work by the Contractor.
If the Contractor proposes to make a claim for adjustment of the Contract Price pursuant to paragraph 1, it must provide notice to Canada of its intention to do so within thirty (30) days of the date that it received information that a change within the scope of paragraph 1 has been made. Failure by the Contractor to give such notice within the prescribed period will constitute a waiver by it of any rights that it may have under the Contract to adjustment in the Contract Price as a result of such change.
1028 08 (2010-08-16) Accommodation
The Contractor must provide for the Inspector and any supervisory or other staff employed by Canada, such office space, office facilities, telephone service, and suitable sanitary and washing facilities as the Inspector or the Contracting Authority may require from time to time at the Contractor's shipyard.
The Contractor must supply suitable warehouse accommodation for all government supply stores issued in connection with the Contract for such length of time as Canada may direct. The Contractor is responsible for the care, handling, embarking, loading, moving and similar duties in respect of supply stores in the custody or control of the Contractor or of the Inspector as the Inspector or the Contracting Authority may from time to time direct.
1028 09 (2010-08-16 Care of Vessel during Construction
The Contractor must maintain all parts of the Vessel including, but not limited to, structure, paint work, machinery, auxiliaries, appliances and apparatus in a satisfactory condition during the entire period of construction. The Contractor must take measures to keep to a minimum any wear and damage incident to construction, and to prevent corrosion, or other deterioration, especially to unpainted, polished and moving parts. The Contractor must keep all water piping, heat exchangers, valve chests and equipment drained, flushed, and cleaned except during trials and tests. The Contractor must take cold weather precautions when conditions so require.
The Contractor is responsible for the care of all machinery and equipment whether furnished by him or by Canada. The Contractor must fully protect electrical, electronic and interior communication equipment, at all times, against dust, moisture, or other foreign matter, and ensure that it is not subjected to rapid temperature changes.
The Contractor must ensure that the design form of the Vessel is maintained throughout the course of construction and that no distortion of materials occurs which might cause locked-in stresses.
1028 10 (2010-08-16) Wharfage and Dockage Fee
Until the completion of the Contract, the Contractor is responsible for and must pay all expenses of wharfage, towage, dockage, running lines, electric light, heating water for testing and refilling the tanks and all other charges, fees, expenses and disbursements for or incidental to the construction, launching and delivery of the Vessel. If at any time after the launching and before final acceptance of the said Vessel, any contingency should arise making it, in the opinion of the Inspector, advisable to have such Vessel placed in dock for survey, the Contractor must dock the Vessel at its own risk and expense.
1028 11 (2010-08-16) Overhanging Charges
In the event of any assessments, taxes or duties, or other levies or charges whatsoever, being unpaid after the Vessel has been formally accepted by Canada, and Canada has complied with all the provisions imposed upon Canada by the Contract, the Contractor must reimburse Canada within thirty (30) days for any such assessments, taxes, duties, levies or charges as may have been paid by Canada.
1028 12 (2010-08-16) Warranty
The General Conditions are amended by deleting the section entitled "Warranty" and replacing it with the following :
Despite acceptance of the Work and without restricting any other term of the Contract or any condition, warranty or provision implied or imposed by law, the Contractor warrants that, during the warranty period, the Vessel, including without limitation, the hull, propelling machinery and auxiliaries, fittings and equipment of all kinds will:
be free from all defects of design, material, workmanship, assembly or compatibility of components; and
meet or surpass all of the performance standards and tests set out in the Specifications and be fit for the particular purposes for which it is required as described in the Contract.
The warranty period for the Vessel is twelve (12) months from the date of its delivery to and acceptance by Canada.
The Contractor must repair or remove and replace, all at its own expense, any work which fails, at any time during the warranty period, to meet the requirements of section 2 above and deliver and install such repair or replacement free from all defects at the Contractor's facility, or at such other facility or location as Canada may direct.
If Canada chooses not to have the defective Work repaired or replaced at the Contractor's facility, then:
the Contractor must replace or make good the defective Work at such location as the Contracting Authority may specify and Canada will pay the actual Cost incurred in so doing (including reasonable traveling and living expenses) with no allowance by way of overhead or profit, less a sum equivalent to the Cost of making good the defective Work had it been made good at the Contractor's facility; or
at Canada's option Canada may have the defective Work repaired or replaced elsewhere, and the Contractor must pay Canada such sums as are equivalent to the Cost of supplying the necessary part or parts and doing the Work at the Contractor's facility.
The warranty period for the Vessel will be extended by the amount of time, in excess of one month for each occasion during which the Vessel is out of service while undergoing warranty repairs or replacements.
If the Contractor is not located close to the vessel home port / station, it must appoint a local representative to resolve and correct defects arising during the warranty period. The name and address of the representative must be given to the Contracting Authority sixty (60) calendar days before the Contractor delivers the Vessel to Canada.
The warranty provided for in this clause does not apply with respect to defects in the Vessel, including defects in performance, which are caused by
Canada not complying with the Contractor's reasonable instructions for the operation, maintenance and repair of the Vessel;
alterations by Canada to the Vessel which are not approved by the Contractor, provided that approval is not unreasonably withheld; and
damage and defects arising from the negligence of any person employed on board the Vessel during the warranty period, except the negligence of the Contractor or its representative.
The Contractor must transfer to Canada all warranties on work supplied or held by the Contractor which exceed the warranty period indicated above, and the Contractor must exercise any such rights and warranties on behalf of Canada.
Upon the identification and reporting to the Contractor of any defects in the Work subject to warranty, the Contractor must carry out the Work to correct warranty defects or failures with a minimum of delay, at a time agreed to with the Technical Authority to avoid any restriction of the Vessel operation.
1028 13 (2010-08-16) Public Ceremony
Unless otherwise provided in the Contract, the Contractor will not be entitled to any increase in the Contract Price by reason of any public ceremony. The Contractor must not allow any public ceremony in connection with the Work without having previously obtained the written permission of Canada.
1028 14 (2010-08-16) Insurance
Despite any other provisions of the Contract, the Contractor must bear and be subject to all risk of loss or damage of or to the Work or any part of the Work until delivery of the Vessel and final acceptance of same pursuant to the provisions of the Contract. If any such loss or damage should occur before such delivery and final acceptance, the Contractor must immediately (unless otherwise directed by the Contracting Authority or the Inspector and subject to such conditions as the Contracting Authority or the Inspector may impose), at its own expense and without making any claim for reimbursement, repair, restore and/or replace the Work or the part of the Work so lost or damaged.
The Contractor must indemnify and save harmless Canada against and from any and all claims, damages, loss, costs and expenses which Canada may, at any time or times, suffer or incur as a result of or arising out of any actual or alleged injury to persons (including injuries resulting in death) or damage to property which may be or be alleged to be caused by or suffered as a result of the carrying out of the Contract or any part of the Contract, whether by the Contractor or by any subcontractor or assignee of the Contractor.
The Contractor must enter into a contract of insurance issued in the joint names of the Contractor and Canada as their respective interests may appear in the standard form of Marine Builder's Risk Policy. The insurance policy must provide full indemnification to Canada for any loss or damage to the Vessel or any other materials which are the property of Canada for installation in the Vessel in the custody of the Contractor or any claim or expenses to Canada as aforesaid for which the Contractor assumes responsibility under the Contract, and the premium or cost of such insurance coverage is included in the purchase price.