Contract Execution: Timelines, Delays, and Termination
Contract Execution Procedures
Delivery Schedule and Commencement
The delivery schedule for the land and the path, along with various conditions, shall form the administrative basis for the work. If not otherwise indicated therein, delivery shall be made within 15 days following the date the contractor or their legal representative delivers copies of the protocolized decree or resolution approving the contract and warranty.
If the contractor or their legal representative fails to attend on the day fixed for delivery, the Department will designate a further period not exceeding eight days. If the contractor fails to attend by the expiration of this period, the Department may administratively terminate the contract early.
Department Obligations
Once the order or decision awarding the contract is processed, signed transcripts are protocolized according to Article 90, and the security (warranty) is held, the Department will provide the contractor, at no charge, with two copies of the plans, specifications, and other project background information. The Department will also notify the contractor in writing of the day the site delivery and work layout will occur.
Delays and Compensation
If the failure to deliver the land is not attributable to the contractor and causes delays affecting the program, the contractor will be compensated for damages based on justified direct costs incurred, as verified by the tax audit. The contract term will also be increased commensurate with the delay caused.
Work Program Requirements
Within the first 30 days after contract award, unless the contract basis specifies a different period, the contractor shall submit the Official Work Program for approval by the tax inspector. This must use a scheduling method like the ‘Critical Path Method’ (CPM) and include:
- All work items
- Work quantities
- The critical path
- Major milestones
- All information relevant to such diagrams
Contractor Delays and Consequences
A delay of more than 15 days in the initiation of work, or any interruption lasting that long, which is not caused by force majeure or fully justified to the tax inspector, entitles the Department to administratively terminate the contract early.
If work progress falls behind schedule, the Department has the authority to take measures to normalize the work pace, without prejudice to terminating the contract if the delay exceeds 30% of the planned work (Art. 161). The contractor must comply with instructions issued for this purpose within 15 days of notification, under penalty of early contract termination.
Work Program Modifications
When special circumstances warrant, the Director, upon the recommendation of the tax inspector, may modify the work program. The contractor shall be compensated, if applicable, for damages this action may cause, in the manner provided in the following Article.
If, under the application of the aforementioned power, the contract term is extended, the contractor shall be indemnified for the proportional increase in overhead costs incurred. For this purpose, and if the contract basis is silent on the matter, it is determined that overhead corresponds to 12% of the total proposal value, and compensation is proportional to the time extension relative to the original contract period.
Department-Initiated Termination or Stoppage
The Directorate has the right to terminate a contract early or order the stoppage of work when funds are unavailable to continue it, or when stoppage is necessary for other reasons. In case of work stoppage ordered by the Director, the contractor shall be indemnified as previously mentioned.
If the stoppage exceeds two months, the contractor may request the settlement of the contract due to the suspension order. In this event, compensation will correspond to a percentage of the reduction from the original contract value.
Work Damage
Accidents that deteriorate or destroy the work, or cause material losses…