The first Conditions of Engagement Fee Adjustment Factor (COE-FAF), for use with the Standard Conditions of Engagement contracts, has been published by the Department of Public Expenditure, Infrastructure, Public Sector Reform and Digitalisation (DPER).
What is COE-FAF and why does it matter?
- The COE-FAF provides a transparent and consistent mechanism for adjusting consultancy fees where the fee adjustment provisions of the contract apply.
- The factor is derived by DPER using a methodology based on movements in relevant economic indicators, including Average Hourly Earnings in the whole economy and the Consumer Price Index, in accordance with the COE-FAF Methodology.
- COE-FAF values are published on a quarterly basis. This ensures that the adjustment mechanism remains responsive to changes in economic conditions reflected in quarterly earnings statistics published by the Central Statistics Office.
- Each published COE-FAF value applies for a 12-month period (Indexation Year).
What is the first published value?
- The COE-FAF for a First Adjustment Date falling in Relevant Quarter 4 - 2026 (1st October 2026 to 31st December 2026) is 1.027.
Which contracts does the COE-FAF apply to?
The COE-FAF applies to the
- Standard Conditions of Engagement for Technical Services (COE1), published in September 2024, and the
- Standard Conditions of Engagement for Archaeological Services (COE2), published in November 2024 on the CWMF website, together with any subsequent revisions.
When does the COE-FAF apply?
- Fees tendered as a lump sum are subject to a fixed-price period extending from 10 days before the Tender Submission Date until the first day of the 25th month after that date (the Base Date) i.e. approximately 2 years.
- For contracts tendered as a lump sum, the Base Date is the First Adjustment Date. For contracts tendered as a percentage fee, the First Adjustment Date is the later of the Base Date and the Percentage Fee Conversion/Application Date.
What do public sector clients need to do?
- Read and understand the inflation adjustment provisions in the Payments subclauses of the relevant contract (COE1 or COE2), together with the Form of Tender and Schedule (FTS9 or FTS10), which contains relevant definitions.
- Read and understand GN 1.6, which includes guidance and worked examples on the practical application of the COE-FAF where fee adjustment provisions apply.
- Become familiar with and comfortable using the COE-FAF tool. There is a training video available on the website.
- Identify the Tender Submission Date for the contract. It should be kept on the project file.
- Enter this information into the COE-FAF tool. (a.) For lump-sum contracts, the tool will determine the Base Date, First Adjustment Date and Relevant Quarter. (b) For percentage fee contracts, the Percentage Fee Conversion/Application Date is also required.
- The COE-FAF tool will automatically populate the available COE-FAF values for the first and, when available, subsequent Indexation Years for the contract.
- Apply the relevant COE-FAF value to consultant fees in accordance with the contract provisions. Each published value applies for one Indexation Year until replaced by the next applicable COE-FAF value for that contract.
Which tender submission date ranges are associated with this first published COE-FAF value?
- To assist Government Clients, the text below identifies the tender submission date ranges for lump-sum contracts that correspond to this first published COE-FAF value.
Contract: COE1 – Technical Services
Contract Publication Date: 30 September 2024
Tender Submission Date Range: 10 October 2024 to 9 December 2024
Contract: COE2 – Archaeological Services
Contract Publication Date: 4 November 2024
Tender Submission Date Range: 14 November 2024 to 9 December 2024
COE-FAF values for First and subsequent Indexation Years will be published annually in each Relevant Quarter tab within the COE-FAF tool spreadsheet (i.e. one update annually for each Relevant Quarter). All contracts will align to only one Relevant Quarter. This will allow Government Clients to easily track COE-FAF values on individual contracts.
The updated tool is available on the Fee Adjustment Mechanism page of this website.
Queries
If you have a query regarding this news item or the supporting documentation, please contact construction@per.gov.ie