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Financial Partnerships Unit: Standardisation in Contract Negotiation

Explore standardisation in contract negotiation across sectors like education, health, and waste, focusing on FPU processes, key issues, and market trends. Learn about alternative funding structures, insurance premium sharing, utilities, and practical considerations.

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Financial Partnerships Unit: Standardisation in Contract Negotiation

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  1. abcdefghij Financial Partnerships Unit Process and Issues in Contract Negotiation CLAIRE DONALD Solicitor, Shepherd+ Wedderburn Legal secondee, Financial Partnerships Unit

  2. Standardisation • Increasing standardisation across all sectors – Education, health, waste • Condition of SE funding for education PPPs that SSSC3 is used • Changes to SSSC3 must be approved by FPU

  3. Process • Submit to FPU all changes to • Main body of Project Agreement • Payment Mechanism • Key Stage Reviews • Table of derogations • Comparison of Project Agreement against latest draft

  4. FPU’s approach to Standardisation • Protecting public sector position • policy considerations • acceptability of reallocation of risk • Awareness of development/sophistication of market • “Golden Rule” • project specific changes inevitable

  5. Authority Approach to Standardisation • Caution against automatically accepting golden rule changes, but….. • …….golden rule provides a guide to what will be acceptable to FPU allowing a firm line to be taken in negotiations

  6. Market approach to Standardisation • Increasing level of acceptance by market of SSSC3 • Generally seeing similar derogations on all projects • C.f. England

  7. Issues in Schools Contract Negotiation • Alternative funding structures • Insurance Premium Sharing • Utilities • Practical Issues

  8. Alternative Funding Structures • SSSC3 drafted on basis of bank funding • Increasing number of deals not bank funded • Bonds • Private placements • Legitimate changes required to contract to reflect structure • E.g. compensation on termination • Resolve prior to appointment of preferred bidder

  9. Insurance Premium Sharing • Traditionally contractor risk • Treasury/FPU – must use SPOC 3 schedule • 30% Exceptional Cost/Saving • 85% - 15% Authority/Contractor sharing • Agree mechanism and base cost figures prior to PB appointment

  10. Utilities • Project specific • Risk share:- • Contractor – consumption • Authority – rate • Resolve prior to PB appointment • Utilities critical to viability of project for FM provider • Drafting notoriously complicated!

  11. Practical Issues • Practical commercial issues, e.g. • Acquisition of FFE • Off Site Works/Planning Conditions • Land sales • All need to be reflected in the contract • Draft as soon as possible • Submit for approval by FPU as soon as possible

  12. Questions

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