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Please check your contracts

Feb 15, 2021

We’re all very used now to hearing about how those in charge of the country have been wrong-footed by the pandemic.

School business managers are an altogether more organised and forward-looking bunch in comparison, but even they have found it tricky to deal with some aspects of the COVID-19 landslide of chaos.

Contracts is one area which has been exposed by the disruption of the past few months.

Most contracts should already feature a ‘force majeure’ clause to provide protection against an unseen event that prevents a contractor from delivering their contracted service.

This should cover your school in some cases, but it’s clear they’re not necessarily suitable for a COVID-19 related lockdown.  So requests to include a specific clause relating to pandemics has become commonplace since the outbreak struck.

My advice? Seek advice before you start down this route because you need to check that the legal detail doesn’t disadvantage your school.

Contracts can create a lot of headaches for schools and the pandemic has added another dimension of hurt for many. But contracts common sense, backed up with professional support and advice, will help.

One of my key pieces of advice is to not necessarily to accept the contract or addendum that the supplier puts forward and be confident about pushing back on a clause if you are not happy with it or need to know more.

Having your own contract at the start of any tendering process, especially one that has been prepared by experts and has been subjected to a legal fine toothcomb, is good practice and a great starting point. Remember that if your contract is high value it should fall under the Public Contracts Regulations 2015 which will legally require you to prepare your own contract at the beginning of the process.

If you leave your bidders to bring their own contracts to the table they will each be different in the detail and you are much more likely to miss clauses that will trip you up later. But if they all work from the same contract – yours – then you will have protection; you’ll be able to dictate the terms and judge all bids on the same standards – and bidders will be clear about the terms on which they will enter any contract.

Make sure that the contract covers off all the areas you expect it to. Standard contract templates may not, for example, feature specialised clauses in areas like the Local Government Pension Scheme (LGPS). You need to be as aware of what is not in the contract as what is in it. It’s a good idea to apply a simple set of questions to a new contract document. What is missing? What are the scenarios you need to insert? And are there any lessons from what’s gone wrong in the past that could inform the new contract?

A lack of specificity in a clause can be another source of problems. Some catering contracts will, for example, suggest that a ‘reasonable sum’ is payable to the contractor if the school has to close for a short time e.g. ‘snow days’. Problems often arise from a lack of definition of what is meant by ‘reasonable sum’. What is reasonable for the contractor will undoubtedly mean something different to the school. And the amount of time and resources spent arguing over that sum can be more than the difference.

So, go for a specific sum on closure rather than the amorphous term ‘reasonable’ – I’d suggest 190th of labour costs, based on the fact that schools usually have 190 ‘trading’ days over the academic year.

Notice periods are another contract blind spot. A well written clause will clearly state that the contractor can’t change any terms or conditions or personnel on site during any notice period.

If that clause is absent it can cause issues. One school’s cleaning contractor missed the tender submission deadline. In a huff, knowing they could no longer retain the contract, they removed their staff to another site and brought in a new team that lacked training and were unfamiliar with the school site. What did the legal paperwork have to say? To paraphrase that wonderfully dry legal euphemism, “the contract was silent on the matter”.

Getting the contract right at the start of any tendering process is an investment of time that will repay you in reduced stress levels when contract signing time comes around. Leave this paperwork to the end and your newly appointed supplier will feel in a strong position to negotiate on all clauses because they weren’t stated at the start of the process. It’s a situation that can turn into a massive and protracted back and forth which could last months.  How many times has a contract of your commenced before the contract has been signed?  It’s commonplace but it’s a big risk.

Contracts are really a foundation stone for any work you do with suppliers. If there is a dispute the first thing I advise clients is to look at what the contract says. Ultimately, if the contract stays silent on a dispute with a contractor then the only recourse is the courts, and – you know where I’m going here - in any court in the land the first step will be to examine the legal agreement.

 

Lorraine Ashover is managing director of Minerva Procurement Consultancy Services Limited. Focused exclusively on the school sector, Minerva has helped schools tender £85 million worth of contracts and generated more than £2.5 million of revenue, refunds and ongoing annual savings for its clients over the past four years.  www.minervapcs.com



Tags: contracts
Category: Minerva blogs

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